EXECUTION COPY
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MBIA INSURANCE CORPORATION,
as Insurer
GMAC MORTGAGE CORPORATION,
as Servicer
GERMAN AMERICAN CAPITAL CORPORATION,
as Seller
ACE SECURITIES CORP.,
as Depositor
ACE SECURITIES CORP. HOME LOAN TRUST 1999-A,
as Issuer
and
FIRST UNION NATIONAL BANK,
as Indenture Trustee
INSURANCE AGREEMENT
$372,062,000
ACE Securities Corp. Home Loan Trust 1999-A
Asset Backed Notes
Class A Notes
Dated as of August 1, 1999]
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TABLE OF CONTENTS
Page
Article I
DEFINITIONS..................................................................1
Article II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representation and Warranties of the Servicer,
the Seller and the Depositor.............................5
Section 2.02. Affirmative Covenants of the Servicer, the Seller
and the Depositor........................................9
Section 2.03. Negative Covenants of the Servicer, the Seller
and the Depositor.......................................16
Section 2.04. Representations and Warranties of the Issuer..............17
Section 2.05. Affirmative Covenants of the Issuer.......................19
Section 2.06. Negative Covenants of the Issuer..........................22
Section 2.07. Representations, Warranties and Covenants
of Indenture Trustee....................................23
Section 2.08. Representations, Warranties and Covenants
of Owner Trustee........................................25
Article III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy....................................26
Section 3.02. Payment of Fees and Premium...............................28
Section 3.03. Reimbursement and Additional Payment Obligation...........29
Section 3.04. Indemnification; Limitation of Liability..................30
Section 3.05. Payment Procedure.........................................33
Article IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement...........33
Section 4.02. Further Assurances and Corrective Instruments.............33
Section 4.03. Obligations Absolute......................................33
Section 4.04. Assignments; Reinsurance; Third-Party Rights..............35
Section 4.05. Liability of the Insurer..................................36
Section 4.06. Parties Will Not Institute Insolvency Proceedings.........36
Section 4.07. Indenture Trustee, Depositor, Seller and Servicer
To Join in Enforcement Action..........................36
Section 4.08. Subrogation...............................................36
Article V
DEFAULTS; REMEDIES
Section 5.01. Defaults..................................................37
Section 5.02. Remedies; No Remedy Exclusive.............................38
Section 5.03. Waivers...................................................39
Article VI
MISCELLANEOUS
Section 6.01. Amendments, Etc...........................................39
Section 6.02. Notices...................................................39
Section 6.03. Severability..............................................41
Section 6.04. Governing Law.............................................41
Section 6.05. Consent to Jurisdiction...................................41
Section 6.06. Consent of the Insurer....................................42
Section 6.07. Counterparts..............................................42
Section 6.08. Headings..................................................42
Section 6.09. Trial by Jury Waived......................................42
Section 6.10. Limited Liability.........................................43
Section 6.11. Entire Agreement..........................................43
INSURANCE AGREEMENT
This INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of August 1,
1999 by and among GERMAN AMERICAN CAPITAL CORPORATION, as seller (together
with its permitted successors and assigns, the "Seller"), GMAC MORTGAGE
CORPORATION, in its capacity as Servicer under the Sale and Servicing
Agreement described below (together with its permitted successors and assigns,
the "Servicer"), ACE SECURITIES CORP., as the Depositor (the "Depositor"), ACE
SECURITIES CORP. HOME LOAN TRUST 1999-A, as the Issuer (the "Issuer"), MBIA
INSURANCE CORPORATION (the "Insurer") and FIRST UNION NATIONAL BANK, as
Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Indenture dated as of August 1, 1999 relating to the
$372,062,000 ACE Securities Corp. Home Loan Trust 1999-A Asset Backed Notes
Class A Notes (the "Obligations"), between the Issuer and the Indenture
Trustee (the "Indenture") provides for, among other things, the issuance of
asset-backed notes and the Insurer has issued its note guaranty insurance
policy (the "Policy") that guarantees certain payments on the Obligations;
WHEREAS, the Insurer shall be paid an insurance premium pursuant to
the Sale and Servicing Agreement, and the details of such premium are set
forth herein; and
WHEREAS, the Servicer, the Seller, the Depositor and the Issuer have
undertaken certain obligations in consideration for the Insurer's issuance of
the Policy;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
Article I
DEFINITIONS
The terms defined in this Article I shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context
clearly requires otherwise, in both singular and plural form, as appropriate.
Unless the context clearly requires otherwise, all capitalized terms used
herein and not otherwise defined in this Article I shall have the meanings
assigned to them in the Sale and Servicing Agreement or the Indenture. All
words used herein shall be construed to be of such gender or number as the
circumstances require. This "Insurance Agreement" shall mean this Insurance
Agreement as a whole and as the same may, from time to time hereafter, be
amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer
to this Insurance Agreement as a whole and not to any particular paragraph,
clause or other subdivision hereof, unless otherwise specifically noted.
"Agency Agreement" means the Agency Agreement dated as of August 1,
1999 between the Administrator and the Indenture Trustee.
"Business Day" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which the Insurer is closed or a day on which banking
institutions in New York City, the State of Pennsylvania or in the city in
which the corporate trust office of the Indenture Trustee under the Indenture
is located are authorized or obligated by law or executive order to close.
"Code" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Commitment" means the letter of commitment from the Insurer to the
Seller dated August 11, 1999.
"Custodial Agreement" means the Custodial Agreement dated as of
August 1, 1999, among the Custodian, the Issuer, the Servicer, and the
Indenture Trustee as the same may be amended or supplemented from time to time
in accordance with the terms thereof.
"Custodian" means Norwest Bank Minnesota, N.A.
"Date of Issuance" means the date on which the Policy is issued as
specified therein.
"Default" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"Event of Default" means any event of default specified in Section
5.01 hereof.
"Financial Statements" means, with respect to the Seller and the
Servicer, the balance sheets and the statements of income, retained earnings
and cash flows and the notes thereto which have been provided to the Insurer.
"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policy.
"Home Loan Sale Agreement" means the Home Loan Sale Agreement dated
as of August 1, 1999 between the Depositor and the Seller as the same may be
amended or supplemented from time to time in accordance with the terms
thereof.
"Indenture" means the Indenture dated August 1, 1999 between the
Issuer and the Indenture Trustee as the same may be amended or supplemented
from time to time in accordance with the terms thereof.
"Indenture Trustee" means First Union National Bank, a national
banking association, as Indenture Trustee under the Indenture, and any
successor Indenture Trustee under the Indenture.
"Indemnification Agreement" means the Indemnification Agreement dated
as of August 6, 1999 between the Insurer, the Seller and the Underwriter.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"Late Payment Rate" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank,
N.A.) plus 3%. The Late Payment Rate shall be computed on the basis of a year
of 365 days calculating the actual number of days elapsed. In no event shall
the Late Payment Rate exceed the maximum rate permissible under any applicable
law limiting interest rates.
"Liabilities" shall have the meaning ascribed to such term in Section
3.04(a) hereof.
"Losses" means (i) any actual out-of-pocket loss paid by the Insurer
or its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term
is used in the Securities Act) of any of the foregoing, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency,
"Moody's" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"Obligor" means the original obligor under each Home Loan, including
any guarantor of such obligor and their respective successors.
"Offering Document" means the Prospectus dated July 26, 1999 and the
Prospectus Supplement thereto dated August 6, 1999, of the Issuer in respect
of the Obligations (and any amendment or supplement thereto) and any other
offering document in respect of the Obligations prepared by the Servicer, the
Seller, Depositor or the Issuer that makes reference to the Policy.
"Opinion Facts and Assumptions" means the facts and assumptions
contained in the insolvency opinion dated August 13, 1999 by ▇▇▇▇▇ & Wood
under the heading "Assumptions of Fact" insofar as they relate to the Seller
and the Depositor.
"Owners" means registered holders of Obligations.
"Person" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner
trust, limited liability company, partnership or other organization or entity
(whether governmental or private).
"Premium" means the premium payable in accordance with Section 3.02
hereof.
"Premium Percentage" shall have the meaning ascribed to such term in
Section 3.02 hereof.
"Registration Statement" means the registration statement on Form
S-3, including a form of prospectus, relating to the Obligations, as amended
or supplemented to the date hereof.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of August 1, 1999, among the Servicer, the Depositor, the Issuer and
the Indenture Trustee as the same may be amended or supplemented from time to
time in accordance with the terms thereof.
"Securities Act" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other
nationally recognized rating agency designated by the Insurer.
"Term of the Insurance Agreement" shall be determined as provided in
Section 4.01 hereof.
"Transaction" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"Transaction Documents" means this Insurance Agreement, the
Indemnification Agreement, the Commitment, the Indenture, the Offering
Document, the Trust Agreement, the Agency Agreement, the Sale and Servicing
Agreement, Home Loan Sale Agreement, the Administration Agreement, the
Underwriting Agreement, the Custodial Agreement and the Obligations.
"Trust" means the trust created pursuant to the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of August 1,
1999 between the Depositor and the Owner Trustee as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriter" means Deutsche Bank Securities Inc.
"Underwriting Agreement" means the Underwriting Agreement between the
Underwriter, the Seller and the Depositor with respect to the offer and sale
of the Obligations, as the same may be amended from time to time.
Article II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Seller and the
Depositor. The Seller and the Depositor represent, warrant and covenant as of
the Date of Issuance, each as to those matters relating to itself, as follows:
(a) Due Organization and Qualification. The Seller and the
Depositor are each a corporation, duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation. Each of the Seller and the Depositor is duly qualified
to do business, is in good standing and has obtained all licenses,
permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in
each jurisdiction in which the failure to be so qualified or to
obtain such approvals would render any Transaction Document
unenforceable in any respect or would have a material adverse effect
upon the Transaction, the Owners or the Insurer.
(b) Power and Authority. Each of the Seller and the
Depositor has all necessary corporate power and authority to conduct
its business as currently conducted and, as described in the Offering
Document, to execute, deliver and perform its obligations under the
Transaction Documents and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Seller and the
Depositor have been duly authorized by all necessary corporate action
and do not require any additional approvals or consents of, or other
action by or any notice to or filing with any Person, including,
without limitation, any governmental entity or the Seller's or the
Depositor's stockholders, which have not previously been obtained or
given by the Seller or the Depositor.
(d) Noncontravention. None of the execution and delivery of
the Transaction Documents by the Seller or the Depositor, the
consummation of the Transaction contemplated thereby or the
satisfaction of the terms and conditions of the Transaction
Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of
incorporation or bylaws of the Seller or the Depositor or
any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in
effect having applicability to the Seller or the Depositor
or any of their material properties, including regulations
issued by an administrative agency or other governmental
authority having supervisory powers over the Seller or the
Depositor;
(ii) constitutes a default by the Seller or the
Depositor under or a breach of any provision of any loan
agreement, mortgage, indenture or other agreement or
instrument to which the Seller or the Depositor is a party
or by which any of its or their respective properties, which
are individually or in the aggregate material to the Seller
or the Depositor, is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Seller or the
Depositor, except as contemplated by the Transaction
Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Seller, the Depositor
or any of its or their subsidiaries, or any properties or rights of
the Seller, the Depositor or any of its or their subsidiaries,
pending or, to the Seller's or the Depositor's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably
be expected to result in a Material Adverse Change with respect to
the Seller or Depositor.
(f) Valid and Binding Obligations. The Obligations, when
executed, authenticated and issued in accordance with the Indenture,
and the Transaction Documents (other than the Obligations), when
executed and delivered by the Seller and the Depositor, will
constitute the legal, valid and binding obligations of the Seller and
the Depositor, as applicable, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable
principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. Neither,
the Seller or the Depositor will at any time in the future deny that
the Transaction Documents constitute the legal, valid and binding
obligations of the Seller or the Depositor, as applicable.
(g) Financial Statements. The Financial Statements of the
Seller, copies of which have been furnished to the Insurer, (i) are,
as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of the Seller as of the dates and
for the periods indicated and (iii) have been prepared in accordance
with generally accepted accounting principles consistently applied,
except as noted therein (subject as to interim statements to normal
year-end adjustments). Since the date of the most recent Financial
Statements, there has been no Material Adverse Change in respect of
the Seller. Except as disclosed in the Financial Statements, the
Seller is not subject to any contingent liabilities or commitments
that, individually or in the aggregate, have a material possibility
of causing a Material Adverse Change in respect of the Seller.
(h) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Seller or the
Depositor in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to any of
them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to the Seller or the Depositor.
The Seller and the Depositor are not in breach of or in default under
any applicable law or administrative regulation of its respective
jurisdiction of incorporation, or any department, division, agency or
instrumentality thereof or of the United States or any applicable
judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Seller or the
Depositor is a party or is otherwise subject which, if enforced,
would have a material adverse effect on the ability of the Seller or
the Depositor, as the case may be, to perform its respective
obligations under the Transaction Documents.
(i) Taxes. The Seller and the Depositor and the Seller's and
the Depositor's parent company or companies have filed prior to the
date hereof all federal and state tax returns that are required to be
filed and paid all taxes, including any assessments received by them
that are not being contested in good faith, to the extent that such
taxes have become due, except for any failures to file or pay that,
individually or in the aggregate, would not result in a Material
Adverse Change with respect to the Seller or the Depositor.
(j) Accuracy of Information. Neither the Transaction
Documents, nor other information relating to the Home Loans, the
operations of the Seller or the Depositor (including origination of
loans) or information relating to the financial condition of the
Seller or the Depositor (collectively, the "Documents"), as amended,
supplemented or superseded, furnished to the Insurer by the Seller or
the Depositor contains any statement of a material fact by the Seller
or Depositor which was untrue or misleading in any material adverse
respect when made. Neither the Seller nor the Depositor has any
knowledge of circumstances that could reasonably be expected to cause
a Material Adverse Change with respect to the Seller or the
Depositor. Since the furnishing of the Documents, there has been no
change or any development or event involving a prospective change
known to the Seller or the Depositor that would render any of the
Documents untrue or misleading in any material respect.
(k) Compliance With Securities Laws. The Seller and the
Depositor represent and warrant that the offer and sale of the
Obligations comply in all material respects with all requirements of
law, including all registration requirements of applicable securities
laws. Without limitation of the foregoing, the Offering Document does
not contain any untrue statement of a material fact and does not omit
to state a material fact necessary to make the statements made
therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation is made
with respect to the information in the Offering Document set forth
under the heading "The MBIA Insurance Policy" or the consolidated
financial statements of the Insurer incorporated by reference in the
Offering Document. Neither the offer nor the sale of the Obligations
has been or will be in violation of the Securities Act or any other
federal or state securities laws. The Trust is not required to be
registered as an "investment company" under the Investment Company
Act.
(l) Transaction Documents. Each of the representations and
warranties of the Seller and the Depositor contained in the
Transaction Documents is true and correct in all material respects,
and the Seller and the Depositor hereby make each such representation
and warranty to, and for the benefit of, the Insurer as if the same
were set forth in full herein.
(m) Solvency, Fraudulent Conveyance. The Seller and the
Depositor are solvent and will not be rendered insolvent by the
Transaction and, after giving effect to the Transaction, none of the
Seller or the Depositor will be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Seller or the Depositor intend to incur, or believe that it has
incurred, debts beyond its ability to pay as they mature. None of the
Seller or the Depositor contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or
similar official in respect of the Seller or the Depositor or any of
their assets. The amount of consideration being received by the
Depositor upon the sale of the Obligations to the Underwriter
constitutes reasonably equivalent value and fair consideration for
the interest in the Home Loans evidenced by the Obligations. The
Seller is not transferring the Home Loans to the Depositor, the
Depositor is not transferring the Home Loans to the Trust and the
Depositor is not selling the Obligations to any Underwriter, as
provided in the Transaction Documents, with any intent to hinder,
delay or defraud any of the Seller's or the Depositor's creditors.
(n) Principal Place of Business. The principal place of
business of the Seller is located in New York, New York and the
principal place of business of the Depositor is located in Charlotte,
North Carolina.
(o) Opinion Facts and Assumptions. The Opinion Facts and
Assumptions insofar as they relate to the Seller and the Depositor
are true and correct as of the Date of Issuance.
Section 2.02. Affirmative Covenants of the Seller and the Depositor.
The Seller and the Depositor hereby agree that during the Term of the
Insurance Agreement, unless the Insurer shall otherwise expressly consent in
writing:
(a) Compliance With Agreements and Applicable Laws. The
Seller and the Depositor shall not be in default under the
Transaction Documents and shall comply with all material requirements
of any law, rule or regulation applicable to it. None of the Seller
or the Depositor shall agree to any amendment to or modification of
the terms of any Transaction Documents unless the Insurer shall have
given its prior written consent.
(b) Corporate Existence. Except as provided in Section 5.23
of the Sale and Servicing Agreement, the Seller, its successors and
assigns, and the Depositor, its successors and assigns, shall
maintain their corporate existence and shall at all times continue to
be duly organized under the laws of their respective jurisdictions of
incorporation and duly qualified and duly authorized (as described in
sections 2.01(a), (b) and (c) hereof) and shall conduct its business
in accordance with the terms of its certificate or articles of
incorporation and bylaws.
(c) Financial Statements; Accountants' Reports; Other
Information. The Seller and the Depositor shall keep or cause to be
kept in reasonable detail books and records of account of their
assets and business, including, but not limited to, books and records
relating to the Transaction. The Seller shall furnish or cause to be
furnished to the Insurer:
(i) Annual Financial Statements. As soon as
available, and in any event within 120 days after the close
of each fiscal year of the Seller, the audited consolidated
balance sheets of the Seller and their subsidiaries as of
the end of such fiscal year and the related audited
consolidated statements of income, changes in shareholders'
equity and cash flows for such fiscal year, all in
reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by the audit opinion of the
Seller's independent accountants (which shall be a
nationally recognized independent public accounting firms)
and by the certificate specified in Section 2.02(e) hereof.
(ii) Quarterly Financial Statements. As soon as
available, and within 120 days after each of the first three
fiscal quarters of each fiscal year of the Seller, the
unaudited consolidated balance sheets of the Seller and
their subsidiaries as of the end of such fiscal quarter and
the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for such
fiscal quarter, all in reasonable detail and stating in
comparative form the respective figures for the
corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.02(e) hereof.
(iii) Initial and Continuing Reports. On or before
the Closing Date, the Seller will provide the Insurer a copy
of the magnetic tape to be delivered to the Indenture
Trustee on the Closing Date setting forth as to each Home
Loan, the information required under the definition of "Home
Loan Schedule" at Section 1.01 of the Sale and Servicing
Agreement.
(iv) Certain Information. Upon the reasonable
request of the Insurer, the Seller shall promptly provide
copies of any requested proxy statements, financial
statements, reports and registration statements which the
Seller files with, or delivers to, the Commission or any
national securities exchange.
(v) Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Seller or the
Depositor pursuant to the terms of the Transaction Documents
and, promptly upon request, such other data as the Insurer
may reasonably request.
All financial statements specified in clause (i) of this
Section 2.02(c) shall be furnished in consolidated form for the
Seller and its subsidiaries in the event the Seller shall consolidate
its financial statements with its subsidiaries.
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports
and other information delivered by the Seller or the Depositor
pursuant to this Section 2.02(c) to the extent provided in Section
2.02(f) hereof.
(d) Reserved.
(e) Compliance Certificate. The Seller shall deliver to the
Insurer, concurrently with the delivery of the financial statements
required pursuant to Sections 2.02(c)(i) and (ii) hereof, one or more
certificates signed by an officer of the Seller authorized to execute
such certificates on behalf of the Seller stating that:
(i) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or Event of Default has
occurred, specifying the nature thereof ; and
(ii) the attached financial statements submitted in
accordance with Sections 2.02(c)(i) or (ii) hereof, as the
case may be, are complete and correct in all material
respects and present fairly the financial condition and
results of operations of the Seller as of the dates and for
the periods indicated, in accordance with generally accepted
accounting principles consistently applied.
(f) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Seller shall, upon the reasonable request of the
Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the Seller
as they may relate to the Obligations, the obligations of
the Seller under the Transaction Documents, and the
Transaction;
(ii) to discuss the affairs, finances and accounts
of the Seller with the chief operating officer and the chief
financial officer of the Seller; and
(iii) with the Seller's consent, as applicable,
which consent shall not be unreasonably withheld, to discuss
the affairs, finances and accounts of the Seller with the
Seller's independent accountants, provided that an officer
of the Seller shall have the right to be present during such
discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Seller. The books and records of the Seller shall be
maintained at the address of the Seller designated herein for receipt
of notices, unless the Seller shall otherwise advise the parties
hereto in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants.
(g) Notice of Material Events. The Seller and the Depositor
shall be obligated (which obligation shall be satisfied as to each if
performed by the Seller or the Depositor) promptly to inform the
Insurer in writing of the occurrence of any of the following to the
extent any of the following relate to it:
(i) the submission of any claim or the initiation
or threat of any legal process, litigation or administrative
or judicial investigation, or rule making or disciplinary
proceeding by or against the Seller or the Depositor that
(A) would be required to be disclosed to the Commission or
to the Seller's or the Depositor's shareholders or (B) could
reasonably be expected to result in a Material Adverse
Change with respect to the Seller or the Depositor, or the
promulgation of any proceeding or any proposed or final rule
which would result in a Material Adverse Change with respect
to the Seller or the Depositor;
(ii) the submission of any claim or the initiation
or threat of any legal process, litigation or administrative
or judicial investigation in any federal, state or local
court or before any arbitration board, or any such
proceeding threatened by any government agency, which, if
adversely determined, would have a material adverse effect
on the Seller, the Depositor, the Owners or the Insurer;
(iii) any change in the location of the Seller's or
the Depositor's principal office or any change in the
location of the Seller's or the Depositor's books and
records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or
against the Seller or the Depositor under any applicable
bankruptcy, reorganization, liquidation, rehabilitation,
insolvency or other similar law now or hereafter in effect
or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or
may be, appointed or requested for the Seller or the
Depositor or any of its or their assets; or
(vi) the receipt of notice that (A) the Seller or
the Depositor is being placed under regulatory supervision,
(B) any license, permit, charter, registration or approval
necessary for the conduct of the Seller's or the Depositor's
business is to be, or may be suspended or revoked, or (C)
the Seller or the Depositor is to cease and desist any
practice, procedure or policy employed by the Seller or the
Depositor in the conduct of its business, and such cessation
is reasonably likely to result in a Material Adverse Change
with respect to the Seller or the Depositor.
(h) Financing Statements and Further Assurances. The Seller
and the Depositor shall, upon the request of the Insurer, from time
to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, within ten days of such request, such
amendments hereto and such further instruments and take such further
action as may be reasonably necessary to effectuate the intention,
performance and provisions of the Transaction Documents. In addition,
each of the Seller and the Depositor agrees to cooperate with S&P and
▇▇▇▇▇'▇ in connection with any review of the Transaction that may be
undertaken by S&P and ▇▇▇▇▇'▇ after the date hereof and to provide
all information reasonably requested by S&P or ▇▇▇▇▇'▇.
(i) Maintenance of Licenses. The Seller and the Depositor,
respectively, or any successors thereof shall maintain or cause to be
maintained all licenses, permits, charters and registrations which
are material to the conduct of its business.
(j) Redemption of Obligations. The Seller and the Depositor
shall instruct the Indenture Trustee, upon redemption or payment of
all of the Obligations pursuant to the Indenture or otherwise, to
furnish to the Insurer a notice of such redemption and, upon a
redemption or payment of all of the Obligations, to surrender the
Policy to the Insurer for cancellation.
(k) Disclosure Document. Each Offering Document delivered
with respect to the Obligations shall clearly disclose that the
Policy is not covered by the property/casualty insurance security
fund specified in Article 76 of the New York Insurance Law.
(l) Reserved.
(m) Reserved.
(n) Closing Documents. The Seller and the Depositor shall
provide or cause to be provided to the Insurer a bound volume or
volumes of the Transaction Documents and an executed original copy of
each document executed in connection with the Transaction within 60
days after the date of closing. Upon the request of the Insurer, the
Seller and the Depositor shall provide or cause to be provided to the
Insurer a copy of each of the Transaction Documents on computer
diskette, in a format acceptable to the Insurer.
(o) Reserved.
(p) Reserved.
(q) Reserved.
Section 2.03. Negative Covenants of the Seller and the Depositor. The
Seller and the Depositor hereby agree that during the Term of the Insurance
Agreement, unless the Insurer shall otherwise expressly consent in writing:
(a) Impairment of Rights. Neither the Seller nor the
Depositor shall take any action, or fail to take any action, if such
action or failure to take action may result in a material adverse
change as described in clause (ii) of the definition of Material
Adverse Change with respect to the Seller or the Depositor, or may
interfere with the enforcement of any rights of the Insurer under or
with respect to the Transaction Documents. The Seller or the
Depositor shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Seller and the
Depositor shall furnish to the Insurer all information requested by
it that is reasonably necessary to determine compliance with this
Section (a).
(b) Adverse Selection Procedure. The Seller and the
Depositor will not use any adverse selection procedure in selecting
Home Loans to be transferred to the Indenture Trustee from the
outstanding mortgage loans that qualify under the Sale and Servicing
Agreement or the Home Loan Sale Agreement for inclusion in the Trust.
(c) Waiver, Amendments, Etc. Neither the Seller nor the
Depositor shall waive, modify or amend, or consent to any waiver,
modification or amendment of, any of the terms, provisions or
conditions of any of the Transaction Documents without the prior
written consent of the Insurer.
(d) Mortgage Loan Agreements; Charge-off Policy. Except as
otherwise permitted in the Sale and Servicing Agreement, the Seller
and the Depositor shall not alter or amend any Home Loan, their
respective collection policies or their respective charge-off
policies in a manner that materially adversely affects the Insurer
unless the Insurer shall have previously given its consent, which
consent shall not be withheld unreasonably.
Section 2.04. Representations and Warranties of the Issuer. As of the
Date of Issuance, the Issuer represents, warrants and covenants as follows:
(a) Due Organization and Qualification. The Issuer is a
business trust and is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The
Issuer is duly qualified to do business, is in good standing and has
obtained all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents to
which it is a party, in each jurisdiction in which the failure to be
so qualified or to obtain such approvals would render any Transaction
Document to which it is a party unenforceable in any respect or would
have a material adverse effect upon the Transaction, the Owner or the
Insurer.
(b) Power and Authority. The Issuer has all necessary power
and authority to conduct its business as currently conducted and, as
described in the Offering Document, to execute, deliver and perform
its obligations under the Transaction Documents to which it is a
party and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Issuer have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Issuer's owners, which have not previously
been obtained or given by the Issuer.
(d) Noncontravention. Neither the execution and delivery of
the Transaction Documents by the Issuer, the consummation of the
Transaction contemplated thereby nor the satisfaction of the terms
and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the Trust Agreement or any
law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to the Issuer or any of its material
properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Issuer;
(ii) constitutes a default by the Issuer under or a
breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Issuer is a party or by which any of its properties, which
are individually or in the aggregate material to the Issuer,
is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Issuer except
as contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Issuer or any
properties or rights of the Issuer pending or, to the Issuer's
knowledge after reasonable inquiry, threatened, which, in any case,
could reasonably be expected to result in a Material Adverse Change
with respect to the Issuer.
(f) Valid and Binding Obligations. The Obligations, when
executed, authenticated and issued in accordance with the Indenture
and the Transaction Documents (other than the Obligations), when
executed and delivered by the Issuer, will constitute the legal,
valid and binding obligations of the Trust enforceable in accordance
with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. The Issuer
will not at any time in the future deny that the Transaction
Documents constitute the legal, valid and binding obligations of the
Issuer.
(g) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Issuer in the
conduct of its business violates any law, regulation, judgment,
agreement, order or decree applicable to it that, if enforced, could
reasonably be expected to result in a Material Adverse Change with
respect to the Issuer. The Issuer is not in breach of or default
under any applicable law or administrative regulation of its
respective jurisdiction or incorporation, or any department,
division, agency or instrumentality thereof or of the United States
or any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Issuer is a party or is otherwise subject which, if enforced, would
have a material adverse effect on the ability of the Issuer, to
perform its obligations under the Transaction Documents.
(h) Reserved.
(i) Taxes. The Issuer has filed prior to the date hereof all
federal and state tax returns that are required to be filed and paid
all taxes, including any assessments received by them that are not
being contested in good faith, to the extent that such taxes have
become due, except for any failures to file or pay that, individually
or in the aggregate, would not result in a Material Adverse Change
with respect to the Issuer.
(j) Transaction Documents. Each of the representations and
warranties of the Issuer contained in the Transaction Documents is
true and correct in all material respects, and the Issuer hereby
makes each such representation and warranty to, and for the benefit
of, the Insurer as if the same were set forth in full herein;
provided that the remedy for any breach of this paragraph shall be
limited to the remedies specified in the related Transaction Document
or in this Insurance Agreement.
(k) Solvency. The Issuer is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the
Transaction, the Issuer will not be left with an unreasonably small
amount of capital with which to engage in its respective business,
nor does the Issuer intend to incur, or believe that it has incurred,
debts beyond its ability to pay as they mature. The Issuer does not
contemplate the commencement of insolvency, bankruptcy, liquidation
or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of
the Issuer or any of its assets.
(l) Principal Place of Business. The principal place of
business of the Issuer is located in Wilmington, Delaware.
(m) Investment Company Act. The Issuer is not an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act. The Issuer is not required to be
registered as an "investment company" under the Investment Company
Act.
(n) No Consents. No authorization or approval or other
action by, and no notice to or filing with, any Person, including,
without limitation, any governmental entity or regulatory body, is
required for the due execution, delivery and performance by the
Issuer of the Transaction Documents or any other material document or
instrument to be delivered thereunder, except (in each case) such as
have been obtained or the failure of which to be obtained would not
be reasonably likely to have a material adverse effect on the
Transaction.
(o) No Material Event of Default. There is no material event
of default on the part of the Issuer under any agreement involving
financial obligations which would materially adversely impact the
financial conditions or operations of the Trust or its obligations
under any document associated with this Transaction.
Section 2.05. Affirmative Covenants of the Issuer. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The
Issuer shall not be in default under the Transaction Documents and
shall comply with all material requirements of any law, rule or
regulation applicable to it. The Issuer shall not agree to any
material amendment to or modification of the terms of any Transaction
Documents unless the Insurer shall have given its prior written
consent.
(b) Maintain Existence. The Issuer and its successors and
assigns shall maintain their existence and shall at all times
continue to be duly organized under the laws of its respective
jurisdiction and duly qualified and duly authorized and shall conduct
its business in accordance with the terms of its organizational
documents.
(c) Notice of Material Events. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of
the following to the extent any of the following relate to it and to
the extent that it receives actual notice of the occurrence of any of
the following events:
(i) the submission of any claim or the initiation
or threat of any legal process, litigation or administrative
or judicial investigation, or rule making or disciplinary
proceeding by or against the Issuer that (A) could be
required to be disclosed to the Commission or to the
Issuer's owners or (B) could result in a Material Adverse
Change with respect to the Issuer or the promulgation of any
proceeding or any proposed or final rule which would result
in a Material Adverse Change with respect to the Issuer;
(ii) any change in the location of the Issuer's or
the Owner Trustee's principal place of business or any
change in the location of the Issuer's books and records;
(iii) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(iv) the commencement of any proceedings by or
against the Issuer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Issuer or any of its assets;
or
(v) the receipt of notice that (A) the Issuer is
being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Issuer's business is to be, or may be
suspended or revoked, or (C) the Issuer is to cease and
desist any practice, procedure or policy employed by the
Issuer in the conduct of its business, and such cessation
may result in a Material Adverse Change with respect to the
Issuer.
(d) Financing Statements and Further Assurances. To the
extent provided in the Indenture, the Issuer will cause to be filed
all necessary financing statements or other instruments, and any
amendments or continuation statements relating thereto, necessary to
be kept and filed in such manner and in such places as may be
required by law to preserve and protect fully the interest of the
Indenture Trustee. The Issuer shall, upon the request of the Insurer,
from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, within ten days of such
request, such amendments hereto and such further instruments and take
such further action as may be reasonably necessary to effectuate the
intention, performance and provisions of the Transaction Documents to
which it is a party. In addition, the Issuer agrees to cooperate with
S&P and ▇▇▇▇▇'▇ in connection with any review of the Transaction that
may be undertaken by S&P and ▇▇▇▇▇'▇ after the date hereof.
(e) Maintenance of Licenses. The Issuer, or any successors
thereof, shall maintain all licenses, permits, charters and
registrations which are material to the conduct of its business.
(f) Third-Party Beneficiary. The Issuer agrees that the
Insurer shall have all rights of a third-party beneficiary in respect
of each Transaction Document and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for
the benefit of the Insurer.
(g) Tax Matters. The Issuer will take all actions necessary
to ensure that the Issuer is not taxable as an association (or
publicly traded partnership), a corporation or a taxable mortgage
pool.
(h) Financial Statements; Accountants' Reports; Other
Information. The Issuer shall keep or cause to be kept in reasonable
detail books and records of account of its assets and business,
including, but not limited to, books and records relating to the
Transaction. The Issuer shall furnish or cause to be furnished to the
Insurer promptly upon receipt thereof, copies of all schedules,
financial statements or other similar reports delivered to or by the
Issuer pursuant to the terms of the Transaction Documents and,
promptly upon request, such other data as the Insurer may reasonably
request.
(i) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Issuer shall, upon the reasonable request of the
Insurer, at its expense, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the Issuer
as they may relate to the Obligations, the obligations of
the Issuer under the Transaction Documents, and the
Transaction;
(ii) to discuss the affairs, finances and accounts
of the Issuer; and
(iii) with the Issuer's consent, as the case may
be, which consent shall not be unreasonably withheld, to
discuss the affairs, finances and accounts of the Issuer
with the Issuer's independent accountants, provided that a
representative of the Seller or the Issuer shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Issuer. The books and records of the Issuer will be maintained
at the address of the Issuer designated herein for receipt of
notices, unless the Issuer shall otherwise advise the parties hereto
in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants.
(j) Financing Statements and Further Assurances. The Issuer
will cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Indenture Trustee in the Trust.
(k) Maintenance of Trust. On or before each August 1
beginning in 2000, so long as any of the Obligations are outstanding,
the Issuer shall furnish to the Insurer and the Indenture Trustee an
officers' certificate either stating that such action has been taken
with respect to the recording, filing, rerecording and refiling of
any financing statements and continuation statements as is necessary
to maintain the interest of the Indenture Trustee created by the
Indenture with respect to the Trust and reciting the details of such
action or stating that no such action is necessary to maintain such
interests. Such officers' certificate shall also describe the
recording, filing, rerecording and refiling of any financing
statements and continuation statements that will be required to
maintain the interest of the Indenture Trustee in the Trust until the
date such next officers' certificate is due. The Issuer will use its
best efforts to cause any necessary recordings or filings to be made
with respect to the Trust.
Section 2.06. Negative Covenants of the Issuer. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Impairment of Rights. The Issuer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Issuer, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Issuer shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Issuer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this paragraph.
(b) Waiver, Amendments, Etc. Except in accordance with the
Transaction Documents, the Issuer shall not waive, modify or amend,
or consent to any waiver, modification or amendment of, any of the
material terms, provisions or conditions of the Transaction Documents
without the consent of the Insurer which consent shall not
unreasonably be withheld. Except upon the prior written consent of
the Insurer which consent shall not unreasonably be withheld, the
Issuer shall not allow the transfer, modification or amendment, nor
consent to any transfer, modification or amendment of the Certificate
of Trust issued pursuant to the Trust Agreement.
(c) Restrictions on Liens. The Issuer shall not, except as
contemplated by the Transaction Documents, (i) create, incur or
suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of
any Lien or Restriction on Transferability of the Home Loans or (ii)
sign or file under the Uniform Commercial Code of any jurisdiction
any financing statement which names the Issuer as a debtor, or sign
any security agreement authorizing any secured party thereunder to
file such financing statement, with respect to the Home Loans.
(d) Successors. The Issuer shall not remove or replace, or
cause to be removed or replaced, the Servicer, the Indenture Trustee
or the Owner Trustee without the prior written approval of the
Insurer.
(e) Subsidiaries. The Issuer shall not form, or cause to be
formed, any subsidiaries.
(f) No Mergers. The Issuer shall not consolidate with or
merge into any Person or transfer all or any material amount of its
assets to any Person, liquidate or dissolve except as permitted by
the Trust Agreement and as contemplated by the Transaction Documents.
(g) Other Activities. The Issuer shall not (i) sell, pledge,
transfer exchange or otherwise dispose of any of its assets except as
permitted under the Transaction Documents; or (ii) engage in any
business or activity except as contemplated by the Transaction
Documents and as permitted by the Trust Agreement.
(h) Trust Agreement. The Issuer shall not amend the Trust
Agreement without the prior written consent of the Insurer.
Section 2.07. Representations, Warranties and Covenants of Indenture
Trustee The Indenture Trustee represents and warrants to, as of the Date of
Issuance, and covenants with the other parties hereto as follows:
(a) Due Organization and Qualification. The Indenture
Trustee is a national banking association, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The Indenture Trustee is duly qualified to do
business, is in good standing and has obtained all licenses, permits,
charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as currently conducted and
as described in the Offering Document and the performance of its
obligations under the Transaction Documents, in each jurisdiction in
which the failure to be so qualified or to obtain such approvals
would render any Transaction Document unenforceable in any respect or
would have a material adverse effect upon the Transaction, the Owners
or the Insurer.
(b) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Indenture Trustee
have been duly authorized by all necessary corporate action and do
not require any additional approvals or consents of, or other action
by or any notice to or filing with any Person, including, without
limitation, any governmental entity or the Indenture Trustee's
stockholders, which have not previously been obtained or given by the
Indenture Trustee.
(c) Noncontravention. None of the execution and delivery of
the Transaction Documents by the Indenture Trustee, the consummation
of the Transaction contemplated thereby or the satisfaction of the
terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate or articles of
incorporation or bylaws of the Indenture Trustee or any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Indenture Trustee or any of its
material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Indenture Trustee ;
(ii) constitutes a default by the Indenture Trustee
under or a breach of any provision of any loan agreement,
mortgage, indenture or other agreement or instrument to
which the Indenture Trustee is a party or by which any of
its properties, which are individually or in the aggregate
material to the Indenture Trustee, is or may be bound or
affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Indenture
Trustee, except as contemplated by the Transaction
Documents.
(d) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Indenture Trustee, or
any of its subsidiaries, or any properties or rights of the Indenture
Trustee, or any of its subsidiaries, pending or, to the Indenture
Trustee's knowledge after reasonable inquiry, threatened, which, in
any case, could reasonably be expected to result in a Material
Adverse Change with respect to the Indenture Trustee.
(e) Valid and Binding Obligations and Agreements. The
Transaction Documents (other than the Obligations), to which the
Indenture Trustee is a party, when executed and delivered by the
Indenture Trustee, will constitute the legal, valid and binding
obligations of the Indenture Trustee enforceable in accordance with
their respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general
equitable principles. The Indenture Trustee will not at any time in
the future deny that the Transaction Documents constitute the legal,
valid and binding obligations of the Indenture Trustee.
(f) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Indenture Trustee
in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to any the Indenture
Trustee that, if enforced, could reasonably be expected to result in
a Material Adverse Change with respect to the Indenture Trustee. The
Indenture Trustee is not in breach of or in default under any
applicable law or administrative regulation of its jurisdiction of
organization, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree
or any loan agreement, note, resolution, certificate, agreement or
other instrument to which the Indenture Trustee is a party or is
otherwise subject which, if enforced, would have a material adverse
effect on the ability of the Indenture Trustee to perform its
obligations under the Transaction Documents.
(g) Transaction Documents. Each of the representations and
warranties of the Indenture Trustee contained in the Transaction
Documents is true and correct in all material respects, and the
Indenture Trustee hereby makes each such representation and warranty
to, and for the benefit of, the Insurer as if the same were set forth
in full herein.
(h) Compliance and Amendments. The Indenture Trustee shall
comply in all material respects with the terms and conditions of the
Transaction Documents to which it is a party and the Indenture
Trustee shall not agree to any amendment to or modification of the
terms of any of the Transaction Documents to which it is a party
unless the Insurer shall otherwise give its prior written consent.
(i) Preference Payments. With respect to any Preference
Amount (as defined in the Policy), the Indenture Trustee shall
provide to the Insurer upon the request of the Insurer:
(i) a certified copy of the final nonappealable
order of a court having competent jurisdiction ordering the
recovery by a trustee in bankruptcy as voidable preference
amounts included in previous distributions under Section
6.05 of the Sale and Servicing Agreement to any Owner
pursuant to the United States Bankruptcy Code, 11 U.S.C.
▇▇.▇▇. 101 et seq., as amended (the "Bankruptcy Code");
(ii) an opinion of counsel satisfactory to the
Insurer, and upon which the Insurer shall be entitled to
rely, stating that such order is final and is not subject to
appeal;
(iii) an assignment in such form as reasonably
required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Servicer, the Indenture
Trustee and any Owner relating to or arising under the Home
Loan against the debtor which made such preference payment
or otherwise with respect to such preference amount; and
(iv) appropriate instruments to effect (when
executed by the affected party) the appointment of the
Insurer as agent for the Indenture Trustee and any Owner in
any legal proceeding relating to such preference payment
being in a form satisfactory to the Insurer.
Section 2.08.Representations and Warranties of the Servicer. The
Servicer represents, warrants and covenants as of the Date of Issuance, as
follows:
(a) Due Organization and Qualification. The Servicer is a
corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Servicer is
duly qualified to do business, is in good standing and has obtained
all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents to
which it is a party in each jurisdiction in which the failure to be
so qualified or to obtain such approvals would render any Transaction
Document to which it is a party unenforceable in any respect or would
have a material adverse effect upon the Transaction, the Owners or
the Insurer.
(b) Power and Authority. The Servicer has all necessary
corporate power and authority to conduct its business as currently
conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents
to which it is a party and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents to which it is a party by
the Servicer, have been duly authorized by all necessary corporate
action and do not require any additional approvals or consents of, or
other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity or the
Servicer's stockholders, which have not previously been obtained or
given by the Servicer.
(d) Noncontravention. None of the execution and delivery of
the Transaction Documents by the Servicer the consummation of the
Transaction contemplated thereby or the satisfaction of the terms and
conditions of the Transaction Documents to which it is a party:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of
incorporation or bylaws of the Servicer or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Servicer or any of its material
properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Servicer;
(ii) constitutes a default by the Servicer under or
a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Servicer is a party or by which any of its properties, which
are individually or in the aggregate material to the
Servicer is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Servicer except
as contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Servicer or any of its
subsidiaries, or any properties or rights of the Servicer or any of
its subsidiaries, pending or, to the Servicer's, knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably
be expected to result in a Material Adverse Change with respect to
the Servicer.
(f) Valid and Binding Obligations. The Transaction Documents
to which it is a party (other than the Obligations), when executed
and delivered by the Servicer, will constitute the legal, valid and
binding obligations of the Servicer enforceable in accordance with
their respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws.
(g) Financial Statements. The Financial Statements of the
Servicer, copies of which have been furnished to the Insurer, (i)
are, as of the dates and for the periods referred to therein,
complete and correct in all material respects, (ii) present fairly
the financial condition and results of operations of the Servicer as
of the dates and for the periods indicated and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied, except as noted therein (subject as to interim
statements to normal year-end adjustments). Since the date of the
most recent Financial Statements, there has been no Material Adverse
Change in respect of the Servicer. Except as disclosed in the
Financial Statements, the Servicer is not subject to any contingent
liabilities or commitments that, individually or in the aggregate,
have a material possibility of causing a Material Adverse Change in
respect of the Servicer.
(h) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Servicer to the
Servicer's knowledge in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to any of
them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to the Servicer. To the
Servicer's knowledge, the Servicer is not in breach of or in default
under any applicable law or administrative regulation of its
respective jurisdiction of incorporation, or any department,
division, agency or instrumentality thereof or of the United States
or any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Servicer is a party or is otherwise subject which, if enforced, would
have a material adverse effect on the ability of the Servicer as the
case may be, to perform its respective obligations under the
Transaction Documents to which it is a party.
(i) Taxes. The Servicer has filed prior to the date hereof
all federal and state tax returns that are required to be filed and
paid all taxes, including any assessments received by them that are
not being contested in good faith, to the extent that such taxes have
become due, except for any failures to file or pay that, individually
or in the aggregate, would not result in a Material Adverse Change
with respect to the Servicer.
(j) Accuracy of Information. Neither the Transaction
Documents to which it is a party, nor other information relating to
the operations of the Servicer, (including servicing of loans) or
information relating to the financial condition of the Servicer
(collectively, the "Documents"), as amended, supplemented or
superseded, furnished to the Insurer by the Servicer contains any
statement of a material fact by the Servicer which was untrue or
misleading in any material adverse respect when made. The Servicer
has no knowledge of circumstances that could reasonably be expected
to cause a Material Adverse Change with respect to the Servicer.
Since the furnishing of the Documents, there has been no change or
any development or event involving a prospective change known to the
Servicer that would render any of the Documents untrue or misleading
in any material respect.
(k) Transaction Documents. Each of the representations and
warranties of the Servicer to which it is a party contained in the
Transaction Documents is true and correct in all material respects,
and the Servicer hereby makes each such representation and warranty
to, and for the benefit of, the Insurer as if the same were set forth
in full herein.
(l) Principal Place of Business. The principal place of
business of the Servicer is located in Horsham, Pennsylvania.
Section 2.09.Affirmative Covenants of the Servicer. The Servicer
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The
Servicer shall not be in default under the Transaction Documents to
which it is a party and shall comply with all material requirements
of any law, rule or regulation applicable to it. The Servicer shall
not agree to any amendment to or modification of the terms of any
Transaction Documents to which it is a party unless the Insurer shall
have given its prior written consent.
(b) Corporate Existence. Except as provided in Section 5.23
of the Sale and Servicing Agreement, the Servicer, its successors and
assigns shall maintain its corporate existence and shall at all times
continue to be duly organized under the laws of their respective
jurisdictions of incorporation and duly qualified and duly authorized
(as described in sections 2.09(a), (b) and (c) hereof) and shall
conduct its business in accordance with the terms of its certificate
or articles of incorporation and bylaws.
(c) Financial Statements; Accountants' Reports; Other
Information. The Servicer shall keep or cause to be kept in
reasonable detail books and records of account of their assets and
business, including, but not limited to, books and records relating
to the Transaction. The Servicer shall furnish or cause to be
furnished to the Insurer:
(i) Annual Financial Statements. As soon as
available, and in any event within 120 days after the close
of each fiscal year of the Servicer, the audited
consolidated balance sheets of the Servicer and their
subsidiaries as of the end of such fiscal year and the
related audited consolidated statements of income, changes
in shareholders' equity and cash flows for such fiscal year,
all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by the audit opinion of the
Servicer's independent accountants (which shall be a
nationally recognized independent public accounting firms)
and by the certificate specified in Section 2.09(e) hereof.
(ii) Semi-Annual Financial Statements. As soon as
available, and in any event within 90 days after the second
fiscal quarters of each fiscal year of the Servicer, the
unaudited consolidated balance sheets of the Servicer and
its subsidiaries as of the end of such fiscal quarter and
the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for such
fiscal quarter, all in reasonable detail and stating in
comparative form the respective figures for the
corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.09(e) hereof.
(iii) Continuing Reports.. The Servicer shall
deliver to the Insurer not later than 12:00 noon, New York
City time, on each Distribution Date the report required by
Section 5.15 of the Sale and Servicing Agreement.
(iv) Computer Diskette. Beginning in November,
1999, the Servicer will deliver to the Insurer on a
quarterly basis, a computer diskette containing a quarterly
summary of the information provided to the Insurer pursuant
to clause (iii) of this subsection 2.09(c) and also
containing information similar to the information provided
in the Home Loan Schedule delivered to the Indenture Trustee
pursuant to the Sale and Servicing Agreement and described
in Exhibit C of the Sale and Servicing Agreement.
(v) Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Servicer
pursuant to the terms of the Transaction Documents to which
it is a party and, promptly upon request, such other data as
the Insurer may reasonably request.
All financial statements specified in clause (i) of this
Section 2.09(c) shall be furnished in consolidated form for the
Servicer and all its subsidiaries in the event the Servicer shall
consolidate its financial statements with its subsidiaries..
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports
and other information delivered by the Servicer pursuant to this
Section 2.09(c) to the extent provided in Section 2.09(f) hereof.
(d) Reserved.
(e) Compliance Certificate. The Servicer shall deliver to
the Insurer, concurrently with the delivery of the financial
statements required pursuant to Sections 2.09(c)(i) and (ii) hereof,
one or more certificates signed by an officer of the Servicer
authorized to execute such certificates on behalf of the Servicer
stating that:
(i) a review of the Servicer's performance under
the Transaction Documents to which it is a party during such
period has been made under such officer's supervision;
(ii) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or Event of Default has
occurred, specifying the nature thereof and, if the Servicer
has a right to cure pursuant to Section 7.01 of the Sale and
Servicing Agreement, stating in reasonable detail
(including, if applicable, any supporting calculations) the
steps, if any, being taken by the Servicer to cure such
Default or Event of Default or to otherwise comply with the
terms of the agreement to which such Default or Event of
Default relates;
(iii) the attached financial statements submitted
in accordance with Sections 2.09(c)(i) or (ii) hereof, as
the case may be, are complete and correct in all material
respects and present fairly the financial condition and
results of operations of the Servicer as of the dates and
for the periods indicated, in accordance with generally
accepted accounting principles consistently applied; and
(iv) the Servicer has in full force and effect a
blanket fidelity bond (or direct surety bond) and an errors
and omissions insurance policy in accordance with the terms
and requirements of Section 5.08 of the Sale and Servicing
Agreement.
(f) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Servicer shall, upon the reasonable request of
the Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the
Servicer as they may relate to the Obligations, the
obligations of the Servicer under the Transaction Documents
to which it is a party, and the Transaction;
(ii) to discuss the affairs, finances and accounts
of the Servicer with the chief operating officer and the
chief financial officer of the Servicer, as the case may be;
and
(iii) with the Servicer's consent, as applicable,
which consent shall not be unreasonably withheld, to discuss
the affairs, finances and accounts of the Servicer with the
Servicer's independent accountants, provided that an officer
of the Servicer shall have the right to be present during
such discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Servicer. The books and records of the Servicer shall be
maintained at the address of the Servicer designated herein for
receipt of notices, unless the Servicer shall otherwise advise the
parties hereto in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants.
(g) Notice of Material Events. The Servicer shall be
obligated promptly to inform the Insurer in writing of the occurrence
of any of the following to the extent any of the following relate to
it:
(i) the submission of any claim or the initiation
of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against the Servicer, that (A) would be
required to be disclosed to the Commission or to the
Servicer's shareholders or (B) could reasonably be expected
to result in a Material Adverse Change with respect to the
Servicer, or the promulgation of any proceeding or any
proposed or final rule which would result in a Material
Adverse Change with respect to the Servicer;
(ii) the submission of any claim or the initiation
of any legal process, litigation or administrative or
judicial investigation in any federal, state or local court
or before any arbitration board, or any such proceeding
threatened by any government agency, which, if adversely
determined, would have a material adverse effect on the
Servicer, the Owners or the Insurer;
(iii) any change in the location of the Servicer's
principal office or any change in the location of the
Servicer's books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or
against the Servicer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Servicer or any of its or
their assets; or
(vi) the receipt of notice that (A) the Servicer is
being placed under regulatory supervision, as a result of a
material event, (B) any license, permit, charter,
registration or approval necessary for the conduct of the
Servicer's business is to be, or may be suspended or
revoked, or (C) the Servicer is to cease and desist any
practice, procedure or policy employed by the Servicer in
the conduct of its business, and such cessation is
reasonably likely to result in a Material Adverse Change
with respect to the Servicer.
(h) Further Assurances. The Servicer shall, upon the request
of the Insurer, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, within ten days
of such request, such amendments hereto and such further instruments
and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the
Transaction Documents to which it is a party. In addition, each of
the Servicer agrees to cooperate with S&P and ▇▇▇▇▇'▇ in connection
with any review of the Transaction that may be undertaken by S&P and
▇▇▇▇▇'▇ after the date hereof and to provide all information
reasonably requested by S&P or ▇▇▇▇▇'▇.
(i) Maintenance of Licenses. The Servicer or any successors
thereof shall maintain or cause to be maintained all licenses,
permits, charters and registrations which are material to the conduct
of its business.
(j) Servicing of Home Loans. The Servicer shall perform such
actions with respect to the Home Loans as are required by or provided
for in the Sale and Servicing Agreement. The Servicer will provide
the Insurer with written notice of any change or amendment to any
Transaction Document as currently in effect.
(k) Reserved.
(l) Year 2000 Program. The Servicer has taken steps
necessary and appropriate to prevent any problems in its computer and
information systems arising from or in connection with the
information processing challenges associated with the Year 2000, and
will provide to the Insurer such information and reports as the
Insurer may reasonably request from time to time with respect to such
steps as have or will be taken with respect thereto.
(m) Transaction Documents. The Servicer will not at any time
in the future deny that the Transaction Documents constitute the
legal, valid and binding obligations of the Servicer, except that the
enforcement thereof may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other
similar laws affecting creditors' rights generally and by general
principles of equity.
Section 2.10. Negative Covenants of the Servicer. The Servicer hereby
agree that during the Term of the Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Impairment of Rights. The Servicer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Servicer or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Servicer shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Servicer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this Section (a).
(b) Waiver, Amendments, Etc. The Servicer shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the
Insurer.
(c) Mortgage Loan Agreements; Charge-off Policy. Except as
otherwise permitted in the Sale and Servicing Agreement, the Servicer
shall not alter or amend any Home Loan, their respective collection
policies or their respective charge-off policies in a manner that
materially adversely affects the Insurer unless the Insurer shall
have previously given its consent, which consent shall not be
withheld unreasonably.
Article III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) Payment of Initial Premium and Expenses. The Insurer
shall have been paid, by the Seller, that portion of a nonrefundable
Premium payable on the Date of Issuance and the Seller shall agree to
reimburse or pay directly other fees and expenses identified in
Section 3.02 hereof as payable.
(b) Transaction Documents. The Insurer shall have received a
fully executed copy of the Commitment and a copy of each of the
Transaction Documents, in form and substance satisfactory to the
Insurer, duly authorized, executed and delivered by each party
thereto.
(c) Certified Documents and Resolutions. The Insurer shall
have received a copy of (i) the certificate or articles of
incorporation and bylaws of the Servicer, the Seller and the
Depositor and (ii) the resolutions of the Seller's and the
Depositor's Board of Directors authorizing the sale of the Home Loans
and (iii) the execution, delivery and performance by the Servicer,
the Seller and the Depositor of the Transaction Documents and the
Transaction contemplated thereby, certified by the Secretary or an
Assistant Secretary of the Servicer, the Seller and the Depositor
(which certificate shall state that such certificate or articles of
incorporation, bylaws and resolutions are in full force and effect
without modification on the Date of Issuance).
(d) Incumbency Certificate. The Insurer shall have received
a certificate of the Secretary or an Assistant Secretary of the
Servicer, the Seller and the Depositor certifying the names and
signatures of the officers of the Servicer, the Seller and the
Depositor authorized to execute and deliver the Transaction Documents
and that shareholder consent to the execution and delivery of such
documents is not necessary.
(e) Representations and Warranties; Certificate. The
representations and warranties of the Servicer, the Seller and the
Depositor set forth or incorporated by reference in this Insurance
Agreement shall be true and correct as of the Date of Issuance as if
made on the Date of Issuance and the Insurer shall have received a
certificate of appropriate officers of the Servicer, the Seller and
the Depositor to that effect.
(f) Opinions of Counsel.
(i) The law firm of ▇▇▇▇▇ & Wood, LLP and the
in-house counsel for the Seller (as applicable) shall have
issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of the Seller and the
validity and enforceability of the Transaction Documents
against the Seller.
(ii) Counsel to the Servicer shall have issued its
favorable opinion, in form and substance acceptable to the
Insurer and its counsel, regarding the corporate existence
and authority of the Servicer and the validity and
enforceability of the Transaction Documents against the
Servicer.
(iii) The law firm of ▇▇▇▇▇ & ▇▇▇▇, LLP shall have
issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of the Depositor and the
validity and enforceability of the Transaction Documents
against such parties.
(iv) The law firm of ▇▇▇▇▇ & Wood, LLP shall have
furnished its opinions, in form and substance acceptable to
the Insurer and its counsel, regarding the sale of the Home
Loans and the tax treatment on the Obligations under federal
and state tax laws.
(v) The Insurer shall have received such other
opinions of counsel, in form and substance acceptable to the
Insurer and its counsel, addressing such other matters as
the Insurer may reasonably request. Each opinion of counsel
delivered in connection with the Transaction shall be
addressed to and delivered to the Insurer.
(g) Approvals, Etc. The Insurer shall have received true and
correct copies of all approvals, licenses and consents, if any,
including, without limitation, any required approval of the
shareholders of the Servicer, the Seller and the Depositor, required
in connection with the Transaction.
(h) No Litigation, Etc. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto,
shall be pending or threatened before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the Transaction Documents
or the consummation of the Transaction.
(i) Legality. No statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
Transaction contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.
(j) Issuance of Ratings. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes at least
a "A" by S&P and and "A2" risk ▇▇▇▇▇'▇, and that the Obligations,
when issued, will be rated "AAA" by S&P and "Aaa" by ▇▇▇▇▇'▇.
(k) No Default. No Default or Event of Default shall have
occurred.
(l) Additional Items. The Insurer shall have received such
other documents, instruments, approvals or opinions requested by the
Insurer or its counsel as may be reasonably necessary to effect the
Transaction, including, but not limited to, evidence satisfactory to
the Insurer and its counsel that the conditions precedent, if any, in
the Transaction Documents have been satisfied.
(m) Conform to Documents. The Insurer and its counsel shall
have determined that all documents, certificates and opinions to be
delivered in connection with the Obligations conform to the terms of
the Transaction Documents.
(n) Compliance With Commitment. All other terms, conditions
and requirements of the Commitment shall have been satisfied.
(o) Satisfaction of Conditions of the Underwriting
Agreement. All conditions in the Underwriting Agreement relating to
the Underwriter's obligation to purchase the Obligations shall have
been satisfied.
(p) Underwriting Agreement. The Insurer shall have received
copies of each of the documents, and shall be entitled to rely on
each of the documents, required to be delivered to the Underwriter
pursuant to the Underwriting Agreement.
Section 3.02. Payment of Fees and Premium.
(a) Legal and Accounting Fees. The Seller shall pay or cause
to be paid, on the Date of Issuance, legal fees and disbursements
incurred by the Insurer in connection with the issuance of the Policy
and any fees of the Insurer's auditors in accordance with the terms
of the Commitment. Any fees of the Insurer's auditors payable in
respect of any amendment or supplement to the Offering Document or
any other Offering Document incurred after the Date of Issuance shall
be paid by the Seller on demand.
(b) Premium. In consideration of the issuance by the Insurer
of the Policy, the Insurer shall be entitled to receive the Premium
as and when due in accordance with the terms of the Commitment (i) in
the case of Premium due on or before the Date of Issuance, directly
from the Seller and (ii) in the case of Premium due after the Date of
Issuance, first, pursuant to the Sale and Servicing Agreement, and
second, to the extent the amounts in subclause first are not
sufficient, directly from the Seller. For purposes of the Sale and
Servicing Agreement, the term "Premium Percentage" shall have the
meaning set forth in paragraph 1(a) of the Commitment. The Premium
shall be calculated according to paragraph 1(a) of the Commitment for
the amount due on or before the Date of Issuance and paragraph 1(b)
of the Commitment for the amount due on each Distribution Date. The
Premium paid hereunder or under the Sale and Servicing Agreement
shall be nonrefundable without regard to whether the Insurer makes
any payment under the Policy or any other circumstances relating to
the Obligations or provision being made for payment of the
Obligations prior to maturity. The Seller shall make all payments of
Premium to be made by them by wire transfer to an account designated
from time to time by the Insurer by written notice to the Servicer,
the Seller, the Depositor and the Trust.
Section 3.03. Reimbursement and Additional Payment Obligation.
(a) In accordance with the priorities established in Section
6.05 of the Sale and Servicing Agreement, the Insurer shall be
entitled to reimbursement for any payment made by the Insurer under
the Policy, which reimbursement shall be due and payable on the date
that any amount is to be paid pursuant to a Notice (as defined in the
Policy), in an amount equal to the amount to be so paid and all
amounts previously paid that remain unreimbursed, together with
interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts
representing interest) from the date such amounts became due until
paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate.
(b) Notwithstanding anything in Section 3.03(a) to the
contrary, the Servicer and the Seller agrees to reimburse the Insurer
as follows: (i) from the Seller, for payments made under the Policy
arising as a result of the Seller's failure to repurchase any Home
Loan required to be repurchased pursuant to Section 1.05 of the Home
Loan Sale Agreement, together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect
of any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate, and
(ii) from the Servicer, for payments made under the Policy, arising
as a result the Servicer's failure to deposit into the Collection
Account any amount required to be so deposited pursuant to the Sale
and Servicing Agreement together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect
to any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(c) The Servicer and the Seller agree to pay to the Insurer
as follows: any and all charges, fees, costs and expenses that the
Insurer may reasonably pay or incur, including, but not limited to,
attorneys' and accountants' fees and expenses, in connection with (i)
any accounts established to facilitate payments under the Policy to
the extent the Insurer has not been immediately reimbursed on the
date that any amount is paid by the Insurer under the Policy, (ii)
the enforcement, defense or preservation of any rights in respect of
any of the Transaction Documents, including defending, monitoring or
participating in any litigation or proceeding (including any
insolvency or bankruptcy proceeding in respect of any Transaction
participant or any affiliate thereof) relating to any of the
Transaction Documents, any party to any of the Transaction Documents,
in its capacity as such a party, or the Transaction, (iii) any
amendment, transfer of servicing, consent, waiver or other action
with respect to, or related to, any Transaction Document, whether or
not executed or completed, or (iv) from the Seller only, for
preparation of bound volumes of the Transaction Documents; costs and
expenses shall include a reasonable allocation of compensation and
overhead attributable to the time of employees of the Insurer spent
in connection with the actions described in clause (ii) above, and
the Insurer reserves the right to charge a reasonable fee as a
condition to executing any waiver or consent proposed in respect of
any of the Transaction Documents. Provided that, the Servicer shall
be required to reimburse the Insurer as set forth in this Section
3.03(c) only to the extent that such charges, fees, costs and
expenses incurred by the Insurer resulted from an action of or
request of the Servicer.
(d) The Seller and the Depositor agree to pay to the Insurer
as follows: interest on any and all amounts described in subsections
(b), (c), (e) and (h) of this Section 3.03 from the date payable or
paid by such party until payment thereof in full, and interest on any
and all amounts described in Section 3.02 hereof from the date due
until payment thereof in full, in each case, payable to the Insurer
at the Late Payment Rate per annum.
(e) The Seller and the Depositor agree to pay to the Insurer
as follows: any payments made by the Insurer on behalf of, or
advanced to the Seller or the Depositor, respectively, including,
without limitation, any amounts payable by the Seller or the
Depositor pursuant to the Obligations or any other Transaction
Documents.
(f) The Servicer agrees to pay to the Insurer as follows:
interest on any and all amounts described in subsections (b)(ii),
(c), and (g) of this Section 3.03 from the date payable or paid by
such party until payment thereof in full, and interest on any and all
amounts described in Section 3.02 hereof from the date due until
payment thereof in full, in each case, payable to the Insurer at the
Late Payment Rate per annum.
(g) The Servicer agrees to pay to the Insurer as follows:
any payments made by the Insurer on behalf of, or advanced to, the
Servicer related to the transfer of servicing, including, without
limitation, any amounts payable by the Servicer pursuant to the
Obligations or any other Transaction Documents to which it is a
party.
(h) Following termination of the Indenture pursuant to
Section 4.01 thereof, the Seller agrees to reimburse the Insurer for
any Insured Payments required to be made pursuant to the Policy
subsequent to the date of such termination.
All such amounts are to be immediately due and payable without
demand.
Section 3.04. Indemnification; Limitation of Liability.
(a) In addition to any and all rights of indemnification or
any other rights of the Insurer pursuant hereto or under law or
equity, the Depositor, the Seller and any successors thereto agree to
pay, and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents, and each
person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act from and against any and all claims, Losses, liabilities
(including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses (including, without limitation,
reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) or obligations whatsoever
paid by the Insurer (herein collectively referred to as
"Liabilities") of any nature arising out of or relating to the
Transaction contemplated by the Transaction Documents by reason of:
(i) any untrue statement or alleged untrue
statement of a material fact contained in the Offering
Document or in any amendment or supplement thereto or in any
preliminary offering document, or arising out of or based
upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar
as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based
upon information set forth in the Offering Document under
the caption "The MBIA Insurance Policy" or in the financial
statements of the Insurer, including any information in any
amendment or supplement to the Offering Document furnished
by the Insurer in writing expressly for use therein that
amends or supplements such information (all such information
being referred to herein as "Insurer Information");
(ii) to the extent not covered by clause (i) above,
any act or omission of the Seller or the Depositor, or the
allegation thereof, in connection with the offering,
issuance, sale or delivery of the Obligations other than by
reason of false or misleading information provided by the
Insurer in writing for inclusion in the Offering Document as
specified in clause (i) above;
(iii) the misfeasance or malfeasance of, or
negligence or theft committed by, any director, officer,
employee or agent of the Seller or the Depositor;
(iv) the violation by the Depositor or the Seller
of any federal or state securities, banking or antitrust
laws, rules or regulations in connection with the issuance,
offer and sale of the Obligations or the Transaction
contemplated by the Transaction Documents;
(v) the violation by the Depositor or the Seller of
any federal or state laws, rules or regulations relating to
the Transaction, including without limitation the maximum
amount of interest permitted to be received on account of
any loan of money or with respect to the Home Loans;
(vi) the breach by the Depositor or the Seller of
any of its obligations under this Insurance Agreement or any
of the other Transaction Documents; and
(vii) the breach by the Seller or the Depositor of
any representation or warranty on the part of the Seller or
the Depositor contained in the Transaction Documents or in
any certificate or report furnished or delivered to the
Insurer thereunder.
This indemnity provision shall survive the termination of
this Insurance Agreement and shall survive until the statute of
limitations has run on any causes of action which arise from one of
these reasons and until all suits filed as a result thereof have been
finally concluded.
(b) The Seller agrees to indemnify the Trust and the Insurer
for any and all Liabilities incurred by the Trust and the Insurer due
to any claim, counterclaim, rescission, setoff or defense asserted by
an Obligor under any Home Loan subject to the Federal Trade
Commission regulations provided in 16 C.F.R. Part 433 and under any
Mortgage Loan which is a "mortgage" as such term is defined in 15
U.S.C. ss. 1602(aa).
(c) In addition to any and all rights of indemnification or
any other rights of the Insurer pursuant hereto or under law or
equity, the Servicer and any successors thereto agree to pay, and to
protect, indemnify and save harmless, the Insurer and its officers,
directors, shareholders, employees, agents, and each person, if any,
who controls the Insurer within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act from
and against any and all claims, Losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs or
reasonable expenses (including, without limitation, reasonable fees
and expenses of attorneys, consultants and auditors and reasonable
costs of investigations) or obligations whatsoever paid by the
Insurer (herein collectively referred to as "Liabilities") of any
nature arising out of or relating to the Transaction contemplated by
the Transaction Documents to which the Servicer is a party by reason
of:
(i) the misfeasance or malfeasance of, or
negligence or theft committed by, any director, officer,
employee or agent of the Servicer;
(ii) the violation by the Servicer of any federal
or state laws, rules or regulations relating to the
Transaction Documents to which it is a party, including
without limitation the maximum amount of interest permitted
to be received on account of any loan of money or with
respect to the Home Loans;
(iii) the breach by the Servicer of any of its
obligations under this Insurance Agreement or any of the
other Transaction Documents to which it is a party; and
(iv) the breach by the Servicer of any
representation or warranty on the part of the Servicer,
contained in the Transaction Documents to which it is a
party or in any certificate or report furnished or delivered
to the Insurer thereunder.
This indemnity provision shall survive the termination of this
Insurance Agreement and shall survive until the statute of limitations has run
on any causes of action which arise from one of these reasons and until all
suits filed as a result thereof have been finally concluded.
(d) Any party which proposes to assert the right to be
indemnified under this Section 3.04 will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against the Seller or
the Depositor under this Section 3.04, notify the Seller or the
Depositor of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. In case any action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the Seller or the Depositor of the commencement thereof,
the Seller or the Depositor shall be entitled to participate in, and,
to the extent that it shall wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from
the Seller or the Depositor to such indemnified party of its election
so to assume the defense thereof the Seller or the Depositor shall
not be liable to such indemnified party for any legal or other
expenses other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its
counsel in any such action the defense of which is assumed by the
Seller or the Depositor in accordance with the terms of this
subsection (c), but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless the employment of
counsel by such indemnified party has been authorized by the Seller
or the Depositor. The Seller or the Depositor shall not be liable for
any settlement of any action or claim effected without its consent.
(e) Any party which proposes to assert the right to be
indemnified under this Section 3.04 will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against the Servicer
under this Section 3.04, notify the Servicer of the commencement of
such action, suit or proceeding, enclosing a copy of all papers
served. In case any action, suit or proceeding shall be brought
against any indemnified party and it shall notify the Servicer of the
commencement thereof, the Servicer shall be entitled to participate
in, and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and
after notice from the Servicer to such indemnified party of its
election so to assume the defense thereof, the Servicer shall not be
liable to such indemnified party for any legal or other expenses
other than reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action the defense of which is assumed by the Servicer in
accordance with the terms of this subsection (c), but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless the employment of counsel by such indemnified party has
been authorized by the Servicer. The Servicer shall not be liable for
any settlement of any action or claim effected without its consent.
Section 3.05.Payment Procedure. In the event of any payment by the
Insurer, the Indenture Trustee, the Servicer, the Seller and the Depositor
agree to accept the voucher or other evidence of payment as prima facie
evidence of the propriety thereof and the liability therefor to the Insurer.
All payments to be made to the Insurer under this Insurance Agreement shall be
made to the Insurer in lawful currency of the United States of America in
immediately available funds at the notice address for the Insurer as specified
in Section 6.02 hereof on the date when due or as the Insurer shall otherwise
direct by written notice to the other parties hereto. In the event that the
date of any payment to the Insurer or the expiration of any time period
hereunder occurs on a day which is not a Business Day, then such payment or
expiration of time period shall be made or occur on the next succeeding
Business Day with the same force and effect as if such payment was made or
time period expired on the scheduled date of payment or expiration date.
Payments to be made to the Insurer under this Insurance Agreement shall bear
interest at the Late Payment Rate from the date when due to the date paid.
Article IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Servicer, the Indenture Trustee, the Seller or the Depositor or from any other
source under the Transaction Documents and all amounts payable under the
Obligations have been paid in full; provided, however, that the provisions of
Sections 3.02, 3.03, 3.04 and 4.06 hereof shall survive any termination of
this Insurance Agreement.
Section 4.02. Further Assurances and Corrective Instruments.
(a) Excepting at such times as a default in payment under
the Policy shall exist or shall have occurred, none of the Servicer,
the Seller, the Depositor, the Issuer or the Indenture Trustee shall
grant any waiver of rights under any of the Transaction Documents to
which any of them is a party without the prior written consent of the
Insurer, and any such waiver without the prior written consent of the
Insurer shall be null and void and of no force or effect.
(b) To the extent permitted by law, the Servicer, the
Indenture Trustee, the Seller, the Issuer and the Depositor agree
that they will, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Insurer may reasonably
request and as may be required in the Insurer's reasonable judgment
to effectuate the intention of or facilitate the performance of this
Insurance Agreement.
Section 4.03. Obligations Absolute.
(a) The obligations of the Servicer, the Seller, the Issuer
and the Depositor hereunder shall be absolute and unconditional and
shall be paid or performed strictly in accordance with this Insurance
Agreement under all circumstances irrespective of:
(i) any lack of validity or enforceability of, or
any amendment or other modifications of, or waiver, with
respect to any of the Transaction Documents, the Obligations
or the Policy;
(ii) any exchange or release of any other obligations
hereunder;
(iii) the existence of any claim, setoff, defense,
reduction, abatement or other right that the Servicer, the
Indenture Trustee, the Seller, the Issuer or the Depositor
may have at any time against the Insurer or any other
Person;
(iv) any document presented in connection with the
Policy proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(v) any payment by the Insurer under the Policy
against presentation of a certificate or other document that
does not strictly comply with terms of the Policy;
(vi) any failure of the Seller, the Issuer or the
Depositor to receive the proceeds from the sale of the
Obligations; or
(vii) any breach by the Servicer, the Indenture
Trustee, the Seller, the Issuer or the Depositor of any
representation, warranty or covenant contained in any of the
Transaction Documents.
(b) The Servicer, the Seller, the Depositor, the Issuer, and
any and all others who are now or may become liable for all or part
of the obligations of the Servicer, the Seller, the Issuer or the
Depositor under this Insurance Agreement agree to be bound by this
Insurance Agreement and (i) to the extent permitted by law, waive and
renounce any and all redemption and exemption rights and the benefit
of all valuation and appraisement privileges against the indebtedness
and obligations evidenced by any Transaction Document or by any
extension or renewal thereof; (ii) waive presentment and demand for
payment, notices of nonpayment and of dishonor, protest of dishonor
and notice of protest; (iii) waive all notices in connection with the
delivery and acceptance hereof and all other notices in connection
with the performance, default or enforcement of any payment
hereunder, except as required by the Transaction Documents; (iv)
waive all rights of abatement, diminution, postponement or deduction,
or any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction
Documents, by any party thereto or any beneficiary thereof, or out of
any obligation at any time owing to the Servicer, the Seller, the
Issuer or the Depositor; (v) agree that its liabilities hereunder
shall, except as otherwise expressly provided in this Section 4.03,
be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree
that any consent, waiver or forbearance hereunder with respect to an
event shall operate only for such event and not for any subsequent
event; (vii) consent to any and all extensions of time that may be
granted by the Insurer with respect to any payment hereunder or other
provisions hereof and to the release of any security at any time
given for any payment hereunder, or any part thereof, with or without
substitution, and to the release of any Person or entity liable for
any such payment; and (viii) consent to the addition of any and all
other makers, endorsers, guarantors and other obligors for any
payment hereunder, and to the acceptance of any and all other
security for any payment hereunder, and agree that the addition of
any such obligors or security shall not affect the liability of the
parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the
Servicer, the Indenture Trustee, the Seller, the Issuer or the
Depositor from pursuing any rights or remedies it may have against
any other Person in a separate legal proceeding.
Section 4.04. Assignments; Reinsurance; Third-Party Rights.
(a) This Insurance Agreement shall be a continuing
obligation of the parties hereto and shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the Servicer, the Indenture Trustee,
the Seller, the Issuer nor the Depositor may assign its rights under
this Insurance Agreement, or delegate any of its duties hereunder,
without the prior written consent of the Insurer. Any assignment made
in violation of this Insurance Agreement shall be null and void.
(b) The Insurer shall have the right to give participations
in its rights under this Insurance Agreement and to enter into
contracts of reinsurance with respect to the Policy upon such terms
and conditions as the Insurer may in its discretion determine;
provided, however, that no such participation or reinsurance
agreement or arrangement shall relieve the Insurer of any of its
obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with
respect to the Transaction or the obligations of the Insurer in
connection therewith any rights of the Insurer under the Transaction
Documents or with respect to any real or personal property or other
interests pledged to the Insurer, or in which the Insurer has a
security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants
and reinsurers, nothing in this Insurance Agreement shall confer any
right, remedy or claim, express or implied, upon any Person,
including, particularly, any Owner, other than the Insurer against
the Servicer, the Indenture Trustee, the Seller, the Issuer or the
Depositor, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive
benefit of the parties hereto and their successors and permitted
assigns. Neither the Indenture Trustee nor any Owner shall have any
right to payment from any Premiums paid or payable hereunder or under
the Sale and Servicing Agreement or from any other amounts paid by
the Servicer, the Indenture Trustee, the Seller or the Depositor
pursuant to Section 3.02, 3.03 or 3.04 hereof.
(e) The Servicer, the Seller, the Depositor, the Issuer and
the Indenture Trustee agree that the Insurer shall have all rights of
a third-party beneficiary in respect of the Indenture and each other
Transaction Document to which it is not a signing party and hereby
incorporate and restate their representations, warranties and
covenants as set forth therein for the benefit of the Insurer.
Section 4.05. Liability of the Insurer. Neither the Insurer nor any
of its officers, directors or employees shall be liable or responsible for:
(a) the use that may be made of the Policy by the Indenture Trustee or for any
acts or omissions of the Indenture Trustee in connection therewith; or (b) the
validity, sufficiency, accuracy or genuineness of documents delivered to the
Insurer (or its Fiscal Agent) in connection with any claim under the Policy,
or of any signatures thereon, even if such documents or signatures should in
fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged (unless the Insurer shall have actual knowledge thereof). In
furtherance and not in limitation of the foregoing, the Insurer (or its Fiscal
Agent) may accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 4.06. Parties Will Not Institute Insolvency Proceedings. So
long as this Agreement is in effect, and for one year following its
termination, none of the parties hereto will file any involuntary petition or
otherwise institute any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law against the Depositor or the Issuer.
Section 4.07. Indenture Trustee, Depositor, Seller and Servicer To
Join in Enforcement Action. To the extent necessary to enforce any right of
the Insurer in or remedy of the Insurer under any Home Loan, the Indenture
Trustee, the Depositor, the Seller, the Issuer and the Servicer agree to join
in any action initiated by the Trust or the Insurer for the protection of such
right or exercise of such remedy.
Section 4.08. Subrogation. To the extent of any payments under the
Policy, the Insurer shall be fully subrogated to any remedies against the
Depositor, the Seller or the Servicer or in respect of the Home Loans
available to the Indenture Trustee under the Indenture or Sale and Servicing
Agreement. The Indenture Trustee acknowledges such subrogation and, further,
agrees to execute such instruments prepared by the Insurer and to take such
reasonable actions as, in the sole judgment of the Insurer, are necessary to
evidence such subrogation and to perfect the rights of the Insurer to receive
any moneys paid or payable under the Indenture or Sale and Servicing
Agreement.
Article V
DEFAULTS; REMEDIES
Section 5.01. Defaults. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Any representation, warranty or statement of the Seller,
the Indenture Trustee, the Servicer, the Issuer or the Depositor made
in this Insurance Agreement or in any other Transaction Document or
any certificate, report or other writing delivered pursuant hereto
shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect
on the Trust Estate or the interest of the Insurer and such
representation, warranty or statement shall not have been eliminated
or otherwise cured within 45 days of the earlier of (i) the date on
which the Indenture Trustee, the Issuer, the Servicer, the Seller or
the Depositor gives notice of such failure to the Indenture Trustee
or the Insurer and (ii) the date on which written notice thereof
shall have been given to the Indenture Trustee, the Issuer, the
Servicer, the Seller or the Depositor by the Trustee or the Insurer;
(b) (i) The Servicer, the Indenture Trustee, the Seller, the
Issuer or the Depositor shall fail to pay when due any amount payable
by the Servicer, the Indenture Trustee, the Seller or the Depositor
hereunder or (ii) a legislative body has enacted any law that
declares or a court of competent jurisdiction shall find or rule that
this Insurance Agreement or any of the Transaction Documents are not
valid and binding on the Servicer, the Indenture Trustee, the Seller,
the Issuer or the Depositor;
(c) The occurrence and continuance of an "Event of Default"
under the Indenture (as defined therein);
(d) Any failure on the part of the Servicer, the Indenture
Trustee, the Seller, the Issuer or the Depositor duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Servicer, the Indenture Trustee, the
Seller, the Issuer or the Depositor contained in this Insurance
Agreement or in any other Transaction Document which continues
unremedied for a period of 45 days with respect to this Insurance
Agreement, or, with respect to any other Transaction Document, beyond
any cure period provided for therein, after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer, the Seller, the Issuer, or the Depositor,
as applicable, by the Insurer (with a copy to the Indenture Trustee)
or by the Indenture Trustee (with a copy to the Insurer);
(e) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency
or similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer, the Seller, the Issuer
or the Depositor and such decree or order shall have remained in
force undischarged or unstayed for a period of 90 consecutive days;
(f) The Servicer, the Seller, the Issuer or the Depositor
shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer, the Seller, the Issuer or the
Depositor or of or relating to all or substantially all of the
property of either;
(g) The Servicer, the Seller, the Issuer or the Depositor
shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of or otherwise
voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
(h) The occurrence and continuance of an "Event of Default"
under the Sale and Servicing Agreement as defined therein;
(i) The failure of the Seller or the Depositor to comply
with, or maintain the accuracy of, the Opinion Facts and Assumptions.
Section 5.02. Remedies; No Remedy Exclusive.
(a) Upon the occurrence of an Event of Default, the Insurer
may exercise any one or more of the rights and remedies set forth
below:
(i) exercise any rights and remedies under the
Transaction Documents in accordance with the terms of the
Transaction Documents or direct the Indenture Trustee to
exercise such remedies in accordance with the terms of the
Transaction Documents; or
(ii) take whatever action at law or in equity as
may appear necessary or desirable in its judgment to collect
the amounts then due under the Transaction Documents or to
enforce performance and observance of any obligation,
agreement or covenant of the Servicer, the Indenture
Trustee, the Seller, the Issuer or the Depositor under the
Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other
available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Transaction Documents or
existing at law or in equity. No delay or omission to exercise any
right or power accruing under the Transaction Documents upon the
happening of any event set forth in Section 5.01 hereof shall impair
any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and
as often as may be deemed expedient. In order to entitle the Insurer
to exercise any remedy reserved to the Insurer in this Article, it
shall not be necessary to give any notice, other than such notice as
may be required in this Article V.
Section 5.03. Waivers.
(a) No failure by the Insurer to exercise, and no delay by
the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder
shall not preclude the exercise of any other right, and the remedies
provided herein to the Insurer are declared in every case to be
cumulative and not exclusive of any remedies provided by law or
equity.
(b) The Insurer shall have the right, to be exercised in its
complete discretion, to waive any Event of Default hereunder, by a
writing setting forth the terms, conditions and extent of such waiver
signed by the Insurer and delivered to the Servicer, the Indenture
Trustee, the Seller, the Issuer and the Depositor. Unless such
writing expressly provides to the contrary, any waiver so granted
shall extend only to the specific event or occurrence which gave rise
to the Event of Default so waived and not to any other similar event
or occurrence which occurs subsequent to the date of such waiver.
Article VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Insurance Agreement may be
amended, modified or terminated only by written instrument or written
instruments signed by the parties hereto. The Servicer agrees to promptly
provide a copy of any amendment to this Insurance Agreement to the Indenture
Trustee, S&P and ▇▇▇▇▇'▇. No act or course of dealing shall be deemed to
constitute an amendment, modification or termination hereof.
Section 6.02. Notices. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally
delivered or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Insured Portfolio Management-Structured
Finance (IPM-SF)
(ACE Securities Corp.,
Home Loan Trust 1999-A)
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
(in each case in which notice or other
communication to the Insurer refers to an Event of
Default, a claim on the Policy or with respect to
which failure on the part of the Insurer to respond
shall be deemed to constitute consent or
acceptance, then a copy of such notice or other
communication should also be sent to the attention
of each of the general counsel and the Insurer and
shall be marked to indicate "URGENT MATERIAL
ENCLOSED.")
(b) To the Seller:
German American Capital Corporation
c/o Deutsche Bank Securities Inc.
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Attention: [ ]
Telecopy No.: [( ) - ]
Confirmation: [( ) - ]
(c) To the Servicer:
GMAC Mortgage Corporation
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇]
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
GMAC Mortgage Corporation
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Associate Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
(d) To the Indenture Trustee:
First Union National Bank
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Attention: Structured Finance Trust Group
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Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
(e) To the Depositor:
ACE Securities Corp.
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Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
(f) To the Issuer:
ACE Securities Corp. Home Loan Trust 1999-A
c/o Wilmington Trust Company
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Attention: Corporate Trust Department
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Confirmation: (▇▇▇)▇▇▇-▇▇▇▇
A party may specify an additional or different address or addresses
by writing mailed or delivered to the other parties as aforesaid. All such
notices and other communications shall be effective upon receipt.
Section 6.03. Severability. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other
remedy available to it.
Section 6.04. Governing Law. This Insurance Agreement shall be
governed by and construed in accordance with the laws of the State of New York
WITHOUT REGARD TO CHOICE OF LAW PROVISIONS.
Section 6.05. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York located
in the City and County of New York, and any appellate court from any
thereof, in any action, suit or proceeding brought against it and to
or in connection with any of the Transaction Documents or the
Transaction contemplated thereunder or for recognition or enforcement
of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action
or proceeding may be heard or determined in such New York state court
or, to the extent permitted by law, in such federal court. The
parties hereto agree that a final judgment in any such action, suit
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. To the extent permitted by applicable law, the parties hereto
hereby waive and agree not to assert by way of motion, as a defense
or otherwise in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such courts, that
the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper or that
the related documents or the subject matter thereof may not be
litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties
hereto shall not seek and hereby waive the right to any review of the
judgment of any such court by any court of any other nation or
jurisdiction which may be called upon to grant an enforcement of such
judgment.
(c) Except as provided in Section 4.06 herein, nothing
contained in this Insurance Agreement shall limit or affect the
Insurer's right to serve process in any other manner permitted by law
or to start legal proceedings relating to any of the Transaction
Documents against any party hereto or its or their property in the
courts of any jurisdiction.
Section 6.06. Consent of the Insurer. In the event that the consent
of the Insurer is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by the
Insurer in its sole discretion without any implied duty towards any other
Person.
Section 6.07. Counterparts. This Insurance Agreement may be executed
in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.
Section 6.08. Headings. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
Section 6.09. Trial by Jury Waived. Each party hereto hereby waives,
to the fullest extent permitted by law, any right to a trial by jury in
respect of any litigation arising directly or indirectly out of, under or in
connection with any of the Transaction Documents or any of the Transaction
contemplated thereunder. Each party hereto (A) certifies that no
representative, agent or attorney of any party hereto has represented,
expressly or otherwise, that it would not, in the event of litigation, seek to
enforce the foregoing waiver and (B) acknowledges that it has been induced to
enter into the Transaction Documents to which it is a party by, among other
things, this waiver.
Section 6.10. Limited Liability. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Obligations or the Policy, it being expressly
agreed and understood that each Transaction Document is solely a corporate
obligation of each party hereto, and that any and all personal liability,
either at common law or in equity, or by statute or constitution, of every
such officer, employee, director, affiliate or shareholder for breaches by any
party hereto of any obligations under any Transaction Document is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Insurance Agreement.
Section 6.11. Entire Agreement. The Transaction Documents and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of such subject matter.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By
---------------------------------
Title
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GMAC MORTGAGE CORPORATION,
as Servicer
By
---------------------------------
Title
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GERMAN AMERICAN CAPITAL
CORPORATION, as Seller
By
---------------------------------
Title
------------------------------
By
---------------------------------
Title
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ACE SECURITIES CORP., as Depositor
By
---------------------------------
Title
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FIRST UNION NATIONAL BANK,
as Indenture Trustee
By
---------------------------------
Title
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ACE SECURITIES CORP. HOME LOAN
TRUST 1999-A, as Issuer
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By
---------------------------------
Title
------------------------------