EXHIBIT 4.4.2
EXECUTION
SEQUOIA MORTGAGE TRUST 1,
DEPOSITOR
AND
FIRST UNION NATIONAL BANK,
TRUSTEE
-----------------------------------------
TRUST AGREEMENT
Dated May 4, 1999
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$157,266,300
Mortgage Bond-Backed Certificates
Series 1999-A
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions........................................................................1
Section 1.02. Calculations Respecting Accrued Interest...........................................6
ARTICLE II
CONVEYANCE OF THE UNDERLYING BONDS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Underlying Bonds.................................................6
Section 2.02. Issuance of Certificates...........................................................7
ARTICLE III
ADMINISTRATION OF THE UNDERLYING BONDS
Section 3.01. Collection of Payments on Underlying Bonds; Certificate Account....................7
Section 3.02. Distributions......................................................................8
Section 3.03. [Reserved].........................................................................8
Section 3.04. Statements to Certificateholders...................................................8
Section 3.05. No Segregation of Moneys...........................................................9
Section 3.06. Tax Status and Reporting...........................................................9
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates..................................................................10
Section 4.02. Registration of and Limitations on Transfer and Exchange of Certificates..........10
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates.................................13
Section 4.04. Persons Deemed Owners.............................................................14
ARTICLE V
THE TRUSTEE
Section 5.01. Representation and Warranty.......................................................14
Section 5.02. Directions to Trustee.............................................................14
Section 5.03. Liability of the Trustee..........................................................14
Section 5.04. Merger or Consolidation of the Trustee............................................14
Section 5.05. Limitation on Liability of the Trustee and Others.................................15
Section 5.06. Trustee's Compensation............................................................16
Section 5.07. Resignation and Removal of the Trustee............................................16
Section 5.08. Successor Trustee.................................................................17
ARTICLE VI
TERMINATION
Section 6.01. Termination Upon Distribution to Certificateholders...............................17
Section 6.02. Failure of Certificateholders to Surrender Certificates...........................18
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ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment.........................................................................18
Section 7.02. Limitation on Rights of Certificateholders........................................19
Section 7.03. Limitation on Liability of the Depositor and Others...............................20
Section 7.04. Governing Law.....................................................................20
Section 7.05. Notices...........................................................................20
Section 7.06. Severability of Provisions........................................................21
Section 7.07. Certificates Nonassessable and Fully Paid.........................................21
Section 7.08. Limitations of Liability..........................................................21
ARTICLE VIII
SECURITIES ACCOUNT
Section 8.01. The Securities Account............................................................22
Section 8.02. Definitions.......................................................................24
Section 8.03. Liability of the Securities Intermediary..........................................25
Exhibit A - Forms of Certificates
Exhibit B - Schedule of Underlying Bonds
Exhibit C - Form of Rule 144A Investment Letter
Exhibit D - Form of Non-Rule 144A Investment Letter
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This Trust Agreement (this "Agreement"), dated May 4, 1999, is between
SEQUOIA MORTGAGE TRUST 1, a Delaware business trust, as Depositor (the
"Depositor"), and FIRST UNION NATIONAL BANK, a national banking association, as
Trustee (the "Trustee").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the
Depositor and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
Accrual Period: With respect to any Distribution Date, the one-month
period beginning on the immediately preceding Distribution Date and ending on
the day immediately preceding the related Distribution Date.
Administrator: Norwest Bank Minnesota, N.A., as administrator under the
Bond and Tax Administration Agreement, dated as of May 4, 1999, by and among the
Depositor, the Company, Redwood Trust, the Trustee and the Administrator.
Available Interest Amount: With respect to any Distribution Date, the
total amount paid in respect of interest on the Underlying Bonds on such
Distribution Date.
Available Principal Amount: With respect to any Distribution Date, the
total amount paid in respect of principal on the Underlying Bonds on such
Distribution Date.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than a Saturday, Sunday or a day on which
banking or savings institutions in the city and state in which the Trustee's
Corporate Trust Office (or, if different, the corporate trust office of the
Underlying Trustee) is located or in the State of Maryland or in New York, New
York are authorized or obligated by law or executive order to be closed.
Carryforward Interest: With respect to any Distribution Date and each
Class of Certificates, the sum of (a) the amount, if any, by which (i) the sum
of (x) Current Interest for such Class for the immediately preceding
Distribution Date and (y) any Unpaid Carryforward Interest for such Class for
such immediately preceding Distribution Date exceeds (ii) the amount distributed
in respect of interest on such Class on such immediately preceding Distribution
Date and (b) accrued interest thereon at the applicable Interest Rate.
Certificate: Any one of the Certificates, each evidencing an undivided
percentage ownership interest in the Trust Fund and executed by the Trustee, in
substantially the form set forth in Exhibit A hereto.
Certificate Account: The trust account created and maintained with the
Trustee pursuant to Section 3.01 and referred to therein as the Certificate
Account. Funds deposited in the Certificate Account shall be held in trust for
the Certificateholders for the uses and purposes set forth in Article III
hereof.
Certificate Owner: With respect to any Book-Entry Certificate, the
Person that is the beneficial owner thereof.
Certificate Register: Shall have the meaning provided in Section 4.02.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement (except for any consent pursuant
to Section 7.01), any Certificate registered in the name of the Depositor or the
Trustee or any affiliate of either shall be deemed not to be outstanding.
Class: Collectively, all of the Certificates bearing the same
designation.
Closing Date: May 4, 1999.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Corporate Trust Office: The principal corporate trust office of the
Trustee located at 230 South Tryon Street, Charlotte, North Carolina 28288-1179,
or at such other address as the Trustee may designate from time to time by
notice to the Certificateholders, or the principal corporate trust office of any
successor Trustee.
Current Interest: With respect to each Class of Certificates and any
Distribution Date, the aggregate amount of interest accrued during the
immediately preceding Accrual Period at the applicable Interest Rate on the
Principal Amount or Notional Amount of such Class for such Distribution Date.
Definitive Certificate: Any Certificate, issued in definitive, fully
registered form.
Denomination: For each Certificate, the amount designated as the
original principal amount or notional amount of such Certificate on the face
thereof.
Depositor: Sequoia Mortgage Trust 1, a Delaware business trust, or its
successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times be
a "clearing corporation" as defined
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in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York,
as amended, or any successor provisions thereto.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for which, from time to time, the Depository effects
book-entry transfers and pledges of securities deposited with such Depository.
Distribution Date: The same meaning as "Payment Date" as defined in the
Underlying Indenture.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company (x) the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated "Aaa" by Moody's and "AAA" by S&P (or comparable ratings if Moody's and
S&P are not the Rating Agencies) at the time any amounts are held on deposit
therein, or (y) otherwise approved in writing by each Rating Agency, (ii) an
account or accounts the deposits in which are insured by the FDIC or the FSLIC
to the limits established by such corporations; provided that any amounts on
deposit therein do not exceed such insurable limits, or (iii) a trust account or
accounts (which shall be a "special deposit account") maintained with a federal
or state chartered depository institution or trust company, acting in its
fiduciary capacity, in a manner acceptable to each Rating Agency in respect of
mortgage pass-through certificates rated in one of the two highest rating
categories. If otherwise permitted by this definition, accounts maintained with
the Trustee (or an affiliate thereof) may constitute Eligible Accounts.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
Final Distribution Date: The Distribution Date set forth in the notice
delivered by the Trustee of the final distribution on the Certificates pursuant
to Section 6.01.
Independent: When used with respect to any specified Person means such
a Person who (i) is in fact independent of the Depositor, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Depositor, and (iii) is not connected with the Depositor as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
Interest Rate: With respect to each Class of Certificates and each
Distribution Date, the per annum rate of interest applicable to Certificates of
such Class, as specified below:
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Class Interest Rate
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A The lesser of (i) LIBOR plus 0.40% and (ii) 10.38%.
X The amount, if any, by which (a) the interest rate
applicable to the Underlying Bonds exceeds (b) the
Interest Rate applicable to the Class A Certificates.
LIBOR: As defined in the Underlying Master Servicing Agreement.
Moody's: Moody's Investors Service, or any successor thereto.
Mortgage Loan: Each mortgage loan included in the Underlying Trust
Estate at any time.
Notional Amount: With respect to any Distribution Date and the Class X
Certificates, an amount equal to the Principal Amount of the Class A
Certificates for such Distribution Date.
Opinion of Counsel: A written opinion of counsel, which may be counsel
for the Depositor or the Trustee, except that any opinion of counsel concerning
certain matters with respect to ERISA, or the taxation, or the federal income
tax status, of the Trust Fund, must be an opinion of Independent counsel.
Outstanding: With respect to the Certificates, as of any date of
determination, all Certificates theretofore executed, authenticated and
delivered under this Agreement except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for or in lieu of which other
Certificates have been executed, authenticated and delivered pursuant
to this Agreement unless proof satisfactory to the Trustee is presented
that any such Certificates are held by a holder in due course.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
Percentage Interest: As to any Certificate, the percentage interest
represented thereby, such percentage interest being equal to the percentage
obtained by dividing the Denomination of such Certificate by the original
aggregate Principal Amount or Notional Amount of such Class of Certificates.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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Principal Amount: With respect to any Distribution Date (without giving
effect to distributions on such date) and the Class A Certificates, the original
Principal Amount thereof less the sum of all previous distributions in reduction
of the Principal Amount of such Class.
Private Placement Memorandum: The private placement memorandum dated
April 30, 1999, relating to the Certificates.
Qualified Institutional Buyer: As defined in Rule 144A under the
Securities Act.
Rating Agency: Each of Moody's and S&P.
Record Date: With respect to any Distribution Date, the last Business
Day immediately preceding such Distribution Date, or in the case of the first
Distribution Date, the Closing Date.
Registrar: Initially the Trustee, in its capacity as Registrar, or any
successor to the Trustee in such capacity.
Responsible Officer: When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the President,
any senior vice president, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer in
the Corporate Trust division, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor thereto.
Schedule of Underlying Bonds: The schedule attached as Exhibit B
hereto, such schedule setting forth as to each Underlying Bond (i) the original
principal amount and (ii) the principal amount after giving effect to any
reduction in principal on or prior to the Closing Date.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Trust: The trust created by this Agreement.
Trust Fund: The corpus of the Trust consisting of (i) the Underlying
Bonds described in the Schedule of Underlying Bonds, (ii) all payments on the
Underlying Bonds payable after May 4, 1999, (iii) all amounts held from time to
time by the Trustee in the Certificate Account, and (iv) the Certificate
Account.
Trustee: First Union National Bank, in its capacity as trustee, or its
successor in interest, or any successor trustee appointed as herein provided.
Underlying Bond: Each of the securities identified on Exhibit B hereto.
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Underlying Distribution Date Statement: The report provided by the
Underlying Trustee to the holders of related Underlying Bonds and to the Trustee
in connection with each Distribution Date.
Underlying Indenture: The indenture dated as of June 1, 1997, between
Sequoia Mortgage Trust 1, as the issuer, and First Union National Bank, as the
trustee, pursuant to which the Underlying Bonds were issued.
Underlying Master Servicing Agreement: The master servicing agreement
dated as of June 1, 1997, among Sequoia Mortgage Trust 1, as the issuer, Redwood
Trust, Inc., Norwest Bank Minnesota, N.A., as the master servicer, and First
Union National Bank, as the trustee.
Underlying Trust Estate: The collateral pledged to secure the
Underlying Bonds pursuant to the Underlying Indenture.
Underlying Trustee: With respect to the Underlying Bonds, the trustee
under the Underlying Indenture.
Unpaid Carryforward Interest: With respect to any Distribution Date and
each Class of Certificates, the aggregate of all Carryforward Interest for such
Class of Certificates for all previous Distribution Dates, less all
distributions made with respect to such Class of Certificates in respect of
Carryforward Interest on such previous Distribution Dates.
Section 1.02. Calculations Respecting Accrued Interest. Accrued
interest, if any, on any Certificate shall be calculated based upon a 360 day
year consisting of twelve 30 day months.
ARTICLE II
CONVEYANCE OF THE UNDERLYING BONDS; ORIGINAL
ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Underlying Bonds. The Depositor,
concurrently with the execution and delivery hereof, does hereby transfer,
convey, sell and assign to the Trustee, on behalf of the Holders of the
Certificates, without recourse, all the right, title and interest of the
Depositor in and to the Underlying Bonds, including all payments thereon payable
after May 4, 1999. In connection with such assignment, the Depositor shall have
caused the Underlying Bonds to be registered in the name of, or endorsed to the
order of, First Union National Bank, as trustee, or in a nominee name of the
Trustee, and to be delivered or transferred to the Trustee. The assignment of
the Underlying Bonds accomplished hereby is absolute and is intended as a sale.
The Depositor represents and covenants that the Underlying Bonds as of the
Closing Date are free and clear of any right, charge, security interest or lien
or claim in favor of the Depositor or any person claiming through the Depositor
(or any such security interest, lien or claim has been released) and that the
Depositor has, as of the Closing Date, the right to assign the Underlying Bonds
to the Trustee. The Depositor shall cooperate with the Trustee in providing any
required transfer documentation with respect to such conveyance. Any payment
received by the Depositor which shall be due to the Trustee hereunder shall be
paid immediately to the Trustee on or prior to the Closing Date.
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In the event that any Underlying Bond has not been delivered or
transferred to the Trustee, together, in the case of Underlying Bonds in
definitive form, with any documentation necessary to effect the assignment
thereof to the Trustee, the Depositor shall, within two Business Days after its
receipt of notice that such delivery or transfer has not occurred, immediately
repurchase such Underlying Bond for a price equal to the principal amount
thereof plus interest accrued thereon at the applicable interest rate.
It is the intention of the Depositor that the transfer and assignment
of the Underlying Bonds shall constitute a sale from the Depositor to the Trust
and that such Underlying Bonds not be a part of the Depositor's estate in the
event of the insolvency of the Depositor. In the event the transfer and
assignment of the Underlying Bonds contemplated by this Agreement is deemed to
be other than a sale notwithstanding the intent of the parties hereto, this
Agreement shall be deemed to be and in such event hereby is the grant of a
security interest from the Depositor to the Trustee, and the Trustee shall have
all the rights, powers and privileges of a secured party under the Uniform
Commercial Code in effect in the applicable jurisdiction. In such event, the
Depositor agrees to take such action and execute such documents as shall be
necessary in order to fully realize the benefits of such secured party status,
including, without limitation, powers of attorney, financing statements, notices
of lien or other instruments or documents.
Section 2.02. Issuance of Certificates. The Trustee acknowledges the
transfer and delivery to it of the Underlying Bonds in the manner described in
Section 2.01 hereof and declares that the Trustee holds and will hold such
Underlying Bonds in trust for the benefit of all present and future
Certificateholders and, concurrently with such transfer and delivery, has caused
to be duly executed, authenticated and delivered to or upon the order of the
Depositor the Certificates in authorized Denominations, registered in such names
as the Depositor has requested.
ARTICLE III
ADMINISTRATION OF THE UNDERLYING BONDS
Section 3.01. Collection of Payments on Underlying Bonds; Certificate
Account. (a) The Trustee shall establish and maintain an account (the
"Certificate Account") entitled "Sequoia Mortgage Trust 1A Mortgage Bond-Backed
Certificates, Series 1999-A, Certificate Account," in which the Trustee shall
deposit, as soon as practicable after receipt, each payment received by the
Trustee with respect to the Underlying Bonds. The Certificate Account shall be
an Eligible Account.
(b) If the bank, trust company or other fiduciary serving as Trustee
hereunder is at any time not also serving as Underlying Trustee under the
Underlying Indenture, the following provisions of this paragraph shall apply. If
the Trustee shall not have received a payment with respect to an Underlying Bond
by the Business Day after the date on which such payment was due and payable
pursuant to the terms of such Underlying Bond, the Trustee shall request the
Underlying Trustee to make such payment as promptly as possible and legally
permitted and may, and at the direction of the Certificateholders shall, subject
to the penultimate sentence of this paragraph, take any available legal action,
including the prosecution of any claims in
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connection therewith. The reasonable legal fees and expenses incurred by the
Trustee in connection with the prosecution of any such legal action shall be
reimbursed by the Depositor.
Section 3.02. Distributions. (a) On each Distribution Date the Trustee
shall distribute to the Certificateholders of record on the immediately
preceding Record Date, by wire transfer to an account specified in writing by
such Certificateholders at least five Business Days prior to the preceding
Record Date, or otherwise by check or by such other means of payment as such
Person and the Trustee shall agree, all amounts on deposit in the Certificate
Account; provided, however, that the Trustee shall not distribute to such
Holders any amount required to be withheld from a payment to such Holder by the
Code.
(b) Any amounts distributed to a particular Certificateholder pursuant
to this Section shall equal the aggregate Percentage Interest evidenced by such
Holder's Certificate(s) in the related Class multiplied by the aggregate of such
amounts to be distributed to such Class.
(c) On each Distribution Date the Trustee shall withdraw from the
Certificate Account the Available Interest Amount for such date and shall
distribute such amount in the following order of priority:
(i) concurrently, to the Class A Certificates and Class X
Certificates, in proportion to the amount of Current Interest for each
such Class, Current Interest for each such Class and such Distribution
Date; and
(ii) concurrently, to the Class A Certificates and Class X
Certificates, in proportion to the amount of Carryforward Interest for
each such Class, Carryforward Interest for each such Class and such
Distribution Date.
(d) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account the Available Principal Amount for such date and shall
distribute such amount to the Holders of the Class A Certificates in reduction
of the Principal Amount thereof until the Principal Amount of the Class A
Certificates has been reduced to zero.
(e) The final distribution on any Certificate shall be made by wire
transfer or otherwise as above specified, after due notice by the Trustee to
each Holder of the pendency of such distribution and only upon surrender of such
Certificate at the Corporate Trust Office.
Section 3.03. [Reserved]
Section 3.04. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee shall prepare, based on the information provided
by the Administrator, and forward by mail a statement to each Certificateholder
and each Rating Agency stating:
(i) the amount of principal distributable on such Distribution
Date to the Holders of the Class A Certificates;
(ii) the amount of Current Interest distributable on such
Distribution Date to the Holders of the Certificates;
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(iii) the amount of Carryforward Interest distributable on such
Distribution date to the Holders of the Certificates;
(iv) the Interest Rate applicable to each Class of Certificates
with respect to such Distribution Date;
(v) the amount of principal and interest, if any, paid in
respect of each of the Underlying Bonds on the related Distribution
Date;
(vi) the outstanding principal balance of each of the
Underlying Bonds and the Principal Amount or Notional Amount, as
applicable, of each Class of Certificates as of such Distribution Date
after giving effect to distributions of principal on such Distribution
Date;
(vii) the amounts in (vi) above, expressed as percentages of
the aggregate principal balance of the related Mortgage Loans; and
(viii) the aggregate principal balance of the related Mortgage
Loans with respect to such Distribution Date.
In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed as a dollar amount per Certificate
with a $1,000 denomination. The information furnished pursuant to subclauses
(iv) through (vii) inclusive shall be as reported in the Underlying Distribution
Date Statements.
(b) The Trustee shall, upon the request of any Certificateholder,
include copies of the most current Underlying Distribution Date Statements
previously delivered to the Trustee with each statement delivered pursuant to
subsection (a) above.
(c) For so long as any of the Certificates are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of the
Depositor and the Trustee agree to cooperate with each other to provide to any
Certificateholders and to any prospective purchaser of Certificates designated
by such Certificateholder, upon the request of such Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Securities Act. Any reasonable, out-of-pocket expenses incurred by the
Trustee in providing such information shall be reimbursed by the Depositor.
Section 3.05. No Segregation of Moneys. Money received by the Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and as provided herein, and may be deposited under such general conditions
as may be prescribed by law, and the Trustee shall not be liable for any
interest thereon.
Section 3.06. Tax Status and Reporting. The Depositor has structured
this Agreement, and the Certificates have been (or will be) issued with the
intention that such Certificates qualify under applicable tax laws as
indebtedness. The Depositor, its affiliates, the Trustee and each
Certificateholder (or Certificate Owner) by acceptance of its Certificate (or,
in the case of a Certificate Owner, by virtue of such Certificate Owner's
acquisition of a beneficial interest
9
therein) agree to treat the Certificates (or beneficial interest therein) for
purposes of federal, state and local income or franchise taxes and any other tax
imposed on or measured by income, as indebtedness. Each Certificateholder agrees
that it will cause any Certificate Owner acquiring an interest in a Certificate
through it to comply with this Agreement as to treatment of the Certificate as
indebtedness for certain tax purposes.
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates. The Certificates shall be issued
substantially in the forms set forth in Exhibit A. The aggregate of the
Denominations of the Class A Certificates issued as of the Closing Date is
$157,266,300.00. The aggregate of the Denominations of the Class X Certificates
issued as of the Closing Date is $157,266,300.00.
The Class A Certificates shall be issued in minimum Denominations in
principal amount of $250,000 and integral multiples of $1 in excess thereof, and
the Class X Certificates will be issued in minimum Denominations in notional
amount of $20,000,000 and integral multiples of $1 in excess thereof; provided
that one Certificate of each such Class may be issued in any amount in excess of
such minimum denomination. The Certificates shall, on original issue, be
executed by the Trustee, not in its individual capacity but solely as Trustee,
authenticated by the Registrar and delivered by the Trustee to or upon the order
of Depositor upon receipt by the Trustee of the Underlying Bonds pursuant to
Section 2.01 hereof. The Class A Certificates shall initially be issued as
Book-Entry Certificates. The Class X Certificates shall initially be issued and
shall be maintained as Definitive Certificates. The Certificates shall be
executed by manual or facsimile signature on behalf of the Trustee by a
Responsible Officer. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless such Certificate shall have been manually authenticated by the Registrar
substantially in the form set forth in Exhibit A, and such manual signature upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication and delivery.
Section 4.02. Registration of and Limitations on Transfer and Exchange
of Certificates.
(a) The Registrar shall cause to be kept at its Corporate Trust Office
a Certificate Register (the "Certificate Register") in which, subject to such
reasonable regulations as it may prescribe, the Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Certificate at the Corporate Trust
Office, the Trustee shall execute and the Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees,
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one or more new Certificates in authorized Denominations evidencing the same
aggregate Percentage Interests.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized Denominations evidencing the same aggregate
Percentage Interests upon surrender of the Certificates to be exchanged at the
Corporate Trust Office of the Registrar. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Registrar shall
authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive. Each Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Registrar) be
duly endorsed by, or be accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing. Certificates delivered upon any such
transfer or exchange will evidence the same obligations, and will be entitled to
the same rights and privileges, as the Certificates surrendered.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be cancelled by the Registrar and delivered to the Trustee for subsequent
destruction without liability on the part of either.
(b) Except as to any Certificate of any Class of Book-Entry
Certificates that is transferred to an entity other than a Qualified
Institutional Buyer, the Book-Entry Certificates shall, except as provided
below, at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration thereof may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Certificates; (iii) ownership and transfers of
registration of the Certificates issued in book-entry form on the books of the
Depository shall be governed by applicable rules established by the Depository
and the rights of Certificate Owners with respect to Book-Entry Certificates
shall be governed by applicable law and agreements between such Certificate
Owners and the Depository, Depository Participants, and indirect participating
firms; (iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
authorized representatives of the Certificate Owners of the Certificates issued
in book-entry form for all purposes including the making of payments due on the
Book-Entry Certificates and exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; (vii)
Certificate Owners shall not be entitled to certificates for the Book-Entry
Certificates; and (viii)
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the Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and give notice
to the Depository of such record date.
Any Book-Entry Certificate or interest therein that is transferred to
an entity other than a Qualified Institutional Buyer may, in accordance with the
applicable rules established by the Depository, and subject to Section 4.02(e)
of this Agreement, be issued in the form of a Definitive Certificate.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures. Except as provided herein, the Trustee shall
have no duty to monitor or restrict the transfer of Certificates or interests
therein, and shall have no liability for any transfer, including any transfer
made through the book-entry facilities of the Depository or between or among
Depository Participants or Certificate Owners, made in violation of applicable
restrictions set forth herein, except in the event of the failure of the Trustee
to perform its duties and fulfill its obligations under this Agreement with
respect to such transfers.
(c) If (x)(i) the Depositor or the Depository advises the Trustee in
writing that the Depository is no longer willing, qualified or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Depositor is unable to locate a qualified successor or (y) the Depositor at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Depository, the Trustee shall notify all Certificate Owners,
through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the Definitive Certificates and deliver them to or upon
the order of Certificate Owners. Neither the Depositor nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates all references herein to obligations imposed upon or
to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
(d) On or prior to the Closing Date, there shall be delivered to the
Depository, or to the Trustee as custodian therefor, one certificate for each
Class of Book-Entry Certificates registered in the name of the Depository's
nominee, Cede & Co. The face amount of each such Certificate shall represent
100% of the initial Principal Amount or Notional Amount thereof, except for such
amount that does not constitute an acceptable denomination to the Depository. An
additional Certificate of each Class of Book-Entry Certificates may be issued
evidencing such remainder and, if so issued, will be held in physical
certificated form by the Holders thereof. Each Certificate issued in book-entry
form shall bear the following legend:
"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Trustee
or its agent for registration of
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transfer, exchange, or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), any transfer,
pledge or other use hereof for value or otherwise by or to any person is
wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest
herein."
(e) Each transferee of a Book-Entry Certificate or interest therein, by
its acceptance of such Certificate or interest, shall be deemed to have
represented to the Trustee, the Depositor and the other Holders that (i) it is a
"qualified institutional buyer," as such term is defined in Rule 144A under the
Securities Act, or, if such Certificate or interest is to be purchased for one
or more institutional accounts ("investor accounts") for which the Holder
thereof is acting as fiduciary or agent (except if the Holder thereof is a bank
as defined in Section 3(a)(2) of the Securities Act, or a savings and loan
association or other institution as described in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or in a fiduciary capacity),
each such investor account is a "qualified institutional buyer," (ii) it will
not transfer such Certificate or interest except in accordance with this
Agreement, and (iii) it will indemnify the Trustee and the Depositor against any
liability that may result if any transfer of a Certificate is not exempt from
the registration requirements of federal, state and foreign securities laws. No
transfer of a Definitive Certificate shall be made unless the Trustee shall have
received a representation letter from the proposed transferee in the form of
Exhibit C or Exhibit D attached hereto.
(f) The Class X Certificates shall initially be registered in the name
of AUER &CO. Notwithstanding any other provision herein, the Class X Certificate
shall not be transferred to any Person other than the Depositor, Sequoia
Mortgage Funding Corporation or Redwood Trust, Inc., and the Trustee shall not
register any transfer thereof, unless the Depositor shall have first delivered
to the Trustee an Opinion of Counsel to the effect that such transfer of
ownership will not result in material adverse tax consequences to the holders of
Class A Certificates, the Trust or the Depositor. Upon any transfer of the Class
X Certificates, the Trustee shall give prompt notice of such transfer to the
Administrator.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Registrar or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and of the ownership thereof, and (ii) there is delivered to the
Trustee such security or indemnity as may be required by it to save it and the
Registrar harmless, then, in the absence of receipt by the Trustee of written
notice that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute and the Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor. Upon the issuance of any new
Certificate under this Section 4.03, the Registrar may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee or the Registrar) connected therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership of a like Percentage Interest as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time. All Certificates surrendered to the Registrar under the terms of this
Section 4.03 shall be cancelled
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by the Registrar and delivered to the Trustee for subsequent destruction without
liability on the part of either.
Section 4.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee and any agent of the
Trustee shall treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 3.02 and at any other time for all other purposes
whatsoever, and neither the Trustee or the Registrar nor any agent of the
Trustee or the Registrar shall be affected by notice to the contrary.
ARTICLE V
THE TRUSTEE
Section 5.01. Representation and Warranty. The Trustee represents and
warrants to the Depositor, for the benefit of the Certificateholders, that this
Agreement has been executed and delivered by its Responsible Officer who is duly
authorized to execute and deliver such document in such capacity on its behalf.
Section 5.02. Directions to Trustee. The Trustee is hereby directed:
(a) to accept assignment of the Underlying Bonds and hold the Trust
Fund in trust for the Certificateholders;
(b) to issue, execute and deliver the Certificates substantially in the
forms prescribed by Exhibit A in accordance with the terms of this Agreement;
and
(c) to take all other actions as shall be required to be taken by the
terms of this Agreement.
Section 5.03. Liability of the Trustee. The Trustee shall be liable in
accordance herewith only to the extent provided in Section 5.05 and only to the
extent of the obligations specifically imposed upon and undertaken by the
Trustee herein and no implied covenants or obligations shall be read into this
Agreement against the Trustee.
The Trustee, upon receipt of all certificates, opinions, documents or
other instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall determine whether
they are in the form required by this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any such
certificate, opinion, document or other instrument furnished to it pursuant to
this Agreement.
Section 5.04. Merger or Consolidation of the Trustee. Any Person into
which the Trustee may be merged or consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any Person succeeding to the corporate trust business of the Trustee shall be
the successor of the Trustee hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto,
14
anything herein to the contrary notwithstanding; provided that such Person shall
satisfy the requirements for a successor trustee specified in the first sentence
of Section 5.08.
Section 5.05. Limitation on Liability of the Trustee and Others. In
entering into this Agreement the Trustee acts solely as trustee hereunder and
not in its individual capacity; and all persons having any claim under this
Agreement or under the Certificates by reason of the transactions contemplated
hereby shall look only to the Trust Fund for payment or satisfaction thereof,
subject to this Section 5.05. The Trustee shall not be responsible for the
validity or sufficiency of any Underlying Bond, the Trust Fund, any assignment
or registration, or for any depreciation in the value of the Trust Fund, subject
to this Section 5.05. The recitals and statements contained herein and in the
Certificates (other than the signature of the Trustee, the authentication of the
Registrar on the Certificates and the representation and warranty of the Trustee
in Section 5.01) shall be taken as the statements of the Depositor, and the
Trustee assumes no responsibility for the correctness of such recitals and
statements.
Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith (and shall be protected in acting or refraining from
acting) pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Trustee or any such person
against liability for any breach of the warranty or representation made in
Section 5.01 hereof or against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
The Trustee and any director, officer, employee or agent of the Trustee may rely
in good faith and shall be protected in acting or refraining from acting on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matter arising hereunder. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the Depositor and held
harmless against any loss, liability, damage, tax, claim, action, suit or
expense (including, without limitation, any and all extraordinary expenses of
the Trust, including any taxes or tax-related payments (other than filing fees)
and any expenses involved in any tax examination, audit or proceeding, including
professional fees incurred by the Trustee in connection with any such
examination, audit or proceeding) incurred by, imposed on or asserted against
the Trustee in any way relating to or arising out of this Agreement, the
Underlying Bonds, the administration of the Trust Fund, the action or inaction
of the Trustee hereunder, or in connection with investigating, preparing or
defending any legal action, commenced or threatened, relating to this Agreement
or the Underlying Bonds, other than any loss, liability, damage, tax, claim,
action, suit or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. All sums due the Trustee pursuant
to the foregoing indemnity shall be reimbursed by the Depositor. The Trustee may
consult counsel satisfactory to it and the opinion or advice of such counsel in
any instance shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or advice of such counsel. The Trustee may execute
any of the powers of trust under this Agreement or perform any duties hereunder
either directly or by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it. The Trustee shall not be deemed to have
notice of any matter, including without limitation any event of default,
15
unless one of its Responsible Officers has actual knowledge thereof or unless
written notice thereof is received by the Trustee at the Corporate Trust Office
and such notice references the Certificates generally or this Agreement. The
Trustee shall not be under any obligation (i) to make any investigation into the
facts or matters stated in any document of any kind presented to it or (ii) to
appear in, prosecute or defend any legal action except with respect to the
Underlying Bonds under the circumstances described in Section 3.01; provided,
however, that the Trustee shall at the request of Holders of Certificates
evidencing Percentage Interests aggregating not less than 66-2/3% of each Class
of Certificates undertake any such legal action which the Certificateholders
making such request shall specify with respect to this Agreement and the rights
and duties of the parties hereto and the interests of the Certificateholders
hereunder. In the event the Trustee takes any action above, whether at the
request of Certificateholders or otherwise, the legal fees and expenses of such
action and any liability therefrom shall be borne by Certificateholders pursuant
to indemnity furnished by them as a precondition to the Trustee's obligation to
take any such action pursuant to any such request.
The right of the Trustee to perform any discretionary act enumerated in
this Agreement shall not be construed as a duty.
Section 5.06. Trustee's Compensation. As compensation for all services
rendered by it hereunder (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) the Trustee shall
be entitled to receive on each Distribution Date the compensation set forth in
the letter dated as of May 4, 1999, between the Trustee and the Depositor.
No provision of this Agreement or of the Certificates shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or thereunder, or in
the exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
Section 5.07. Resignation and Removal of the Trustee. Subject to the
last paragraph of this Section 5.07, the Trustee may at any time resign and be
discharged from the trusts hereby created by giving written notice thereof to
the Depositor. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
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The Holders of Certificates evidencing Percentage Interests aggregating
not less than 66-2/3% of each Class of Certificates may, at any time, remove the
Trustee with cause and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective only upon acceptance of appointment by the successor trustee as
provided in Section 5.08 hereof.
Section 5.08. Successor Trustee. Any successor trustee appointed as
provided in Section 5.07 hereof shall be a bank, trust company or other
fiduciary authorized to administer trusts, subject to regulation or supervision
by federal or state authority and having a combined capital and surplus of at
least $50,000,000. Any such successor trustee shall execute, acknowledge and
deliver to the Depositor and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The predecessor Trustee shall
transfer to the successor trustee the Underlying Bonds and shall turn over all
related documents and statements held hereunder. In addition, the predecessor
Trustee and, upon request of the successor trustee, the Depositor shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations, subject, however, to
the payment of all amounts due the predecessor Trustee under this Agreement.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such Trustee
hereunder to each Rating Agency and to all Holders of Certificates at their
addresses as shown in the Certificate Register. The predecessor Trustee shall
cooperate with the Depositor to prepare and mail such notice. If the Depositor
fails to mail such notice within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Depositor.
No Trustee hereunder shall be personally liable hereunder by reason of
any act or failure to act of any predecessor or successor trustee hereunder.
Upon any termination or resignation of the Trustee, the Trustee shall
be entitled to and shall receive any and all accrued and unpaid fees and
expenses due to the Trustee hereunder.
ARTICLE VI
TERMINATION
Section 6.01. Termination Upon Distribution to Certificateholders. This
Agreement and the respective obligations and responsibilities of the Depositor
and the Trustee created hereby
17
shall terminate upon the earlier of (i) the distribution to Certificateholders
and the Trustee of all amounts required to be distributed pursuant to Article
III; (ii) the receipt by the Trustee of a written instruction executed by or on
behalf of 100% of Certificateholders ordering such termination; and (iii) the
expiration of 21 years from the death of the survivor of the descendants of
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James, living on the date hereof.
Holders of 100% of the Percentage Interests of each Class of
Certificates may, at any time, deliver a written instruction to the Trustee,
signed by or on behalf of each Holder, directing the Trustee to distribute all
assets of the Trust Fund to such Holders in the manner specified in such
instruction. The Trustee shall promptly comply with such instruction upon
receipt thereof, and upon such compliance this Agreement and the Trust created
hereby shall be terminated. Any expenses incurred by the Trustee in complying
with such instruction shall be reimbursed by the Depositor.
The Trustee shall notify the Certificateholders of the Distribution
Date upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and cancellation. Such notice
shall be given promptly by the Trustee by letter to Certificateholders and each
Rating Agency mailed not later than three Business Days following the earlier of
(a) the receipt of notice by the Trustee of the final Distribution Date for the
Underlying Bonds and (b) receipt by the Trustee of the final distribution on the
Underlying Bonds, specifying (i) the Distribution Date as of which the final
distribution on the Certificates will be made upon presentation and surrender of
Certificates at the office of the Trustee therein designated, (ii) the amount of
any such final distribution, and (iii) that the Record Date otherwise applicable
to such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. Upon presentation and surrender of a Certificate, the Trustee
shall cause to be distributed to the Holder thereof an amount equal to all
interest and principal distributable on such Certificate on the Final
Distribution Date.
Section 6.02. Failure of Certificateholders to Surrender Certificates.
In the event that any of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the Final Distribution
Date, the Trustee shall give a written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one year after such
notice all the Certificates shall not have been surrendered for cancellation,
the Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain subject to the Trust Fund.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment. This Agreement may be amended from time to
time by the Trustee and the Depositor, without the consent of any of the
Certificateholders, (i) to cure any
18
ambiguity, (ii) to cause the provisions herein to conform to or be consistent
with or in furtherance of the statements made with respect to the Certificates,
the Trust Fund or this Agreement in the Private Placement Memorandum, to correct
an error, or to correct or supplement any provisions herein which may be
inconsistent with any other provision herein, (iii) to add such other provisions
with respect to matters or questions arising under this Agreement that shall not
be inconsistent with other provisions of this Agreement, or (iv) to add, delete,
or amend any provisions to the extent necessary or desirable to comply with any
requirements imposed by the Code; provided that such action pursuant to clause
(iii) above shall not adversely affect in any material respect the interests of
any Certificateholder and that no such amendment shall, as evidenced by an
Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee or the Trust Fund), adversely affect the tax status of the Trust
pursuant to this Agreement. This Agreement may also be amended from time to time
by the Trustee and the Depositor with the consent of the Holders of Certificates
evidencing Percentage Interests aggregating not less than 66-2/3% of each Class
of Certificates for the purpose of adding any provisions to or modifying this
Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, amounts required to be distributed
on any Certificate without the consent of the Holder of such Certificate, (ii)
reduce the aforesaid percentage of the Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
all Certificates then Outstanding, or (iii) permit the removal of the Trustee
without cause. In addition, this Agreement and the Certificates may be amended
at any time with the consent of the Holders of Certificates evidencing 100% of
the Percentage Interests of each Class for the purpose of increasing or
decreasing the Interest Rate applicable to any Class of Certificates.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and to
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 7.02. Limitation on Rights of Certificateholders. The
dissolution, bankruptcy, termination, death or incapacity of any
Certificateholder shall not operate to terminate this Agreement or the Trust
Fund, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust Fund, nor otherwise affect the rights,
obligations and liabilities of any of the parties hereto.
19
Except as expressly provided in this Agreement, no Certificateholder
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
Except in the case of an action, suit or proceeding against the Trustee
in respect to a breach or alleged breach of its duties and responsibilities
hereunder, no Certificateholder shall have any right by virtue of any provisions
of this Agreement to institute any action, suit or proceeding in equity or at
law upon or under or with respect to this Agreement unless such Holder
previously shall have given to the Trustee a written notice of the basis of such
action, suit or proceeding, and unless also the Holders of Certificates
evidencing Percentage Interests aggregating not less than 51% of each Class of
Certificates shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Holder of a Certificate and the Trustee,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder of
Certificates, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders of
Certificates. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 7.03. Limitation on Liability of the Depositor and Others.
Neither the Depositor nor any of the directors, officers, employees or agents of
the Depositor shall be under any liability to the Trust Fund or
Certificateholders for any action taken, or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor or any
such Person against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder.
Section 7.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in the State of New York, and the obligations, rights and
remedies of the parties hereto and the Certificateholders shall be determined in
accordance with such laws without regard to conflict of laws principles applied
in New York.
Section 7.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by
20
registered mail, postage prepaid, to (a) in the case of the Depositor, Sequoia
Mortgage Trust 1, c/o Redwood Trust, Inc., 591 Redwood Highway, Suite 3100, Mill
Valley, California 94941, Attention: Vickie Rath or to such other address as may
hereafter be furnished to the Trustee in writing by the Depositor; (b) in the
case of the Trustee, First Union National Bank, 230 South Tryon Street,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Department, or
to such other address as may hereafter be furnished to the Depositor in writing
by the Trustee; (c) in the case of the Administrator, Norwest Bank Minnesota,
National Association, 11000 Broken Land Parkway, Columbia, Maryland 21044-3562,
Attention: Sequoia Mortgage Trust 1A, 99-A; (d) in the case of Moody's, Moody's
Investors Service, 99 Church Street, New York, New York 10007, Attention: Rod
Dubitsky; and (e) in the case of S&P, Standard & Poor's Investors Services, 26
Broadway, 10th Floor, New York, New York 10004, Attention: Residential Mortgage
Surveillance Group. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, to the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed whether or not the
Certificateholder receives such notice.
Section 7.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 7.07. Certificates Nonassessable and Fully Paid. It is the
intention of this Agreement that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the beneficial ownership
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust Fund or for any reason whatsoever, and that
Certificates upon execution, authentication and delivery thereof by the Trustee
pursuant to Section 2.02 are and shall be deemed fully paid.
Section 7.08. Limitations of Liability. Notwithstanding any other
provision herein or elsewhere (i) this Agreement has been executed and delivered
by Wilmington Trust Company, not in its individual capacity, but solely in its
capacity as Owner Trustee (the "Owner Trustee") of the Depositor under the
Amended and Restated Deposit Trust Agreement of the Depositor, dated as of July
17, 1997 (the "Deposit Trust Agreement"), and solely pursuant to the instruction
of Sequoia Mortgage Funding Corporation as the sole Certificateholder (as
defined in the Deposit Trust Agreement) of the Depositor under the Deposit Trust
Agreement, (ii) in no event shall Wilmington Trust Company or the Owner Trustee
have any liability in respect of the representations, warranties, or obligations
of the Depositor hereunder or under any other document, as to all of which
recourse shall be had solely to the assets of the Depositor, and (iii) for all
purposes of this Agreement and every other document, the Owner Trustee and
Wilmington Trust Company shall be entitled to the benefits of the Deposit Trust
Agreement.
21
ARTICLE VIII
SECURITIES ACCOUNT
Section 8.01. The Securities Account. The Depositor shall establish a
"Securities Account" in the name of the Securities Intermediary which shall be
pledged to the Trustee, as collateral agent, for the benefit of the
Certificateholders. The Securities Account shall be a segregated,
non-interest-bearing trust account maintained with the Trustee and established
for the purpose of holding the Underlying Bonds. The Depositor and the Trustee
hereby appoint First Union National Bank as Securities Intermediary with respect
to the Securities Account, and the Depositor hereby grants to the Trustee, as
collateral agent for the benefit of the Certificateholders, a security interest
to secure all amounts due Certificateholders hereunder in and to the Securities
Account and the Security Entitlements to all Financial Assets credited to the
Securities Account, including without limitation all amounts, securities,
investments, Financial Assets, investment property and other property from time
to time deposited in or credited to the Securities Account and all proceeds
thereof. Amounts held from time to time in the Securities Account will continue
to be held by the Securities Intermediary for the benefit of the Trustee, as
collateral agent, for the benefit of the Certificateholders. Upon the
termination of the Trust, the Trustee shall inform the Securities Intermediary
of such termination. By acceptance of their Certificates or interests therein,
the Certificateholders shall be deemed to have appointed First Union National
Bank as Securities Intermediary. First Union National Bank hereby accepts such
appointment as Securities Intermediary.
(i) With respect to the Account Property credited to the
Securities Account, the Securities Intermediary agrees that:
(A) any Account Property that is held in deposit
accounts shall be held solely in a bank rated no less than
"Aaa" by Moody's and "AAA" by S&P, or a bank otherwise approved
in writing by each Rating Agency; and each such deposit account
shall be subject to the exclusive custody and control of the
Securities Intermediary, and the Securities Intermediary shall
have sole signature authority with respect thereto;
(B) the sole assets permitted in the Securities Account
shall be those as the Securities Intermediary agrees to treat
as Financial Assets; and
(C) any such Account Property that is, or is treated
as, a Financial Asset shall be physically delivered
(accompanied by any required endorsements) to, or credited to
an account in the name of, the Securities Intermediary or other
eligible institution maintaining the Securities Account in
accordance with the Securities Intermediary's customary
procedures such that the Securities Intermediary or such other
institution establishes a Security Entitlement in favor of the
Trustee with respect thereto over which the Securities
Intermediary or such other institution has Control.
(ii) The Securities Intermediary hereby confirms that (A) the
Securities Account is an account to which Financial Assets are or may
be credited, and the
22
Securities Intermediary shall, subject to the terms of this Agreement,
treat the Trustee, as collateral agent, as entitled to exercise the
rights that comprise any Financial Asset credited to the Securities
Account, (B) all Account Property in respect of the Securities Account
will be promptly credited by the Securities Intermediary to the
Securities Account, and (C) all securities or other property underlying
any Financial Assets credited to the Securities Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities
account maintained in the name of the Securities Intermediary and in no
case will any Financial Asset credited to the Securities Account be
registered in the name of the Depositor, payable to the order of the
Depositor or specially endorsed to the Depositor except to the extent
the foregoing have been specially endorsed to the Securities
Intermediary or in blank.
(iii) The Securities Intermediary hereby agrees that each item
of property (whether investment property, Financial Asset, security,
instrument or cash) credited to the Securities Account shall be treated
as a Financial Asset.
(iv) If at any time the Securities Intermediary shall receive
any order from the Trustee directing transfer or redemption of any
Financial Asset relating to the Securities Account, the Securities
Intermediary shall comply with such entitlement order without further
consent by the Depositor or any other Person. If at any time the
Trustee notifies the Securities Intermediary in writing that the Trust
has been terminated in accordance herewith and the security interest
granted above has been released, then thereafter if the Securities
Intermediary shall receive any order from the Depositor directing
transfer or redemption of any Financial Asset relating to the
Securities Account, the Securities Intermediary shall comply with such
entitlement order without further consent by the Trustee or any other
Person.
(v) In the event that the Securities Intermediary has or
subsequently obtains by agreement, operation of law or otherwise a
security interest in the Securities Account or any Financial Asset
credited thereto, the Securities Intermediary hereby agrees that such
security interest shall be subordinate to the security interest of the
Trustee. The Financial Assets credited to the Securities Account will
not be subject to deduction, set-off, banker's lien, or any other right
in favor of any Person other than the Trustee (except that the
Securities Intermediary may set off the face amount of any checks which
have been credited to the Securities Account but are subsequently
returned unpaid because of uncollected or insufficient funds).
(vi) There are no other agreements entered into between the
Securities Intermediary in such capacity and the Depositor with respect
to the Securities Account. In the event of any conflict between this
Agreement (or any provision of this Agreement) and any other agreement
now existing or hereafter entered into, the terms of this Agreement
shall prevail.
(vii) The rights and powers granted herein to the Trustee have
been granted in order to perfect its security interest in the
Securities Account and the Security Entitlements to the Financial
Assets credited thereto and are powers coupled with an
23
interest and will neither be affected by the bankruptcy of the
Depositor nor by the lapse of time. The obligations of the Securities
Intermediary hereunder shall continue in effect until the security
interest of the Trustee in the Securities Account and such Security
Entitlements has been terminated pursuant to the terms of this
Agreement and the Trustee has notified the Securities Intermediary of
such termination in writing.
(viii) Notwithstanding anything else contained herein, the
Depositor agrees that the Securities Account will be established only
with the Securities Intermediary or another institution meeting the
requirements of this Section, which agrees substantially as follows:
(1) it will comply with Entitlement Orders related to such account
issued by the Trustee, as collateral agent, without further consent by
the Depositor; (2) until termination of the Agreement, it will not
enter into any other agreement related to such account pursuant to
which it agrees to comply with Entitlement Orders of any Person other
than the Trustee, as collateral agent; and (3) all assets delivered or
credited to it in connection with such account and all investments
thereof will be promptly credited to such account.
(ix) The Depositor agrees to take or cause to be taken such
further actions, to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments (including,
without limitation, any financing statements under the Relevant UCC or
this Agreement) as may be determined to be necessary, in order to
perfect the interests created by this Section and otherwise effectuate
the purposes, terms and conditions.
Section 8.02. Definitions. Capitalized terms set forth below and used
in Section 8.01 shall have the following meanings:
"Account Property" means all amounts and investments held from time to
time in the Securities Account (whether in the form of deposit accounts,
physical property, book-entry securities, uncertificated securities, securities
entitlements, investment property or otherwise), and all proceeds of the
foregoing.
"Control" shall have the meaning specified in Section 8-106 of the UCC.
"Entitlement Holder" shall have the meaning specified in Section
8-102(a)(7) of the UCC.
"Entitlement Order" shall have the meaning specified in Section
8-102(a)(8) of the UCC (i.e., generally, orders directing the transfer or
redemption of any Financial Asset).
"Financial Asset" shall have the meaning specified in Section
8-102(a)(9) of the UCC.
"Relevant UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
"Securities Intermediary" means the Person acting as Securities
Intermediary under this Agreement (which is First Union National Bank), its
successor in interest, and any successor Securities Intermediary appointed
pursuant to Section 8.01.
24
"Security Entitlement" shall have the meaning specified in Section
8-102(a)(17) of the UCC.
"UCC" shall mean the Uniform Commercial Code as adopted in the State of
New York.
Section 8.03. Liability of the Securities Intermediary. The Securities
Intermediary shall be liable in accordance herewith only to the same extent as
the Trustee shall be liable hereunder as provided in Sections 5.03 and 5.05
hereof.
25
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
SEQUOIA MORTGAGE TRUST 1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Owner Trustee of Sequoia Mortgage
Trust 1 under the Amended and
Restated Deposit Trust Agreement
dated as of July 17, 1997
By:__________________________________
Name:
Title:
FIRST UNION NATIONAL BANK,
as Trustee
By: _____________________________________
Name:
Title:
EXHIBIT A
FORMS OF CERTIFICATES
[Form of Class A Certificates]
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF SEQUOIA
MORTGAGE TRUST 1, THE TRUSTEE (AS HEREINAFTER DEFINED) OR ANY OF THEIR
RESPECTIVE AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY NOR ANY OTHER PERSON OR ENTITY.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR FOREIGN
SECURITIES LAWS, AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE
TRANSFERRED, OR OFFERED FOR SALE, UNLESS THE PROPOSED TRANSFEREE IS (I) A
"QUALIFIED INSTITUTIONAL BUYER" PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A "QUALIFIED INSTITUTIONAL BUYER" TO WHOM NOTICE HAS BEEN GIVEN THAT
THE RESALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE
SECURITIES ACT OR (II) A SOPHISTICATED INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" OR ALL OF WHOSE EQUITY OWNERS ARE "ACCREDITED INVESTORS"
AS SUCH TERM IS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT, OR, IF THIS CERTIFICATE IS TO BE PURCHASED FOR ONE OR MORE INSTITUTIONAL
ACCOUNTS ("INVESTOR ACCOUNTS") FOR WHICH SUCH PROPOSED TRANSFEREE IS ACTING AS
FIDUCIARY OR AGENT (EXCEPT IF SUCH PROPOSED TRANSFEREE IS A BANK DEFINED IN
SECTION 3(a)(2) OF THE SECURITIES ACT, OR A SAVINGS AND LOAN ASSOCIATION OR
OTHER INSTITUTION AS DESCRIBED IN SECTION 3(a)(5)(A) OF THE SECURITIES ACT,
WHETHER ACTING IN ITS INDIVIDUAL OR IN A FIDUCIARY CAPACITY), EACH SUCH INVESTOR
ACCOUNT IS AN INSTITUTIONAL INVESTOR AND AN "ACCREDITED INVESTOR" ON A LIKE
BASIS, AND SUCH TRANSFER IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF
THE TRUST AGREEMENT REFERRED TO HEREIN. ANY SUCH TRANSFER MUST ALSO COMPLY WITH
THE OTHER PROVISIONS OF SECTION 4.02 OF THE TRUST AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SEQUOIA MORTGAGE TRUST 1A
MORTGAGE BOND-BACKED CERTIFICATES,
SERIES 1999-A
Class A
Certificate No. 1
Original Principal Amount of this Certificate: $157,266,300.00
Percentage Interest: 100%
Certificate Interest Rate: Variable
Closing Date: May 4, 1999
CUSIP No.: 817435 AC4
This certifies that CEDE & CO. is the registered owner of the undivided
Percentage Interest evidenced by this Certificate in the aggregate amount
distributable on the Class of Certificates specified above evidencing undivided
ownership interests in a trust fund (the "Trust Fund") consisting primarily of
two classes of collateralized mortgage bonds with an aggregate outstanding
principal amount as of the Closing Date of $157,266,300.30 (the "Underlying
Bonds"), collateralized by a pool of adjustable rate, one- to-four-family first
lien mortgage loans and the Bond Insurance Policy. The Trust Fund was created
pursuant to a trust agreement dated May 4, 1999 (the "Trust Agreement") between
Sequoia Mortgage Trust 1 (the "Depositor") and First Union National Bank, as
trustee (the "Trustee"), which terms include any successor entity under the
Trust Agreement, a summary of certain of the pertinent provisions of which is
set forth hereinafter. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of Sequoia Mortgage
Trust 1A Mortgage Bond-Backed Certificates, Series 1999-A (herein called the
"Certificates") issued under the Trust Agreement to which reference is hereby
made for a statement of the respective rights thereunder of the Depositor, the
Trustee and the Holders of the Certificates and the terms upon which the
Certificates are executed and delivered. All terms used in this Certificate
which are defined in the Trust Agreement shall have the meanings assigned to
them in the Trust Agreement.
2
The Trust Agreement requires the distribution on each Distribution
Date, commencing in June 1999, to the person in whose name this Certificate is
registered at the close of business on the immediately preceding Record Date, of
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount distributable pursuant to the Trust Agreement on the
Class of Certificates specified above for such Distribution Date. Pursuant to
the Trust Agreement, this Class of Certificates is entitled on each Distribution
Date to distributions of interest and of principal to the extent provided for in
the Trust Agreement. Notwithstanding the foregoing, the obligation of the
Trustee to make any such distribution on any Distribution Date is limited to the
extent that distributions of interest and principal in respect of the Underlying
Bonds shall have been received by it not later than such Distribution Date.
Distributions on this Certificate will be made by the Trustee by wire
transfer to an account specified in writing by such Certificateholder at least
five Business Days prior to the preceding Record Date or in such other manner as
may be agreed to by the Trustee and such Certificateholder. Except as otherwise
provided in the Trust Agreement, the final distribution on this Certificate will
be made only upon presentation and surrender of this Certificate to the Trustee
at the office thereof specified in the notice to Certificateholders of such
final distribution.
The Certificates are limited in right of distribution to the Percentage
Interests represented thereby in distributions in respect of the Underlying
Bonds received by the Trustee, subject to the provisions of and all as more
specifically set forth in the Trust Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account for distributions hereunder and that neither
the Trustee in its individual capacity nor the Depositor is personally liable to
the Certificateholders for any amount distributable under this Certificate or
the Trust Agreement or, except as expressly provided in the Trust Agreement,
subject to any liability under the Trust Agreement.
This Certificate does not purport to summarize the Trust Agreement and
reference is made to the Trust Agreement for the interests, rights and
limitations of rights, benefits, obligations and duties evidenced hereby, and
the rights, duties and immunities of the Trustee.
This Class of Certificates is issuable in registered form in minimum
denominations of $250,000 initial Principal Amount and integral multiples of $1
in excess thereof. Transfer of this Class of Certificates is subject to certain
restrictions and limitations in the manner more fully set forth above and in,
and as limited by, the Trust Agreement.
The Holder hereof or of any interest herein, by its acceptance of this
Certificate or such interest, agrees with the Trustee, the Depositor and the
other Holders that (i) it is a "qualified institutional buyer", as such term is
defined in Rule 144A under the Securities Act or a sophisticated institutional
investor that is, or in which each equity owner is, an "accredited investor" as
such term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, or, if this Certificate or such interest is to be purchased for one or more
institutional accounts ("investor accounts") for which the Holder hereof or
thereof is acting as fiduciary or agent (except if the Holder hereof or thereof
is a bank as defined in Section 3(a)(2) of the Securities Act, or a savings and
loan association or other institution as described in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or in a fiduciary capacity),
each such investor account is an institutional investor and an "accredited
investor" on a like basis, (ii) it will not
3
transfer this Certificate or such interest except in accordance with the Trust
Agreement, (iii) it will indemnify the Trustee and the Depositor against any
liability that may result if any transfer of this Certificate or such interest
is not exempt from the registration requirements of federal, state and foreign
securities laws, and (iv) it will treat this Certificate as debt for all tax
purposes. The foregoing agreements are in addition to the other obligations of
the Holders under the Trust Agreement.
The Trustee and the Registrar shall treat the person in whose name a
Certificate is registered as provided in the Trust Agreement as the absolute
owner thereof for all purposes, whether or not such Certificate shall be overdue
and notwithstanding any notation of ownership or other writing thereon, and
neither the Trustee nor the Registrar shall be affected by any notice to the
contrary.
The Trust Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights of the
Holders of the Certificates under the Trust Agreement at any time by the
Depositor and Trustee with the consent of the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66-2/3% of each Class of
Certificates. Any such consent by the Holder of this Certificate shall be
conclusive and binding upon such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate. The Trust Agreement also
permits the Trustee to amend or waive certain terms and conditions set forth in
the Trust Agreement without the consent of Holders of the Certificates issued
thereunder.
4
IN WITNESS WHEREOF, the Trustee has caused this certificate to be duly
executed.
Dated:____________________ FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as
Trustee of the within mentioned Trust
Fund
By:____________________________________
Authorized Officer
Certificate of Authentication
This is one of the Certificates referred to in the within mentioned
Trust Agreement.
Dated:___________________
FIRST UNION NATIONAL BANK,
as Registrar
By:_____________________________________
5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate and hereby authorize(s) the transfer of registration of
such Certificate on the books of the Registrar.
I (we) further direct the Registrar to issue a new Certificate of
authorized denomination or notional amount, as the case may be, evidencing the
same aggregate Percentage Interest as the within Certificate, to the above named
assignee and to deliver such Certificate to the following
address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: _______________________
Tax Identification _________________________________________
No. of Assignee: Signature by or on behalf of assignor
(signature must be signed as registered)
______________________________ _________________________________________
Signature Guaranteed
6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by wire transfer in immediately available funds to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of account number _____, or, if mailed by check, to ____________
Applicable statements should be mailed to _____________________________
________________________________________________________________________________
_________________________________________
Signature of assignee or agent
(for authorization of wire transfer only)
7
[Form of Class X Certificates]
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF SEQUOIA
MORTGAGE TRUST 1, THE TRUSTEE (AS HEREINAFTER DEFINED) OR ANY OF THEIR
RESPECTIVE AFFILIATES, AND IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY NOR ANY OTHER PERSON OR ENTITY.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR FOREIGN
SECURITIES LAWS, AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE
TRANSFERRED, OR OFFERED FOR SALE, UNLESS THE PROPOSED TRANSFEREE IS (I) A
"QUALIFIED INSTITUTIONAL BUYER" PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A "QUALIFIED INSTITUTIONAL BUYER" TO WHOM NOTICE HAS BEEN GIVEN THAT
THE RESALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE
SECURITIES ACT OR (II) A SOPHISTICATED INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" OR ALL OF WHOSE EQUITY OWNERS ARE "ACCREDITED INVESTORS"
AS SUCH TERM IS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT, OR, IF THIS CERTIFICATE IS TO BE PURCHASED FOR ONE OR MORE INSTITUTIONAL
ACCOUNTS ("INVESTOR ACCOUNTS") FOR WHICH SUCH PROPOSED TRANSFEREE IS ACTING AS
FIDUCIARY OR AGENT (EXCEPT IF SUCH PROPOSED TRANSFEREE IS A BANK DEFINED IN
SECTION 3(a)(2) OF THE SECURITIES ACT, OR A SAVINGS AND LOAN ASSOCIATION OR
OTHER INSTITUTION AS DESCRIBED IN SECTION 3(a)(5)(A) OF THE SECURITIES ACT,
WHETHER ACTING IN ITS INDIVIDUAL OR IN A FIDUCIARY CAPACITY), EACH SUCH INVESTOR
ACCOUNT IS AN INSTITUTIONAL INVESTOR AND AN "ACCREDITED INVESTOR" ON A LIKE
BASIS, AND SUCH TRANSFER IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF
THE TRUST AGREEMENT REFERRED TO HEREIN. ANY SUCH TRANSFER MUST ALSO COMPLY WITH
THE OTHER PROVISIONS OF SECTION 4.02 OF THE TRUST AGREEMENT.
EXCEPT AS PROVIDED IN SECTION 4.02 OF THE TRUST AGREEMENT REFERRED TO HEREIN,
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON UNLESS THE
TRUSTEE SHALL HAVE RECEIVED AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH
TRANSFER WILL NOT RESULT IN MATERIAL ADVERSE TAX CONSEQUENCES TO THE HOLDERS OF
CLASS A CERTIFICATES, THE TRUST FUND OR THE DEPOSITOR.
PRINCIPAL WILL NOT BE DISTRIBUTABLE IN RESPECT OF THIS CERTIFICATE. INTEREST IS
CALCULATED ON THIS CERTIFICATE BASED ON A NOTIONAL AMOUNT, WHICH, AS OF ANY
DISTRIBUTION DATE, IS EQUAL TO THE AGGREGATE PRINCIPAL AMOUNT OF THE CLASS A
CERTIFICATES ON SUCH DISTRIBUTION DATE. CONSEQUENTLY, THE NOTIONAL AMOUNT OF
THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL NOTIONAL AMOUNT OF
THIS CERTIFICATE AS SET FORTH HEREIN.
8
SEQUOIA MORTGAGE TRUST 1A
MORTGAGE BOND-BACKED CERTIFICATES,
SERIES 1999-A
Class X
Certificate No. 1
Original Notional Amount of this Certificate: $157,266,300.00
Percentage Interest: 100%
Certificate Interest Rate: Variable
Closing Date: May 4, 1999
CUSIP No.: 817435 AD2
This certifies that AUER & CO. is the registered owner of the undivided
Percentage Interest evidenced by this Certificate in the aggregate amount
distributable on the Class of Certificates specified above evidencing undivided
ownership interests in a trust fund (the "Trust Fund") consisting primarily of
two classes of collateralized mortgage bonds with an aggregate outstanding
principal amount as of the Closing Date of $157,266,300.30 (the "Underlying
Bonds") collateralized by a pool of adjustable rate, one- to-four-family first
lien mortgage loans and the Bond Insurance Policy. The Trust Fund was created
pursuant to a trust agreement dated May 4, 1999 (the "Trust Agreement") between
Sequoia Mortgage Trust 1 (the "Depositor") and First Union National Bank, as
trustee (the "Trustee"), which terms include any successor entity under the
Trust Agreement, a summary of certain of the pertinent provisions of which is
set forth hereinafter. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of Sequoia Mortgage
Trust 1A Mortgage Bond-Backed Certificates, Series 1999-A (herein called the
"Certificates") issued under the Trust Agreement to which reference is hereby
made for a statement of the respective rights thereunder of the Depositor, the
Trustee and the Holders of the Certificates and the terms upon which the
Certificates are executed and delivered. All terms used in this Certificate
which are defined in the Trust Agreement shall have the meanings assigned to
them in the Trust Agreement.
9
The Trust Agreement requires the distribution on each Distribution
Date, commencing June 1999, to the person in whose name this Certificate is
registered at the close of business on the immediately preceding Record Date, of
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount distributable pursuant to the Trust Agreement on the
Class of Certificates specified above for such Distribution Date. Pursuant to
the Trust Agreement, this Class of Certificates is entitled on each Distribution
Date to distributions of interest to the extent provided for in the Trust
Agreement. Notwithstanding the foregoing, the obligation of the Trustee to make
any such distribution on any Distribution Date is limited to the extent that
distributions of interest in respect of the Underlying Bonds shall have been
received by it not later than such Distribution Date.
Distributions on this Certificate will be made by the Trustee by wire
transfer to an account specified in writing by such Certificateholder at least
five Business Days prior to the preceding Record Date or in such other manner as
may be agreed to by the Trustee and such Certificateholder. Except as otherwise
provided in the Trust Agreement, the final distribution on this Certificate will
be made only upon presentation and surrender of this Certificate to the Trustee
at the office thereof specified in the notice to Certificateholders of such
final distribution.
The Certificates are limited in right of distribution to the Percentage
Interests represented thereby in distributions in respect of the Underlying
Bonds received by the Trustee, subject to the provisions of and all as more
specifically set forth in the Trust Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account for distributions hereunder and that neither
the Trustee in its individual capacity nor the Depositor is personally liable to
the Certificateholders for any amount distributable under this Certificate or
the Trust Agreement or, except as expressly provided in the Trust Agreement,
subject to any liability under the Trust Agreement.
This Certificate does not purport to summarize the Trust Agreement and
reference is made to the Trust Agreement for the interests, rights and
limitations of rights, benefits, obligations and duties evidenced hereby, and
the rights, duties and immunities of the Trustee.
This Class of Certificates is issuable in registered form in minimum
denominations of $20,000,000 initial Notional Amount and integral multiples of
$1 in excess thereof. Transfer of this Class of Certificates is subject to
certain restrictions and limitations in the manner more fully set forth above
and in, and as limited by, the Trust Agreement.
The Holder hereof or of any interest herein, by its acceptance of this
Certificate or such interest, agrees with the Trustee, the Depositor and the
other Holders that (i) it is a "qualified institutional buyer", as such term is
defined in Rule 144A under the Securities Act or a sophisticated institutional
investor that is, or in which each equity owner is, an "accredited investor" as
such term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, or, if this Certificate or such interest is to be purchased for one or more
institutional accounts ("investor accounts") for which the Holder hereof or
thereof is acting as fiduciary or agent (except if the Holder hereof or thereof
is a bank as defined in Section 3(a)(2) of the Securities Act, or a savings and
loan association or other institution as described in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or in a fiduciary capacity),
each such investor account is an institutional investor and an "accredited
investor" on a like basis, (ii) it will not
10
transfer this Certificate or such interest except in accordance with the Trust
Agreement, (iii) it will indemnify the Trustee and the Depositor against any
liability that may result if any transfer of this Certificate or such interest
is not exempt from the registration requirements of federal, state and foreign
securities laws, and (iv) it will treat this Certificate as debt for all tax
purposes. The foregoing agreements are in addition to the other obligations of
the Holders under the Trust Agreement.
The Trustee and the Registrar shall treat the person in whose name a
Certificate is registered as provided in the Trust Agreement as the absolute
owner thereof for all purposes, whether or not such Certificate shall be overdue
and notwithstanding any notation of ownership or other writing thereon, and
neither the Trustee nor the Registrar shall be affected by any notice to the
contrary.
The Trust Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights of the
Holders of the Certificates under the Trust Agreement at any time by the
Depositor and Trustee with the consent of the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66-2/3% of each Class of
Certificates. Any such consent by the Holder of this Certificate shall be
conclusive and binding upon such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate. The Trust Agreement also
permits the Trustee to amend or waive certain terms and conditions set forth in
the Trust Agreement without the consent of Holders of the Certificates issued
thereunder.
11
IN WITNESS WHEREOF, the Trustee has caused this certificate to be duly
executed.
Dated:____________________ FIRST UNION NATIONAL BANK,
not in its individual capacity but
solely as Trustee of the within
mentioned Trust Fund
By:___________________________________
Authorized Officer
Certificate of Authentication
This is one of the Certificates referred to in the within
mentioned Trust Agreement.
Dated:___________________
FIRST UNION NATIONAL BANK,
as Registrar
By:___________________________________
12
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate and hereby authorize(s) the transfer of registration of
such Certificate on the books of the Registrar.
I (we) further direct the Registrar to issue a new Certificate of
authorized denomination or notional amount, as the case may be, evidencing the
same aggregate Percentage Interest as the within Certificate, to the above named
assignee and to deliver such Certificate to the following
address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated:____________________________
Tax Identification ________________________________________
No. of Assignee: Signature by or on behalf of assignor
(signature must be signed as registered)
__________________________________ ________________________________________
Signature Guaranteed
13
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by wire transfer in immediately available funds to
________________________________________________________________________________
________________________________________________________________________________
for the account of account number _____, or, if mailed by check, to ____________
Applicable statements should be mailed to _____________________________
________________________________________________________________________________
_________________________________________
Signature of assignee or agent
(for authorization of wire transfer only)
14
EXHIBIT B
SCHEDULE OF UNDERLYING BONDS
Original Principal Outstanding Principal
Certificate Designation Amount Amount
- ----------------------- ------ ------
Sequoia Mortgage Trust 1
Collateralized Mortgage Bonds
Class A-1 $334,347,000.00 $98,403,314.15
Class A-2 200,000,000.00 58,862,986.15
EXHIBIT C
FORM OF RULE 144A INVESTMENT LETTER
[FORM OF "QUALIFIED INSTITUTIONAL BUYER" TRANSFEREE'S CERTIFICATE]
____________________
Date
Sequoia Mortgage Trust 1
c/o Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, California 94941
Attention: Vickie Rath
First Union National Bank
230 South Tryon Street
Charlotte, North Carolina 28288
Attention: Structured Finance Trust Services - NC1179
Re: Sequoia Mortgage Trust 1A Mortgage
Bond-Backed Certificates, Series 1999-A
Ladies and Gentlemen:
In connection with our acquisition of the above-referenced Mortgage
Bond-Backed Certificates (the "Certificates") we certify that (a) we understand
that the Certificates have not been registered under the Securities Act of 1933,
as amended (the "Act"), or any state securities laws and are being transferred
to us in a transaction that is exempt from the registration requirements of the
Act and any such laws, (b) we have such knowledge and experience in financial
and business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the transferor concerning the purchase of
the Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates, (d) we have not,
nor has anyone acting on our behalf, offered, transferred, pledged, sold or
otherwise disposed of the Certificates or any interest in the Certificates, or
solicited any offer to buy, transfer, pledge or otherwise dispose of the
Certificates or any interest in the Certificates from any person in any manner,
or made any general solicitation by means of general advertising or in any other
manner, or taken any other action that would constitute a distribution of the
Certificates under the Act or that would render the disposition of the
Certificates a violation of Section 5 of the Act or any state securities laws or
require registration pursuant thereto, and we will not act, or authorize any
person to act, in such manner with respect to the Certificates, and (e) we are a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Act. We are aware that the sale to us is being made in reliance on Rule 144A
under the Act. We are acquiring the Certificates for our own account or for
resale pursuant to Rule 144A under the Act and understand that such Certificates
may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A under the Act or (ii) pursuant
to another exemption from registration under the Act.
Very truly yours,
________________________________________
Print Name of Purchaser
By: ____________________________________
Name:
Title:
C-2
EXHIBIT D
FORM OF NON-RULE 144A INVESTMENT LETTER
____________________
Date
Sequoia Mortgage Trust 1
c/o Redwood Trust, Inc.
591 Redwood Highway
Suite 3100
Mill Valley, California 94941
Attention: Vickie Rath
First Union National Bank
230 South Tryon Street
Charlotte, North Carolina 28288
Attention: Structured Finance Trust Services - NC1179
Re: Sequoia Mortgage Trust 1A Mortgage
Bond-Backed Certificates, Series 1999-A
Ladies and Gentlemen:
In connection with our acquisition of the above-referenced Mortgage
Bond-Backed Certificates (the "Certificates") we certify that (a) we understand
that the Certificates have not been registered under the Securities Act of 1933,
as amended (the "Act"), or any state securities laws and are being transferred
to us in a transaction that is exempt from the registration requirements of the
Act and any such laws, (b) we are an "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity to
ask questions of and receive answers from the transferor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (d)
we are acquiring the Certificates for investment for our own account and not
with a view to any distribution of such Certificates (but without prejudice to
our right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (f) below), (e) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action that would result in a violation of Section 5 of the Act
or any state securities laws, and (f) we will not sell, transfer or otherwise
dispose of any Certificates unless (1) such sale, transfer or other disposition
is made pursuant to an effective registration statement under the Act and in
compliance with any relevant state securities laws or is exempt from such
registration requirements and, if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has
executed and delivered to you a certificate to substantially the same effect as
this certificate, and (3) the purchaser or transferee has otherwise complied
with any conditions for transfer set forth in the Trust Agreement dated May 4,
1999, between Sequoia Mortgage Trust 1, as depositor, and First Union National
Bank, as trustee.
Very truly yours,
________________________________________
Print Name of Purchaser
By:_____________________________________
Name:
Title:
D-2