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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 11, 1998
Residential Asset Funding Corporation
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(Exact name of registrant as specified in its charter)
North Carolina 333-64775 56-2064715
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
301 South College Street
Charlotte, North Carolina 28202-6001
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(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code (704) 374-4868
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No Change
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(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
Residential Asset Funding Corporation registered issuances of up to
$500,000,000 principal amount of Asset Backed Notes and Asset Backed
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by the Registration Statements
on Form S-3 (Registration File No. 333-64775) (the "Registration Statement").
Pursuant to the Registration Statement, RBMG Funding Co. Mortgage Loan Trust
1998-2 (the "Issuer") issued $170,000,000 in aggregate principal amount of its
Asset Backed Notes, Class A-1 and Class A-2, Series 1998-2 (the "Notes"), on
December 11, 1998. This Current Report on Form 8-K is being filed to satisfy an
undertaking to file copies of certain agreements executed in connection with the
issuance of the Notes.
The Notes were issued pursuant to an Indenture (the "Indenture")
attached hereto as Exhibit 4.1, dated as of December 1, 1998, between RBMG
Funding Co. Mortgage Loan Trust 1998-2, and The Bank of New York, in its
capacity as indenture trustee (the "Indenture Trustee"). The Notes represent
non-recourse obligations of the Issuer, which obligations are secured by a
pledge of mortgage loans and certain related property. The Bank of New York will
serve as indenture trustee with respect to the Notes.
The assets of the Trust consist primarily of (i) two groups of fixed
and adjustable rate, residential one- to four-family, first lien mortgage loans
(the "Mortgage Loans") to be pledged to the Indenture Trustee for the benefit of
the holders of the Notes, (ii) all payments in respect of principal and interest
on the Mortgage Loans (other than any principal or interest payments on the
Mortgage Loans due on or prior to the applicable Cut-Off Date), (iii) the
Issuer's rights under the Depositor Sale Agreement and the Servicing Agreement,
(iv) the rights of the Indenture Trustee under the Insurance Policy, (v) the
Pre-Funding Accounts, and funds on deposit therein and (vi) certain other
property.
Interest distributions on each Class of Notes are based on the
aggregate principal balance thereof and the then applicable Note Interest Rate
thereof. With respect to the Class A-1 Notes, the Note Interest Rate is LIBOR
plus 0.64% for each Interest Period prior to the Redemption Date and LIBOR plus
1.28% for each Interest Period thereafter. With respect to the Class A-2 Notes,
the Note Interest Rate is LIBOR plus 0.65% for each Interest Period prior to the
Redemption Date and LIBOR plus 1.30% for each Interest Period thereafter.
As of December 1, 1998, the Mortgage Loans possessed the
characteristics described in the Prospectus dated November 10, 1998 and the
Prospectus Supplement dated December 9, 1998 filed pursuant to Rule 424(b)(2) of
the Act on December 10, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not applicable
(b) Not applicable
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(c) Exhibit 1.1. Underwriting Agreement, dated December 9, 1998, between
Residential Asset Funding Corporation and Wheat First Securities,
Inc. acting through First Union Capital Markets, a division of Wheat
First Securities, Inc.
Exhibit 4.1. Indenture, dated as of December 1, 1998, between the
Issuer and the Indenture Trustee.
Exhibit 8.1. Opinion of Dewey Ballantine LLP regarding tax matters,
dated December 11, 1998.
Exhibit 10.1. Indemnification Agreement, dated as of December 1,
1998, among MBIA Insurance Corporation, Resource Bancshares Mortgage
Group, Inc., Ocwen Federal Bank FSB, Residential Asset Funding
Corporation and Wheat First Securities, Inc.
Exhibit 10.2. Insurance Agreement, dated as of December 1, 1998,
among MBIA Insurance Corporation, Ocwen Federal Bank FSB, Resource
Bancshares Mortgage Group, Inc., RBMG Funding Co., RBMG Funding Co.
Mortgage Loan Trust 1998-2, RBMG Asset Management Company, Inc.,
Residential Asset Funding Corporation, First Union Corporation and
The Bank of New York.
Exhibit 23.1. Consent of PricewaterhouseCoopers L.L.P. regarding
financial statements of the MBIA Insurance Corporation and
Subsidiaries.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunto duly authorized.
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor and on behalf of RBMG Funding Co.
Mortgage Loan Trust 1998-2
Registrant
By: /s/ Shanker Merchant
----------------------
Name: Shanker Merchant
Title: Senior Vice President
Dated: December 11, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
Exhibit 1.1 Underwriting Agreement, dated December 9, 1998, between
Residential Asset Funding Corporation and Wheat First
Securities, Inc. acting through First Union Capital
Markets, a division of Wheat First Securities, Inc.
Exhibit 4.1 Indenture, dated as of December 1, 1998, between the
Issuer and the Indenture Trustee.
Exhibit 8.1 Opinion of Dewey Ballantine LLP regarding tax matters,
dated December 11, 1998.
Exhibit 10.1 Indemnification Agreement, dated as of December 1, 1998,
among MBIA Insurance Corporation, Resource Bancshares
Mortgage Group, Inc., Ocwen Federal Bank FSB, Residential
Asset Funding Corporation and Wheat First Securities, Inc.
Exhibit 10.2 Insurance Agreement, dated as of December 1, 1998, among MBIA
Insurance Corporation, Ocwen Federal Bank FSB, Resource
Bancshares Mortgage Group, Inc., RBMG Funding Co., RBMG
Funding Co. Mortgage Loan Trust 1998-2, RBMG Asset Management
Company, Inc., Residential Asset Funding Corporation, First
Union Corporation and The Bank of New York.
Exhibit 23.1 Consent of PricewaterhouseCoopers L.L.P. regarding financial
statements of the MBIA Insurance Corporation and Subsidiaries.
Exhibit 1.1
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
ASSET BACKED NOTES
SERIES 1998-2
UNDERWRITING AGREEMENT
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UNDERWRITING AGREEMENT
First Union Capital Markets
301 South College Street
Charlotte, North Carolina 28202-6001
December 9, 1998
Dear Sirs:
Residential Asset Funding Corporation (the "Depositor") proposes,
subject to the terms and conditions stated herein and in the attached
Underwriting Agreement Standard Provisions, dated December 9, 1998 (the
"Standard Provisions"), between the Depositor and Wheat First Securities, Inc.,
acting through First Union Capital Markets, a division of Wheat First
Securities, Inc. ("First Union") to issue and sell to you (the "Underwriter")
the Securities specified in Schedule I hereto (the "Offered Securities") in the
amounts set forth in Schedule I hereto. The Depositor agrees that each of the
provisions of the Standard Provisions is incorporated herein by reference in its
entirety, and shall be deemed to be a part of this Agreement to the same extent
as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Underwriting Agreement. Each reference to the
"Representative" herein and in the provisions of the Standard Provisions so
incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Standard Provisions are used herein as
therein defined. The Prospectus Supplement and the accompanying Prospectus
relating to the Offered Securities (together, the "Prospectus") are incorporated
by reference herein.
Subject to the terms and conditions set forth herein and in the
Standard Provisions incorporated herein by reference, the Depositor agrees to
cause the Issuer to issue and sell to the Underwriter, and each Underwriter
agrees to purchase from the Depositor, at the time and place and at the purchase
price to the Underwriter and in the manner set forth in Schedule I hereto, the
original principal balance of the Offered Securities.
[Remainder of Page Intentionally Left Blank]
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If the foregoing is in accordance with your understanding, please
sign and return to us two counterparts hereof, and upon acceptance hereof by
you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
Yours truly,
RESIDENTIAL ASSET FUNDING CORPORATION
By: /s/ Shanker Merchant
_____________________________
Name: Shanker Merchant
Title: Senior Vice President
Accepted as of the date hereof:
WHEAT FIRST SECURITIES, INC.
acting through FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /s/ Peter Perna
_____________________________
Name: Peter Perna
Title: Vice President
[Signature Page to Underwriting Agreement]
<PAGE>
SCHEDULE I
Issuer: RBMG Funding Co. Mortgage Loan Trust 1998-2
Title of Offered RBMG Funding Co. Mortgage Loan Trust 1998-2,
Securities: Asset Backed Notes, Series 1998-2, Class A-1
and Class A-2
Terms of Offered The Offered Securities shall have the terms set
Securities: forth in the Prospectus and shall conform in all
material respects to the descriptions thereof
contained therein, and shall be issued pursuant to
an Indenture to be dated as of December 1, 1998
among the Issuer and Bank of New York, as
indenture trustee.
Purchase Commitment: Wheat First Securities, Inc., acting through
First Union Capital Markets, a division of
Wheat First Securities, Inc.: $170,000,000
Purchase Price: The purchase price for the Offered
Securities shall be 100.00% of the aggregate
principal balance of the Class A-1 Notes and
the Class A-2 Notes, as of the Closing Date.
Specified funds for
payment of Purchase Price: Federal Funds (immediately available funds).
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's Ratings Services
Closing Date: On or about December 11, 1998 at 10:00 A.M.
eastern standard time or at such other time
as the Depositor and the Underwriter shall
agree.
Closing Location: Offices of Dewey Ballantine LLP, 1301 Avenue
of the Americas, New York, New York 10019.
Representative: Designated Representative: Wheat First
Securities, Inc., acting through First Union
Capital Markets, a division of Wheat First
Securities, Inc..
Address for Notices, etc: First Union Capital Markets
One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6001
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Attn: Evan Peverley
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
December 9, 1998
From time to time, Residential Asset Funding Corporation, a North
Carolina corporation (the "Depositor") may enter into one or more underwriting
agreements (each, an "Underwriting Agreement") that provide for the sale of
designated securities to the several underwriters named therein (such
underwriters constituting the "Underwriter" with respect to such Underwriting
Agreement and the securities specified therein). The several underwriters named
in an Underwriting Agreement will be represented by one or more representatives
as named in such Underwriting Agreement (collectively, the "Representative").
The term "Representative" also refers to a single firm acting as sole
representative of the Underwriter and to Underwriter who act without any firm
being designated as their representative. The standard provisions set forth
herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. This Agreement shall not be construed as an obligation
of the Depositor to sell any securities or as an obligation of any of the
Underwriter to purchase such securities. The obligation of the Depositor to sell
any securities and the obligation of any of the Underwriter to purchase any of
the securities shall be evidenced by the Underwriting Agreement with respect to
the securities specified therein. An Underwriting Agreement shall be in the form
of an executed writing (which may be in counterparts), and may be evidenced by
an exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of the communications transmitted. The
obligations of the underwriters under this Agreement and each Underwriting
Agreement shall be several and not joint. Unless otherwise defined herein, the
terms defined in the Underwriting Agreement are used herein as defined in the
Prospectus referred to below.
SECTION 1. The Offered Securities. The Depositor proposes to cause
the Issuer to sell, pursuant to the Underwriting Agreement to the Underwriter or
Underwriters named therein, asset backed notes (the "Securities") representing
obligations of the Issuer, which obligations are secured by a pledge of mortgage
loans (the "Mortgage Loans") and certain related property. The Securities will
be issued pursuant to an indenture (the "Indenture") dated as of December 1,
1998 by and between the Issuer and Bank of New York, a New York banking
corporation., as indenture trustee (the "Indenture Trustee"). The underlying
loans were originated or acquired by Resource Mortgage Bancshares Group, Inc.
("RBMG"). RBMG has conveyed its interest in the Mortgage Loans to RBMG Asset
Management Company, Inc. (the "Company"). The Company has conveyed its interest
in the Mortgage Loans to RBMG Funding Co., a special purpose corporation and a
wholly-owned subsidiary of the Company, ("Funding Co.") Funding Co., in turn,
will convey the Mortgage Loans to the Depositor which will in turn convey the
Mortgage Loans to the Issuer. The Mortgage Loans are to be serviced pursuant to
a Servicing Agreement dated as of December 1, 1998 by and among the Issuer,
RBMG, as servicer (in such capacity, the "Servicer")and the Indenture Trustee
and a Sub-Servicing Agreement dated as of December 1, 1998 by and among the
Servicer and the Sub-Servicer.
The terms and rights of any particular issuance of Securities shall
be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Indenture identified in such Underwriting Agreement. The
Securities which are the subject of any particular Underwriting Agreement into
which this Agreement is incorporated are herein referred to as the "Offered
Securities."
<PAGE>
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 333-64775),
including a prospectus relating to the Securities under the Securities Act of
1933, as amended (the "1933 Act"). The term "Registration Statement" means such
registration statement as amended to the date of the Underwriting Agreement. The
term "Base Prospectus" means the prospectus included in the Registration
Statement. The term "Prospectus" means the Base Prospectus together with the
prospectus supplement specifically relating to the Offered Securities, as first
filed with the Commission pursuant to Rule 424. The term "Preliminary
Prospectus" means a preliminary prospectus supplement specifically relating to
the Offered Securities together with the Base Prospectus.
SECTION 2. Offering by the Underwriter. Upon the execution of the
Underwriting Agreement to any Offered Securities and the authorization by the
Representative of the release of such Offered Securities, the several
Underwriter propose to offer for sale to the public the Offered Securities at
the prices and upon the terms set forth in the Prospectus.
SECTION 3. Purchase, Sale and Delivery of the Offered Securities.
Unless otherwise specified in the Underwriting Agreement, payment for the
Offered Securities shall be made by certified or official bank check or checks
payable to the order of the Depositor in immediately available or next day
funds, at the time and place set forth in the Underwriting Agreement, upon
delivery to the Representative for the respective accounts of the several
Underwriter of the Offered Securities registered in definitive form and in such
names and in such denominations as the Representative shall request in writing
not less than five full business days prior to the date of delivery. The time
and date of such payment and delivery with respect to the Offered Securities are
herein referred to as the "Closing Date".
SECTION 4. Conditions of the Underwriter' Obligations. The
respective obligations of the several Underwriter pursuant to the Underwriting
Agreement shall be subject, in the discretion of the Representative, to the
accuracy in all material respects of the representations and warranties of the
Depositor contained herein as of the date of the Underwriting Agreement and as
of the Closing Date as if made on and as of the Closing Date, to the accuracy in
all material respects of the statements of the officers of the Depositor and the
Servicer made in any certificates pursuant to the provisions hereof and of the
Underwriting Agreement, to the performance by the Depositor of its covenants and
agreements contained herein and to the following additional conditions
precedent:
(a) All actions required to be taken and all filings required to be
made by or on behalf of the Depositor under the 1933 Act and the Securities
Exchange Act of 1934, as amended (the "1934 Act") prior to the sale of the
Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for such purpose
shall be pending before or threatened by the Commission, or by any authority
administering any state securities or "Blue Sky" laws; (iii) any requests for
additional information on the part of the Commission shall have been complied
with to the Representative's reasonable satisfaction; (iv) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings,
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affairs, regulatory situation or business prospects of the Depositor; (v) there
are no material actions, suits or proceedings pending before any court or
governmental agency, authority or body or threatened, affecting the Depositor or
the transactions contemplated by the Underwriting Agreement; (vi) the Depositor
is not in violation of its charter or its by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it or its properties may be
bound, which violations or defaults separately or in the aggregate would have a
material adverse effect on the Depositor; and (vii) the Representative shall
have received, on the Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement, there
shall not have occurred any of the following: (i) if at or prior to the Closing
Date, trading in securities on the New York Stock Exchange shall have been
suspended or any material limitation in trading in securities generally shall
have been established on such exchange, or a banking moratorium shall have been
declared by New York or United States authorities; (ii) if at or prior to the
Closing Date, there shall have been an outbreak or escalation of hostilities
between the United States and any foreign power, or of any other insurrection or
armed conflict involving the United States which results in the declaration of a
national emergency or war, and, in the reasonable opinion of the Representative,
makes it impracticable or inadvisable to offer or sell the Offered Securities;
or (iii) if at or prior to the Closing Date, a general moratorium on commercial
banking activities in New York shall have been declared by either federal or New
York State authorities.
(d) The Representative shall have received, on the Closing Date, a
certificate dated the Closing Date and signed by an executive officer of the
Depositor to the effect that attached thereto is a true and correct copy of the
letter from each nationally recognized statistical rating organization (as that
term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933
Act) that rated the Offered Securities and confirming that, unless otherwise
specified in the Underwriting Agreement, the Offered Securities have been rated
in the highest rating categories by each such organization and that each such
rating has not been rescinded since the date of the applicable letter
substantially to the effect set forth in Exhibit E hereto.
(e) The Representative shall have received, on the Closing Date, an
opinion of Dewey Ballantine LLP, special counsel for the Depositor, dated the
Closing Date, in form and substance satisfactory to the Representative and
containing opinions substantially to the effect set forth in Exhibit A hereto.
(f) The Representative shall have received, on the Closing Date, an
opinion of Graham & James LLP, counsel for RBMG, the Company and Funding Co.,
dated the Closing Date, in form and substance satisfactory to the Representative
and counsel for the Underwriter and containing opinions substantially to the
effect set forth in Exhibits B-1, B-2 and B-3 hereto.
(g) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Indenture Trustee, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the Underwriter
and containing opinions substantially to the effect set forth in Exhibit C
hereto.
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(h) The Representative shall have received, on the Closing Date, an
opinion of Dewey Ballantine LLP, counsel for the Underwriter, dated the Closing
Date, with respect to the incorporation of the Depositor, the validity of the
Offered Securities, the Registration Statement, the Prospectus and other related
matters as the Underwriter may reasonably require, and the Depositor shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(i) The Representative shall have received, on the Closing Date, such
other opinions of Counsel in form and substance satisfactory to the
Representative and counsel to the Underwriter as the Representative shall
request.
(j) The Representative shall have received, on or prior to the date of
first use of each of the preliminary prospectus supplement and the prospectus
supplement relating to the Offered Securities, and on the Closing Date if
requested by the Representative, letters of independent accountants of the
Depositor in the form and reflecting the performance of the procedures
previously requested by the Representative.
(k) The Depositor shall have furnished or caused to be furnished to the
Representative on the Closing Date a certificate of an executive officer of the
Depositor satisfactory to the Representative as to the accuracy of the
representations and warranties of the Depositor herein at and as of such Closing
Date as if made as of such date, as to the performance by the Depositor of all
of its obligations hereunder to be performed at or prior to such Closing Date,
and as to such other matters as the Representative may reasonably request;
(l) The Servicer shall have furnished or caused to be furnished to the
Representative on the Closing Date a certificate of officers of the Servicer in
form and substance reasonably satisfactory to the Representative;
(m) The Sub-Servicer shall have furnished or caused to be furnished to
the Representative on the Closing Date a certificate of officers of the
Sub-Servicer in form and substance reasonably satisfactory to the
Representative;
(n) The Note Guaranty Insurance Policy (the "Note Insurance Policy")
shall have been duly executed and issued at or prior to the Closing Date and
shall conform in all material respects to the description thereof in the
Prospectus Supplement.
(o) The Representative shall have received, on the Closing Date, an
opinion of counsel to MBIA Insurance Corporation. (the "Note Insurer"), dated
the Closing Date, in form and substance satisfactory to the Representative and
counsel for the Underwriter and containing opinions substantially to the effect
set forth in Exhibit D hereto.
(p) On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the Note
Insurer's claims paying ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the 1933 Act.
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(q) There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since September 31, 1997 of the Note Insurer,
that is in the Representative's judgment material and adverse and that makes it
in the Representative's judgment impracticable to market the Offered Securities
on the terms and in the manner contemplated in the Prospectus.
(r) The Representative shall have received, on the Closing Date, a
certificate dated the Closing Date and signed by the President, a senior vice
president or a vice president of the Note Insurer to the effect that the signer
of such certificate has carefully examined the Note Insurance Policy, the
Insurance Agreement dated the Closing Date (the "Insurance Agreement") among the
Note Insurer, the Issuer, the Servicer, the Depositor and the Indenture Trustee
and the related documents and that, to the best of his or her knowledge based on
reasonable investigation:
(i) there are no actions, suits or proceedings pending or
threatened against or affecting the Note Insurer which, if
adversely determined, individually or in the aggregate, would
adversely affect the Note Insurer's performance under the Note
Insurance Policy or the Insurance Agreement;
(ii) each person who, as an officer or representative of the Note
Insurer, signed or signs the Note Insurance Policy, the
Insurance Agreement or any other document delivered pursuant
hereto, on the date thereof, or on the Closing Date, in
connection with the transactions described in this Agreement
was, at the respective times of such signing and delivery, and
is now, duly elected or appointed, qualified and acting as
such officer or representative, and the signatures of such
persons appearing on such documents are their genuine
signatures;
(iii) the information contained in the Prospectus under the caption
"THE INSURANCE POLICY AND THE NOTE INSURER" is true and
correct in all material respects and does not omit to state a
material fact with respect to the description of the Note
Insurance Policy or the ability of the Note Insurer to meet
its payment obligations under the Note Insurance Policy;
(iv) the tables regarding the Note Insurer's capitalization set
forth under the heading " THE INSURANCE POLICY AND THE NOTE
INSURER" present fairly the capitalization of the Note Insurer
as of March 31, 1998;
(v) on or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended
or potential downgrading or (ii) any review or possible
changes in rating the direction of which has not been
indicated, in the rating accorded the claims paying ability of
the Note Insurer by any "nationally recognized statistical
rating organization," as such term is defined for purposes of
the 1933 Act;
(vi) the audited balance sheet of the Note Insurer as of December
31, 1997 and the related statement of income and retained
earnings for the fiscal year then ended, and the accompanying
footnotes, together with an opinion thereon of Coopers &
Lybrand L.L.P., independent certified public accountants,
copies of which are incorporated by reference in the
Prospectus, fairly present in all material respects
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the financial condition of the Note Insurer as of such date
and for the period covered by such statements in accordance
with generally accepted accounting principles consistently
applied.
(vii) to the best knowledge of such officer, since December 31, 1997
no material adverse change has occurred in the financial
position of the Note Insurer other than as set forth in the
Prospectus.
The officer of the Note Insurer certifying to items (v)-(vii)
shall be an officer in charge of a principal financial
function. The Note Insurer shall attach to such certificate a
true and correct copy of its certificate or articles of
incorporation, as appropriate, and its bylaws, all of which
are in full force and effect on the date of such certificate.
(s) The Representative shall have been furnished such further
information, certificates, documents and opinions as the
Representative may reasonably request.
SECTION 5. Covenants of the Depositor. In further consideration of the
agreements of the Underwriter contained in the Underwriting Agreement, the
Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of the
Registration Statement and any amendments thereto including exhibits and as many
copies of the Prospectus and any supplements and amendments thereto as the
Representative may from time to time reasonably request.
(b) Immediately following the execution of the Underwriting Agreement,
the Depositor will prepare a prospectus supplement setting forth the principal
amount, notional amount or stated amount, as applicable, of Offered Securities
covered thereby, the price at which the Offered Securities are to be purchased
by the Underwriter from the Depositor, either the initial public offering price
or prices or the method by which the price or prices at which the Offered
Securities are to be sold will be determined, the selling concessions and
reallowances, if any, any delayed delivery arrangements, and such other
information as the Representative and the Depositor deem appropriate in
connection with the offering of the Offered Securities, but the Depositor will
not file any amendment to the Registration Statement or any supplement to the
Prospectus of which the Representative shall not previously have been advised
and furnished with a copy a reasonable time prior to the proposed filing or to
which the Representative shall have reasonably objected. The Depositor will use
its best efforts to cause any amendment to the Registration Statement to become
effective as promptly as possible. During the time when a Prospectus is required
to be delivered under the 1933 Act, the Depositor will comply so far as it is
able with all requirements imposed upon it by the 1933 Act and the rules and
regulations thereunder to the extent necessary to permit the continuance of
sales or of dealings in the Offered Securities in accordance with the provisions
hereof and of the Prospectus, and the Depositor will prepare and file with the
Commission, promptly upon request by the Representative, any amendments to the
Registration Statement or supplements to the Prospectus which may be necessary
or advisable in connection with the distribution of the Offered Securities by
the Underwriter, and will use its best efforts to cause the same to become
effective as promptly as possible. The Depositor will advise the
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Representative, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement or any amended Registration Statement
has become effective or any supplement to the Prospectus or any amended
Prospectus has been filed. The Depositor will advise the Representative,
promptly after it receives notice or obtains knowledge thereof, of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of any
preliminary Prospectus or the Prospectus, or the suspension of the qualification
of the Offered Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or of any
request made by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information, and the
Depositor will use its best efforts to prevent the issuance of any such stop
order or any order suspending any such qualification, and if any such order is
issued, to obtain the lifting thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary for any other reason to amend or supplement the Prospectus to comply
with the 1933 Act, to promptly notify the Representative thereof and upon their
request to prepare and file with the Commission, at the Depositor's own expense,
an amendment or supplement which will correct such statement or omission or any
amendment which will effect such compliance.
(d) During the period when a prospectus is required by law to be
delivered in connection with the sale of the Offered Securities pursuant to the
Underwriting Agreement, the Depositor will file, on a timely and complete basis,
all documents that are required to be filed by the Depositor with the Commission
pursuant to Sections 13, 14, or 15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale under the
securities or "Blue Sky" laws of such jurisdictions as the Representative shall
reasonably request and to pay all expenses (including fees and disbursements of
counsel) in connection with such qualification of the eligibility of the Offered
Securities for investment under the laws of such jurisdictions as the
Representative may designate provided that in connection therewith the Depositor
shall not be required to qualify to do business or to file a general consent to
service of process in any jurisdiction.
(f) To make generally available to the Depositor's security holders, as
soon as practicable, but in any event not later than eighteen months after the
date on which the filing of the Prospectus, as amended or supplemented, pursuant
to Rule 424 under the 1933 Act first occurs, an earnings statement of the
Depositor covering a twelve-month period beginning after the date of the
Underwriting Agreement, which shall satisfy the provisions of Section 11(a) of
the 1933 Act and the applicable rules and regulations of the Commission
thereunder (including, at the option of the Depositor, Rule 158).
(g) For so long as any of the Offered Securities remain outstanding, to
furnish to the Representative upon request in writing copies of such financial
statements and other periodic and special reports as the Depositor may from time
to time distribute generally to its creditors or the
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holders of the Offered Securities and to furnish to the Representative copies of
each annual or other report the Depositor shall be required to file with the
Commission.
(h) For so long as any of the Offered Securities remain outstanding,
the Depositor will, or will cause the Servicer to, furnish to the
Representative, as soon as available, a copy of (i) the annual statement of
compliance delivered by the Servicer to the Indenture Trustee under the
Servicing Agreement, (ii) the annual independent public accountants' servicing
report furnished to the Indenture Trustee pursuant to the Servicing Agreement,
(iii) each report regarding the Offered Securities mailed to the holders of such
Securities, and (iv) from time to time, such other information concerning such
Securities as the Representative may reasonably request.
SECTION 6. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with, each Underwriter, as of
the date of the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus relating to the
Securities and the offering thereof from time to time in accordance with Rule
415 under the 1933 Act has been filed with the Commission and such Registration
Statement, as amended to the date of the Underwriting Agreement, has become
effective. No stop order suspending the effectiveness of such Registration
Statement has been issued and no proceeding for that purpose has been initiated
or threatened by the Commission. A prospectus supplement specifically relating
to the Offered Securities will be filed with the Commission pursuant to Rule 424
under the 1933 Act; provided, however, that a supplement to the Prospectus
prepared pursuant to Section 5(b) hereof shall be deemed to have supplemented
the Base Prospectus only with respect to the Offered Securities to which it
relates. The conditions to the use of a registration statement on Form S-3 under
the 1933 Act, as set forth in the General Instructions on Form S-3, and the
conditions of Rule 415 under the 1933 Act, have been satisfied with respect to
the Depositor and the Registration Statement. There are no contracts or
documents of the Depositor that are required to be filed as exhibits to the
Registration Statement pursuant to the 1933 Act or the rules and regulations
thereunder that have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Base Prospectus conformed in all material
respects to the requirements of the 1933 Act and the rules and regulations
thereunder, and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; on the date of the Underwriting Agreement
and as of the Closing Date, the Registration Statement and the Prospectus
conform, and as amended or supplemented, if applicable, will conform in all
material respects to the requirements of the 1933 Act and the rules and
regulations thereunder, and on the date of the Underwriting Agreement and as of
the Closing Date, neither of such documents, any Computational Materials nor any
ABS Term Sheets includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither of such documents as amended or
supplemented, if applicable, will include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the foregoing does not apply to statements or omissions in any of such documents
based upon written information furnished to the Depositor by any Underwriter
specifically for use therein. "Computational Materials" shall mean those
materials
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delivered within the meaning of the no-action letter dated May 20, 1994 issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I. Kidder, Peabody & Co., Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association for which the filing of such material is a condition of
the relief granted in such letters. "ABS Term Sheet" shall mean those materials
delivered in the form of "Structural Term Sheets" or "Collateral Term Sheets",
in each case within the meaning of the no-action letter dated February 13, 1995
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association for which the filing of such material is a condition of
the relief granted in such letter.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
there has been no material adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of the
Depositor, whether or not arising in the ordinary course of the business of the
Depositor.
(d) The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of North Carolina.
(e) The Depositor has all requisite power and authority (corporate and
other) and all requisite authorizations, approvals, orders, licenses,
certificates and permits of and from all government or regulatory officials and
bodies to own its properties, to conduct its business as described in the
Registration Statement and the Prospectus and to execute, deliver and perform
this Agreement, the Underwriting Agreement, the Deposit Trust Agreement, Loan
Sale Agreement and the Loan Transfer Agreement, except such as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution by the Underwriter of the Offered Securities; all such
authorizations, approvals, orders, licenses, certificates are in full force and
effect and contain no unduly burdensome provisions; and, except as set forth or
contemplated in the Registration Statement or the Prospectus, there are no legal
or governmental proceedings pending or, to the best knowledge of the Depositor,
threatened that would result in a material modification, suspension or
revocation thereof.
(f) The Offered Securities have been duly authorized, and when the
Offered Securities are issued and delivered pursuant to the Underwriting
Agreement, the Offered Securities will have been duly executed, issued and
delivered and will be entitled to the benefits provided by the Indenture,
subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity (regardless of whether
the entitlement to such benefits is considered in a proceeding in equity or at
law), and will conform in substance to the description thereof contained in the
Registration Statement and the Prospectus, and will in all material respects be
in the form contemplated by the Indenture.
(g) The execution and delivery by the Depositor of this Agreement, the
Underwriting Agreement, the Deposit Trust Agreement, dated as of December 1,
1998, among the Depositor, the Owner Trustee and Bank of New York, as trust
paying agent (the "Deposit Trust Agreement"), Loan Sale Agreement, dated as of
December 1, 1998, between Funding Co. and the
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Depositor (the "Loan Sale Agreement) and the Loan Transfer Agreement, dated as
of December 1, 1998, between the Depositor and the Issuer (the "Loan Transfer
Agreement) (collectively, the "Depositor Agreements") are within the corporate
power of the Depositor and neither the execution and delivery by the Depositor
of the Depositor Agreements, nor the consummation by the Depositor of the
transactions therein contemplated, nor the compliance by the Depositor with the
provisions thereof, will conflict with or result in a breach of, or constitute a
default under, the charter or the by-laws of the Depositor or any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
binding on the Depositor or its properties, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the Depositor is a
party or by which it is bound, or will result in the creation or imposition of a
lien, charge or encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, contract or other instrument, except such as have
been obtained under the 1933 Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Offered
Securities by the Underwriter.
(h) The Underwriting Agreement has been, and at the Closing Date the
Deposit Trust Agreement, the Loan Sale Agreement and the Loan Transfer Agreement
will have been, duly authorized, executed and delivered by the Depositor.
(i) At the Closing Date, each of the Depositor Agreements will
constitute a legal, valid and binding obligation of the Depositor, enforceable
against the Depositor, in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally, and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law).
(j) No filing or registration with, notice to, or consent, approval,
non-disapproval, authorization or order or other action of, any court or
governmental authority or agency is required for the consummation by the
Depositor of the transactions contemplated by the Depositor Agreements, except
such as have been obtained and except such as may be required under the 1933
Act, the rules and regulations thereunder, or state securities or "Blue Sky"
laws, in connection with the purchase and distribution of the Offered Securities
by the Underwriter.
(k) The Depositor owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be, and to
operate, its properties and to carry on its business as presently conducted and
has received no notice of proceedings relating to the revocation of any such
license, permit, consent, order or approval, which singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
adversely affect the conduct of the business, results of operations, net worth
or condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Depositor is a
party or of which any property of the Depositor is the subject which, if
determined adversely to the Depositor would individually or in the aggregate
have a material adverse effect on the condition (financial or otherwise),
earnings, affairs, or business or business prospects of the Depositor and, to
the best of the Depositor's
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knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(m) Each of the Offered Securities will, when issued, be a "mortgage
related security" as such term is defined in Section 3(a)(41) of the 1934 Act.
(n) At the Closing Date, or any date on which Additional Mortgage Loans
are transferred by the Depositor to the Issuer (each, a "Additional Transfer
Date"), as the case may be, the representations and warranties made by the
Depositor in such Loan Transfer Agreement will be true and correct as of such
date.
(o) At the time of execution and delivery of the Loan Transfer
Agreement, or on any Additional Transfer Date, as the case may be, the Depositor
will have good and marketable title to the Initial Mortgage Loans, or the
Additional Mortgage Loans, as the case may be, being transferred to the Issuer
pursuant to the Loan Transfer Agreement, or the Additional Mortgage Loans, free
and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or
other security interest claiming through the Depositor (collectively, "Liens"),
and will not have assigned to any person any of its right, title or interest in
such Initial Mortgage Loans, or the Additional Mortgage Loans, as the case may
be, or in such Loan Transfer Agreement, the Depositor will have the power and
authority to transfer such Initial Mortgage Loans, or Additional Mortgage Loans,
as the case may be, to the Issuer and to cause the Issuer to transfer the
Offered Securities to each of the Underwriter, and upon execution and delivery
to the Issuer of the Loan Transfer Agreement and delivery to each of the
Underwriter of the Offered Securities, the Issuer will have good and marketable
title to the Initial Mortgage Loans, or the Additional Mortgage Loans, as the
case may be, and each of the Underwriter will have good and marketable title to
the Offered Securities, in each case free and clear of any Liens claiming
through the Depositor.
(p) The Indenture has been duty qualified under the Trust Indenture Act
of 1939, as amended, and the Issuer is not required to be registered under the
Investment Company Act of 1940, as amended.
(q) Any taxes, fees and other governmental charges in connection with
the execution and delivery of the Depositor Agreements, and issuance of the
Offered Securities have been or will be paid at or prior to the Closing Date.
SECTION 7. Indemnification and Contribution. (a) The Depositor agrees
to indemnify and hold harmless each Underwriter (including Wheat First
Securities, Inc., acting through First Union Capital Markets, a division of
Wheat First Securities, Inc.. acting in its capacity as Representative and as
one of the Underwriters), and each person, if any, who controls any Underwriter
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, any Computational Materials, any ABS Term Sheets, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
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<PAGE>
misleading, and will reimburse each Underwriter and each such controlling person
for any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Depositor will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with (1) written
information furnished to the Depositor by any Underwriter through the
Representative specifically for use therein or (2) information regarding the
RBMG or the Mortgage Loans, except to the extent that the Depositor has been
indemnified by RBMG or (3) information supplied by the Note Insurer. This
indemnity agreement will be in addition to any liability which the Depositor may
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Depositor,
each of the Depositor's directors, each of the Depositor's officers who signed
the Registration Statement and each person, if any, who controls the Depositor,
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which the Depositor, or any such director, officer or controlling
person may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, any Computational Materials, any ABS Term Sheets or
any amendment or supplement thereto, or any other prospectus relating to the
Offered Securities, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statements or alleged untrue
statements or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Depositor by any
Underwriter through the Representative specifically for use therein; and each
Underwriter will reimburse any legal or other expenses reasonably incurred by
the Depositor or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have. The Depositor acknowledges that the statements
set forth under the caption "UNDERWRITING" in the Prospectus Supplement
constitute the only information furnished to the Depositor by or on behalf of
any Underwriter for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus, and each of the several Underwriter represents and
warrants that such statements are correct as to it.
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 7 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by
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the Depositor on the one hand, and the Underwriter on the other, from the
offering of the Offered Securities (taking into account the portion of the
proceeds of the offering realized by each), the Depositor's and the Underwriter'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Depositor and the Underwriter agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriter were treated as one entity for such
purpose). No Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate exceeds the
total underwriting fee of the Offered Securities purchased by such Underwriter
under the Underwriting Agreement, less the aggregate amount of any damages which
such Underwriter and its controlling persons have otherwise been required to pay
in respect of the same or any substantially similar claim. The Underwriter's
obligation to contribute hereunder are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 7, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Depositor, each officer of the Depositor who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the 1933 Act, shall have the same rights to
contribution as the Depositor.
(d) The parties hereto agree that the first sentence of Section 6 of
the Indemnification Agreement (the "Indemnification Agreement") dated as of the
Closing Date among the Note Insurer, Resource Mortgage Bancshares Group, Inc.,
and Wheat First Securities, Inc., acting through First Union Capital Markets, a
division of Wheat First Securities, Inc., shall not be construed as limiting the
Depositor's right to enforce its rights under Section 7 of this Agreement. The
parties further agree that, as between the parties hereto, to the extent that
the provisions of Section 6 of the Indemnification Agreement conflict with
Section 7 hereof, the provisions of Section 7 hereof shall govern.
SECTION 8. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Depositor, its officers and the several Underwriter set
forth in, or made pursuant to, the Underwriting Agreement shall remain in full
force and effect, regardless of any investigation, or statement as to the result
thereof, made by or on behalf of any Underwriter, the Depositor, or any of the
officers or directors or any controlling person of any of the foregoing, and
shall survive the delivery of and payment for the Offered Securities.
SECTION 9. Termination. (a) The Underwriting Agreement may be
terminated by the Depositor by notice to the Representative in the event that a
stop order suspending the effectiveness of the Registration Statement shall have
been issued or proceedings for that purpose shall have been instituted or
threatened.
(b) The Underwriting Agreement may be terminated by the Representative
by notice to the Depositor in the event that the Depositor shall have failed,
refused or been unable to perform all obligations and satisfy all conditions to
be performed or satisfied hereunder by the Depositor at or prior to the Closing
Date.
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(c) Termination of the Underwriting Agreement pursuant to this Section
9 shall be without liability of any party to any other party other than as
provided in Sections 7 and 11 hereof.
SECTION 10. Default of Underwriter. If any Underwriter or Underwriter
defaults or default in their obligation to purchase Offered Securities which it
or they have agreed to purchase under the Underwriting Agreement and the
aggregate principal amount of the Offered Securities which such defaulting
Underwriter or Underwriter agreed but failed to purchase is ten percent or less
of the aggregate principal amount, notional amount or stated amount, as
applicable, of the Offered Securities to be sold under the Underwriting
Agreement, as the case may be, the other Underwriter shall be obligated
severally in proportion to their respective commitments under the Underwriting
Agreement to purchase the Offered Securities which such defaulting Underwriter
or Underwriter agreed but failed to purchase. If any Underwriter or Underwriter
so defaults or default and the aggregate principal amount of the Offered
Securities with respect to which such default or defaults occurs or occur is
more than ten percent of the aggregate principal amount, notional amount or
stated amount, as applicable, of Offered Securities to be sold under the
Underwriting Agreement, as the case may be, and arrangements satisfactory to the
Representative and the Depositor for the purchase of such Offered Securities by
other persons (who may include one or more of the non-defaulting Underwriter
including the Representative) are not made within 36 hours after any such
default, the Underwriting Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Depositor except for the expenses to be
paid or reimbursed by the Depositor pursuant to Section 11 hereof. As used in
the Underwriting Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
SECTION 11. Expenses. The Depositor agrees with the several Underwriter
that:
(a) whether or not the transactions contemplated in the Underwriting
Agreement are consummated or the Underwriting Agreement is terminated, the
Depositor will pay all fees and expenses incident to the performance of its
obligations under the Underwriting Agreement, including, but not limited to, (i)
the Commission's registration fee, (ii) the expenses of printing and
distributing the Underwriting Agreement and any related underwriting documents,
the Registration Statement, any Preliminary Prospectus, the Prospectus, any
amendments or supplements to the Registration Statement or the Prospectus, and
any Blue Sky memorandum or legal investment survey and any supplements thereto,
(iii) fees and expenses of rating agencies, accountants and counsel for the
Depositor, (iv) the expenses referred to in Section 5(e) hereof, and (v) all
miscellaneous expenses referred to in Item 30 of the Registration Statement;
(b) all out-of-pocket expenses, including counsel fees, disbursements
and expenses, reasonably incurred by the Underwriter in connection with
investigating, preparing to market and marketing the Offered Securities and
proposing to purchase and purchasing the Offered Securities under the
Underwriting Agreement will be borne and paid by the Depositor if the
Underwriting Agreement is terminated by the Depositor pursuant to Section 9(a)
hereof or by the Representative on account of the failure, refusal or inability
on the part of the Depositor to perform all obligations and satisfy all
conditions on the part of the Depositor to be performed or satisfied hereunder;
and
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(c) the Depositor will pay the cost of preparing the certificates for
the Offered Securities.
Except as otherwise provided in this Section 11, the Underwriter
agree to pay all of their expenses in connection with investigating, preparing
to market and marketing the Offered Securities and proposing to purchase and
purchasing the Offered Securities under the Underwriting Agreement, including
the fees and expenses of their counsel and any advertising expenses incurred by
them in making offers and sales of the Offered Securities.
SECTION 12. Notices. All communications under the Underwriting
Agreement shall be in writing and, if sent to the Underwriter, shall be mailed,
delivered or telegraphed and confirmed to the Representative at the address and
to the attention of the person specified in the Underwriting Agreement, and, if
sent to the Depositor, shall be mailed, delivered or telegraphed and confirmed
to Residential Asset Funding Corporation, One First Union Center, 301 South
College Street, Charlotte, North Carolina 28202-6001, Attention: Managing
Director Asset Finance Group; provided, however, that any notice to any
Underwriter pursuant to the Underwriting Agreement shall be mailed, delivered or
telegraphed and confirmed to such Underwriter at the address furnished by it.
SECTION 13. Representative of Underwriter. Any Representative
identified in the Underwriting Agreement will act for the Underwriter of the
Offered Securities and any action taken by the Representative under the
Underwriting Agreement will be binding upon all of such Underwriter.
SECTION 14. Successors. The Underwriting Agreement shall inure to the
benefit of and shall be binding upon the several Underwriter and the Depositor
and their respective successors and legal representatives, and nothing expressed
or mentioned herein or in the Underwriting Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of the Underwriting Agreement, or any provisions herein
contained, the Underwriting Agreement and all conditions and provisions hereof
being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriter shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Offered Securities from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 15. Time of the Essence. Time shall be of the essence of each
Underwriting Agreement.
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SECTION 16. Governing Law. This Agreement and each Underwriting
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
[Signature Page Follows]
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If the foregoing is in accordance with your understanding, please
sign and return two counterparts hereof.
Yours truly,
RESIDENTIAL ASSET FUNDING CORPORATION
By:/s/ Shanker Merchant
__________________________________
Name: Shanker Merchant
Title: Senior Vice President
Accepted as of the date hereof:
WHEAT FIRST SECURITIES, INC.
acting through FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /s/ Peter Perna
_____________________________________
Name: Peter Perna
Title: Vice President
[Signature Page to Underwriting Agreement Standard Provisions]
<PAGE>
Exhibit A
Opinions of Dewey Ballantine LLP,
special counsel for the Depositor
(1) Each of the Depositor Documents constitutes the valid, legal and
binding agreement of the Depositor, and is enforceable against the Depositor in
accordance with its terms.
(2) The Notes, assuming the due execution by the Indenture Trustee
and due authentication by the Indenture Trustee and payment therefor pursuant to
the Underwriting Agreement, are validly issued and outstanding and are entitled
to the benefits of the Indenture.
(3) No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required under
federal laws or the laws of the State of New York for the execution, delivery
and performance of the Documents or the offer, issuance, sale or delivery of the
Notes or the consummation of any other transaction contemplated thereby by the
Depositor, except such which have been obtained.
(4) The Registration Statement and the Prospectus (other than the
financial and statistical data included therein, as to which we are not called
upon to express any opinion), at the time the Registration Statement became
effective, as of the date of execution of the Underwriting Agreement and as of
the date hereof comply as to form in all material respects with the requirements
of the 1933 Act and the rules and regulations thereunder, and the Exchange Act
and the rules and regulations thereunder, and we do not know of any amendment to
the Registration Statement required to be filed, or of any contracts, indentures
or other documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration Statement
or the Prospectus, which has not been filed or described as required.
(5) The Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended and the Issuer is not required to be registered under
the Investment Company Act of 1940.
(6) The statements in the Prospectus Supplement set forth under the
caption "DESCRIPTION OF THE NOTES," to the extent such statements purport to
summarize certain provisions of the Notes or of the Indenture, are fair and
accurate in all material respects.
A-1
<PAGE>
Exhibit B-1
Form of Opinions of Counsel to
Resource Mortgage Bancshares Group, Inc.
(1) Resource Mortgage Bancshares Group, Inc. (the "Company") has
been duly organized and is validly existing as a corporation in good standing
under the State of Delaware and is duly qualified to transact business in all
states in which the conduct of its business requires such qualification.
(2) The Company has the requisite power and authority to execute and
deliver, engage in the transactions contemplated by, and perform and observe the
conditions of, the Basic Documents (as defined in the Indenture) to which it is
a party (collectively referred to herein as the "Company Agreements").
(3) The Company Agreements have been duly and validly authorized,
executed and delivered by the Company, all requisite corporate action having
been taken with respect thereto, and each constitutes the valid, legal and
binding agreement of the Company, and are enforceable against the Company in
accordance with their respective terms.
(4) Neither the transfer of the Mortgage Loans to the RBMG Asset
Management Company, Inc., nor the execution, delivery or performance by the
Company of the Company Agreements conflicts or will conflict with or results or
will result in a breach of, or constitutes or will constitute a default under or
violates or will violate, (i) any term or provision of the Articles of
Incorporation or By-laws of the Company; (ii) any term or provision of any
material agreement, contract, instrument or indenture, to which the Company or
any of its subsidiaries is a party or is bound; or (iii) any order, judgment,
writ, injunction or decree of any court or governmental agency or body or other
tribunal having jurisdiction over the Company or any of its properties.
(5) The endorsement and delivery of each Mortgage Note, and the
preparation, delivery and recording of an Assignment of Mortgage with respect to
each Mortgage is sufficient fully to transfer to [RBMG Asset Management Company,
Inc.] and its assignees all right, title and interest of the Company in the
Mortgage Note and Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of, registration or
qualification of or with or notice to, any courts, governmental agency or body
or other tribunal is required under the laws of New York or Delaware, for the
execution, delivery and performance of the RBMG Agreements or the consummation
of any other transaction contemplated thereby by the Company, except such which
have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company; (ii) the Company's ability to perform its obligations under, or the
validity or enforceability of, the Company Agreements; (iii) any Mortgage Note
or Mortgaged Property, or the title of any
B-I-1
<PAGE>
Mortgagor to any Mortgaged Property; or (B) which have not otherwise been
disclosed in the Registration Statement and to the best of such counsel's
knowledge, no such proceedings or investigations are threatened or contemplated
by governmental authorities or threatened by others.
B-I-2
<PAGE>
Exhibit B-2
Opinions of Counsel to
RBMG Asset Management Company, Inc.
(1) RBMG Asset Management Company, Inc. ("the Company") has been
duly organized and is validly existing as a corporation in good standing under
the State of Nevada duly qualified to transact business in all states in which
the conduct of its business requires such qualification.
(2) the Company has the requisite power and authority to execute and
deliver, engage in the transactions contemplated by, and perform and observe the
conditions of, the Basic Documents (as defined in the Indenture) to which it is
a party (collectively referred to herein as the "the Company Agreements").
(3) The Company Agreements have been duly and validly authorized,
executed and delivered by the Company, all requisite corporate action having
been taken with respect thereto, and each constitutes the valid, legal and
binding agreement of the Company, and are enforceable against the Company in
accordance with their respective terms.
(4) Neither the transfer of the Mortgage Loans to Funding Co., nor
the execution, delivery or performance by the Company of the Company Agreements
conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default under or violates or will violate, (i)
any term or provision of the Articles of Incorporation or By-laws of the
Company; (ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Company or any of its subsidiaries is a
party or is bound; or (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having jurisdiction
over the Company or any of its properties.
(5) The endorsement and delivery of each Mortgage Note, and the
preparation, delivery and recording of an Assignment of Mortgage with respect to
each Mortgage is sufficient fully to transfer to the [RBMG Funding Co.] and its
assignees all right, title and interest of the Company in the Mortgage Note and
Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of, registration or
qualification of or with or notice to, any courts, governmental agency or body
or other tribunal is required under the laws of New York or Nevada, for the
execution, delivery and performance of the Company Agreements or the
consummation of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company; (ii) the Company's ability to perform its obligations under, or the
validity or enforceability of, the Company Agreements; (iii) any Mortgage Note
or Mortgaged Property, or the title of any Mortgagor to any Mortgaged Property;
or (B) which have not otherwise been disclosed in the
B-2-1
<PAGE>
Registration Statement and to the best of such counsel's knowledge, no such
proceedings or investigations are threatened or contemplated by governmental
authorities or threatened by others.
B-2-2
<PAGE>
Exhibit B-3
Opinions of Counsel to
RBMG Funding Co.
(1) RBMG Funding Co. ("the Company") has been duly organized and is
validly existing as a corporation in good standing under the State of Nevada and
is duly qualified to transact business in all states in which the conduct of its
business requires such qualification.
(2) the Company has the requisite power and authority to execute and
deliver, engage in the transactions contemplated by, and perform and observe the
conditions of, the Basic Documents (as defined in the Indenture) to which it is
a party (collectively referred to herein as the "the Company Agreements").
(3) The Company Agreements have been duly and validly authorized,
executed and delivered by the Company, all requisite corporate action having
been taken with respect thereto, and each constitutes the valid, legal and
binding agreement of the Company, and are enforceable against the Company in
accordance with their respective terms.
(4) Neither the transfer of the Mortgage Loans to the Depositor, nor
the execution, delivery or performance by the Company of the Company Agreements
conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default under or violates or will violate, (i)
any term or provision of the Articles of Incorporation or By-laws of the
Company; (ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Company or any of its subsidiaries is a
party or is bound; or (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having jurisdiction
over the Company or any of its properties.
(5) The endorsement and delivery of each Mortgage Note, and the
preparation, delivery and recording of an Assignment of Mortgage with respect to
each Mortgage is sufficient fully to transfer to the [Depositor] and its
assignees all right, title and interest of the Company in the Mortgage Note and
Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of, registration or
qualification of or with or notice to, any courts, governmental agency or body
or other tribunal is required under the laws of New York or Nevada, for the
execution, delivery and performance of the Company Agreements or the
consummation of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company; (ii) the Company's ability to perform its obligations under, or the
validity or enforceability of, the Company Agreements; (iii) any Mortgage Note
or Mortgaged Property, or the title of any Mortgagor to any Mortgaged Property;
or (B) which have not otherwise been disclosed in the Registration Statement and
to the best of such counsel's knowledge, no such proceedings or investigations
are threatened or contemplated by governmental authorities or threatened by
others.
B-3-1
<PAGE>
Exhibit C
Opinions of Counsel to
the Indenture
Trustee
----------------------
(1) The Indenture Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has the power and authority to enter into and to take all actions required
of it under the Indenture.
(2) The Indenture has been duly authorized, executed and delivered
by the Indenture Trustee and the Indenture constitutes the legal, valid and
binding obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as enforceability thereof may be
limited by (A) bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, as such laws would
apply in the event of a bankruptcy, insolvency or reorganization or similar
occurrence affecting the Indenture Trustee, and (B) general principles of equity
regardless of whether such enforcement is sought in a proceeding at law or in
equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Indenture Trustee in connection with its execution and delivery of the Indenture
or the performance of its obligations thereunder.
(4) The Notes have been duly executed, authenticated and delivered
by the Indenture Trustee.
(5) The execution and delivery of, and performance by the Indenture
Trustee of its obligations under, the Indenture do not conflict with or result
in a violation of any statute or regulation applicable to the Indenture Trustee,
or the charter or bylaws of the Indenture Trustee, or to the best knowledge of
such counsel, any governmental authority having jurisdiction over the Indenture
Trustee or the terms of any indenture or other agreement or instrument to which
the Indenture Trustee is a party or by which it is bound.
C-1
<PAGE>
Exhibit D
Opinions of Counsel
to the Note Insurer
-------------------
(1) The Note Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York. The
Note Insurer is validly licensed and authorized to issue the Note Insurance
Policy and perform its obligations under the Note Insurance Policy in accordance
with the terms thereof, under the laws of the State of New York.
(2) The execution and delivery by the Note Insurer of the Note
Insurance Policy, and the Indemnification Agreement are within the corporate
power of the Note Insurer and have been authorized by all necessary corporate
action on the part of the Note Insurer; the Note Insurance Policy has been duly
executed and is the valid and binding obligation of the Note Insurer enforceable
in accordance with its terms except that the enforcement of the Note Insurance
Policy may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity.
(3) The Note Insurer is authorized to deliver the Indemnification
Agreement, and the Indemnification Agreement has been duly executed and is the
valid and binding obligation of the Note Insurer enforceable in accordance with
its terms except that the enforcement thereof may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and other
similar laws affecting creditors' rights generally and by general principles of
equity and by public policy considerations relating to indemnification for
securities law violations.
(4) No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required on the part of the Note
Insurer, the lack of which would adversely affect the validity or enforceability
of the Note Insurance Policy; to the extent required by applicable legal
requirements that would adversely affect validity or enforceability of the Note
Insurance Policy, the form of each Note Insurance Policy has been filed with,
and approved by, all governmental authorities having jurisdiction over the Note
Insurer in connection with such Note Insurance Policy.
(5) To the extent the Note Insurance Policy constitutes a security
within the meaning of Section 2(1) of the 1933 Act, it is a security that is
exempt from the registration requirements of the Act.
(6) The information set forth under the captions "THE INSURANCE
POLICY AND THE NOTE INSURER" in the Prospectus insofar as such statements
constitute a description of the Note Insurance Policy, accurately summarizes the
Note Insurance Policy.
D-1
Exhibit 4.1
THIS INDENTURE, dated as of December 1, 1998 (as amended or
supplemented from time to time as permitted hereby, this "Indenture"), is
between RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2, a Delaware business trust
(together with its permitted successors and assigns, the "Issuer") and THE BANK
OF NEW YORK, a New York banking corporation, as trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Asset-Backed Notes, Series 1998-2 (the "Notes"),
issuable in two Classes as provided in this Indenture. All covenants and
agreements made by the Issuer herein are for the benefit and security of the
Holders of the Notes and the Note Insurer. The Issuer is entering into this
Indenture, and the Indenture Trustee is accepting the trusts created hereby, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes and the Note Insurer, without recourse but
subject to the terms and provisions of this Agreement, all of the Issuer's
right, title and interest in and to (a) the Initial Mortgage Loans, the
Additional Mortgage Loans (as from time to time may be Granted by the Issuer)
and all Qualified Replacement Mortgage Loans (as from time to time may be
Granted by the Issuer) (including property that secures a Mortgage Loan that
becomes an REO Property), including the related Mortgage Files delivered or to
be delivered to the Indenture Trustee pursuant to the Depositor Sale Agreement,
all payments of principal and interest due after the applicable Cut-off Date for
each Mortgage Loan and all other proceeds received in respect of such Mortgage
Loans, (b) the MBIA Insurance Policy, (c) the Servicing Agreement, (d) Sections
2, 3, 4, 7, 10 and 13 of the Company Sale Agreement, (e) Sections 2, 3, 4, 7, 10
and 13 of the Depositor Sale Agreement, (f) Sections 2, 3, 4, 7, 10 and 13 of
the Funding Co. Sale Agreement, (g) Sections 2, 3, 4, 5, 6, 7, 10, 11, 14 and 17
of the Loan Contribution Agreement, (h) the Insurance Policies, (i) all cash,
instruments or other property held or required to be deposited in the Collection
Account, the Note Accounts, the Pre-Funding Accounts, the Reserve Account and
the Interest Coverage Accounts, including all investments made with funds in
such accounts (but not including any income on funds deposited in, or earnings
on, investments made with funds deposited in, the Collection Account, which
income shall belong to and be for the account of the Servicer, and not including
any income on funds deposited in, or earnings on investments made with funds
deposited in the Note Accounts, which income shall belong to and be for the
account of the Issuer, and not including any income on funds deposited in, or
earnings on investments made with funds deposited in, the Pre-Funding Accounts,
which income shall belong to and be for the account of the Issuer) and (j) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including, without limitation, all insurance
proceeds and condemnation awards. Such Grants are made, however, in trust, to
secure the Notes equally and ratably without prejudice, priority or distinction
between any Note and any other
<PAGE>
Note by reason of difference in time of issuance or otherwise, and for the
benefit of the Note Insurer to secure (x) the payment of all amounts due on the
Notes in accordance with their terms, (y) the payment of all other sums payable
under this Indenture and (z) compliance with the provisions of this Indenture,
all as provided in this Indenture.
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required in order that, and for the purpose that, the
interests of the Holders of the Notes may be adequately and effectively
protected. The Indenture Trustee agrees that it will hold the MBIA Insurance
Policy in trust and that it will hold any proceeds of any claim upon the MBIA
Insurance Policy, solely for the use and benefit of the Noteholders in
accordance with the terms hereof and the MBIA Insurance Policy.
In connection with the Grant set forth above, the Issuer does hereby
deliver to, and deposit with the Custodian as the agent of the Indenture
Trustee, the Mortgage Files.
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL DEFINITIONS. Except as otherwise specified or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Indenture, including the Preliminary
Statement and the Granting Clause, and the definitions of such terms are
applicable to the singular as well as to the plural forms of such terms and to
the masculine as well as to the feminine genders of such terms. Whenever
reference is made herein to an Event of Default or a Default known to the
Indenture Trustee or of which the Indenture Trustee has notice or knowledge,
such reference shall be construed to refer only to an Event of Default or
Default of which the Indenture Trustee is deemed to have notice or knowledge
pursuant to Section 6.01(d).
"A Risk Mortgage Loans": Mortgage Loans graded in the "A" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"A- Risk Mortgage Loans": Mortgage Loans graded in the "A-" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"Accountant": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Issuer or an Affiliate of the Issuer.
"Act": With respect to any Noteholder, as defined in Section 11.03.
"Addition Notice": With respect to the transfer of Additional
Mortgage Loans to the Trust Estate pursuant to Section 2.14 of this Indenture, a
notice, which shall be given prior to the related Additional Transfer Date, of
the Issuer's designation of Additional Mortgage Loans being Granted to the
Indenture Trustee for inclusion in the Trust Estate.
2
<PAGE>
"Additional Cut-off Date": With respect to any Additional Mortgage
Loan which is transferred and assigned to the Indenture Trustee pursuant to an
Additional Transfer Instrument, the close of business on the related Additional
Transfer Date.
"Additional Mortgage Loans": The Mortgage Loans Granted by the
Issuer to the Indenture Trustee pursuant to Section 2.14, such Mortgage Loans
being identified on the related Mortgage Loan Schedules attached to the related
Additional Transfer Instruments.
"Additional Transfer Date": Each date on which an Additional
Mortgage Loan is Granted to the Indenture Trustee, none of which dates shall be
later than March 11, 1999.
"Additional Transfer Instrument": Each Additional Transfer
Instrument dated as of an Additional Transfer Date executed by the Indenture
Trustee and the Issuer substantially in the form of Exhibit E to the Custodial
Agreement, by which Additional Mortgage Loans are Granted to the Indenture
Trustee.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan, with respect to
which the Coupon Rate adjusts from time-to-time as provided in the related
Mortgage Note and designated as an adjustable-rate Mortgage Loan on the Mortgage
Loan Schedule.
"Adjustment Date": With respect to each Adjustable-Rate Mortgage
Loan, each Adjustment Date, which is the first day of the month in which the
Coupon Rate of an Adjustable-Rate Mortgage Loan changes pursuant to the related
Mortgage Note. The first Adjustment Date following the Cut-off Date as to each
Adjustable-Rate Mortgage Loan is set forth in the Mortgage Loan Schedule.
"Administrative Fee Amount": For each Group and any Payment Date,
the sum of the related Servicing Fee, the related Indenture Trustee's Fee and
the Note Insurer Premium and allocable to such Group, each relating to such
Payment Date.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract, relation to individuals or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent": Any Note Registrar, Paying Agent, Authenticating Agent or
Custodian.
"Aggregate Scheduled Principal Balance": On any date of
determination, the aggregate of the Scheduled Principal Balances of the Mortgage
Loans and REO Properties in Group I, Group II or the Trust Estate, as applicable
on such date.
"Aggregate Stated Principal Balance": On any date of determination,
the aggregate of the Stated Principal Balances of the Mortgage Loans and REO
Properties in Group I, Group II or the Trust Estate, as applicable on such date.
3
<PAGE>
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Issuer pursuant to Section 6.14, until any successor
Authenticating Agent for the Notes is named, and thereafter "Authenticating
Agent" shall mean such successor. The initial Authenticating Agent shall be the
Indenture Trustee. Any Authenticating Agent other than the Indenture Trustee
shall sign an instrument under which it agrees to be bound by all of the terms
of this Indenture applicable to the Authenticating Agent.
"Authorized Officer": With respect to the Indenture Trustee, any
Responsible Officer in the case of the Owner Trustee, the President, any Vice
President, Financial Services Officer or Trust Officer, or any other officer or
employee of the Owner Trustee who has been authorized by the Owner Trustee's
board of directors or by-laws to act for the Owner Trustee with respect to the
Issuer, and with respect to any other Person, the Chairman, Chief Operating
Officer, President or any Vice President of such Person.
"Available Funds": With respect to a Group and any Payment Date, the
sum of the amounts described in clauses (a) through (h) below, together with
amounts from the Reserve Account for the benefit of such Group on such Payment
Date, less (i) the Administrative Fee Amount for such Group in respect of such
Payment Date, (ii) P&I Advances and Servicing Advances for such Group previously
made that are reimbursable to the Servicer (other than those included in
liquidation expenses for any Liquidated Mortgage Loan in such Group and
reimbursed from the related Liquidation Proceeds) with respect to the related
Collection Period to the extent permitted by the Servicing Agreement, (iii) the
aggregate amounts (A) deposited into the Collection Account or Note Account and
allocable to the related Group that may not be withdrawn therefrom pursuant to a
final and nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the Bankruptcy Code and
that would otherwise have been included in Available Funds on such Payment Date
and (B) received by the Indenture Trustee that are recoverable and sought to be
recovered from the Issuer as a voidable preference by a trustee in bankruptcy
pursuant to the Bankruptcy Code in accordance with a final nonappealable order
of a court of competent jurisdiction, (iv) any Stayed Funds and , (v) any
amounts reimbursable to the Indenture Trustee to the extent appointed as
successor servicer for an advance made pursuant to Section 5.02(b) of the
Servicing Agreement, which advance the Indenture Trustee has determined to be
nonrecoverable from the Stayed Funds in respect of which it was made (without
duplication of any such amount not constituting a portion of Remittable Funds).
(a) all scheduled payments of interest received with respect to the
Mortgage Loans in such Group and due during the related Due Period and all
other interest payments on or in respect of the Mortgage Loans in such
Group received by or on behalf of the Servicer during the related
Collection Period (including Payments Ahead that are allocable to interest
for the related Due Period), net of amounts representing interest accrued
on such Mortgage Loans in respect of any period prior to the applicable
Cut-off Dates, plus any Compensating Interest Payments made by the
Servicer in respect of the
4
<PAGE>
related Mortgage Loans and any net income from related REO Properties for
such Collection Period;
(b) all scheduled payments of principal received with respect to the
Mortgage Loans in such Group and due during the related Due Period and all
other principal payments (including Principal Prepayments, but excluding
amounts described elsewhere in this definition) received or deemed to be
received during the related Collection Period (including Payments Ahead
that are allocable as principal for the related Due Period) in respect of
the related Mortgage Loans;
(c) the aggregate of any related Insurance Proceeds collected by the
Servicer during the related Collection Period with respect to Mortgaged
Property securing a Mortgage Loan in such Group;
(d) the aggregate of any related Net Liquidation Proceeds collected
by the Servicer during the related Collection Period with respect to
Mortgaged Property securing a Mortgage Loan in such Group;
(e) the aggregate of the Purchase Prices received with respect to
Mortgaged Property securing a Mortgage Loan in such Group that are
required or permitted to be repurchased, released, removed or substituted
by any of RBMG, Funding Co., the Company, the Depositor or the Issuer
during or in respect of the related Collection Period, to the extent such
amounts are received by the Indenture Trustee on or before the related
Servicer Remittance Date;
(f) the amount of any P&I Advances with respect to such Group made
by the Servicer for such Payment Date;
(g) the aggregate of amounts deposited in the related Note Account
during such Collection Period in connection with redemption of the Notes
pursuant to Article X; and
(h) with respect to each Group and the January 1999, February 1999
and March 1999 Payment Dates only, the amount applied by the Indenture
Trustee from funds on deposit in the Interest Coverage Account with
respect to each Group to cover shortfalls in the amount of Note Interest
and Note Insurer Premium due on such Payment Date.
"Available Funds Cap Rate": For a Class of Notes and any Payment
Date is a rate per annum equal to a fraction, expressed as a percentage, the
numerator of which is (i) an amount equal to (A) 1/12 of the Aggregate Scheduled
Principal Balance of the then outstanding Mortgage Loans and REO Properties in
the related Group multiplied by the weighted average of the Expense Adjusted
Coupon Rates on the then outstanding Mortgage Loans and REO Properties in the
related Group minus (B) the amount of the Note Insurer Premium allocable to the
related Group for such Payment Date, and the denominator of which is (ii) an
amount equal to (x) the Note Balance of the related Class on such Payment Date
multiplied by (y) the actual number of days elapsed in the related Interest
Period divided by 360.
5
<PAGE>
"Available Funds Cap Rate Carry Forward Amount": For a Class of
Notes and any Payment Date for which the related Note Interest Rate was equal to
the related Available Funds Cap Rate, the difference between the amount of Note
Interest that would have accrued had the related Note Interest Rate equaled the
related Note Formula Rate, minus the amount of Note Interest that did accrue for
such Class and Payment Date, plus interest accrued on such difference from such
Payment Date at the related Note Interest Rate for each successive Interest
Period to but excluding the Payment Date on which such amount, with interest, is
paid in full.
"B Risk Mortgage Loans": Mortgage Loans graded in the "B" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"B- Risk Mortgage Loans": Mortgage Loans graded in the "B-" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.
"Basic Documents": This Agreement, the Trust Agreement, the
Servicing Agreement, the Company Sale Agreement, the Funding Co. Sale Agreement,
the Depositor Sale Agreement, the Sub-Servicing Agreement, the Management
Agreement, the Loan Contribution Agreement, the Custodial Agreement, the
Insurance Agreement and the Indemnification Agreement.
"Beneficial Owner": With respect to a Book-Entry Note, the Person
who is the beneficial owner of such Note as reflected on the books of the
Clearing Agency for the Notes or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Best Efforts": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, in its reasonable
discretion. Such efforts do not require such Person to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require such Person to advance or expend fees or sums of money in addition to
those specifically set forth in this Indenture and the Servicing Agreement.
"Book-Entry Notes": Any Notes registered in the name of the Clearing
Agency or its nominee, ownership of which is reflected on the books of the
Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (directly or as an indirect participant in accordance with the
rules of such Clearing Agency).
"Book-Entry Custodian": The custodian appointed pursuant to Section
2.12 (c)
"Book-Entry Termination": The time at which the book-entry
registration of the Book-Entry Notes shall terminate, as specified in Section
2.13.
"Business Day": Any day other than (i) a Saturday or Sunday or (ii)
a day on which banking institutions in the State of Nevada, the State of New
York, the State of New Jersey, the State of South Carolina, the State of
Delaware, or the city in which the Corporate
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Trust Office of the Indenture Trustee or in which the Note Insurer's principal
office is located are authorized or obligated by law, regulation, executive
order or governmental decree to be closed.
"C Risk Mortgage Loans": Mortgage Loans graded in the "C" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which were more than $1000 in excess of the principal balance of any existing
first mortgage or subordinate mortgage on the related Mortgaged Property and
related closing costs, and any consumer debt of the borrower that was paid at
closing.
"Cedel": Cedel, Societe anonyme.
"Certificate": As defined in the Trust Agreement.
"Certificate Distribution Account": As defined in the Trust
Agreement.
"Certificateholders": As defined in the Trust Agreement.
"Class": The Class A-1 Notes or the Class A-2 Notes as applicable.
"Class A-1 Aggregate O/C Surplus Amount": As defined in Section
8.18(c)(i) of this Indenture.
"Class A-1 Available Funds": Available Funds with respect to the
Class A-1 Notes.
"Class A-1 Available Funds Cap Rate Carry-Forward Amount": The
Available Funds Cap Rate Carry-Forward Amount with respect to the Class A-1
Notes.
"Class A-1 Cash O/C Amount": As defined in Section 8.18 (a) of this
Indenture.
"Class A-1 Monthly Principal Available": The Monthly Principal
Available with respect to the Class A-1 Notes.
"Class A-1 Noteholder": A Holder of a Class A-1 Note.
"Class A-1 Note Interest": The Note Interest payable with respect to
the Class A-1 Notes.
"Class A-1 Notes": The RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset Backed Notes, Series 1998-2, Class A-1.
"Class A-1 Overcollateralization Amount": The Overcollateralization
Amount with respect to the Class A-1 Notes.
"Class A-1 Overcollateralization Deficit": The Overcollateralization
Deficit with respect to the Class A-1 Notes.
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"Class A-1 Overcollateralization Surplus": As defined in Section
8.18(d)(i) of this Indenture.
"Class A-1 Required Overcollateralization Amount": The Required
Overcollateralization Amount with respect to the Class A-1 Notes.
"Class A-2 Aggregate O/C Surplus Amount": As defined in Section
8.18(c)(ii) of this Indenture.
"Class A-2 Available Funds": Available Funds with respect to the
Class A-2 Notes.
"Class A-2 Available Funds Cap Rate Carry-Forward Amount": The
Available Funds Cap Rate Carry-Forward Amount with respect to the Class A-2
Notes.
"Class A-2 Cash O/C Amount": As defined in Section 8.18 (a) of this
Indenture.
"Class A-2 Monthly Principal Available": The Monthly Principal
Available with respect to the Class A-2 Notes.
"Class A-2 Noteholder": A Holder of a Class A-2 Note.
"Class A-2 Note Interest": The Note Interest payable with respect to
the Class A-2 Notes.
"Class A-2 Notes": The RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset Backed Notes, Series 1998-2, Class A-2.
"Class A-2 Overcollateralization Amount": The Overcollateralization
Amount with respect to the Class A-2 Notes.
"Class A-2 Overcollateralization Deficit": The Overcollateralization
Deficit with respect to the Class A-2 Notes.
"Class A-2 Overcollateralization Surplus": As defined in Section
8.18(d)(ii) of this Indenture.
"Class A-2 Required Overcollateralization Amount": The Required
Overcollateralization Amount with respect to the Class A-2 Notes.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder and shall initially be The
Depository Trust Company, the nominee of which is Cede & Co.
"Clearing Agency Participants": The entities for whom the Clearing
Agency will maintain book-entry records of ownership and transfer of Book-Entry
Notes, which may include
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securities brokers and dealers, banks and trust companies and clearing
corporations and certain other organizations.
"Closing Date": December 11, 1998, the date of initial issuance of
the Notes.
"Code": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, as successor statutes thereto, and applicable
U.S. Department of Treasury regulations issued pursuant thereto in temporary or
final form and proposed regulations thereunder to the extent that, by reason of
their proposed effective date, such proposed regulations would apply.
"Collection Account": As defined in the Servicing Agreement.
"Collection Period": With respect to each Class of Notes and any
Payment Date and any Mortgage Loan, the calendar month immediately preceding the
month in which such Payment Date occurs (or, in the case of the first Payment
Date after a Mortgage Loan constitutes part of the Trust Estate, the period
beginning on the day following the applicable Cut-off Date for such Mortgage
Loan through and including the last day of the month prior to the month in which
such Payment Date occurs).
"Commission": The Securities and Exchange Commission, as from time
to time constituted, or if at any time such Commission is not existing and
performing the duties now assigned to it, then the body performing such duties
at such time.
"Company": RBMG Asset Management Company, Inc., a Nevada
corporation, or its successor in interest.
"Company Sale Agreement": That certain Loan Sale Agreement, dated as
of December 1, 1998, between Funding Co. and the Company pursuant to which the
Mortgage Loans will be acquired from the Company by Funding Co.
"Compensating Interest Payments": As defined in the Servicing
Agreement.
"Corporate Trust Office": The principal office of the Indenture
Trustee at which at any particular time its corporate trust business with
respect to this Indenture shall be principally administered, which office at the
date of the execution of this Indenture is located at 101 Barclay Street, 12th
Floor, New York, New York 10268 or such other address as the Indenture Trustee
may designate from time to time by notice to the Noteholders, the Issuer, the
Servicer and the Note Insurer.
"Coupon Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (i) in the case of
each Mortgage Loan other than an Adjustable-Rate Mortgage Loan shall remain
constant at the rate set forth in the Mortgage Loan Schedule as the Coupon Rate
in effect immediately following the Cut-off Date and (ii) in the case of each
Adjustable-Rate Mortgage Loan, (A) as of any date of determination until the
first Adjustment Date following the applicable Cut-off Date, shall be the rate
set forth in the Mortgage Loan Schedule as the Coupon Rate in effect immediately
following the applicable Cut-
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off Date and (B), as of any date of determination thereafter, shall be the rate
as adjusted on the most recent Adjustment Date, to equal the sum, rounded to the
nearest 0.125% as provided in the Mortgage Note, of the Index, as most recently
available as of a date prior to the Adjustment Date as set forth in the related
Mortgage Note, plus the related Gross Margin; PROVIDED that the Coupon Rate on
such Mortgage Loan on any Adjustment Date shall never be more than the lesser of
(i) the sum of the Coupon Rate in effect immediately prior to the Adjustment
Date plus the related Periodic Rate Cap, if any, and (ii) the related Maximum
Rate, and shall never be less than the greater of (x) the Coupon Rate in effect
immediately prior to the Adjustment Date less the Periodic Rate Cap, if any, and
(y) the related Minimum Rate. With respect to each Mortgage Loan that becomes an
REO Property, as of any date of determination, the annual rate determined in
accordance with the immediately preceding sentence as of the date such Mortgage
Loan became an REO Property.
"Crossover Amount": With respect to a Class of Notes and any Payment
Date, the amount withdrawn from the Note Account for the other Class and
deposited to the Note Account with respect to the first Class, pursuant to
clauses (i), (iii) and (iv) of Section 8.02(c) hereof on such Payment Date.
"Cumulative Insured Payments": As of any time of determination, the
aggregate amount of all Insured Payments previously made by the Note Insurer
under the MBIA Insurance Policy plus interest thereon from the date such amount
became due until paid in full, at a rate of interest calculated as provided in
the Insurance Agreement minus the sum of all payments previously made to the
Note Insurer pursuant to Section 8.02 hereof as reimbursement for such amounts.
"Custodial Agreement": The agreement between the Indenture Trustee
and a Custodian appointed pursuant to Section 8.15 and one or more other
parties. As of the Closing Date, the Custodial Agreement, is that certain
Custodial Agreement, dated as of December 1, 1998, among the Issuer, the
Indenture Trustee, LaSalle National Bank, as Custodian, and the Servicer, as may
be amended from time to time.
"Custodian": A Person who is at any time appointed by the Indenture
Trustee pursuant to Section 8.15 as a document custodian for the Mortgage Files,
which Person shall not be the Issuer or an Affiliate of the Issuer. As of the
Closing Date, the Custodian is LaSalle National Bank, having an address at 135
South LaSalle Street, Chicago, Illinois 60674-4107.
"Cut-off Date": With respect to an Initial Mortgage Loan, the
Initial Cut-off Date, with respect to an Additional Mortgage Loan, the related
Additional Cut-off Date, and with respect to the Qualified Substitute Mortgage
Loans, their respective dates of substitution.
"Cut-off Date Mortgage Loan": Any Initial Mortgage Loan.
"D Risk Mortgage Loans": Mortgage Loans graded in the "D" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"Default": Any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
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"Defective Mortgage Loan": Any Mortgage Loan that is required to be
repurchased or substituted by the Issuer, the Company, Funding Co., the
Depositor or RBMG.
"Deficiency Event": The inability of the Indenture Trustee to remit
the Insured Payment on any Payment Date due to a shortage of funds for such
purpose then held in the Note Account and the failure of the Note Insurer to pay
in full a claim made in accordance with the MBIA Insurance Policy with respect
to such Payment Date.
"Deficient Valuation": As defined in the Servicing Agreement.
"Definitive Notes": Notes other than Book-Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a Qualified Replacement Mortgage Loan.
"Delinquency Amount": As of any Payment Date, the product of the
Delinquency Percentage and the Aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties in the related Group as of the Determination
Date relating to such Payment Date.
"Delinquency Loss Factor": With respect to each Group and as of any
Payment Date, the sum of (i) the Aggregate Stated Principal Balance of all
Mortgage Loans in such Group 30-59 days delinquent multiplied by 10.75%, (ii)
the Aggregate Stated Principal Balance of all Mortgage Loans in such Group 60-89
days delinquent multiplied by 21.50% and (iii) the Aggregate Stated Principal
Balance of all Mortgage Loans in such Group 90 or more days delinquent
multiplied by 43%.
"Delinquency Percentage": With respect to each Group and any Payment
Date, the fraction expressed as a percentage, the numerator of which is (x) the
sum of the aggregate Stated Principal Balance of (i) all related Mortgage Loans
90 or more days delinquent on a contractual basis (including those in
bankruptcy) plus (ii) related Mortgage Loans in foreclosure, plus all Mortgage
Loans purchased pursuant to Section 2.15(c) of the Servicing Agreement for so
long as such related Mortgage Loans are 90 days delinquent plus (iv) related
Mortgage Loans converted to REO Properties, and the denominator of which is (y)
the then Aggregate Stated Principal Balance of the related Mortgage Loans.
"Depositor": Residential Asset Funding Corporation, a North Carolina
corporation, and its successors and permitted assigns.
"Depositor Sale Agreement": That certain Loan Sale Agreement, dated
as of December 1, 1998, between the Depositor and the Issuer, pursuant to which
the Mortgage Loans will be acquired from the Depositor by the Issuer for
inclusion in the Trust Estate.
"Determination Date": As to any Payment Date, the fifteenth (15th)
day of the month in which such Payment Date occurs, or if such fifteenth day is
not a Business Day, the immediately preceding Business Day.
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"Due Date": With respect to each Payment Date, the first day of the
calendar month in which such Payment Date occurs, which is the day of the month
on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of
grace.
"Due Period": With respect to any Payment Date, the period
commencing on the second day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs (or, with respect to the first
Payment Date after a Mortgage Loan constitutes part of the Trust Estate,
commencing the day following the applicable Cut-off Date for such Mortgage Loan)
and ending on the first day of the calendar month in which such Payment Date
occurs.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
long-term unsecured debt obligations of which shall be rated "AA" or better by
Standard & Poor's and "Aa2" or better by Moody's and in the highest short term
rating category by Standard & Poor's and Moody's, and that is either (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the Note
Insurer or (B) a segregated account maintained with the trust department of a
federal or state chartered depository institution or trust company acceptable to
each Rating Agency and the Note Insurer, having capital and surplus of not less
than $100,000,000, acting in its fiduciary capacity, the long-term unsecured
debt obligations of which shall be rated "Baa3" or better by Moody's or (C) a
segregated account or accounts the deposits in which are fully insured by the
FDIC (to the limits established by such corporation), the uninsured deposits in
which account are otherwise secured such that the Noteholders will have a claim
with respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or general creditors of the depository institution with which such
account is maintained. Any Eligible Accounts maintained with the Indenture
Trustee shall conform to the preceding clause (B).
"Euroclear": Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Event of Default": As defined in Section 5.01.
"Excess Cash": With respect to a Group and any Payment Date, the
amount, if any, by which Available Funds for such Group and Payment Date exceed
the sum of (i) any amounts payable to the Note Insurer for Insured Payments with
respect to either Group paid on prior Payment Dates and not yet reimbursed and
for any unpaid Note Insurer Premiums for such Group on prior Payment Dates (in
each case with interest thereon at the "Late Payment Rate" (as defined in the
Insurance Agreement)) (and to the extent not covered by Available Funds for the
other Group, such amounts with respect to the other Group), (ii) the Note
Interest for the related Class and Payment Date (and to the extent not covered
by Available Funds for the other Group, the available portion of such amounts
with respect to the other Group), (iii) an amount equal to
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the Overcollateralization Deficit for the other Class, and (iv) the Monthly
Principal for the related Class and Payment Date.
"Excess Cash Payment": As defined in clause fourth of Section
8.02(c).
"Expense Adjusted Coupon Rate": With respect to any Mortgage Loan,
the then applicable Coupon Rate thereon minus the sum of (i) the Minimum Spread
and (ii) the Servicing Fee Rate.
"FDIC": The Federal Deposit Insurance Corporation and its successors
in interest.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Certification": A certification as to the completeness of
each Mortgage File provided by the Indenture Trustee, or a Custodian on its
behalf, on or before the 270th day after the Closing Date pursuant to Section
6.15(b) hereof and Section 6(b) of the Custodial Agreement substantially in the
form of Exhibit B-2 to the Custodial Agreement.
"Final Maturity Date": The Payment Date in April 2030.
"First Mortgage Loan": A Mortgage Loan which constitutes a first
priority mortgage lien with respect to any Mortgaged Property.
"FNMA": The Federal National Mortgage Association or any successor
thereto.
"Full Prepayment": With respect to any Mortgage Loan, when any one
of the following occurs: (i) payment is made by the Mortgagor to the Servicer of
100% of the outstanding principal balance of such Mortgage Loan, together with
all accrued and unpaid interest thereon at the Coupon Rate on such Mortgage
Loan, (ii) payment is made to the Indenture Trustee of the Purchase Price of
such Mortgage Loan in connection with the purchase of such Mortgage Loan by
RBMG, the Company, the Depositor, Funding Co. or the Servicer or (iii) payment
is made to the Servicer of all Insurance Proceeds and Liquidation Proceeds, and
other payments, if any, that have been determined by the Servicer in accordance
with the provisions of the Servicing Agreement to be finally recoverable, in the
Servicer's reasonable judgment, in respect of such Mortgage Loan.
"Funding Co. ": RBMG Funding Co., a Nevada corporation.
"Funding Co. Sale Agreement": That certain Loan Sale Agreement,
dated as of December 1, 1998, between the Depositor and Funding Co., pursuant to
which the Mortgage Loans will be acquired from Funding Co. by the Depositor.
"Funding Period": The period beginning on the Closing Date and
ending on the earlier of the date on which (a) the amount on deposit in the
Pre-Funding Account is zero or (b) the close of business on March 11, 1998.
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"Grant": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Mortgage Loan
and related Mortgage Files, a Permitted Investment, the Servicing Agreement, the
Company Sale Agreement, the Funding Co. Sale Agreement, the Loan Contribution
Agreement, an Insurance Policy or any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder (except as otherwise specified in the Granting Clause), including
without limitation the immediate and continuing right to claim for, collect,
receive and give receipts for principal and interest payments thereunder,
insurance proceeds, purchase prices and all other moneys payable thereunder and
all proceeds thereof, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise, and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Gross Margin": With respect to each Adjustable-Rate Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Coupon Rate for such Mortgage Loan.
"Group": Group I or Group II, as the case may be.
"Group I": The group of Mortgage Loans pledged to the Indenture
Trustee and assigned to Group I, as reflected on the Mortgage Loan Schedule.
"Group I Initial Mortgage Loan": The Group I Mortgage Loans as of
the close of business on the Initial Cut-Off Date.
"Group I Mortgage Loans": The Mortgage Loans assigned to Group I.
"Group II": The group of Mortgage Loans pledged to the Indenture
Trustee and assigned to Group II, as reflected on the Mortgage Loan Schedule.
"Group II Initial Mortgage Loan": The Group II Mortgage Loans as of
the close of business on the Initial Cut-Off Date.
"Group II Mortgage Loans": The Mortgage Loans assigned to Group II.
"Group I Original Pre-Funding Amount": The amount deposited by the
Issuer in the related Pre-Funding Account on the Closing Date, which amount is
$26,756,291.05.
"Group II Original Pre-Funding Amount": The amount deposited by the
Issuer in the related Pre-Funding Account on the Closing Date, which amount is
$15,488,838.26.
"Highest Lawful Rate": As defined in Section 11.19.
"Indenture": This Indenture, dated as of December 1, 1998, between
the Issuer and the Indenture Trustee, as originally executed and, if from time
to time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable
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provisions hereof, as so supplemented or amended. All references in this
instrument to designated "Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this instrument as originally executed. The words "herein",
"hereof", "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.
"Indenture Trustee": The Bank of New York, a New York banking
corporation, and any Person resulting from or surviving any consolidation or
merger to which it may be a party until a successor Person shall have become the
Indenture Trustee pursuant to the applicable provisions of this Indenture, and
thereafter "Indenture Trustee" shall mean such successor Person.
"Indenture Trustee's Fee": With respect to each Class of Notes, the
Indenture Trustee's monthly fee, equal to 1/12th of 0.015% of the Aggregate
Stated Principal Balance of the Mortgage Loans in the related Group as of the
first day of the related Due Period.
"Independent": When used with respect to any specified Person means
such a Person who (i) is in fact independent of the Issuer, RBMG, Funding Co.,
the Sub-Servicer, the Company, the Servicer and any other obligor upon the
Notes, (ii) does not have any direct financial interest or any material indirect
financial interest in the Issuer, RBMG, Funding Co., the Sub-Servicer, the
Company, the Servicer or in any such other obligor or in an Affiliate of the
Issuer, RBMG, Funding Co., the Sub-Servicer, the Company, the Servicer or such
other obligor, and (iii) is not connected with the Issuer, RBMG, Funding Co.,
the Sub-Servicer, the Company, the Servicer or any such other obligor as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions; PROVIDED, HOWEVER, that a Person shall not fail to
be Independent of the Issuer, RBMG, Funding Co., the Sub-Servicer, the Company
or the Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any class of securities issued by the Issuer,
RBMG, Funding Co., the Sub-Servicer, the Company or the Servicer or any
Affiliate thereof, as the case may be. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Indenture
Trustee, such Person shall be appointed by an Issuer Order and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning hereof.
"Index": With respect to each Adjustable-Rate Mortgage Loan and each
related Adjustment Date, the average of the interbank offered rates for
six-month United States dollar deposits in the London market as published in THE
WALL STREET JOURNAL and as most recently available either (i) as of the first
business day 45 days prior to such Adjustment Date or (ii) as of the first
business day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note.
"Individual Note": A Note of an original principal amount of $1,000
(PROVIDED, HOWEVER, one Note may be less than that amount); a Note of an
original principal amount in excess of $1,000 shall be deemed to be a number of
Individual Notes equal to the quotient obtained by dividing such original
principal amount by $1,000.
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"Initial Certification": A certification as to the completeness of
each Mortgage File provided by the Indenture Trustee, or a Custodian on its
behalf, on the Closing Date or each Additional Transfer Date pursuant to Section
6.15(a) hereof and Section 6(a) of the Custodial Agreement, substantially in the
form of Exhibit B-1 to the Custodial Agreement.
"Initial Cut-off Date": For any Initial Mortgage Loan, December 1,
1998.
"Initial Mortgage Loans": The Mortgage Loans listed on the Mortgage
Loan Schedule annexed hereto as Schedule I and identified therein as "Initial".
"Indemnification Agreement": As defined in the Insurance Agreement.
"Insurance Agreement": The Insurance Agreement, dated as of December
1, 1998, among the Note Insurer, the Issuer, the Servicer, the Sub-Servicer, the
Company, the Depositor, First Union Corporation, Funding Co., RBMG and the
Indenture Trustee, as may be amended from time to time.
"Insurance Policies": All insurance policies insuring any Mortgage
Loan or Mortgaged Property, to the extent the Issuer or the Indenture Trustee
has any interest therein.
"Insurance Proceeds": As defined in the Servicing Agreement.
"Insured Payments": As to any Payment Date, and with respect to
either Class of Notes, the amount required to be paid by the Note Insurer under
the MBIA Insurance Policy pursuant to a Notice of Claim presented by the
Indenture Trustee (in the manner described in Section 8.05). The Insured Payment
for a Class of Notes is (a) for any Payment Date, the sum of (i) the Note
Interest for the related Class for such Payment Date minus the Total Available
Funds for the related Class for such Payment Date; (ii) the then existing
Overcollateralization Deficit for the related Class, if any (after application
of the Total Available Funds for the related Class for such Payment Date to
reduce the Note Balance for the related Class on such Payment Date) and (b) any
shortfall in the amount required to pay a Preference Amount for the related
Class from any source other than the MBIA Insurance Policy.
"Interest Coverage Account": The account, which shall be an Eligible
Account, established and maintained pursuant to Section 8.04 and entitled "The
Bank of New York, as Indenture Trustee for RBMG Funding Co. Mortgage Loan Trust
1998-2 Asset-Backed Notes, Series 1998-2, Class A-1 Interest Coverage Account"
or "The Bank of New York, as Indenture Trustee for RBMG Funding Co. Mortgage
Loan Trust 1998-2 Asset-Backed Notes, Series 1998-2, Class A-2 Interest Coverage
Account" on behalf of the Noteholders of the related Class of Notes and the Note
Insurer.
"Interest Coverage Amount": The amount deposited by the Issuer in
the Interest Coverage Account on the Closing Date, which amount is $477,145.57
with respect to the Class A-1 Notes and $ 289,027.31 with respect to the Class
A-2 Notes.
"Interest Determination Date": With respect to any Interest Period
after the first Interest Period, the second London Business Day immediately
preceding the first day of such Interest Period.
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"Interest Period": With respect to the first Payment Date, the
period beginning on the Closing Date and ending on the day preceding the Payment
Date in January 1999 and, as to any subsequent Payment Date, the period
beginning on the immediately preceding Payment Date and ending on the day prior
to the related Payment Date.
"Interim Certification": A certification as to the completeness of
each Mortgage File provided by the Indenture Trustee, or a Custodian on its
behalf, pursuant to Section 6.15(b) hereof and Section 6(b) of the Custodial
Agreement substantially in the form of Exhibit B-2 to the Custodial Agreement.
"Issuer": RBMG Funding Co. Mortgage Loan Trust 1998-2, a Delaware
business trust.
"Issuer Order" and "Issuer Request": A written order or request of
the Issuer signed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee and delivered to the Indenture Trustee or the Authenticating Agent, as
applicable.
"Letter Agreement": The Letter of Representations to The Depository
Trust Company from the Indenture Trustee and the Issuer dated December 11, 1998.
"Liquidated Mortgage Loan": As defined in the Servicing Agreement.
"Liquidation Date": With respect to any Mortgage Loan, the date of
the final receipt of all Liquidation Proceeds, Insurance Proceeds or other
payments with respect to such Mortgage Loan.
"Liquidation Event": As defined in the Servicing Agreement.
"Liquidation Proceeds": As defined in the Servicing Agreement.
"Loan Contribution Agreement": That certain Loan Contribution
Agreement, dated as of December 1, 1998, between the Company and RBMG, pursuant
to which the Mortgage Loans will be acquired from RBMG by the Company.
"Loan-To-Value Ratio": With respect to any Mortgage Loan as of any
date of determination, the fraction, expressed as a percentage, the numerator of
which is the principal balance of the related Mortgage Loan as of such date and
the denominator of which is the Value of the related Mortgaged Property.
"London Business Day": A Business Day on which banks are open for
dealing in foreign currency and exchange in London and New York City.
"Majority Certificateholder": The holder of the majority interest in
the Certificate, which as of the Closing Date is Funding Co.
"Management Agreement": That certain Management Agreement, dated as
of December 1, 1998, among the Issuer, the Manager and RBMG Asset Management
Company, Inc., as may be amended from time to time.
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"Manager": Resource Bancshares Mortgage Group, Inc., a Delaware
corporation, its successors and permitted assigns.
"Maturity": With respect to any Note, the date on which the entire
unpaid principal amount of such Note becomes due and payable as therein or
herein provided, whether at the Final Maturity Date or by declaration of
acceleration, call for redemption or otherwise.
"Maximum Rate": With respect to each Mortgage Loan, the percentage
set forth in the related Mortgage Note as the maximum Coupon Rate thereunder.
"MBIA Insurance Policy": The financial guaranty insurance policy
(No. 28167), dated December 11, 1998, issued by the Note Insurer to the
Indenture Trustee for the benefit of the Noteholders, pursuant to which the Note
Insurer guarantees payment of Insured Payments.
"MBIA Payment Default": Failure and continued failure by the Note
Insurer to make an Insured Payment required under the MBIA Insurance Policy in
accordance with its terms.
"Minimum Rate": With respect to each Mortgage Loan, the percentage
set forth in the related Mortgage Note as the minimum Coupon Rate thereunder.
"Minimum Spread": With respect to each Group and Payment Date
occurring from the Closing Date through and including the twelfth Payment Date
after the Closing Date, 0.00% per annum. With respect to each Payment Date
occurring after the twelfth Payment Date, 0.50% per annum.
"Monthly Payment": With respect to any Mortgage Note, the amount of
each scheduled monthly payment of principal and interest payable from time to
time under such Mortgage Note by the Mortgagor in accordance with its terms,
including one month's accrued interest on the related Scheduled Principal
Balance at the then applicable Coupon Rate, but net of any portion of such
monthly payment that represents late payment charges, prepayment or extension
fees or collections allocable to payments to be made by Mortgagors for payment
of insurance premiums or similar items.
"Monthly Principal": For each Class of Notes and any Payment Date,
the excess of (i) the Monthly Principal Available for such Class and Payment
Date over (ii) the Overcollateralization Surplus for such Class and Payment
Date.
"Monthly Principal Available": For each Class of Notes and any
Payment Date, an amount equal to the lesser of: (a) the excess of (i) the
Available Funds in the related Note Account, over (ii) the amounts payable
pursuant to Section 8.02(c)(i), (ii), (iii) and (iv) and, (b) the aggregate of
(i) all scheduled payments of principal received (or advanced or to be advanced
on the related Servicer Remittance Date) with respect to the Mortgage Loans in
the related Group and due during the related Due Period and all other amounts
collected, received or otherwise recovered in respect of principal on such
Mortgage Loans (including Principal Prepayments, but not including Payments
Ahead that are not allocable to principal for the related Due Period) during or
in respect of the related Collection Period, and (ii) the aggregate of the
amounts allocable to principal deposited in the related Note Account on the
related Servicer
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Remittance Date by the Issuer, Funding Co., the Company, the Depositor, the
Servicer or the Note Insurer or RBMG in connection with a repurchase, release,
removal or substitution of any Mortgage Loans in the related Group pursuant to
this Indenture or the Servicing Agreement.
"Moody's": Moody's Investors Service, Inc. and its successors in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on an estate in fee simple in real property securing a Mortgage
Loan.
"Mortgage File": The mortgage documents listed in Section 3(b) of
the Depositor Sale Agreement pertaining to a particular Mortgage Loan and any
additional documents pertaining to a Mortgage Loan required to be delivered to
the Issuer under the Depositor Sale Agreement.
"Mortgage Loan": Each of the mortgage loans Granted to the Indenture
Trustee under this Indenture as security for the Notes and that from time to
time comprise part of the Trust Estate, including the Initial Mortgage Loans,
the Additional Mortgage Loans, the Qualified Replacement Mortgage Loans, and any
property that secures a Mortgage Loan that becomes REO Property.
"Mortgage Loan Schedule": As of any date, the schedule, provided in
computer readable format, of Mortgage Loans included in the Trust Estate.
Schedule I hereto identifies the Initial Mortgage Loans being Granted to the
Indenture Trustee on the Closing Date. The Issuer shall deliver the initial
Mortgage Loan Schedule to the Indenture Trustee in both physical and
computer-readable form.
The Mortgage Loan Schedule shall set forth the following information
with respect to each Mortgage Loan (and shall set forth such information
according to Group):
(i) RBMG's Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including
the state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the
applicable Cut-off Date based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
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(ix) the Coupon Rate in effect immediately following the
applicable Cut-off Date;
(x) (A) the date on which the first Monthly Payment was due on
the Mortgage Loan and, (B) if such date is not consistent with the Due
Date currently in effect, such Due Date;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal Balance;
(xiv) the original principal amount of the Mortgage Loan;
(xv) the Scheduled Principal Balance of the Mortgage Loan as
of the close of business on the applicable Cut-off Date;
(xvi) in the case of each Adjustable-Rate Mortgage Loan, the
Adjustment Dates;
(xvii) in the case of each Adjustable-Rate Mortgage Loan, the
Gross Margin;
(xviii) a code indicating the purpose of the Mortgage Loan
(i.e., purchase financing, Rate/Term Refinancing, Cash-Out Refinancing);
(xix) in the case of each Adjustable-Rate Mortgage Loan, the
Maximum Rate;
(xx) in the case of each Adjustable-Rate Mortgage Loan, the
Minimum Rate;
(xxi) the Coupon Rate at origination;
(xxii) in the case of each Adjustable-Rate Mortgage Loan, the
Periodic Rate Cap and the maximum first Adjustment Date Coupon Rate
adjustment;
(xxiii) a code indicating the documentation style (i.e., Full
Documentation, Limited Documentation or Stated Income Documentation);
(xxiv) a code indicating the originator;
(xxv) in the case of each Adjustable-Rate Mortgage Loan, the
first Adjustment Date immediately following the applicable Cut-off Date;
(xxvi) the risk grade;
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(xxvii) the Value of the Mortgaged Property;
(xxviii) the sale price of the Mortgaged Property, if
applicable;
(xxix) the actual unpaid principal balance of the Mortgage
Loan as of the applicable Cut-off Date;
(xxx) a code indicating whether there is a prepayment penalty;
(xxxi) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan;
(xxxii) the first payment date of the Mortgage Loan; and
(xxxiii) the first payment date of the Mortgage Loan
immediately succeeding the Cut-off Date.
The Mortgage Loan Schedule shall set forth the following information
as of the Initial Cut-off Date with respect to the Initial Mortgage Loans in the
aggregate in each Group: (1) the number of Mortgage Loans; (2) the current
principal balance of the Mortgage Loans; (3) the weighted average Coupon Rate of
the Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans.
The Mortgage Loan Schedule shall be amended from time to time by the Issuer upon
each Grant of an Additional Mortgage Loan or Qualified Replacement Mortgage Loan
to set forth the aforementioned information with respect to the Mortgage Loans
as of the applicable Additional Cut-off Date or Cut-off Date and the deletion of
Mortgage Loans.
"Mortgage Note": The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property.
"Mortgagor": The obligor under a Mortgage Note.
"Net Liquidation Proceeds": As defined in the Servicing Agreement.
"Nonrecoverable P&I Advance": As defined in the Servicing Agreement.
"Note Account": With respect to each Class of Notes, the segregated
trust account, which shall be an Eligible Account, established and maintained
pursuant to Section 8.02 and entitled "The Bank of New York, as Indenture
Trustee for RBMG Funding Co. Mortgage Loan Trust 1998-2 Asset-Backed Notes,
Series 1998-2, Class A-1 Note Account" or "The Bank of New York, as Indenture
Trustee for RBMG Funding Co. Mortgage Loan Trust 1998-2 Asset Backed Notes,
Series 1998-2, Class A-2 Note Account" on behalf of the Noteholders and the Note
Insurer.
"Note Balance": With respect to the Class A-1 or Class A-2 Notes
will be equal, as of any Payment Date, to the Original Note Balance of such
Class less all Monthly Principal
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and Excess Cash paid to the related Noteholders on previous Payment Dates to
reduce the Note Balance of such Class (exclusive, for the sole purpose of
effecting the Note Insurer's subrogation rights, of payments made by the Note
Insurer in respect of any Overcollateralization Deficit related to such Class of
Notes and such Payment Date under the Insurance Policy, except to the extent
reimbursed to the Note Insurer pursuant to Section 8.02(c) of this Indenture).
"Note Factor": With respect to each Class of Notes as of any Payment
Date, a fraction, expressed as a decimal carried to six places, the numerator of
which is the aggregate Outstanding Note Balance of the related Notes on such
Payment Date (after giving effect to any distributions of principal in reduction
of the aggregate Outstanding Note Balance of the related Notes to be made on
such Payment Date), and the denominator of which is the related Original Note
Balance.
"Noteholder" or "Holder": The Person in whose name a Note is
registered in the Note Register, except that, solely for the purpose of taking
any action under Section 5.02 or giving of any consent pursuant to this
Indenture, any Note registered in the name of the Issuer, the Company, the
Servicer, Funding Co., RBMG or the Depositor, or any Persons actually known by a
Responsible Officer of the Indenture Trustee to be an Affiliate of the Issuer,
the Company, the Servicer, Funding Co., RBMG or the Depositor shall be deemed
not to be Outstanding and the percentage interest evidenced thereby shall not be
taken into account in determining whether Holders of the requisite percentage
interests necessary to take any such action or effect any such consent have
acted or consented unless the Issuer, the Company, the Servicer, Funding Co.,
the Depositor, RBMG, or any such Person is an owner of record of all of the
Notes.
"Note Formula Rate": With respect to the Class A-1 Notes and for any
Interest Period ending prior to the Redemption Date, a per annum rate equal to
One-Month LIBOR plus 0.64% and, for any Interest Period ending thereafter, a per
annum rate equal to One-Month LIBOR plus 1.28%. With respect to the Class A-2
Notes and for any Interest Period ending prior to the Redemption Date, a per
annum rate equal to One-Month LIBOR plus 0.65% and, for any Interest Period
ending thereafter, a per annum rate equal to One-Month LIBOR plus 1.30%.
"Note Insurer": MBIA Insurance Corporation, a New York stock
insurance company, and any successors thereto.
"Note Insurer Commitment Letter": The commitment letter dated
December 10, 1998, from the Note Insurer to RBMG and the Issuer regarding the
issuance of a financial guaranty insurance policy.
"Note Insurer Default": The existence and continuance of any of the
following:
(a) a MBIA Payment Default;
(b) the entry by a court having jurisdiction of (i) a final and
nonappealable decree or order for relief in respect of the Note Insurer in
an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or
other similar law of (ii) a final and nonappealable decree or order
adjudging the Note Insurer bankrupt or insolvent, or approving as properly
filed
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a petition seeking reorganization, rehabilitation, arrangement, adjustment
or composition of or in respect of the Note Insurer under any applicable
United States federal or state law, or appointing a custodian, receiver,
liquidator, rehabilitator, assignee, trustee, sequestrator or other
similar official of the Note Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(c) the commencement by the Note Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated bankrupt or insolvent, or the consent of the
Note Insurer to the entry of a decree or order for relief in respect of
the Note Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency case or proceeding
against the Note Insurer, or the filing by the Note Insurer of a petition
or answer or consent seeking reorganization or relief under any applicable
United States federal or state law, or the consent by the Note Insurer to
the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Note Insurer or of any substantial
part of its property, or the failure by the Note Insurer to pay debts
generally as they become due, or the admission by the Note Insurer in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Note Insurer in furtherance of any
such action.
Notwithstanding anything to the contrary contained herein, upon the
existence and continuance of a Note Insurer Default, the consent by the Note
Insurer shall not be required to any action or inaction hereunder and the Note
Insurer shall not have any rights with respect thereto.
"Note Insurer Premium": On the Closing Date, the premium due to the
Note Insurer in paragraph 1(a)(i) of the Note Insurer Commitment Letter and
thereafter the premium due to the Note Insurer on each Payment Date, which
amount shall be equal to the product of the Note Insurer Premium Rate and the
Note Balance immediately prior to such Payment Date.
"Note Insurer Premium Rate": On the Closing Date, the Premium
Percentage specified in paragraph 1(a)(i) of the Note Insurer Commitment Letter
and beginning on January 25, 1999 and on each Payment Date thereafter, the
Premium Percentage specified in paragraph 1(b) thereof.
"Note Interest": As to a Class of Notes and any Payment Date, the
amount of interest payable to Holders of such Notes on such Payment Date, which
amount shall be equal to (a) with respect to the initial Interest Period,
interest for the number of days in the period commencing on the Closing Date and
ending on the day prior to such Payment Date at the related Note Interest Rate
on the related Original Note Balance, and (b) with respect to any subsequent
Interest Period, interest for the number of days in such Interest Period at the
related Note Interest Rate on the related Note Balance as of the preceding
Payment Date (after giving effect to the payment, if any, in reduction of
principal made on such Notes on such preceding Payment Date) reduced by (i) the
related aggregate Prepayment Interest Shortfall, if any, for such
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Payment Date, to the extent not covered by related Compensating Interest
Payments, and (ii) the aggregate amount of Relief Act Interest Shortfall with
respect to Mortgage Loans in the related Group, if any, for such Payment Date.
All calculations of interest on each Class of Notes will be computed on the
basis of the actual number of days elapsed in the related Interest Period and in
a year of 360 days.
"Note Interest Rate": With respect to the Interest Period relating
to the January 1999 Payment Date and the Class A-1 Notes, 6.18656% per annum.
With respect to each Interest Period thereafter and the Class A-1 Notes, a per
annum rate equal to the lesser of (a) the related Note Formula Rate and (b) the
related Available Funds Cap Rate. With respect to the Interest Period relating
to the January 1999 Payment Date and the Class A-2 Notes, 6.19656% per annum.
With respect to each Interest Period thereafter and the Class A-2 Notes, a per
annum rate equal to the lesser of (a) the related Note Formula Rate and (b) the
related Available Funds Cap Rate.
"Note Register": As defined in Section 2.06.
"Notes": The Class A-1 Notes and the Class A-2 Notes of the RBMG
Funding Co. Mortgage Loan Trust 1998-2 Asset-Backed Notes, Series 1998-2,
authorized by, and authenticated and delivered under, this Indenture.
"Notice of Claim": The notice required to be furnished by the
Indenture Trustee to the Note Insurer in the event an Insured Payment is
required to be paid under the MBIA Insurance Policy with respect to any Payment
Date, in the form set forth as Exhibit A to the MBIA Insurance Policy.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, Chief Operating Officer or
a Vice President of RBMG, the Company, the Depositor, Funding Co., the Servicer
or, in the case of the Issuer, an authorized signatory of the Owner Trustee, as
the case may be, and delivered to the Indenture Trustee, Note Insurer or each
Rating Agency, as the case may be.
"One-Month Libor": With respect to the first Interest Period,
5.54656% per annum. With respect to any Interest Period after the first Interest
Period, the per annum rate determined by the Indenture Trustee on the related
Interest Determination Date on the basis of the offered rates of the Reference
Banks for one-month U.S. dollar deposits as such rates appear on page 3750 of
Telerate, as of 11:00 a.m. (London time) on such Interest Determination Date.
For purposes of this Indenture, "page 3750 of Telerate" means the display
designated as page 3750 on the Dow Jones Telerate Service (or such other page as
may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks). On each Interest Determination Date,
One-Month LIBOR will be established by the Indenture Trustee as follows:
(i) if on such Interest Determination Date two or more
Reference Banks provide such offered quotations, One-Month LIBOR shall be
the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 0.0625%) of such offered quotations; or
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(ii) if on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR shall be
the higher of (x) One-Month LIBOR as determined on the previous Interest
Determination Date and (y) the Reserve Interest Rate.
"Opinion Of Counsel": A written opinion of counsel reasonably
acceptable to the Indenture Trustee and, in the case of opinions delivered to
the Note Insurer, reasonably acceptable to it. Any expense related to obtaining
an Opinion of Counsel for an action requested by a party shall be borne by the
party required to obtain such opinion or seeking to effect the action that
requires the delivery of such Opinion of Counsel, except in such instances where
such opinion is at the request of the Indenture Trustee, in which case such
expense shall be an expense of the Issuer.
"Original Note Balance": The aggregate principal balance of the
Notes at the issue date thereof, equal to $107,500,000 for the Class A-1 Notes
and $62,500,000 for the Class A-2 Notes.
"Original Pre-Funding Amount": The Group I Original Pre-Funding
Amount or the Group II Original Pre-Funding Amount.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent (other than the Issuer) in trust for
the Holders of such Notes; PROVIDED, HOWEVER, that if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor, satisfactory to the Indenture Trustee,
has been made;
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser (as defined by the Uniform
Commercial Code of the applicable jurisdiction); and
(iv) Notes alleged to have been destroyed, lost or stolen that
have been paid as provided for in Section 2.07;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite percentage of the Note Balance of the Outstanding Notes have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Issuer, any other obligor upon the
Notes, RBMG, the Depositor, the Company, the Servicer, the Sub-Servicer,
or Funding Co., the Issuer or any Affiliate of any of them, shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand,
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authorization, direction, notice, consent or waiver, only Notes that the
Indenture Trustee knows to be so owned shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee
the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, RBMG, the
Depositor, the Company, the Servicer, the Sub-Servicer, Funding Co., or
any Affiliate of any of them; PROVIDED, FURTHER, HOWEVER, that Notes that
have been paid with the proceeds of the MBIA Insurance Policy shall be
deemed to be Outstanding for the purposes of this Indenture, such payment
to be evidenced by written notice from the Note Insurer to the Indenture
Trustee, and the Note Insurer shall be deemed to the Holder thereof to the
extent of any payments thereon made by the Note Insurer.
"Outstanding Note Balance": With respect to any Note as of any date
of determination, the original principal amount of such Note, reduced by all
prior payments (including Insured Payments), if any, made with respect to
principal of such Note.
"Outstanding Pre-Funding Amount": With respect to each Group and as
of any date of determination, the amount on deposit in the related Pre-Funding
Account.
"Overcollateralization Amount": For each Class of Notes and any
Payment Date, the amount, if any, by which (x) the sum of (a) the Aggregate
Stated Principal Balance of the Mortgage Loans in the related Group as of the
end of the related Due Period, and (b) the related Outstanding Pre-Funding
Amount (excluding any earnings in respect thereof) as of such date, exceeds (y)
the Note Balance of the related Class of Notes for such Payment Date, after
taking into account the Monthly Principal (disregarding any permitted reduction
in Monthly Principal due to an Overcollateralization Surplus) to be applied in
reduction of the related Note Balance on such Payment Date. If the sum of (a)
the Aggregate Stated Principal Balance of the Mortgage Loans in such Group as of
the end of the related Due Period, and (b) the related Outstanding Pre-Funding
Amount (excluding any earnings in respect thereof) as of such date, is less than
the related Note Balance for such Payment Date, determined as provided above,
the Overcollateralization Amount for such Class and Payment Date shall be zero.
"Overcollateralization Deficit": With respect to each Class of Notes
and any Payment Date, the amount, if any, by which the related Note Balance on
such Payment Date (after taking into account any payments to be paid on such
Payment Date in reduction of such Note Balance, including any Available Funds
related to each Group) exceeds the sum of (a) the Aggregate Stated Principal
Balance of the related Mortgage Loans in such Group as of the end of the related
Due Period, and (b) the Outstanding Pre-Funding Amount (excluding any earnings
in respect thereof) as of such date. If the sum of (a) and (b) of the preceding
sentence is greater than the related Note Balance for such Payment Date
determined as provided above, the related Overcollateralization Deficit for such
Payment Date shall be zero.
"Overcollaterization Surplus": Either the Class A-1
Overcollaterization Surplus or the Class A-2 Overcollaterization Surplus, as
applicable.
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"Owner Trustee": Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"P&I Advance": As defined the Servicing Agreement.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Issuer pursuant to
Section 3.03 to pay the principal of, or interest on, any Notes on behalf of the
Issuer, which agent, if not the Indenture Trustee, shall have signed an
instrument agreeing to be bound by the terms of this Indenture applicable to the
Paying Agent.
"Payment Ahead": As defined in the Servicing Agreement.
"Payment Date": The 25th day of each month or, if any such day is
not a Business Day, the Business Day immediately following such 25th day,
beginning January 25, 1999.
"Payment Date Statement": The statement prepared pursuant to Section
2.08(d) with respect to collections on or in respect of the Mortgage Loans in
each Group and other assets of the Trust Estate and payments on or in respect of
the Notes, based solely upon the information contained in the Servicer
Remittance Report prepared pursuant to the Servicing Agreement and setting forth
the following information with respect to each Payment Date and each Group (to
the extent the Servicer has made such information (other than the information
described in clause (ii), (iii), (iv), (v), (xii) and (xix) below) available to
the Indenture Trustee):
(i) the amount of such payment to Noteholders of each Class
allocable to (x) Monthly Principal (separately setting forth Principal
Prepayments) and (y) any Excess Cash Payment;
(ii) the amount of such payment to Noteholders of each Class
allocable to (x) Note Interest and (y) the Available Funds Cap Rate Carry
Forward Amount;
(iii) the Note Balance for each Class, after giving effect to
the payment of Monthly Principal and any Excess Cash Payment applied to
reduce the Note Balance on such Payment Date;
(iv) the amount of any Insured Payments with respect to the
properties securing the Mortgage Loans in each Group for such Payment Date
and the respective portions thereof allocable to principal and interest;
(v) the related Overcollateralization Amount, the then
applicable Required Overcollateralization Amount, the
Overcollateralization Surplus, if any, and the Overcollateralization
Deficit, if any, with respect to such Payment Date;
(vi) the Aggregate Stated Principal Balance of the Mortgage
Loans and REO Properties in each Group as of the end of the related Due
Period;
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(vii) the amount of P&I Advances made with respect to each
Group and such Payment Date and the aggregate amount of unreimbursed P&I
Advances and Servicing Advances, if any;
(viii)the number and aggregate of the Stated Principal
Balances of Mortgage Loans (including the Stated Principal Balances of all
Mortgage Loans in foreclosure) in each Group contractually delinquent (i)
one month, (ii) two months and (iii) three or more months, as of the end
of the related Collection Period;
(ix) the number and aggregate of the Stated Principal Balances
of the Mortgage Loans in each Group in foreclosure or subject to other
similar proceedings, and the number and aggregate of the Stated Principal
Balances of Mortgage Loans in each Group the Mortgagors of which are known
by the Servicer to be in bankruptcy as of the end of the related
Collection Period and the book value of any real estate acquired through
foreclosure, grant of a deed in lieu of foreclosure or other similar
proceedings during the related Collection Period;
(x) the aggregate of the Stated Principal Balances of the
Mortgage Loans in each Group repurchased by RBMG, the Company, the
Depositor or Funding Co. or purchased by the Servicer, the Majority
Certificateholders or the Note Insurer, separately setting forth the
aggregate of the Stated Principal Balances of Mortgage Loans in each Group
delinquent for three consecutive monthly installments purchased by the
Majority Certificateholder, the Servicer or the Note Insurer at their
option pursuant to the Servicing Agreement;
(xi) the aggregate amount of the related Servicing Fee paid to
or retained by the Servicer for the related Collection Period;
(xii) the amount of any reimbursement payment made to the Note
Insurer on the related Payment Date pursuant to Section 8.02(c)(i) and
(iv) and the amount of Cumulative Insured Payments after giving effect to
any Insured Payment made or such Payment Date to the Noteholders or any
such reimbursement payment to the Note Insurer;
(xiii)the number, aggregate principal balance, weighted
average remaining term to maturity and weighted average Coupon Rate of the
Mortgage Loans in each Group as of the related Due Date;
(xiv) with respect to any Mortgage Loan that in each Group
became an REO Property during the preceding calendar month, the loan
number of such Mortgage Loan, the unpaid principal balance and the Stated
Principal Balance of such Mortgage Loan as of the date it became an REO
Property;
(xv) the book value of any REO Property in each Group as of
the close of business on the last Business Day of the calendar month
preceding the Payment Date;
(xvi) the aggregate amount of Principal Prepayments in each
Group made during the related Collection Period;
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(xvii) the aggregate amount of Realized Losses in each Group
incurred during the related Collection Period;
(xviii) the Class A-1 Cash O/C Amount, the Class A-2 Cash O/C
Amount the Class A-1 Aggregate O/C Surplus Amount and the Class A-2
Aggregate O/C Surplus Amount;
(xix) the Note Factor for the related Notes applicable to such
Payment Date;
(xx) the aggregate amount of any Prepayment Interest
Shortfalls for such Group and Payment Date, to the extent not covered by
Compensating Interest Payments by the Servicer pursuant to Section 2.23 of
the Servicing Agreement; and
(xxi) the aggregate amount of Relief Act Interest Shortfalls
for such Group and Payment Date.
In the case of information furnished pursuant to subclauses (i) and
(ii) above, the amounts shall be expressed as a dollar amount per Individual
Note.
"Percentage Interest": With respect to a Note, the undivided
percentage interest (carried to eight places rounded down) obtained by dividing
the original principal balance of such Note by the related Original Note Balance
and multiplying the result by 100.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Coupon Rate for
such Mortgage Loan may increase or decrease (without regard to the Maximum Rate
or the Minimum Rate) on such Adjustment Date from the Coupon Rate in effect
immediately prior to such Adjustment Date.
"Permitted Investments": One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully
guaranteed by, the United States of America, the Federal Home Loan
Mortgage Corporation, Fannie Mae, the Federal Home Loan Banks or any
agency or instrumentality of the United States of America, the obligations
of which are backed by the full faith and credit of the United States of
America;
(b) (i) demand and time deposits in, certificates of deposit
of, banker's acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Indenture Trustee
or its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any state
thereof and subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, such depository institution or
trust company or its ultimate parent has a short-term uninsured debt
rating in one of the two highest available rating categories of Standard &
Poor's and the highest available rating category of Moody's and
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provided that each such investment has an original maturity of no more
than 365 days and (ii) any other demand or time deposit or deposit which
is fully insured by the FDIC;
(c) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (a) above and entered
into with a depository institution or trust company (acting as a
principal) rated A or higher by Standard & Poor's and rated A2 or higher
by Moody's; PROVIDED, HOWEVER, that collateral transferred pursuant to
such repurchase obligation must be of the type described in clause (a)
above and must (i) be valued daily at current market price plus accrued
interest, (ii) pursuant to such valuation, be equal, at all times, to 105%
of the cash transferred by the Indenture Trustee in exchange for such
collateral and (iii) be delivered to the Indenture Trustee or, if the
Indenture Trustee is supplying the collateral, an agent for the Indenture
Trustee, in such a manner as to accomplish perfection of a security
interest in the collateral by possession of certificated securities;
(d) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any state thereof which has a long-term unsecured debt rating
in the highest available rating category of each of the Rating Agencies at
the time of such investment;
(e) commercial paper having an original maturity of less than
365 days and issued by an institution having a short-term unsecured debt
rating in the highest available rating category of each of the Rating
Agencies at the time of such investment;
(f) a guaranteed investment contract approved by each of the
Rating Agencies and the Note Insurer and issued by an insurance company or
other corporation having a long-term unsecured debt rating in the highest
available rating category of each of the Rating Agencies at the time of
such investment;
(g) money market funds having ratings in one of the two
highest available rating categories of Standard & Poor's and the highest
available rating category Moody's at the time of such investment which
invest only in other Permitted Investments (any such money market funds
which provide for demand withdrawals being conclusively deemed to satisfy
any maturity requirements for Permitted Investments set forth herein)
including money market funds of the Indenture Trustee and any such funds
that are managed by the Indenture Trustee or its affiliates or for which
the Indenture Trustee or any affiliate acts as advisor as long as such
money market funds satisfy the criteria of this subparagraph (g); and
(h) any investment approved in writing by the Note Insurer and
written evidence that any such investment will not result in a downgrading
or withdrawal of the rating by each Rating Agency on the Notes.
The Indenture Trustee may purchase from or sell to itself or an
affiliate, as principal or agent, the Permitted Investments listed above. All
Permitted Investments in a trust account under the Indenture shall be made in
the name of the Indenture Trustee for the benefit of the Noteholders and the
Note Insurer.
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"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"Policy Payments Account": As defined in Section 8.05(e).
"Predecessor Notes": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note.
"Preference Amount": Any amount previously distributed to a
Noteholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code in
accordance with a final nonappealable order of a court having competent
jurisdiction.
"Pre-Funding Account": The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 8.03 and
entitled "The Bank of New York, as Indenture Trustee for RBMG Funding Co.
Mortgage Loan Trust 1998-2 Asset-Backed Notes, Series 1998-2, Pre-Funding
Account (Group I)" or "The Bank of New York, as Indenture Trustee for RBMG
Funding Co. Mortgage Loan Trust 1998-2, Pre-Funding Account (Group II)" on
behalf of the Noteholders of the related Class of Notes and the Note Insurer.
"Prepayment Interest Shortfall": As defined in the Servicing
Agreement.
"Principal Prepayment": As to any Mortgage Loan and Collection
Period, any payment by a Mortgagor or other recovery in respect of principal on
a Mortgage Loan (including Net Liquidation Proceeds and Insurance Proceeds)
that, in the case of a payment by a Mortgagor, is received in advance of its
scheduled due date and is not a Payment Ahead, or (b) is accompanied by
instructions from the related Mortgagor directing the Servicer to apply such
payment to the principal balance of such Mortgage Loan currently.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Prospectus Supplement": The Issuer's Prospectus Supplement, dated
December 9, 1998, relating to the Notes.
"Purchase Price": With respect to any Mortgage Loan or REO Property
to be purchased pursuant to or as contemplated by Section 8.07 or 10.01, and as
confirmed by an Officers' Certificate from the Servicer to the Indenture
Trustee, an amount equal to the sum of (i) 100% of the Stated Principal Balance
thereof as of the date of purchase (or such other price as provided in Section
8.07), (ii) in the case of (x) a Mortgage Loan, accrued interest on such Stated
Principal Balance (plus, in the case of a Defective Mortgage Loan, the amount of
any Related Loss resulting From a Deficient Valuation) at a rate equal to the
applicable Coupon Rate minus the related Servicing Fee Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment by
the Mortgagor or an advance by the Servicer, which payment
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or advance had as of the date of purchase been paid pursuant to Section 8.02,
through the end of the calendar month in which the purchase is to be effected,
and (y) an REO Property, the sum of (1) accrued interest on such Stated
Principal Balance (plus, in the case of a Defective Mortgage Loan, the amount of
any Related Loss resulting from a Deficient Valuation) at a rate equal to the
applicable Coupon Rate minus the related Servicing Fee Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment by
the Mortgagor or an advance by the Servicer through the end of the calendar
month immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each calendar
month commencing with the calendar month in which such REO Property was acquired
and ending with the calendar month in which such purchase is to be effected, net
of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds
and P&I Advances that had as of the date of purchase been distributed as or to
cover REO Imputed Interest pursuant to Section 8.02, (iii) any unreimbursed
Servicing Advances and P&I Advances and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from
the Collection Account in respect of such Mortgage Loan or REO Property pursuant
to the Servicing Agreement, and (v) in the case of a Mortgage Loan required to
be purchased pursuant to Section 8.07, expenses reasonably incurred or to be
incurred by the Servicer or the Indenture Trustee in respect of the breach or
defect giving rise to the purchase obligation.
"Qualified Replacement Mortgage Loan": A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 8.07 that must, at
the end of the Due Period preceding the date of such substitution, (i) have an
outstanding principal balance (when taken together with any other Qualified
Replacement Mortgage Loan being substituted for such Deleted Mortgage Loan), not
in excess of and not ten percent less than the unpaid principal balance of the
Deleted Mortgage Loan(s) at the end of the Due Period preceding the date of
substitution, (ii) have the Coupon Rate computed on substantially the same basis
as the Coupon Rate on the related Mortgage Loan, utilizing the same Index and
having a Gross Margin or Minimum Rate not less than (and not more than one
percentage point in excess of) the Gross Margin and Minimum Rate applicable to
the Deleted Mortgage Loan, (iii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(iv) have a Loan-to-Value Ratio equal to or lower than the Loan-to- Value Ratio
of the Deleted Mortgage Loan, (v) have a first lien priority, (vi) comply as of
the date of substitution with each representation and warranty set forth in
Section 3(b) of the Funding Co. Sale Agreement, Section 3(b) of the Company Sale
Agreement, Section 3(b) of the Depositor Sale Agreement or Section (6) of the
Loan Contribution Agreement (vii) have the same or better property type as the
Deleted Mortgage Loan and (viii) have the same or better occupancy status. In
the event that one or more mortgage loans are proposed to be substituted for one
or more Deleted Mortgage Loans, the foregoing tests may be met on a weighted
average basis or other aggregate basis acceptable to the Note Insurer, except
that the requirements of clauses (v), (vi), (vii) and (viii) hereof must be
satisfied as to each Qualified Replacement Mortgage Loan.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds of
which are not more than $1000 in excess of the amounts outstanding on the
existing first mortgage loan, on any subordinate mortgage loan
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on the related Mortgaged Property, related closing costs, and consumer debt of
the borrower that was paid at closing and were used exclusively (except for up
to $1000) to satisfy the then existing first mortgage loan, any subordinate
mortgage loan of the Mortgagor on the related Mortgaged Property to pay related
closing costs, and consumer debt of the borrower.
"Rating Agencies": Standard & Poor's and Moody's (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical credit rating
agency, or other comparable Person, designated by the Issuer and the Note
Insurer, notice of which designation shall be given to the Indenture Trustee.
"RBMG": Resource Bancshares Mortgage Group, Inc., a Delaware
corporation, and its successors.
"RBMG Guidelines": As defined in the Prospectus Supplement.
"Realized Loss": As defined in the Servicing Agreement.
"Record Date": With respect to any Payment Date, the date on which
the Persons entitled to receive any payment of principal of or interest on any
Notes (or notice of a payment in full of principal) due and payable on such
Payment Date are determined; such date shall be the last Business Day preceding
such Payment Date or, with respect to Definitive Notes, the last Business Day of
the month preceding the month of such Payment Date. With respect to a vote of
Noteholders required or allowed hereunder, the Record Date shall be the later of
(i) 30 days prior to the first solicitation of consents or (ii) the date of the
most recent list of Noteholders furnished to the Indenture Trustee pursuant to
Section 7.01(a) prior to such solicitation.
"Redemption Date": The Payment Date, if any, on which a Class of
Notes is redeemed pursuant to Article X hereof, which date may occur on or after
the Payment Date on which the Outstanding Note Balance of the related Class of
Notes as of the related Determination Date is less than 10% of the Note Balance
of the related Class as of the Closing Date.
"Redemption Price": With respect to any Note to be redeemed in whole
or in part, an amount equal to 100% of the Outstanding Note Balance of the Note
to be so redeemed, together with accrued and unpaid interest on such amount at
the Note Interest Rate, plus any unpaid Available Funds Cap Rate Carry Forward
Amount, through the end of the Interest Period immediately preceding the
Redemption Date.
"Reference Banks": The Bank of New York, Barclay's Bank PLC, the
Bank of Tokyo and National Westminster Bank PLC; PROVIDED that, if any of the
foregoing banks are deemed by the Indenture Trustee as not suitable to serve as
a Reference Bank, then any leading banks selected by the Indenture Trustee that
are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
whose quotations appear on page 3750 of Telerate on the relevant Interest
Determination Date, (iii) that have been designated as such by the Indenture
Trustee and (iv) not controlling, controlled by, or under common control with
the Issuer, the Company, the Depositor, Funding Co., RBMG, or any Affiliates
thereof.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
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"Release Date": The date forty (40) calendar days after the later of
(i) the commencement of the offering of the Notes and (ii) the Closing Date.
"Relief Act Interest Shortfall": With respect to any Payment Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended calendar month as a result of the
application of The Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
"Remittable Funds": As defined in the Servicing Agreement.
"REO Imputed Interest": As to any REO Property, for any calendar
month during which such REO Property was at any time part of the Trust Estate,
one month's interest at a rate equal to the then applicable Coupon Rate minus
the related Servicing Fee Rate on the Stated Principal Balance of such REO
Property (or, in the case of the first such calendar month, of the related
Mortgage Loan if appropriate) as of the close of business on the Payment Date in
such calendar month.
"REO Principal Amortization": As defined in the Servicing Agreement.
"REO Property": As defined in the Servicing Agreement.
"Required Overcollateralization Amount" means with respect to each
Class of Notes:
(a) for any Payment Date occurring during the period
commencing on the Closing Date and ending on the later of the thirtieth
Payment Date following the Closing Date and the date upon which principal
payments on the Notes in an amount equal to one-half of the Aggregate
Stated Principal Balance of the related Mortgage Loans as of the Initial
Cut-off Date plus the related Original Pre-Funding Amount has been
received by the Noteholders, the greater of: (i) 5.20% of the Aggregate
Stated Principal Balance of the related Mortgage Loans as of the Initial
Cut-off Date plus the related Original Pre-Funding Amount and (ii) 87% of
the related Delinquency Amount.
(b) for any Payment Date occurring after the end of the period
described in clause (a) above, the greatest of (i) 10.40% of the Aggregate
Stated Principal Balance of the related Mortgage Loans as of the
Determination Date relating to such Payment Date, (ii) 87% of the related
Delinquency Amount, and (iii) the greater of (A) 0.75% of the Aggregate
Stated Principal Balance of the Mortgage Loans as of the Initial Cut-off
Date plus the related Original Pre-Funding Amount and (B) the aggregate
Stated Principal Balance of the three Mortgage Loans in such Group with
the largest Stated Principal Balance.
(C) PROVIDED, HOWEVER, that for any Payment Date occurring
after the end of the period described in clause (a) above, if the
Delinquency Percentage for the related Group exceeds 10%, the Required
Overcollateralization Amount shall be no less than the related Required
Overcollateralization Amount as of the previous Payment Date. The Note
Insurer may, in its sole discretion, at the request of the Majority
Certificateholder, modify clause (a)(ii) or (b)(ii) above for the purpose
of reducing or eliminating, in whole or in
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part, the application of clause (a)(ii) or (b)(ii) above, if the Indenture
Trustee and each Rating Agency shall have been notified in writing of such
modification prior to the related Payment Date and each Rating Agency
shall have confirmed that such modification shall not result in a
downgrading of the then-current implied ratings on the Notes (without
regard to the MBIA Insurance Policy).
After the expiration of the Funding Period, the Note Insurer in its reasonable
discretion may change the Required Overcollateralization Amount to account for
the particular characteristics of the Additional Mortgage Loans in the related
Group.
"Required Payment Amount": With respect to each Class of Notes and
any Payment Date, the Note Interest for such Payment Date plus the amount of any
related Overcollateralization Deficit for such Payment Date.
"Reserve Account": That certain account, which shall be an Eligible
Account, established pursuant to Section 8.18 of this Indenture.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Indenture Trustee determines to be either (i)
the arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of 0.0625%) of the one-month U.S. dollar lending rates that New York City banks
selected by the Indenture Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market, (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate
that New York City banks selected by the Indenture Trustee are quoting on such
Interest Determination Dates to leading European banks or (iii) in the event New
York City banks are not offering quotes, One-Month LIBOR for the Interest Period
in which such Interest Determination Date occurs.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
detached one-family dwelling in a planned unit development, or (iv) condominium
units.
"Responsible Officer": With respect to the Indenture Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller, any assistant
controller or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
in each case having direct responsibility for the administration of this
Indenture also, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Sale": As defined in Section 5.17.
"Scheduled Principal Balance": With respect to any Mortgage Loan:
(a) as of the applicable Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such
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date; (b) as of any Due Date subsequent to the applicable Cut-off Date up to and
including the Due Date in the calendar month in which a Liquidation Event occurs
with respect to such Mortgage Loan, the Scheduled Principal Balance of such
Mortgage Loan as of the applicable Cut-off Date, minus the sum of (i) the
principal portion of each Monthly Payment due on or before such Due Date but
subsequent to the applicable Cut-off Date, whether or not received, (ii) all
Principal Prepayments received before such Due Date but after the applicable
Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the applicable
Cut-off Date, net of any portion thereof that represents principal due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) on a Due Date occurring on or before the date on which such proceeds were
received and (iv) any Realized Loss incurred with respect thereto as a result of
a Deficient Valuation occurring before such Due Date, but only to the extent
such Realized Loss represents a reduction in the portion of principal of such
Mortgage Loan not yet due (without regard to any acceleration of payments under
the related Mortgage and Mortgage Note) as of the date of such Deficient
Valuation; and (c) as of any Due Date subsequent to the occurrence of a
Liquidation Event with respect to such Mortgage Loan, zero. With respect to any
REO Property: (a) as of any Due Date subsequent to the date of its acquisition
on behalf of the Trust Estate up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such REO Property, an
amount (not less than zero) equal to the Scheduled Principal Balance of the
related Mortgage Loan as of the Due Date in the calendar month in which such REO
Property was acquired, minus the aggregate amount of REO Principal Amortization,
if any, in respect of such REO Property for all previously ended calendar
months; and (b) as of any Due Date subsequent to the occurrence of a Liquidation
Event with respect to such REO Property, zero.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Resource Bancshares Mortgage Group, Inc., a Delaware
corporation, in its capacity as servicer under the Servicing Agreement, and its
permitted successors and assigns thereunder, including any successor servicer
appointed pursuant to the Servicing Agreement.
"Servicer Remittance Date": With respect to any Payment Date, 3:00
p.m. New York Time on the 18th day of the calendar month in which such Payment
Date occurs or, if such 18th day is not a Business Day, the Business Day
immediately following such 18th day.
"Servicer Remittance Report": As defined in the Servicing Agreement.
"Servicing Advance": As defined in the Servicing Agreement.
"Servicing Agreement": The Servicing Agreement, dated as of December
1, 1998, among the Issuer, the Servicer and the Indenture Trustee, as indenture
trustee and backup servicer, providing, among other things, for the servicing of
the Mortgage Loans, as such agreement may be amended or supplemented from time
to time as permitted hereby and thereby. Such term shall also include any
servicing agreement entered into with a successor servicer. A copy of the
Servicing Agreement as in effect as of the date hereof is attached hereto as
Exhibit D.
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"Servicing Fee": As defined in the Servicing Agreement.
"Servicing Fee Rate": With respect to each Group, 0.44% per annum;
PROVIDED, HOWEVER, that such rate may be increased to a maximum of 0.50% per
annum if the Indenture Trustee and the Note Insurer mutually determine in good
faith that such increase is required in order to obtain a successor servicer or
a successor sub-servicer pursuant to Section 5.02 of the Servicing Agreement.
"Standard & Poor's": Standard & Poor's Ratings Services, a Division
of The McGraw-Hill Companies Inc., and its successors in interest.
"Stated Principal Balance": With respect to any Mortgage Loan: (a)
as of any date of determination up to but not including the Payment Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the Scheduled Principal Balance of such Mortgage Loan
as of the applicable Cut-off Date, as shown in the Mortgage Loan Schedule, minus
the sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the applicable Cut-off Date, to the extent received from the
Mortgagor or advanced by the Servicer and distributed pursuant to Section 8.02
on or before such date of determination, (ii) all Principal Prepayments received
after the applicable Cut-off applicable Date, to the extent distributed pursuant
to Section 8.02 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the Servicer as recoveries of
principal in accordance with the Servicing Agreement, to the extent distributed
pursuant to Section 8.02 on or before such date of determination, and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Collection Period for the most recent Payment Date
coinciding with or preceding such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (a) as of any date
of determination up to but not including the Payment Date on which the proceeds,
if any, of a Liquidation Event with respect to such REO Property would be
distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Estate, minus the sum (i) if such REO
Property was acquired before the Payment Date in any calendar month, the
principal portion of the Monthly Payment due on the Due Date in the calendar
month of acquisition, to the extent advanced by the Servicer and distributed
pursuant to Section 8.02 on or before such date of determination, and (ii) the
aggregate amount of REO Principal Amortization in respect of such REO Property
for all previously ended calendar months, to the extent distributed pursuant to
Section 8.02 on or before such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, zero.
"Stayed Funds": As defined in the Servicing Agreement.
"Sub-Servicer": Ocwen Federal Bank FSB, a federally-chartered
savings bank, as Sub-Servicer under the Sub-Servicing Agreement, and its
permitted successors and assigns thereunder, including any successor
sub-servicer appointed pursuant to the Sub-Servicing Agreement.
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"Sub-Servicing Agreement": The Sub-Servicing Agreement, dated as of
December 1, 1998, between the Servicer and the Sub-Servicer, providing among
other things for the sub-servicing of the Mortgage Loans which the Servicer is
obliged to service under the Servicing Agreement, as such agreement may be
amended or supplemented from time to time as permitted hereby and thereby. Such
term shall also include any servicing agreement entered into with a successor
sub-servicer.
"TIA": The Trust Indenture Act of 1939, as it may be amended from
time to time.
"Three Month Rolling Average Delinquency Percentage": With respect
to each Group and any Payment Date, the average of the Delinquency Percentages
of such Group as of the last day of each of the three (or one or two, in case of
the first and second Payment Dates) preceding calendar months.
"Total Available Funds": As to any Payment Date and with respect to
either Class of Notes, the sum of (i) the Available Funds for such Payment Date
and Class, (ii) any Crossover Amount available from the other Class on such
Payment Date and (iii) any amount withdrawn from the Reserve Account and
deposited to the Note Account for the related Class.
"Total Expected Losses": With respect to any Payment Date,
cumulative Realized Losses of such Group occurring from the Closing Date through
and including such Payment Date plus the Delinquency Loss Factor as of such
Payment Date.
"Transferor": As defined in Section 8.07(a).
"Trust Agreement": That certain Deposit Trust Agreement, dated as of
December 1, 1998, among the Depositor, as depositor, The Bank of New York, as
Trust Paying Agent, and Wilmington Trust Company, as Owner Trustee.
"Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of this Indenture for the benefit of the
Noteholders and the Note Insurer as of any particular time (including, without
limitation, all property and interests Granted to the Indenture Trustee,
including all proceeds thereof).
"Trust Paying Agent": The entity appointed to act as paying agent
pursuant to the Trust Agreement with respect to amounts on deposit from time to
time in the Certificate Distribution Account and distributions thereof to
Certificateholders. The initial Trust Paying Agent is The Bank of New York.
"Twelve Month Loss Amount": With respect to each Group and any
Payment Date, an amount equal to the aggregate of all related Realized Losses
during the previous twelve Due Periods.
"Underwriter": Wheat First Securities, Inc., acting through First
Union Capital Markets, a division of Wheat First Securities, Inc. as underwriter
of the Notes pursuant to the Underwriting Agreement, dated December 9, 1998,
between the Underwriter and the Depositor.
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"U.S. Bankruptcy Code": shall mean the United States Bankruptcy
Code, 11 U.S.C. Sections 101, et seq., as amended or supplemented from time to
time.
"Value": With respect to any Mortgaged Property, the lesser of (i)
the lesser of (a) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of FNMA and FHLMC, and (b) the
value thereof as determined by a review appraisal conducted by RBMG in the event
any such review appraisal determines an appraised value ten percent or more
lower than the value thereof as determined by the appraisal referred to in
clause (i)(a) above and (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan; PROVIDED,
HOWEVER, (A) in the case of a Refinanced Mortgage Loan, such value of the
Mortgaged Property is based solely upon the lesser of (1) the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of FNMA and FHLMC and (2) the value thereof as determined
by a review appraisal conducted by RBMG in the event any such review appraisal
determines an appraised value ten percent or more lower than the value thereof
as determined by the appraisal referred to in clause (ii)(A)(1) above and (B) in
the case of a Mortgage Loan originated in connection with a "lease-option
purchase," such value of the Mortgaged Property is based on the lower of the
value determined by an appraisal made for the originator of such Mortgage Loan
at the time of origination or the sale price of such Mortgaged Property if the
"lease option purchase price" was set less than 12 months prior to origination,
and is based on the value determined by an appraisal made for the originator of
such Mortgage Loan at the time of origination if the "lease option purchase
price" was set 12 months or more prior to origination.
"Vice President": Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
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ARTICLE II
THE NOTES
SECTION 2.01. FORMS GENERALLY.
The Notes shall be in substantially the form set forth on Exhibit
A-1 with respect to the Class A-1 Notes and Exhibit A-2 with respect to the
Class A-2 Notes, each attached hereto. Each Note may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the Authorized Officers of the
Owner Trustee executing such Notes on behalf of the Issuer, as evidenced by
their execution thereof. Any portion of the text of any Note may be set forth on
the reverse thereof with an appropriate reference on the face of the Note.
The Definitive Notes may be produced in any manner determined by the
Authorized Officers of the Owner Trustee executing such Notes, as evidenced by
their execution thereof.
Section 2.02. Forms of Certificate of Authentication.
The form of the Authenticating Agent's certificate of authentication
is as follows:
This is one of the Notes referred to in the within mentioned
Indenture.
THE BANK OF NEW YORK, as Authenticating Agent
By:__________________________________________
Authorized Signatory
SECTION 2.03. GENERAL PROVISIONS WITH RESPECT TO PRINCIPAL AND
INTEREST PAYMENTS.
The Notes shall be designated generally as the "Asset-Backed Notes,
Series 1998-2" of the Issuer.
The aggregate principal amount of Notes that may be authenticated
and delivered under the Indenture is limited to $107,500,000 Class A-1 Notes and
$62,500,000 Class A-2 Notes, except for the Notes authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Sections 2.06, 2.07, or 9.06 of this Indenture. The Notes shall
consist of two classes, each having an Original Note Balance, Note Interest Rate
for the initial Interest Period and Final Maturity Date as follows:
Note Interest
Rate for the
Original Note Initial Final
Designation Balance Interest Period Maturity Date
----------- ------- --------------- -------------
Class A-1 $107,500,000 LIBOR + 0.64% APRIL 25, 2030
Class A-2 $62,500,000 LIBOR + 0.65% APRIL 25, 2030
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The Notes shall be issued in the form specified in Section 2.01.
Subject to the provisions of Section 3.01, Section 5.07, Section
5.09 and Section 8.02, the principal of the Notes shall be payable in
installments ending no later than the Final Maturity Date unless the unpaid
principal of such Notes become due and payable at an earlier date by declaration
of acceleration or call for redemption or otherwise.
All payments made with respect to any related Note shall be applied
first to the interest then due and payable on such Note and then to the
principal thereof. All computations of interest accrued on any Note shall be
made on the basis of the actual number of days elapsed in the related Interest
Period in a year of 360 days.
Interest on the Notes shall accrue at the related Note Interest Rate
during each Interest Period on the Outstanding Note Balance of each Outstanding
Note at the end of such Interest Period. Interest accrued during an Interest
Period shall be payable on the next following Payment Date.
All payments of principal of and interest on any Note shall be made
in the manner specified in Section 2.08.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be made
in accordance with Section 5.07.
SECTION 2.04. DENOMINATIONS.
The Notes shall be issuable only as registered Notes in the minimum
denomination of $1,000 and integral multiples in excess thereof, with the
exception of one Note which may be issued in a lesser amount.
SECTION 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Issuer by an Authorized
Officer of the Owner Trustee. The signature of such Authorized Officer of the
Owner Trustee on the Notes may be manual or by facsimile.
Notes bearing the manual or facsimile signature of an individual who
was at any time an Authorized Officer of the Owner Trustee shall bind the
Issuer, notwithstanding that such individual has ceased to be an Authorized
Officer of the Owner Trustee prior to the authentication and delivery of such
Notes or was not an Authorized Officer of the Owner Trustee at the date of
issuance of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Issuer may deliver Notes executed on behalf of the Issuer
to the Authenticating Agent for authentication; and the Authenticating Agent
shall authenticate and deliver such Notes as in this Indenture provided and not
otherwise.
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Each Note authenticated on the Closing Date shall be dated the
Closing Date. All other Notes that are authenticated after the Closing Date for
any other purpose hereunder shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Authenticating Agent by the manual signature of one of its
Authorized Officers, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.06. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and
(b) the registration of transfers of Notes. The Indenture Trustee is
hereby initially appointed "Note Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. The Indenture Trustee
shall remain the Note Registrar throughout the term hereof. Upon any
resignation of the Indenture Trustee, the Issuer shall promptly appoint a
successor, with the approval of the Note Insurer, or, in the absence of
such appointment, shall assume the duties of Note Registrar.
(c) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section
3.02, the Owner Trustee on behalf of the Issuer, shall execute, and the
Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any
authorized denominations and of a like aggregate principal amount.
(d) At the option of the Holder, Notes may be exchanged for other
Notes of any authorized denominations, and of a like aggregate initial
principal amount, upon surrender of the Notes to be exchanged at the
office or agency of the Issuer to be maintained as provided in Section
3.02. Whenever any Notes are so surrendered for exchange, the Owner
Trustee shall execute, and the Authenticating Agent shall authenticate and
deliver, the Notes that the Noteholder making the exchange is entitled to
receive.
(e) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Note Registrar duly
executed by the Holder thereof or his attorney duly authorized in writing.
(g) No service charge shall be made for any registration of transfer
or exchange of Notes, but the Issuer and the Note Registrar may require
payment of a sum sufficient to cover
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any tax or other governmental charge as may be imposed in connection with
any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.07.
(h) The Note Registrar shall not register the transfer of any Note
(other than the transfer of a Note to the nominee of a Clearing Agency)
unless the transferee has executed and delivered a certification in the
form and substance attached hereto as Exhibit D to the effect that either
(i) the transferee is not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that is subject to the provisions of Title I of ERISA
or (B) a plan (as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) that is subject to Section 4975 of
the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii) that the
transferee's acquisition and continued holding of the Note will be covered
by a U.S. Department of Labor Prohibited Transaction Class Exemption. Each
transferee of a Book-Entry Note shall be deemed to make one of the
foregoing representations.
SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
If (1) any mutilated Note is surrendered to the Note Registrar or
the Note Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (2) there is delivered to the Note Registrar such
security or indemnity as may be required by the Note Registrar to hold each of
the Issuer, the Note Insurer and the Note Registrar harmless, then, in the
absence of notice to the Issuer or the Note Registrar that such Note has been
acquired by a bona fide purchaser, an Authorized Officer of the Owner Trustee
shall execute and upon its request the Authenticating Agent shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Note, a new Note or Notes of the same tenor and aggregate initial
principal amount bearing a number not contemporaneously outstanding. If, after
the delivery of such new Note, a bona fide purchaser of the original Note in
lieu of which such new Note was issued presents for payment such original Note,
the Issuer and the Note Registrar shall be entitled to recover such new Note
from the person to whom it was delivered or any person taking therefrom, except
a bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Issuer, the Note Insurer or the Note Registrar in connection
therewith. If any such mutilated, destroyed, lost or stolen Note shall have
become or shall be about to become due and payable, or shall have become subject
to redemption in full, instead of issuing a new Note, the Issuer may pay such
Note without surrender thereof, except that any mutilated Note shall be
surrendered.
Upon the issuance of any new Note under this Section, the Issuer or
the Note 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 reasonable expenses (including the fees and expenses of the Indenture
Trustee, the Note Registrar and the Authenticating Agent) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be
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at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.08. PAYMENTS OF PRINCIPAL AND INTEREST.
(a) Payments on Notes issued as Book-Entry Notes will be made
by or on behalf of the Indenture Trustee to the Clearing Agency or its
nominee. Any installment of interest or principal payable on any
Definitive Notes that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the
close of business on the Record Date for such Payment Date by either (i)
check mailed to such Person's address as it appears in the Note Register
on such Record Date, or (ii) by wire transfer of immediately available
funds to the account of a Noteholder, if such Noteholder (A) is the
registered holder of Definitive Notes having an initial principal amount
of at least $1,000,000 and (B) has provided the Indenture Trustee with
wiring instructions in writing by five Business Days prior to the related
Record Date or has provided the Indenture Trustee with such instructions
for any previous Payment Date, except for the final installment of
principal payable with respect to such Note (or the Redemption Price for
any Note called for redemption, if such redemption will result in payment
of the then entire unpaid principal amount of such Note), which shall be
payable as provided in subsection (b) below of this Section 2.08. A fee
may be charged by the Indenture Trustee to a Noteholder of Definitive
Notes for any payment made by wire transfer. Any installment of interest
or principal not punctually paid or duly provided for shall be payable as
soon as funds are available to the Indenture Trustee for payment thereof,
or if Section 5.07 applies, pursuant to Section 5.07.
(b) All reductions in the principal amount of a Note (or one
or more Predecessor Notes) effected by payments of installments of
principal made on any Payment Date shall be binding upon all Holders of
such Note and of any Note issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof, whether or not such payment is
noted on such Note. The final installment of principal of each Note
(including the Redemption Price of any Note called for optional
redemption, if such optional redemption will result in payment of the
entire unpaid principal amount of such Note) shall be payable only upon
presentation and surrender thereof on or after the Payment Date therefor
at the Indenture Trustee's presenting office located within the United
States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire remaining
unpaid principal amount of any Note will become due and payable on the next
Payment Date other than pursuant to a redemption pursuant to Article X, it
shall, no later than two days prior to such Payment Date, telecopy or hand
deliver to each Person in whose name a Note to be so retired is registered at
the close of business on such otherwise applicable Record Date a notice to the
effect that:
(i) the Indenture Trustee expects that funds sufficient to pay
such final installment will be available in the Note Account on such
Payment Date; and
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(ii) if such funds are available, (A) such final installment
will be payable on such Payment Date, but only upon presentation and
surrender of such Note at the office or agency of the Note Registrar
maintained for such purpose pursuant to Section 3.02 (the address of which
shall be set forth in such notice) and (B) no interest shall accrue on
such Note after such Payment Date. A copy of such form of notice shall be
sent to the Note Insurer by the Indenture Trustee. Notices in connection
with redemptions of Notes shall be mailed to Noteholders in accordance
with Section 10.02.
(c) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
subsection (a) of this Section 2.08 and returned undelivered shall be held in
accordance with Section 3.03.
(d) Each Payment Date Statement, prepared by the Indenture Trustee
based solely on the Servicer Remittance Report delivered to the Indenture
Trustee pursuant to the Servicing Agreement, shall be delivered by the Indenture
Trustee to the Issuer or the designee of the Issuer on each Payment Date for the
Issuer's or such designees review of the information contained therein and to
the Issuer, any designee of the Issuer, the Note Insurer, the Rating Agencies,
the Underwriter and each Noteholder on each Payment Date. Such report shall
constitute the report required pursuant to Section 8.08. In addition, on each
Payment Date the Indenture Trustee shall forward to the Underwriter and
Bloomberg the electromagnetic tape or disk containing certain Mortgage Loan
information required to be delivered to the Indenture Trustee by the Servicer
pursuant to Section 3.01 of the Servicing Agreement; PROVIDED, HOWEVER, that the
Indenture Trustee shall not forward any such tape or disk that separately sets
forth the Note Insurer Premium or the Note Insurer Premium Rate. None of the
Indenture Trustee, the Paying Agent or the Owner Trustee shall have any
responsibility to recalculate, verify or recompute information contained in any
such tape or disk or any such Servicer Remittance Report, except to the extent
necessary to attempt to reconciliate any errors between such tape or disk and
the Indenture Trustee's calculations as described in Section 2.08(d).
(e) If the Issuer or the Issuer's designee, believes the Payment
Date Statement contains an inaccuracy, the Issuer or the Issuer's designee shall
promptly notify the Indenture Trustee and the Indenture Trustee and the Issuer
agree to cooperate to promptly produce a revised Payment Date Statement that
they both agree is accurate.
(f) Within 90 days after the end of each calendar year, the
Indenture Trustee will be required to furnish to each person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (i) and
(ii) in the definition of "Payment Date Statement," aggregated for such calendar
year or the applicable portion thereof during which such person was a
Noteholder. Such obligation will be deemed to have been satisfied to the extent
that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force.
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(g) The Issuer agrees to designate the Manager to review the Payment
Date Statement. The Issuer may change such designation from time to time by
written notice to the Indenture Trustee.
SECTION 2.09. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any Note,
the Issuer, the Indenture Trustee, the Authenticating Agent, any Paying Agent
and any other agent of the Issuer, the Note Insurer or the Indenture Trustee may
treat the Person in whose name any Note is registered as the owner of such Note
(a) on the applicable Record Date for the purpose of receiving payments of the
principal of and interest on such Note and (b) on any other date for all other
purposes whatsoever, and neither the Issuer, the Indenture Trustee, any Paying
Agent nor any other agent of the Issuer, the Note Insurer or the Indenture
Trustee shall be affected by notice to the contrary.
SECTION 2.10. CANCELLATION.
All Notes surrendered for payment, registration of transfer,
exchange or redemption shall, if surrendered to any Person other than the Note
Registrar, be delivered to the Note Registrar and shall be promptly canceled by
it. The Issuer may at any time deliver to the Note Registrar for cancellation
any Note previously authenticated and delivered hereunder which the Issuer may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Note Registrar. No Notes shall be authenticated in lieu
of or in exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Notes held by the Note
Registrar shall be held by the Note Registrar in accordance with its standard
retention policy, unless the Issuer shall direct by an Issuer Order that they be
destroyed or returned to it.
SECTION 2.11. AUTHENTICATION AND DELIVERY OF NOTES.
On the Closing Date, the Notes may be executed by an Authorized
Officer of the Owner Trustee and delivered to the Authenticating Agent for
authentication, and thereupon the same shall be authenticated and delivered by
the Authenticating Agent, upon Issuer Request. On or prior to the Closing Date,
the Issuer shall deliver the following:
(a) An Issuer Order authorizing the execution, authentication and
delivery of the Notes and specifying the Final Maturity Date, the principal
amount and the Note Interest Rate (or the manner in which such Note Interest
Rate is to be determined) of such Notes to be authenticated and delivered.
(b) An Issuer Order authorizing the execution and delivery of this
Indenture.
(c) One or more Opinions of Counsel addressed to the Indenture
Trustee, Authenticating Agent and the Note Insurer or upon which the
Authenticating Agent and the Note Insurer is expressly permitted to rely,
complying with the requirements of Section 11.01, reasonably satisfactory in
form and substance to the Authenticating Agent and the Note Insurer.
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In rendering the opinions described above, such counsel may rely
upon officer's certificates of the Issuer, the Owner Trustee, the Servicer and
the Indenture Trustee, without independent confirmation or verification with
respect to factual matters relevant to such opinions. In rendering the opinions
described above, such counsel need express no opinion as to (A) the existence
of, or the priority of the security interest created by the Indenture against,
any liens or other interests that arise by operation of law and that do not
require any filing or similar action in order to take priority over a perfected
security interest or (B) the priority of the security interest created by this
Indenture with respect to any claim or lien in favor of the United States or any
agency or instrumentality thereof (including federal tax liens and liens arising
under Title IV of the Employee Retirement Income Security Act of 1974).
The acceptability to the Note Insurer of the Opinion of Counsel
delivered to the Indenture Trustee, the Authenticating Agent and the Note
Insurer at the Closing Date shall be conclusively evidenced by the delivery on
the Closing Date of the MBIA Insurance Policy.
(d) An Officers' Certificate of the Issuer complying with the
requirements of Section 11.01 and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Trust
Agreement or any indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any proceeding to
which the Issuer is a party or by which it may be bound or to which it may
be subject, and that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Notes have been
complied with;
(ii) the Issuer is the owner of each Mortgage Loan, free and
clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Mortgage Loan (or, if any such
interest or participation has been assigned, it has been released) and has
the right to Grant each such Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan Schedule
attached as Schedule I to this Indenture is correct;
(iv) the Issuer has Granted to the Indenture Trustee all of
its right, title and interest in each Mortgage Loan;
(v) as of the Closing Date, no lien in favor of the United
States described in Section 6321 of the Code, or lien in favor of the
Pension Benefit Guaranty Corporation described in Section 4068(a) of the
Employee Retirement Income Security Act of 1974, as amended, has been
filed as described in subsections 6323(f) and 6323(g) of the Code upon any
property belonging to the Issuer; and
(vi) attached thereto is a true and correct copy of letters
signed by each Rating Agency confirming that the Notes have been rated in
the highest rating category of such Rating Agency.
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(e) An executed counterpart of the Servicing Agreement.
(f) An executed counterpart of each of the Company Sale Agreement,
the Depositor Sale Agreement and the Funding Co. Sale Agreement.
(g) An executed counterpart of the Loan Contribution Agreement.
SECTION 2.12. BOOK-ENTRY NOTES.
(a) The notes, upon original issuance, will be issued in the form of
typewritten Notes representing the Book-Entry Notes, to be delivered to the
initial Clearing Agency, or its custodian by, or on behalf of, the Issuer. The
Book-Entry Notes shall be registered initially on the Note Register in the name
of Cede & Co., the nominee of the initial Clearing Agency, and no Beneficial
Owner thereof will receive a Definitive Note representing such Beneficial
Owner's interest in such Note, except as provided in Section 2.13. Unless and
until Definitive Notes have been issued to such Beneficial Owners pursuant to
Section 2.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar, the Note Insurer and the Indenture
Trustee shall be entitled to deal with the Clearing Agency for all
purposes of this Indenture (including the payment of principal of and
interest on the Notes and the giving of instructions or directions
hereunder) as the sole holder of the Notes (subject to Section 8.16
hereof), and shall have no obligation to the Beneficial Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants pursuant to the Note Depository
Agreement. Unless and until Definitive Notes are issued pursuant to
Section 2.13, the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments
of principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing
a specified percentage of the Note Balance, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has
received instructions to such effect from Beneficial Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
(b) Except as provided in Section 2.06, registration of Book-Entry
Notes may not be transferred by the Note Registrar except to another Clearing
Agency that agrees to hold such Book-Entry Notes for the respective Beneficial
Owners. Beneficial Owners shall hold their
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respective ownership interests in and to such Book-entry Notes through the
book-entry facilities of the Clearing Agency. Except as provided below,
Beneficial Owners shall not be entitled to Definitive Notes.
(c) All transfers by Beneficial Owners of their respective ownership
interests in the Book-Entry Notes shall be made in accordance with the
procedures established by the Clearing Agency Participant or brokerage firm
representing such Beneficial Owner. Each Clearing Agency Participant shall only
transfer the ownership interests in the Book-Entry Notes of the Beneficial
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Clearing Agency's normal procedures.
(d) The Indenture Trustee is hereby initially appointed as the
Book-Entry Custodian and hereby agrees to act as such in accordance herewith and
in accordance with the agreement that it has with the Clearing Agency
authorizing it to act as such. The Book-Entry Custodian may, and, if it is no
longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a
written instrument delivered to the Issuer, the Servicer, the Note Insurer and,
if the Indenture Trustee is not the Book-Entry Custodian, the Indenture Trustee,
any other transfer agent (including the Clearing Agency or any successor
Clearing Agency) to act as Book-Entry Custodian under such conditions as the
predecessor Book-Entry Custodian and the Clearing Agency or any successor
Clearing Agency may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Clearing Agency. If the
Indenture Trustee resigns or is removed in accordance with the terms hereof, the
successor trustee or, if it so elects, the Clearing Agency shall immediately
succeed to its predecessor's duties as Book-Entry Custodian. The Issuer shall
have the right to inspect, and to obtain copies of, any Book-Entry Notes held by
the Book-Entry Custodian.
(e) Whenever a notice or other communication to the Noteholders is
required under this Indenture, unless and until Definitive Notes shall have been
issued to the Beneficial Owners pursuant to Section 2.13, the Indenture Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Notes to the Clearing Agency, and shall have no obligation to the
Beneficial Owners.
(f) Registration of the Notes may not be transferred by the Note
Registrar except upon Book-Entry Termination. In such case, the Note Registrar
shall deal with the Clearing Agency as representatives of the Beneficial Owners
of such Notes for purposes of exercising the rights of Noteholders hereunder.
Each payment of principal of and interest on a Book-Entry Note shall be paid to
the Clearing Agency, which shall credit the amount of such payments to the
accounts of its Clearing Agency Participants in accordance with its normal
procedures. Each Clearing Agency Participant shall be responsible for disbursing
such payments to the Beneficial Owners of the Book-Entry Notes that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm shall be responsible for disbursing funds to the Beneficial Owners of the
Book-Entry Notes that it represents. All such credits and disbursements are to
be made by the Clearing Agency and the Clearing Agency Participants in
accordance with the provisions of the Notes. None of the Indenture Trustee, the
Note Registrar, if any, the Issuer, or any Paying Agent or the Note Insurer
shall have any responsibility therefor except as otherwise provided by
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applicable law. Requests and directions from, and votes of, such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Beneficial Owners.
SECTION 2.13. TERMINATION OF BOOK ENTRY SYSTEM.
(a) The book-entry system through the Clearing Agency with respect
to the Book-Entry Notes will be terminated upon the occurrence of any of the
following:
(i) The Clearing Agency or the Issuer advises the Indenture
Trustee that the Clearing Agency is no longer willing or able to discharge
properly its responsibilities as nominee and depositary with respect to
the Notes and the Issuer or the Indenture Trustee is unable to locate a
qualified successor clearing agency satisfactory to the Issuer;
(ii) The Issuer, in its sole discretion, elects to terminate
the book-entry system by notice to the Clearing Agency and the Indenture
Trustee; or
(iii) After the occurrence of an Event of Default the
Beneficial Owners of no less than 51% of the Note Balance of both Classes
of the Book-Entry Notes advise the Indenture Trustee and the Clearing
Agency in writing, through the related Clearing Agency Participants, that
the continuation of a book-entry system through the Clearing Agency to the
exclusion of any Definitive Notes being issued to any person other than
the Clearing Agency or its nominee is no longer in the best interests of
such Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a)
above, the Indenture Trustee shall use its Best Efforts to notify all Beneficial
Owners, through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same, in an
aggregate Outstanding Note Balance representing the interest of each, making
such adjustments and allowances as it may find necessary or appropriate as to
accrued interest and previous calls for redemption. Definitive Notes shall be
issued only upon surrender to the Indenture Trustee of the global Certificate(s)
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions for the Definitive Notes. Neither the Issuer nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon issuance of the Definitive Notes, (i) all references herein
to obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Indenture Trustee to the extent
applicable to such Definitive Notes, (ii) the provisions herein relating to
Definitive Notes shall be applicable and (iii) the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders hereunder.
SECTION 2.14. CONVEYANCE OF ADDITIONAL MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b) below in
consideration of the Indenture Trustee's delivery on the related Additional
Transfer Dates to or upon the order of the Issuer of all or a portion of the
balance of funds in the related Pre-Funding Account, the Issuer shall on any
Additional Transfer Date Grant to the Indenture Trustee, for the exclusive
benefit of the Holders of the related Class of Notes and the Note Insurer, for
inclusion in the Trust Estate without recourse but subject to the terms and
provisions of this Agreement, all of the
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Issuer's right, title and interest in and to (i) the Additional Mortgage Loans
identified on the related Mortgage Loan Schedule attached to the related
Additional Transfer Instrument, (and allocated to Group I or Group II) delivered
by the Issuer on such Additional Transfer Date, (ii) principal and interest due
on the Additional Mortgage Loans after the related Additional Cut-off Date and
all other proceeds received in respect of such Additional Mortgage Loans after
the applicable Cut-off Date for each such Additional Mortgage Loan and (iii) all
items with respect to such Additional Mortgage Loans to be delivered pursuant to
Section 3(b) of the Depositor Sale Agreement and the other items in the related
Mortgage Files; provided, however, that the Issuer reserves and retains all
right, title and interest in and to principal (including Principal Prepayments)
and interest due on the Additional Mortgage Loans on or prior to the related
Additional Cut-off Date.
The Indenture Trustee shall release from the related Pre-Funding Account an
amount equal to one-hundred percent (100%) of the aggregate principal balances
as of the applicable Additional Cut-off Date of the Additional Mortgage Loans so
Granted; provided, however, that if the aggregate principal balance as of the
applicable additional cut-off date is greater than the amount on deposit in the
applicable pre-funding account, the indenture trustee shall release an amount
not greater than the amount on deposit in such pre-funding account.
(b) The Issuer shall Grant to the Indenture Trustee the Additional
Mortgage Loans and the other property and rights related thereto described in
Section 3(b) of the Depositor Sale Agreement and the Indenture Trustee shall
release funds from the related Pre-Funding Account, only upon the satisfaction
of each of the following conditions on or prior to the related Additional
Transfer Date:
(A) the Issuer shall have provided the Indenture Trustee and
the Note Insurer with a timely Addition Notice and shall have provided any
information reasonably requested by the Indenture Trustee or the Note
Insurer with respect to the Additional Mortgage Loans;
(B) the Issuer shall have delivered to the Indenture Trustee a
duly executed Additional Transfer Instrument, which shall include a
Mortgage Loan Schedule, listing the Additional Mortgage Loans and
allocated to Group I or Group II;
(C) as of each Additional Transfer Date, the Issuer shall not
be insolvent nor shall it have been made insolvent by such Grant nor shall
it be aware of any pending insolvency;
(D) the Issuer shall have delivered to the Indenture Trustee
an Opinion of Counsel confirming that such Grant shall not result in a
material adverse tax consequence to the Trust Estate or the Noteholders;
(E) the Funding Period shall not have terminated;
(F) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate, confirming the satisfaction of each condition
precedent and the representations specified in this Section 2.14(b) and
Section 2.14(c) and in the related Additional Transfer Instrument;
(G) the Servicer has deposited into the Collection Account all
collections on the Additional Mortgage Loans since the Additional Cut-off
Date;
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(H) each of RBMG, the Company, the Depositor and Funding Co.
has delivered to the Indenture Trustee, the Rating Agencies and the Note
Insurer legal opinions (bankruptcy and corporate) with respect to the
Additional Mortgage Loans in substantially the form delivered on the
Closing Date; and
(I) the Insurer has delivered to the Servicer and the
Indenture Trustee an officer's certificate approving the subsequent
transfer and indicating whether any adjustments to the Required
Overcollateralization Amount is to be made following the transfer, and
(J) five Business Days prior to the Additional Transfer Date,
the Issuer shall have delivered the Mortgage Files to the Custodian on
behalf of the Indenture Trustee, for review in order that the Custodian on
behalf of the Indenture Trustee, is able to deliver the Initial
Certification, as provided in Section 6.15(a) with respect to such
Additional Mortgage Loans.
(c) Any Grant of an Additional Mortgage Loan on an Additional
Transfer Date is subject to the following representations and warranties of the
Issuer with respect to the Additional Mortgage Loans and must satisfy the
representations and warranties specified in the related Additional Transfer
Instrument and this Indenture: (i) the Issuer will not select such Additional
Mortgage Loan in a manner that it believes is adverse to the interests of the
Noteholders and the Note Insurer; (ii) after giving effect to such Additional
Mortgage Loan, the Additional Mortgage Loans Granted hereunder and allocated to
Group I shall have the following characteristics, in the aggregate:
(A) the Additional Mortgage Loans shall have a weighted
average Loan-to-Value Ratio of not more than 78.5%;
(B) the weighted average Coupon Rate on the Additional
Mortgage Loans should be no less than 9.63%;
(C) the weighted average Gross Margin on the Additional
Mortgage Loans should be no less than 6.40%;
(D) the Additional Mortgage Loans will have a weighted average
Stated Principal Balance of not greater than $114,000, and no Additional
Mortgage Loan will have a Stated Principal Balance greater than $227,150.
Each Additional Mortgage Loan conforms to the underwriting guidelines of
FNMA;
(E) the first payment on each such Additional Mortgage Loan
shall be due no later than March 1, 1999;
(F) each Additional Mortgage Loan will have a stated maturity
of not more than 30 years;
(G) each Additional Mortgage Loan will be a fully amortizing
loan with level-payments not to exceed 30 years;
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(H) the aggregate of the Stated Principal Balances of
Additional Mortgage Loans relating to Mortgaged Properties having the same
zip code will not exceed 1.25% of the aggregate Stated Principal Balance
of the Additional Mortgage Loans and the aggregate of the Stated Principal
Balances of Additional Mortgage Loans relating to Mortgaged Properties
located in California will not exceed 28% of the aggregate Stated
Principal Balance of the Additional Mortgage Loans;
(I) no Additional Mortgage Loan will be more than 30 days
delinquent.
(J) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are A Risk Mortgage Loans will be no less
than 57.5% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(K) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are A- Risk Mortgage Loans will be no less
than 20.5% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(L) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are B Risk Mortgage Loans will be no less
than 17% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(M) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are C Risk Mortgage Loans will be no less
than 6% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(N) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are D Risk Mortgage Loans will be no
greater than 2% of the aggregate Stated Principal Balance of the
Additional Mortgage Loans;
(O) the weighted average FICO of the Additional Mortgage Loans
shall be no less than 614;
(P) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are fixed rate loans shall not exceed 15.25% of the
aggregate Stated Principal Balance of the Additional Mortgage Loans;
(Q) The aggregate Stated Principal Balance of the Additional
Mortgage Loans that are six-month LIBOR Adjustable Rate Mortgage Loans
shall not exceed 4.0% of the aggregate Stated Principal Balance of the
Additional Mortgage Loans;
(R) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are 2/28 Adjustable Rate Mortgage Loans shall not
exceed 86% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(S) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are full documentation loans under the RBMG Guidelines
shall not be less than 65% of the aggregate Stated Principal Balance of
the Additional Mortgage Loans;
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(T) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are investor loans shall not exceed 4.25% of the
aggregate Stated Principal Balance of the Additional Mortgage Loans;
(U) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are Cash-Out Refinancing loans shall not exceed 29% of
the aggregate Stated Principal Balance of the Additional Mortgage Loans;
(V) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are 15 year Balloon Loans shall not exceed 3% of the
aggregate Stated Principal Balance of the Additional Mortgage Loans;
(W) immediately following the final Additional Transfer Date,
the aggregate of the Stated Principal Balance Mortgage Loans that are
either A Risk Mortgage Loans or A- Risk Mortgage Loans will be no less
than 78% of the aggregate Stated Principal Balance of the Mortgage Loans;
and
(X) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans which have existing "silent second loans"
secured by the related Mortgaged Properties will be no more than 29% of
the aggregate Stated Principal Balance of the Additional Mortgage Loans;
(iii) after giving effect to such Additional Mortgage Loan the Additional
Mortgage Loans Granted hereunder and allocated to Group II shall have the
following characteristics in the aggregate:
(A) the Additional Mortgage Loans shall have a weighted
average Loan-to-Value Ratio of not more than 78.5%;
(B) the weighted average Coupon Rate on the Additional
Mortgage Loans should be no less than 9.63%;
(C) the weighted average Gross Margin on the Additional
Mortgage Loans should be no less than 6.40%;
(D) the Additional Mortgage Loans will have a weighted average
Stated Principal Balance of not greater than $114,000, and none of the
Additional Mortgage Loans will have a Stated Principal Balance greater
than $400,000.
(E) the first payment on each such Additional Mortgage Loan
shall be due no later than March 1, 1999;
(F) each Additional Mortgage Loan will have a stated maturity
of not more than 30 years;
(G) each Additional Mortgage Loan will be a fully amortizing
loan with level-payments not to exceed 30 years;
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(H) the aggregate of the Stated Principal Balances of
Additional Mortgage Loans relating to Mortgaged Properties having the same
zip code will not exceed 1.25% of the aggregate Stated Principal Balance
of the Additional Mortgage Loans and the aggregate of the Stated Principal
Balances of Additional Mortgage Loans relating to Mortgaged Properties
located in California will not exceed 28% of the aggregate Stated
Principal Balance of the Additional Mortgage Loans;
(I) no Additional Mortgage Loan will be more than 30 days
delinquent.
(J) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are A Risk Mortgage Loans will be no less
than 57.5% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(K) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are A- Risk Mortgage Loans will be no less
than 20.5% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(L) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are B Risk Mortgage Loans will be no less
than 17% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(M) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are C Risk Mortgage Loans will be no less
than 6% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(N) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans that are D Risk Mortgage Loans will be no
greater than 2% of the aggregate Stated Principal Balance of the
Additional Mortgage Loans;
(O) the weighted average FICO of the Additional Mortgage Loans
shall be no less than 614;
(P) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are fixed rate loans shall not exceed 15.25% of the
aggregate Stated Principal Balance of the Additional Mortgage Loans;
(Q) The aggregate Stated Principal Balance of the Additional
Mortgage Loans that are six-month LIBOR Adjustable Rate Mortgage Loans
shall not exceed 4.0% of the aggregate Stated Principal Balance of the
Additional Mortgage Loans;
(R) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are 2/28 Adjustable Rate Mortgage Loans shall not
exceed 86% of the aggregate Stated Principal Balance of the Additional
Mortgage Loans;
(S) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are full documentation loans under the RBMG Guidelines
shall not be less than 65% of the aggregate Stated Principal Balance of
the Additional Mortgage Loans;
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(T) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are investor loans shall not exceed 4.25% of the
aggregate Stated Principal Balance of the Additional Mortgage Loans;
(U) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are Cash-Out Refinancing loans shall not exceed 29% of
the aggregate Stated Principal Balance of the Additional Mortgage Loans;
(V) the aggregate Stated Principal Balance of the Additional
Mortgage Loans that are 15 year Balloon Loans shall not exceed 3% of the
aggregate Stated Principal Balance of the Additional Mortgage Loans;
(W) immediately following the final Additional Transfer Date,
the aggregate of the Stated Principal Balance Mortgage Loans that are
either A Risk Mortgage Loans or A- Risk Mortgage Loans will be no less
than 78% of the aggregate Stated Principal Balance of the Mortgage Loans;
and
(X) the aggregate of the Stated Principal Balances of the
Additional Mortgage Loans which have existing "silent second loans"
secured by the related Mortgaged Properties will be no more than 29% of
the aggregate Stated Principal Balance of the Additional Mortgage Loans.
In the sole discretion of the Note Insurer, Additional Mortgage
Loans allocable to Group I or Group II with characteristics varying from those
set forth above may be Granted by the Issuer to the Indenture Trustee for
inclusion in the Trust Estate; PROVIDED, HOWEVER, that the addition of such
Mortgage Loans will not materially affect the aggregate characteristics of the
Trust Estate.
SECTION 2.15. CERTAIN AVAILABLE INFORMATION.
The Indenture Trustee shall maintain at its Corporate Trust Office
and shall make available free of charge during normal business hours upon
reasonable prior written notice for review by any Holder of a Note or any Person
identified to the Indenture Trustee as a prospective transferee of a Note,
originals or copies of the following items: (A) this Indenture and any
amendments hereof entered into pursuant to Article IX hereof, (B) all monthly
reports required to be delivered to Noteholders pursuant to Section 8.08 since
the Closing Date, and all other notices, reports, statements and written
communications delivered to the Noteholders pursuant to this Indenture since the
Closing Date, (C) any and all Officers' Certificates delivered to the Indenture
Trustee by the Servicer since the Closing Date to evidence the Servicer's
determination that any P&I Advance was, or if made, would be a Nonrecoverable
P&I Advance and (D) any and all other Officers' Certificates delivered to the
Indenture Trustee since the Closing Date pursuant to this Indenture. Copies and
mailing of any and all of the foregoing items will be available from the
Indenture Trustee upon request at the expense of the person requesting the same.
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ARTICLE III
COVENANTS
SECTION 3.01. PAYMENT OF NOTES.
The Issuer will pay or cause to be duly and punctually paid the
principal of, and interest on, the Notes in accordance with the terms of the
Notes and this Indenture. The Notes shall be non-recourse obligations of the
Issuer and shall be limited in right of payment to amounts available from the
Trust Estate as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Notes. No person shall be personally liable for any
amounts payable under the Notes. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this Section 3.01, the
provisions of this Section 3.01 shall control.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer will cause the Note Registrar to, and the Indenture
Trustee, as initial Note Registrar agrees, to maintain its corporate trust
office at a location where Notes may be surrendered for registration of transfer
or exchange, and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served.
The Issuer may also from time to time at its own expense designate
one or more other offices or agencies within the United States of America where
the Notes may be presented or surrendered for any or all such purposes and may
from time to time rescind such designations; PROVIDED, HOWEVER, any designation
of an office or agency for payment of Notes shall be subject to Section 3.03.
The Issuer will give prompt written notice to the Indenture Trustee and the Note
Insurer of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 3.03. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
All payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the related Note Account
pursuant to Section 8.02(c) or Section 5.07 shall be made on behalf of the
Issuer by the Paying Agent, and no amounts so withdrawn from the related Note
Account for payments of Notes shall be paid over to the Issuer under any
circumstances except as provided in this Section 3.03 or in Section 5.07 or
Section 8.02.
With respect to Definitive Notes, if the Issuer shall have a Paying
Agent that is not also the Note Registrar, such Note Registrar shall furnish to
the Paying Agent, no later than the fifth calendar day after each Record Date, a
list, in such form as such Paying Agent may reasonably require, of the names and
addresses of the Holders of Notes and of the number of Individual Notes held by
each such Holder.
Whenever the Issuer shall have a Paying Agent other than the
Indenture Trustee, it will, on or before the Business Day next preceding each
Payment Date direct the Indenture Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the related Note
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Account), such sum to be held in trust for the benefit of the Persons entitled
thereto. Any moneys deposited with a Paying Agent in excess of an amount
sufficient to pay the amounts then becoming due on the Notes with respect to
which such deposit was made shall, upon Issuer Order, be paid over by such
Paying Agent to the Indenture Trustee for application in accordance with Article
VIII.
Subject to the prior consent of the Note Insurer, any Paying Agent
other than the Indenture Trustee shall be appointed by Issuer Order and at the
expense of the Issuer. The Issuer shall not appoint any Paying Agent (other than
the Indenture Trustee) that is not, at the time of such appointment, a
depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (c) of the definition of the term Permitted
Investments. The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) allocate all sums received for payment to the Holders of
Notes on each Payment Date among such Holders in the proportion specified
in the applicable Payment Date Statement, in each case to the extent
permitted by applicable law;
(ii) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(iii) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of the Notes if at
any time the Paying Agent ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;
(iv) if such Paying Agent is not the Indenture Trustee, give
the Indenture Trustee notice of any Default by the Issuer (or any other
obligor upon the Notes) in the making of any payment required to be made
with respect to any Notes for which it is acting as Paying Agent;
(v) if such Paying Agent is not the Indenture Trustee, at any
time during the continuance of any Default by the Issuer, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture Trustee
all sums so held in trust by such Paying Agent; and
(vi) comply with all requirements of the Code, and all
regulations thereunder, with respect to withholding from any payments made
by it on any Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection
therewith; PROVIDED, HOWEVER, that with respect to withholding and
reporting requirements applicable to original issue discount (if any) on
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any of the Notes, the Issuer has provided the calculations pertaining
thereto to the Indenture Trustee and the Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Issuer; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Indenture Trustee or such Paying Agent
with respect to such trust money shall thereupon cease. The Indenture Trustee
may adopt and employ, at the expense of the Issuer, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or any Agent, at the last address of record for each such Holder).
SECTION 3.04. EXISTENCE OF ISSUER.
(a) Subject to Sections 3.04(b) and (c), the Issuer will keep in
full effect its existence, rights and franchises as a business trust under the
laws of the State of Delaware or under the laws of any other state or the United
States of America, and will obtain and preserve its qualification to do business
in each jurisdiction in which it is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes, the Servicing
Agreement, the Sub-Servicing Agreement, the Insurance Agreement, the Additional
Transfer Instruments, the Management Agreement, the Depositor Sale Agreement and
the Funding Co. Sale Agreement.
(b) Subject to Section 3.09(vii), the prior consent of the Note
Insurer, and receipt from the Rating Agencies of a written statement that their
ratings and shadow ratings of the Notes in effect immediately prior to such
merger or consolidation will not be qualified, reduced or withdrawn as a result
thereof, any entity into which the Issuer may be merged or with which it may be
consolidated, or any entity resulting from any merger or consolidation to which
the Issuer shall be a party, shall be the successor Issuer under this Indenture
without the execution or filing of any paper, instrument or further act to be
done on the part of the parties hereto, anything in any agreement relating to
such merger or consolidation, by which any such Issuer may seek to retain
certain powers, rights and privileges therefore obtaining for any period of time
following such merger or consolidation to the contrary notwithstanding (other
than Section 3.09(vii)).
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(c) Upon any consolidation or merger of or other succession to the
Issuer in accordance with this Section 3.04, the Person formed by or surviving
such consolidation or merger (if other than the Issuer) may exercise every right
and power of, and shall have all of the obligations of, the Issuer under this
Indenture with the same effect as if such Person had been named as the Issuer
herein.
SECTION 3.05. PROTECTION OF TRUST ESTATE.
(a) The Issuer or a designee on its behalf, which the Issuer agrees
that as of the Closing Date shall be the Manager, will from time to time execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action as it shall have been notified by
the Indenture Trustee in writing that may be necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien of this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans, the Servicing
Agreement, the Sub-Servicing Agreement, the Company Sale Agreement, the
Management Agreement, the Funding Co. Sale Agreement, the Depositor Sale
Agreement or the Loan Contribution Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, and of the Noteholders, in the Mortgage
Loans and the other property held as part of the Trust Estate against the
claims of all Persons and parties.
(b) The Indenture Trustee shall not remove any portion of the
Trust Estate that consists of money or is evidenced by an instrument,
certificate or other writing from the jurisdiction in which it was held at
the date of the most recent Opinion of Counsel delivered pursuant to
Section 3.06 (or from the jurisdiction in which it was held, or to which
it is intended to be removed, as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 2.11(c), if no Opinion
of Counsel has yet been delivered pursuant to Section 3.06) or cause or
permit ownership or the pledge of any portion of the Trust Estate that
consists of book-entry securities to be recorded on the books of a Person
located in a different jurisdiction from the jurisdiction in which such
ownership or pledge was recorded at such time unless the Indenture Trustee
shall have first received an Opinion of Counsel to the effect that the
lien and security interest created by this Indenture with respect to such
property will continue to be maintained after giving effect to such action
or actions.
SECTION 3.06. OPINIONS AS TO TRUST ESTATE.
On or before April 30, 1999 and each April 30 thereof, the Issuer or
its designee, which as of the Closing Date the Issuer agrees shall be the
Manager, shall furnish to the
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Indenture Trustee and the Note Insurer an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee and the Note Insurer
either stating that, in the opinion of such counsel, such action has been taken
as is necessary to maintain the lien and security interest created by this
Indenture and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe all such action, if any,
that will, in the opinion of such counsel, be required to be taken to maintain
the lien and security interest of this Indenture with respect to the Trust
Estate until May 1st in the following calendar year.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING AGREEMENT.
(a) The Issuer shall punctually perform and observe all of its
obligations under this Indenture and the Servicing Agreement.
(b) The Issuer shall not take any action and will use its Best
Efforts not to permit any action to be taken by others that would release any
Person from any of such Person's covenants or obligations under any of the
documents or instruments contained in any Mortgage File or under any instrument
included in the Trust Estate, or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the documents or instruments contained in
any Mortgage File, except as expressly permitted in this Indenture, the
Servicing Agreement or such document included in the Mortgage File or other
instrument.
(c) If the Issuer shall have knowledge of the occurrence of a
default under the Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee, the Note Insurer and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect to
such default.
(d) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify
the Rating Agencies. As soon as any successor Servicer is appointed, the
Indenture Trustee shall notify the Rating Agencies, specifying in such notice
the name and address of such successor Servicer.
SECTION 3.08. INVESTMENT COMPANY ACT.
The Issuer shall at all times conduct its operations so as not to be
subject to, or shall comply with, the requirements of the Investment Company Act
of 1940, as amended (or any successor statute), and the rules and regulations
thereunder.
SECTION 3.09. NEGATIVE COVENANTS.
The Issuer shall not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this
Indenture or the Servicing Agreement;
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(ii) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of the payment of
any taxes levied or assessed upon any portion of the Trust Estate;
(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in connection with, or
relating to, the issuance of the Notes pursuant to this Indenture or amend
the Trust Agreement, as in effect on the Closing Date, other than in
accordance with the terms hereof or thereof;
(iv) incur, issue, assume or otherwise become liable for any
indebtedness other than the Notes;
(v) incur, assume, guaranty or agree to indemnify any Person
with respect to any indebtedness of any Person, except for such
indebtedness as may be incurred by the Issuer in connection with the
issuance of the Notes pursuant to this Indenture;
(vi) dissolve or liquidate in whole or in part (until the
Notes are paid in full);
(vii) (1) permit the validity or effectiveness of this
Indenture or any Grant to be impaired, or permit the lien of this
Indenture to be impaired, amended, hypothecated, subordinated, terminated
or discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (2) permit any lien, charge, security interest, mortgage or other
encumbrance (other than the lien of this Indenture or any encumbrance
permitted under the Depositor Sale Agreement) to be created on or extend
to or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof, or (3) permit the lien of
this Indenture not to constitute a valid perfected first priority security
interest in the Trust Estate; or
(viii)take any other action that should reasonably be expected
to, or fail to take any action if such failure should reasonably be
expected to, cause the Issuer to be taxable as (a) an association pursuant
to Section 7701 of the Code or (b) a taxable mortgage pool pursuant to
Section 7701(i) of the Code.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.
Not later than 90 days following the end of the fiscal year of the
Issuer beginning in 1999, the Issuer shall deliver to the Indenture Trustee, the
Note Insurer and the Underwriter a written statement, signed by an Authorized
Officer of the Owner Trustee, stating as to the signer thereof, that:
(i) a certificate, opinion or letter of a Certificateholder,
the Depositor and the Servicer as contemplated by Section 11.01(c)
regarding the fulfillment by the Issuer during such year of its
obligations under this Indenture has been received by the Issuer; and
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(ii) to the best of such Authorized Officer's knowledge, based
solely on such certificate, opinion or letter, the Issuer has complied
with all conditions and covenants under this Indenture throughout such
year, or, if there has been a Default in the fulfillment of any such
covenant or condition, specifying each such Default known to such
Authorized Officer and the nature and status thereof.
SECTION 3.11. RESTRICTED PAYMENTS.
The Issuer shall not, directly or indirectly, (i) pay any dividend
or make any distribution (by reduction of capital or otherwise), whether in
cash, property, securities or a combination thereof, to the Owner Trustee or any
owner of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such ownership
or equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; PROVIDED, HOWEVER, that the Issuer may make, or
cause to be made, distributions to the Servicer, the Indenture Trustee, the
Owner Trustee, the Note Insurer and the Certificateholders as contemplated by,
and to the extent funds are available for such purpose under, the Servicing
Agreement, the Insurance Agreement or the Trust Agreement and the Issuer will
not, directly or indirectly, make or cause to be made payments to or
distributions from the Note Account except in accordance with this Indenture.
SECTION 3.12. TREATMENT OF NOTES AS DEBT FOR TAX PURPOSES.
The Issuer shall treat the Notes as indebtedness for all federal and
state tax purposes.
SECTION 3.13. NOTICE OF EVENTS OF DEFAULT.
The Issuer shall give the Indenture Trustee, the Note Insurer, the
Rating Agencies and the Underwriter prompt written notice of each Event of
Default hereunder, each default on the part of the Servicer of its obligations
under the Servicing Agreement, each default on the part of Funding Co. of its
obligations under the Funding Co. Sale Agreement, and each default on the part
of the Depositor of its obligations under the Depositor Sale Agreement.
SECTION 3.14. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Indenture Trustee or the Note Insurer, the
Issuer will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions shall have been satisfied:
(1) either
(a) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.07, and (ii) Notes for whose
payment money has theretofore been deposited in trust and thereafter
repaid to the Issuer, as provided in Section 3.03) have been delivered to
the Note Registrar for cancellation; or
(b) all Notes not theretofore delivered to the Note Registrar
for cancellation (i) have become due and payable, or (ii) will become due
and payable at the Final Maturity Date within one year, or (iii) are to be
called for redemption within one year under irrevocable arrangements
satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense, of
the Servicer, the Majority Certificateholder, or the Note Insurer and the
Servicer, the Majority Certificateholder, or the Note Insurer in the case
of clauses (b)(i), (b)(ii) or (b)(iii) above, has irrevocably deposited or
caused to be deposited with the Indenture Trustee, in trust for such
purpose, an amount sufficient to pay and discharge the entire indebtedness
on such Notes not theretofore delivered to the Indenture Trustee for
cancellation, for principal and interest to the Final Maturity Date or to
the applicable Redemption Date, as the case may be, and in the case of
Notes that were not paid at the Final Maturity Date of their entire unpaid
principal amount, for all overdue principal and all interest payable on
such Notes to the next succeeding Payment Date therefor;
(2) the later of (a) eighteen months after payment in full of all
outstanding obligations under the Notes, and (b) the date on which the
Issuer has paid or caused to be paid all other sums payable hereunder by
the Issuer (including, without limitation, any amounts due the Note
Insurer hereunder); and
(3) the Issuer has delivered to the Indenture Trustee and the Note Insurer
an Officers' Certificate and an Opinion of Counsel satisfactory in form
and substance to the Indenture Trustee and the Note Insurer each stating
that all conditions precedent herein providing for the satisfaction and
discharge of this Indenture have been complied with; then, upon Issuer
Request, this Indenture and the lien, rights and interests created hereby
and thereby shall cease to be of further effect, and the Indenture Trustee
and each co-trustee and separate trustee, if any, then acting as such
hereunder shall, at the expense of the party redeeming the Notes, execute
and deliver all such instruments as may be necessary to acknowledge the
satisfaction and discharge of this Indenture and shall pay, or assign or
transfer and
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deliver, to the Issuer or upon Issuer Order all cash, securities and other
property held by it as part of the Trust Estate remaining after
satisfaction of the conditions set forth in clauses (1) and (2) above.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Indenture Trustee and the Paying Agent to the Issuer and
the Holders of Notes under Section 3.03, the obligations of the Indenture
Trustee to the Holders of Notes under Section 4.02 and the provisions of Section
2.07 with respect to lost, stolen, destroyed or mutilated Notes, registration of
transfers of Notes and rights to receive payments of principal of and interest
on the Notes shall survive.
SECTION 4.02. APPLICATION OF TRUST MONEY.
All money deposited with the Indenture Trustee pursuant to Sections
3.03 and 4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the Persons
entitled thereto, of the principal and interest for whose payment such money has
been deposited with the Indenture Trustee.
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ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01. EVENT OF DEFAULT.
"Event of Default", wherever used herein, means, with respect to
each Class of Notes issued hereunder, any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if the Issuer shall default in the payment on any Payment
Date of any payment of Note Interest or Monthly Principal on any Note in
such Class or fail to pay the Notes in such Class in full on or before the
Final Maturity Date (and in the case of any such default, such default or
failure shall continue for a period of 5 days unremedied);
(b) if, with respect to the related Class of Notes, the Issuer
shall breach or default in the due observance of any one or more of the
covenants set forth in clauses (i) through (viii) of Section 3.09;
(c) if, with respect to the related Class of Notes, the Issuer
shall breach, or default in the due observance or performance of, any
other of its covenants in this Indenture, the Servicing Agreement, the
Depositor. Sale Agreement or the Insurance Agreement, and such Default
shall continue for a period of 30 days after there shall have been given,
by registered or certified mail, to the Issuer and the Note Insurer by the
Indenture Trustee at the direction of the Note Insurer, or to the Issuer
and the Indenture Trustee by the Holders of Notes representing at least
25% of the Note Balance of the Outstanding Notes of the related Class,
with the prior written consent of the Note Insurer, a written notice
specifying such Default and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder;
(d) if any representation or warranty of the Issuer made in
this Indenture or any certificate or other writing delivered by the Issuer
pursuant hereto or in connection herewith, the Servicing Agreement, the
Depositor Sale Agreement or the Insurance Agreement, shall prove to be
incorrect in any material respect as of the time when the same shall have
been made and, within 30 days after there shall have been given, by
registered or certified mail, written notice thereof to the Issuer by the
Indenture Trustee at the direction of the Note Insurer, or to the Issuer
and the Indenture Trustee by the Holders of Notes representing at least
25% of the Note Balance of the related Class of the Outstanding Notes,
with the prior written consent of the Note Insurer, the circumstance or
condition in respect of which such representation or warranty was
incorrect shall not have been eliminated or otherwise cured; PROVIDED,
HOWEVER, that in the event that there exists a remedy with respect to any
such breach that consists of a purchase obligation, repurchase obligation
or right to substitute under the Basic Documents, then such purchase
obligation, repurchase obligation or right to substitute shall be the sole
remedy with respect to such breach and shall not constitute an Event of
Default hereunder;
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(e) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Issuer in an involuntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any substantial
part of its property, or ordering the winding up or liquidation of the
affairs of the Issuer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(f) the commencement by the Issuer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or the consent by the Issuer to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or of any substantial part of its
property or the making by the Issuer of an assignment for the benefit of
creditors or the failure by the Issuer generally to pay its debts as such
debts become due or the taking of corporate action by the Issuer in
furtherance of any of the foregoing.
(g) the occurrence of any event described in (a) - (f) above
with respect to the other Class.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default occurs and is continuing, then and in every such case, but
with the consent of the Note Insurer in the absence of a Note Insurer Default,
the Indenture Trustee may, and on request of the Holders of Notes representing
not less than 50% of the Note Balance of the Outstanding Notes of the related
Class, shall, declare such Notes to be immediately due and payable by a notice
in writing to the Issuer (and to the Indenture Trustee if given by Noteholders
of the related Class of Notes), and upon any such declaration such Notes, in an
amount equal to the Note Balance of such Notes, together with accrued and unpaid
interest thereon to the date of such acceleration, shall become immediately due
and payable, all subject to the prior written consent of the Note Insurer in the
absence of a Note Insurer Default.
At any time after such a declaration of acceleration of maturity of
the related Class of Notes has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article provided, the Note Insurer or the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes of the
related Class, with the prior written consent of the Note Insurer, by written
notice to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(i) all payments of principal of, and interest on, all the
related Notes and all other amounts that would then be due hereunder or
upon such Notes if the Event of Default giving rise to such acceleration
had not occurred; and
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(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of the related Notes that have become due solely by such
acceleration, have been cured or waived as provided in Section 5.14.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE. Subject to the provisions of Section 3.01 and the
following sentence, if an Event of Default occurs and is continuing, the
Indenture Trustee may, with the prior written consent of the Note Insurer in the
absence of a Note Insurer Default, proceed to protect and enforce its rights and
the rights of the Noteholders of the related Class of Notes and the Note Insurer
by any Proceedings the Indenture Trustee deems appropriate to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or enforce any other proper remedy. Any proceedings brought by the
Indenture Trustee on behalf of the Noteholders of the related Class of Notes and
the Note Insurer or any Noteholder against the Issuer shall be limited to the
preservation, enforcement and foreclosure of the liens, assignments, rights and
security interests under the Indenture and no attachment, execution or other
unit or process shall be sought, issued or levied upon any assets, properties or
funds of the Issuer, other than the Mortgage Loans in the Group related to the
Class of Notes in respect of which such Event of Default has occurred. If there
is a foreclosure of any such liens, assignments, rights and security interests
under this Indenture, by private power of sale or otherwise, no judgment for any
deficiency upon the indebtedness represented by such Class of Notes may be
sought or obtained by the Indenture Trustee or any Noteholder of the related
Class of Notes against the Issuer. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to this Article V,
including reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
SECTION 5.04. REMEDIES. If an Event of Default shall have occurred
and be continuing and the Notes of the related Class have been declared due and
payable and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee, at the direction of the Note Insurer in the
absence of a Note Insurer Default or the Holders of the related Class of Notes
representing not less than 50% of the Note Balance of the Outstanding Notes of
the related Class with the prior written consent of the Note Insurer (subject to
Section 5.17, to the extent applicable) may, for the benefit of the Noteholders
of the related Class of Notes and the Note Insurer, do one or more of the
following:
(a) institute Proceedings for the collection of all amounts then
payable on such Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer
moneys adjudged due, subject in all cases to the provisions of Sections
3.01 and 5.03;
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(b) in accordance with Section 5.17, sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or
private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of
the Notes of the related Class of Notes and the Note Insurer hereunder;
and
(e) refrain from selling the Mortgage Loans in the Group related to
such Class of Notes and apply all Remittable Funds pursuant to Section
5.07.
SECTION 5.05. INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Issuer or any other obligor upon any of the Notes or the property of the
Issuer or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether such Class of Notes shall then be due and payable as
provided in this Indenture or in the related Class of Notes or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand on the Issuer for the payment of any overdue principal or interest)
shall, with the prior written consent of, or at the direction of, the Note
Insurer in the absence of a Note Insurer Default, be entitled and empowered, by
intervention in such Proceeding or otherwise to:
(a) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of such Notes and file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel) and of the Noteholders of the related
Class of Notes and the Note Insurer allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, or sequestrator (or other similar
official) in any such Proceeding is hereby authorized by each Noteholder
of the related Class of Notes and the Note Insurer to make such payments
to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of such payments directly to the Noteholders
of the related Class of Notes and the Note Insurer, to pay to the
Indenture Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents
and counsel.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the related Class of Notes or the
rights of any Holder thereof, or the Note Insurer, or to authorize the Indenture
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Trustee to vote in respect of the claim of any Noteholder of the related Class
of Notes or the Note Insurer in any such Proceeding.
SECTION 5.06. INDENTURE TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF NOTES. All rights of action and claims under this Indenture or any
of the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee at
the direction of the Note Insurer shall be brought in its own name as trustee of
an express trust, and any recovery of judgment shall be for the ratable benefit
of the Holders of the related Class of Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (a) of Section 5.07.
SECTION 5.07. APPLICATION OF MONEY COLLECTED. If the Class of Notes
has been declared due and payable following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, any money
collected by the Indenture Trustee with respect to each Class of Notes pursuant
to this Article or otherwise and any other monies that may then be held or
thereafter received by the Indenture Trustee as security for such Class of Notes
shall be applied in the following order, at the date or dates fixed by the
Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, such Class of Notes, upon presentation
and surrender thereof:
(a) first, to the Indenture Trustee, any unpaid Indenture Trustee's
Fees then due with respect to the related Group and any other amounts
payable and due to the Indenture Trustee with respect to such Class under
this Indenture, including any costs or expenses incurred by it in
connection with the enforcement of the remedies provided for in this
Article V;
(b) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees with respect to the related Group
then due and to reimburse the Servicer for P&I Advances previously made
by, and not previously reimbursed or retained by, the Servicer and, upon
the final liquidation of the related Mortgage Loans or the final
liquidation of the Trust Estate, Servicing Advances with respect to the
related Group previously made by, and not previously reimbursed or
retained by, the Servicer;
(c) third, to the payment of Note Interest then due and unpaid upon
the Outstanding Notes of such Class through the day preceding the date on
which such payment is made;
(d) fourth, to the payment of the Note Balance of the Outstanding
Notes of such Class, up to the amount of their respective Outstanding Note
Balances, ratably, without preference or priority of any kind;
(e) fifth, such amounts set forth in (c) and (d) above with respect
to the other Class.
(f) sixth, to the payment to the Note Insurer, as subrogee to the
rights of the Noteholders, (A) the aggregate amount necessary to reimburse
the Note Insurer for any
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unreimbursed Insured Payments for such Class paid by the Note Insurer on
prior Payment Dates, together with interest thereon at the "Late Payment
Rate" specified in the Insurance Agreement from the date such Insured
Payments were paid by the Note Insurer to such Payment Date, (B) the
amount of any unpaid Note Insurer Premium for such Class then due,
together with interest thereon at the "Late Payment Rate" specified in the
Insurance Agreement from the date such amounts were due, (C) any other
amounts due and owing to the Note Insurer under the Insurance Agreement
and (D) such amounts set forth in (A), (B) and (C) above with respect to
the other Class;
(g) seventh, to the Class A-1 or Class A-2 Noteholders, any
amounts due them as a result of Prepayment Interest Shortfalls and
shortfalls in interest resulting from application of the Relief Act with
respect to Mortgage Loans in the related Group;
(h) eighth, to the payment of the entire outstanding Available
Funds Cap Rate Carry Forward Amount then due and unpaid upon the
Outstanding Notes of the related Class through the day preceding the date
on which such payment is made; and
(i) ninth, to the Owner Trustee and the Issuer, certain
amounts reimbursable to them with respect to the related Class pursuant to
the Indenture or the Trust Agreement;
(j) tenth, to the payment of the remainder, if any, to the
Issuer or any other Person legally entitled thereto.
SECTION 5.08. LIMITATION ON SUITS.
No Holder of a Class of Note shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Indenture Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the
Note Balance of the Outstanding Notes of the related Class shall have made
written request to the Indenture Trustee to institute Proceedings in
respect of such Event of Default in its own name as Indenture Trustee
hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities to
be incurred in compliance with such request;
(d) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any
such Proceeding;
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes of the related Class; and
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(f) the consent of the Note Insurer shall have been obtained;
it being understood and intended that no one or more Holders of a Class of
Notes shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of such Class of Notes or to
obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders of the
related Class of Notes.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of a
Class of Notes, each representing less than 50% of the Note Balances of the
Outstanding Notes of the related Class, the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken notwithstanding any
other provision herein to the contrary.
SECTION 5.09. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST.
Subject to the provisions in this Indenture (including Sections 3.01
and 5.03) limiting the right to recover amounts due on a Note to recovery from
amounts in the Trust Estate, the Holder of any Note shall have the right, to the
extent permitted by applicable law, which right is absolute and unconditional,
to receive payment of each installment of interest on such Note on the
respective Payment Date for such installment of interest, to receive payment of
each installment of principal of such Note when due (or, in the case of any Note
called for redemption, on the date fixed for such redemption) and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of such Holder.
SECTION 5.10. RESTORATION OF RIGHTS AND REMEDIES.
If the Indenture Trustee, the Note Insurer or any Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Indenture Trustee, the Note Insurer or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee, the
Note Insurer and the Noteholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee, the
Note Insurer and the Noteholders shall continue as though no such Proceeding had
been instituted.
SECTION 5.11. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the
Indenture Trustee, the Note Insurer or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.12. DELAY OR OMISSION NOT WAIVER.
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No delay or omission of the Indenture Trustee, the Note Insurer or
of any Holder of any Note to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Indenture Trustee, the Note Insurer or to
the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee, the Note Insurer or by the
Noteholders (with the prior consent of the Note Insurer in the absence of a Note
Insurer Default), as the case may be.
SECTION 5.13. CONTROL BY NOTEHOLDERS.
Subject to Section 8.16 hereof, the Holders of Notes representing
more than 50% of the Note Balance of the Outstanding Notes of a Class of Notes
on the applicable Record Date shall, with the consent of the Note Insurer in the
absence of a Note Insurer Default, have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale of
the Trust Estate shall be by the Holders of Notes representing the
percentage of the Note Balance of the Outstanding Notes specified in
Section 5.17(b) (i), unless Section 5.17(b) (ii) is applicable; and
(c) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
PROVIDED, HOWEVER, that, subject to Section 6.01, the Indenture Trustee
need not take any action that it determines might involve it in liability
or be unjustly prejudicial to the Noteholders not consenting.
SECTION 5.14. WAIVER OF PAST DEFAULTS.
Subject to Section 8.16 hereof, the Holders of Notes representing
more than 50% of the Note Balance of the Outstanding Notes of a Class of Notes
on the applicable Record Date may on behalf of the Holders of all the Notes, and
with the consent of the Note Insurer in the absence of a Note Insurer Default,
waive any past Default hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest
on any Note; or
(b) in respect of a covenant or provision hereof that under
Section 9.02 cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
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Section 5.15. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
Note Balance of the Outstanding Notes of the related Class of Notes, or to any
suit instituted by any Noteholder of such Class of for the enforcement of the
payment of any Required Payment Amount on any Note on or after the related
Payment Date or for the enforcement of the payment of principal of any Note on
or after the Final Maturity Date (or, in the case of any Note called for
redemption, on or after the applicable Redemption Date).
SECTION 5.16. WAIVER OF STAY OR EXTENSION LAWS.
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension of law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
in, or the performance of, this Indenture; and the Issuer (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 5.17. SALE OF TRUST ESTATE.
(a) The power to effect any sale (a "Sale") of any portion of the
Trust Estate pursuant to Section 5.04 shall not be exhausted by any one or more
Sales as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes and under this Indenture with respect thereto shall have
been paid. The Indenture Trustee may from time to time postpone any public Sale
by public announcement made at the time and place of such Sale.
(b) To the extent permitted by law, the Indenture Trustee shall not
in any private Sale sell or otherwise dispose of the Trust Estate, or any
portion thereof, unless: (i) the Holders of Notes representing not less than 50%
of the Note Balance of the Notes then Outstanding of the related Class of Notes
consent to or direct the Indenture Trustee to make such Sale; or (ii) the
proceeds of such Sale would be not less than the entire amount that would be
payable to the Holders of the Notes, in full payment thereof in accordance with
Section 5.07, on the Payment Date next succeeding the date of such Sale.
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In the absence of a Note Insurer Default, no sale hereunder shall be
effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes of the related Class
of Notes have otherwise consented or directed the Indenture Trustee, at any
public Sale of all or any portion of the Trust Estate at which a minimum bid
equal to or greater than the amount described in clause (ii) of subsection (b)
of this Section 5.17 has not been established and no Person bids an amount equal
to or greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee on behalf of the Noteholders, shall prevent such sale and
reject all bids.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(i) any Holder or Holders of Notes may bid for and purchase
the property offered for Sale, and upon compliance with the terms of sale
may hold, retain and possess and dispose of such property, without further
accountability, and may, in paying the purchase money therefor, deliver
any Outstanding Notes or claims for interest thereon in lieu of cash up to
the amount that shall, upon distribution of the net proceeds of such Sale,
be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the
Holders thereof after being appropriately stamped to show such partial
payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale thereof, and,
in lieu of paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of (A) the amount
that would be payable to the Holders of the Notes as a result of such Sale
in accordance with Section 5.07 on the Payment Date next succeeding the
date of such Sale and (B) the expenses of the Sale and of any Proceedings
in connection therewith which are reimbursable to it, without being
required to produce the Notes in order to complete any such Sale or in
order for the net Sale price to be credited against such Notes, and any
property so acquired by the Indenture Trustee shall be held and dealt with
by it in accordance with the provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate related to the Class of Notes in connection
with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its
interest in any portion of the Trust Estate related to the Class of Notes
in connection with a Sale thereof, and to take all action necessary to
effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
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Section 5.18. ACTION ON NOTES.
The Indenture Trustee's right to seek and recover judgment under
this Indenture shall not be affected by the seeking, obtaining or application of
any other relief under or with respect to this Indenture. Neither the lien of
this Indenture nor any rights or remedies of the Indenture Trustee, the Note
Insurer or the Holders of Notes shall be impaired by the recovery of any
judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate.
SECTION 5.19. NO RECOURSE TO OTHER TRUST ESTATES OR OTHER ASSETS OF
THE ISSUER.
The Trust Estate Granted to the Indenture Trustee as security for
the Notes serves as security only for the Notes. Holders of the Notes shall have
no recourse against the trust estate granted as security for any other
securities issued by the Issuer, and no judgment against the Issuer for any
amount due with respect to the Notes may be enforced against either the trust
estate securing any other securities or any other assets of the Issuer, nor may
any prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Issuer.
SECTION 5.20. APPLICATION OF THE TRUST INDENTURE ACT.
Pursuant to Section 316(a) of the TIA, all provisions automatically
provided for in Section 316(a) are hereby expressly excluded.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Indenture Trustee need perform only those duties that
are specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) In the absence of bad faith on its part, the Indenture
Trustee may request and conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and conforming
to the requirements of this Indenture. The Indenture Trustee shall,
however, examine such certificates and opinions to determine whether they
conform on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of subsection (b)
of this Section 6.01;
(ii) The Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) The Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.13 or 5.17 or exercising
any trust or power conferred upon the Indenture Trustee under this
Indenture.
(d) For all purposes under this Indenture, the Indenture Trustee
shall not be deemed to have notice or knowledge of any Event of Default
described in Section 5.01(b), 5.01(e) or 5.01(f) or any Default described in
Section 5.01(c) or 5.01(d) or of any event described in Section 3.05 unless a
Responsible Officer assigned to and working in the Indenture Trustee's corporate
trust department has actual knowledge thereof or unless written notice of any
event that is in fact such an Event of Default or Default is received by the
Indenture Trustee at the Corporate Trust Office, and such notice references the
Notes generally, the Issuer, the Trust Estate or this Indenture.
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(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of
any of the Noteholders pursuant to the provisions of this Indenture, or to make
any investigation into the facts or matters stated in any resolution, note,
statement, instrument, opinion, report, notice, request, order, approval, bond
or other paper 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 under the Servicing Agreement or otherwise.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the Maturity of the Notes,
whether such extinguishment occurs through a Sale of the Trust Estate to another
Person, the acquisition of the Trust Estate by the Indenture Trustee or
otherwise, the rights, powers and duties of the Indenture Trustee with respect
to the Trust Estate (or the proceeds thereof) and the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(h) The Indenture Trustee or any Custodian appointed pursuant to
Section 8.15 shall at all times retain possession of the Mortgage Files in the
State of New York or the State of Illinois, except for those Mortgage Files or
portions thereof released to the Servicer pursuant to this Indenture or the
Servicing Agreement.
(i) The Indenture Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Indenture or any agreement referred to
herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Note Accounts, (D) to confirm or verify
the contents of any reports or certificates of the Servicer delivered to the
Indenture Trustee pursuant to this Indenture believed by the Indenture Trustee
to be genuine and to have been signed or presented by the proper party or
parties.
SECTION 6.02. NOTICE OF DEFAULT.
Immediately after the occurrence of any Default known to the
Indenture Trustee, the Indenture Trustee shall transmit by mail to the Note
Insurer and the Underwriter notice of each such Default and, within 90 days
after the occurrence of any Default known to the Indenture Trustee, the
Indenture Trustee shall transmit by mail to all Holders of Notes notice of each
such Default, unless such Default shall have been cured or waived. Concurrently
with the mailing of any such notice to the Holders of the Notes, the Indenture
Trustee shall transmit by mail a copy of such notice to the Rating Agencies.
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SECTION 6.03. RIGHTS OF INDENTURE TRUSTEE.
(a) Except as otherwise provided in Section 6.01, the Indenture
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper Person. The Indenture Trustee need not
investigate any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) With the consent of the Note Insurer, which consent shall not be
unreasonably withheld, the Indenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or within
its rights or powers.
(e) The right of the Indenture Trustee to perform any discretionary
act enumerated in this Indenture shall not be construed as a duty, and the
Indenture Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
(f) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Fund created hereby or the
powers granted hereunder.
(g) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys or custodians, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney or custodian appointed by the Indenture Trustee with due care.
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the
certificates of authentication on the Notes, shall be taken as the statements of
the Issuer, and the Indenture Trustee and the Authenticating Agent assume no
responsibility for their correctness. The Indenture Trustee makes no
representations with respect to the Trust Estate or as to the validity or
sufficiency of this Indenture or of the Notes. The Indenture Trustee shall not
be accountable for the use or application by the Issuer of the Notes or the
proceeds thereof or any money paid to the Issuer or upon Issuer Order pursuant
to the provisions hereof.
SECTION 6.05. MAY HOLD NOTES.
The Indenture Trustee, any Agent, or any other agent of the Issuer,
in its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Sections 6.07 and 6.13, may otherwise deal with the Issuer
or any Affiliate of the Issuer with the same rights it would have if it were not
Indenture Trustee, Agent or such other agent.
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SECTION 6.06. MONEY HELD IN TRUST.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Indenture Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Issuer and
except to the extent of income or other gain on investments that are obligations
of the Indenture Trustee, in its commercial capacity, and income or other gain
actually received by the Indenture Trustee on investments, which are obligations
of others.
SECTION 6.07. ELIGIBILITY; DISQUALIFICATION.
Irrespective of whether this Indenture is qualified under the TIA,
this Indenture shall always have an Indenture Trustee who satisfies the
requirements of TIA Sections 310(a)(1) and 310(a)(5). The Indenture Trustee
shall always have a combined capital and surplus as stated in Section 6.08. The
Indenture Trustee shall be subject to TIA Section 310(b).
SECTION 6.08. INDENTURE TRUSTEE'S CAPITAL AND SURPLUS.
The Indenture Trustee shall at all times be a corporation or banking
association organized and doing business under the laws of the United States or
any state thereof, be authorized under such laws to exercise corporate trust
powers, be subject to supervision or examination by federal or state
authorities, and have a combined capital and surplus of at least $50,000,000 or
shall be a member of a bank holding company system, the aggregate combined
capital and surplus of which is at least $50,000,000. If the Indenture Trustee
publishes annual reports of condition of the type described in TIA Section
310(a)(1), its combined capital and surplus for purposes of this Section 6.08
shall be as set forth in the latest such report. If at any time the Indenture
Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.08, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. SECTION 6.09. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.10.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Issuer, the Note Insurer, each Rating Agency, and the
Servicer. If an instrument of acceptance by a successor Indenture Trustee shall
not have been delivered to the Indenture Trustee within 30 days after the giving
of such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee. Any successor Indenture Trustee must be approved by the Note Insurer
and the Rating Agencies.
(c) The Indenture Trustee may be removed at any time by the Note
Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Balance of the Outstanding Notes of both
Classes, delivered to the Indenture Trustee and to the Issuer.
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(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest
prohibited by Section 6.07 and shall fail to resign or eliminate such
conflicting interest in accordance with Section 6.07 after written request
therefor by the Issuer or by any Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible under
Section 6.08 or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent, or a receiver of the Indenture Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation; then, in any such
case, (i) the Issuer by an Issuer Order, with the consent of the Note
Insurer, may remove the Indenture Trustee, and the Issuer shall join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such
successor Indenture Trustee any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Indenture;
PROVIDED, HOWEVER, if the Issuer and the Note Insurer do not join in such
appointment within fifteen (15) days after the receipt by it of a request
to do so, or in case an Event of Default has occurred and is continuing,
the Indenture Trustee may petition a court of competent jurisdiction to
make such appointment, or (ii) subject to Section 5.15, and, in the case
of a conflicting interest as described in clause (1) above, unless the
Indenture Trustee's duty to resign has been stayed as provided in TIA
Section 310(b), the Note Insurer or any Noteholder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself
and all others similarly situated, with the consent of the Note Insurer,
petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Issuer, by an Issuer Order, shall promptly appoint a
successor Indenture Trustee acceptable to the Note Insurer and the Rating
Agencies. If within one year after such resignation, removal or incapability or
the occurrence of such vacancy a successor Indenture Trustee shall be appointed
by the Note Insurer or, with the consent of the Note Insurer, by Act of the
Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes of both Classes delivered to the Issuer and the retiring
Indenture Trustee, the successor Indenture Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Indenture Trustee
(subject to approval by the Rating Agencies) and supersede the successor
Indenture Trustee appointed by the Issuer. If no successor Indenture Trustee
shall have been so appointed by the Issuer, the Note Insurer or Noteholders and
shall have accepted appointment in the manner hereinafter provided, any
Noteholder who has been a bona fide Holder of a Note for at least six months
may, on behalf of himself and all others similarly situated, with the consent of
the Note Insurer and the Rating Agencies, petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee to the Holders of Notes
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and the Note Insurer. Each notice shall include the name of the successor
Indenture Trustee and the address of its Corporate Trust Office.
SECTION 6.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Note Insurer and the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective
and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Indenture Trustee. Notwithstanding the foregoing, on request of
the Issuer or the successor Indenture Trustee, such retiring Indenture Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee, and shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by such
retiring Indenture Trustee hereunder. Upon request of any such successor
Indenture Trustee, the Issuer shall execute and deliver any and all instruments
for more fully and certainly vesting in and confirming to such successor
Indenture Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment unless
(i) at the time of such acceptance such successor Indenture Trustee shall be
qualified and eligible under this Article and (ii) the Note Insurer and the
Rating Agencies have approved such appointment.
SECTION 6.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF INDENTURE TRUSTEE.
Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor of
the Indenture Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Notes have been authenticated, but not delivered, by the Indenture Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Indenture Trustee may adopt such authentication and deliver the
Notes so authenticated with the same effect as if such successor Indenture
Trustee had authenticated such Notes.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Indenture Trustee (and any co-trustee or separate trustee) shall
be subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b), and an Indenture Trustee (and any co-trustee or separate
trustee) who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.
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Section 6.13. CO-INDENTURE TRUSTEES AND SEPARATE INDENTURE TRUSTEES.
At any time or times, for the purpose of meeting the requirements of
this Indenture or of any jurisdiction in which any of the Trust Estate may at
the time be located, the Indenture Trustee shall have power to appoint, and,
upon the written request of the Indenture Trustee, of the Note Insurer or of the
Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes of both Classes with respect to which a co-trustee or separate
trustee is being appointed with the consent of the Note Insurer, the Issuer
shall for such purpose join with the Indenture Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Indenture Trustee either to act
as co-trustee, jointly with the Indenture Trustee, of all or any part of the
Trust Estate, or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such Person or Persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of
this Section. If the Issuer does not join in such appointment within 15 days
after the receipt by it of a request to do so, or in case an Event of Default
has occurred and is continuing, the Indenture Trustee alone shall have power to
make such appointment. All fees and expenses of any co-trustee or separate
trustee shall be payable by the Issuer.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer.
Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms:
(a) The Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be exercised,
solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby conferred or
imposed upon the Indenture Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee or by the Indenture Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Indenture
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by an Issuer Order,
may accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, in case an Event of Default has occurred and
is continuing, the Indenture Trustee shall have power to accept the resignation
of, or remove, any such co-trustee or separate trustee without the concurrence
of the Issuer upon the written request of the Indenture Trustee, the Issuer
shall join with the Indenture
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Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Indenture Trustee, or any other
such trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee shall
be deemed to have been delivered to each such co-trustee and separate trustee.
(f) Any separate trustee or co-trustee may, at any time, constitute
the Indenture Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.14. AUTHENTICATING AGENTS.
Issuer shall appoint an Authenticating Agent with power to act on
its behalf and subject to its direction in the authentication and delivery of
the Notes designated for such authentication by the Issuer and containing
provisions therein for such authentication (or with respect to which the Issuer
has made other arrangements, satisfactory to the Indenture Trustee and such
Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges under Section 2.06, as
fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by that Section to authenticate and deliver Notes. For all
purposes of this Indenture (other than in connection with the authentication and
delivery of Notes pursuant to Sections 2.05 and 2.11 in connection with their
initial issuance), the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Notes "by the Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.07 for the Indenture Trustee hereunder and has an
office for presentation of Notes in the United States of America. The Indenture
Trustee shall initially be the Authenticating Agent and shall be the Note
Registrar as provided in Section 2.06. The office from which the Indenture
Trustee shall perform its duties as Note Registrar and Authenticating Agent
shall be the Corporate Trust Office. Any Authenticating Agent appointed pursuant
to the terms of this Section 6.14 or pursuant to the terms of any supplemental
indenture shall deliver to the Indenture Trustee as a condition precedent to the
effectiveness of such appointment an instrument accepting the trusts, duties and
responsibilities of Authenticating Agent and of Note Registrar or co-Note
Registrar and indemnifying the Indenture Trustee for and holding the Indenture
Trustee harmless against, any loss, liability or expense (including reasonable
attorneys' fees) incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance, administration of the trust or
exercise of authority by such Authenticating Agent, Note Registrar or co-Note
Registrar.
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Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Issuer. The Issuer may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Issuer
shall promptly appoint a successor Authenticating Agent, shall give written
notice of such appointment to the Indenture Trustee, and shall mail notice of
such appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e), to pay to
any Authenticating Agent from time to time reasonable compensation for its
services and the Indenture Trustee shall be entitled to be reimbursed for such
payments pursuant to Section 8.02. The provisions of Sections 2.09, 6.04 and
6.05 shall be applicable to any Authenticating Agent.
SECTION 6.15. REVIEW OF MORTGAGE FILES.
(a) The Indenture Trustee shall cause a Custodian on its behalf to
review, for the benefit of the Noteholders and the Note Insurer, each Mortgage
File prior to the Closing Date and prior to each Additional Transfer Date to
ascertain that all documents required to be included in the Mortgage File are
included therein, and shall deliver, or cause to be delivered, to the Issuer,
RBMG, the Company, Funding Co., the Depositor, the Note Insurer and the Servicer
on the Closing Date or each Additional Transfer Date, as the case may be, an
Initial Certification with respect to each Mortgage Loan covered thereby to the
effect that, except as specifically noted on a schedule of exceptions thereto,
(A) all documents required to be contained in the related Mortgage File are in
its possession, (B) such documents have been reviewed by it and appear regular
on their face and relate to such Mortgage Loan, and (C) based on its examination
and only as to the foregoing documents, the information set forth on the related
Mortgage Loan Schedule accurately reflects information set forth in the related
Mortgage File.
(b) On each of (i) the 45th day after the Closing Date and (ii) the
270th day after the Closing Date, the Indenture Trustee shall deliver, or cause
a Custodian on its behalf to deliver, to the Issuer, RBMG, the Depositor, the
Company, Funding Co., the Note Insurer and the Servicer, on the date referred to
in clause (i) of this subsection an Interim Certification, and on the date
referred to in clause (ii) of this subsection (b), a Final Certification, with
respect to each Mortgage Loan to the effect that, except as specifically noted
on a schedule of exceptions thereto, (A) all documents required to be contained
in the related Mortgage File are in its possession, (B) such documents have been
reviewed by it and appear regular on their face and relate to such Mortgage
Loan, and (C) based on its examination and only as to the foregoing documents,
the information set forth on the related Mortgage Loan Schedule accurately
reflects information set forth in the related Mortgage File.
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(c) It is understood that before making the Initial Certification,
the Interim Certifications and the Final Certification, the Indenture Trustee,
or a Custodian on its behalf, shall examine the related Mortgage File to confirm
that:
(i) each Mortgage Note and Mortgage bears an original
signature or signatures purporting to be that of the Person or Persons
named as the maker and mortgagor/trustor or, if photocopies are permitted,
that such copies bear a reproduction of such signature or signatures;
(ii) except for the endorsement to the Indenture Trustee,
neither the Mortgage nor any Assignment, on the face or the reverse
side(s) thereof, contains evidence of any unsatisfied claims, liens,
security interests, encumbrances or restrictions on transfer;
(iii) the principal amount of the indebtedness secured by the
related Mortgage is identical to the original principal amount of the
related Mortgage Note;
(iv) the Assignment of the related Mortgage from RBMG to the
Indenture Trustee is in the form required pursuant to Section 4(b)(iv) of
the Loan Contribution Agreement, and bears an original signature of RBMG
and any other necessary party (or signatures purporting to be that of RBMG
and any such other party) or, if photocopies are permitted, that such
copies bear a reproduction of such signature or signatures;
(v) if intervening Assignments are included in the Mortgage
File, each such intervening Assignment bears an original signature of the
related mortgagee and/or the assignee (and any other necessary party) (or
signatures purporting to be that of each such party) or, if photocopies
are permitted, that such copies bear a reproduction of such signature or
signatures; (vi) if either a title insurance policy, a preliminary title
report or a written commitment to issue a title insurance policy is
delivered, the address of the real property set forth in such policy,
report or written commitment is identical to the real property address
contained in the related Mortgage; and
(vii) if any of a title insurance policy, certificate of title
insurance or a written commitment to issue a title insurance policy is
delivered, such policy, certificate or written commitment is for an amount
not less than the original principal amount of the related Mortgage Note
and such title insurance policy insures that the related Mortgage creates
a first lien, senior in priority to all other deeds of trust, mortgages,
deeds to secure debt, financing statements and security agreements and to
any mechanics' liens, judgment liens or writs of attachment (or if the
title insurance policy or certificate of title insurance has not been
issued, the written commitment for such insurance obligates the insurer to
issue such policy for an amount not less than the original principal
amount of the related Mortgage Note);
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PROVIDED THAT, with respect to the Initial Certification, the scope of such
review shall only include those items described in clauses (i) (solely with
respect to each Mortgage Note), (iv) and (v) above.
(d) In giving the Initial Certification, the Interim Certifications
and the Final Certification, the Indenture Trustee shall be under no duty or
obligation (i) to inspect, review or examine any such documents, instruments,
securities or other papers to determine that they or the signatures thereto are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face or (ii) to determine whether any Mortgage File should include a
flood insurance policy, any rider, addenda, surety or guaranty agreement, power
of attorney, buy down agreement, assumption agreement, modification agreement,
written assurance or substitution agreement.
(e) No later than the fifth Business Day of each third month,
commencing in March, 1999, the Indenture Trustee shall deliver, or cause a
Custodian on its behalf to deliver, to the Company, Funding Co., RBMG, the
Servicer and the Note Insurer a recordation report dated as of the first day of
such month, identifying those Mortgage Loans for which it has not yet received
(i) an original recorded Mortgage or a copy thereof certified to be true and
correct by the public recording office in possession of such Mortgage or (ii) an
original recorded Assignment of the Mortgage to the Indenture Trustee and any
required intervening Assignments or a copy thereof certified to be a true and
correct copy by the public recording office in possession of such Assignment.
SECTION 6.16. INDENTURE TRUSTEE FEES AND EXPENSES.
(a) On each Payment Date, the Indenture Trustee shall be entitled to
receive its Indenture Trustee Fee (which shall not be limited by any provision
of law in regard to the compensation of a trustee of any express trust) from
amounts deposited into the Note Accounts on the related Servicer Remittance
Date. The Indenture Trustee Fee constitutes compensation for all services
rendered by the Indenture Trustee in the exercise and performance of any of the
powers and duties hereunder. The Indenture Trustee does not and will not have
any lien on the Trust Estate for payment of any such fees or expenses.
(b) This Section 6.16 shall survive the termination of this
Indenture or the resignation or removal of the Indenture Trustee as regards
rights accrued prior to such resignation or removal.
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ARTICLE VII
NOTEHOLDERS' LISTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS.
(a) The Issuer shall furnish or cause to be furnished to the
Indenture Trustee (i) semi-annually, not less than 45 days nor more than 60 days
after the Payment Date occurring closest to six months after the Closing Date
and each Payment Date occurring at six-month intervals thereafter, all
information in the possession or control of the Issuer, in such form as the
Indenture Trustee may reasonably require, as to names and addresses of the
Holders of Notes, and (ii) at such other times, as the Indenture Trustee may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished.
(b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under subsection (a), the Issuer shall also
furnish all Noteholder lists, if any, required under Section 3.03 at the times
required by Section 3.03.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of the Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.03. REPORTS BY INDENTURE TRUSTEE.
(a) Within 60 days after December 31 of each year (the "reporting
date"), commencing with the year after the issuance of the Notes, (i) the
Indenture Trustee shall, if required by TIA Section 313(a), mail to all Holders
a brief report dated as of such reporting date that complies with TIA Section
313(a); (ii) the Indenture Trustee shall, to the extent not set forth in the
Payment Date Statement pursuant to Section 2.08(d), also mail to Holders of
Notes and the Note Insurer with respect to which it has made advances, any
reports with respect to such advances that are required by TIA Section
313(b)(2); and, the Indenture Trustee shall also mail to Holders of Notes and
the Note Insurer any reports required by TIA Section 313(b)(1). For purposes of
the information required to be included in any such reports pursuant to TIA
Sections 313(a)(2), 313(b)(1) (if applicable), or 313(b)(2), the principal
amount of indenture securities
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outstanding on the date as of which such information is provided shall be the
Note Balance of the then Outstanding Notes covered by the report.
(b) A copy of each report required under this Section 7.03 shall, at
the time of such transmission to Holders of Notes and the Note Insurer be filed
by the Indenture Trustee with the Commission and with each securities exchange
upon which the Notes are listed. The Issuer will notify the Indenture Trustee
when the Notes are listed on any securities exchange.
SECTION 7.04. REPORTS BY ISSUER.
The Issuer (a) shall deliver to the Indenture Trustee within 15 days
after the Issuer is required to file the same with the Commission copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and (b) shall also comply with the other provisions of TIA Section
314(a).
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ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
SECTION 8.01. COLLECTION OF MONEYS.
Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture.
If the Indenture Trustee shall not have received the Remittable
Funds by close of business on any related Servicer Remittance Date, the
Indenture Trustee shall, unless the Issuer or the Servicer shall have made
provisions satisfactory to the Indenture Trustee for delivery to the Indenture
Trustee of an amount equal to such Remittable Funds, deliver a notice, with a
copy to the Note Insurer, to the Issuer and to the Servicer of the Servicer's
failure to remit such Remittable Funds and that such failure, if not remedied by
the close of business on the Business Day after the date upon which such notice
is delivered to the Servicer, shall constitute an event of default under the
Servicing Agreement. If the Indenture Trustee shall subsequently receive any
such Remittable Funds by 2:00 p.m. Eastern Time on such Business Day, such event
of default shall not be deemed to have occurred. Notwithstanding any other
provision hereof, the Indenture Trustee shall deliver to the Issuer or the
Servicer, or their respective designee or assignee, any Remittable Funds
received with respect to a Mortgage Loan after the related Servicer Remittance
Date to the extent that the Issuer or the Servicer, respectively, previously
made payment or provision for payment with respect to such Remittable Funds in
accordance with this Section 8.01, and any such Remittable Funds shall not be
deemed part of the Trust Estate. Except as otherwise expressly provided in this
Indenture and the Servicing Agreement, if, following delivery by the Indenture
Trustee of the notice described above, the Servicer shall fail to remit the
Remittable Funds on any Servicer Remittance Date, the Indenture Trustee shall
deliver a second notice to the Servicer, the Issuer and the Note Insurer by 2:00
p.m. Eastern Time on the third Business Day prior to the related Payment Date
indicating that an event of default occurred and is continuing under the
Servicing Agreement. Thereupon, the Indenture Trustee shall take such actions as
are required of the Indenture Trustee under Article V of the Servicing
Agreement. In addition, if a default occurs in any other performance required
under the Servicing Agreement, the Indenture Trustee may, with the consent of
the Note Insurer, and upon the request of the Note Insurer or, with the consent
of the Note Insurer, the Holders of Notes representing more than 50% of the Note
Balance of the Outstanding Notes of both Classes shall, take such action as may
be appropriate to enforce such payment or performance including the institution
and prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article V.
SECTION 8.02. ESTABLISHMENT OF ACCOUNTS;
(a) The Issuer hereby directs the Indenture Trustee to establish for
each Class of Notes, one or more separate trust accounts that shall collectively
be the "NOTE ACCOUNT" for such
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Class on or before the Closing Date. The Indenture Trustee shall promptly
deposit in the related Note Account (i) all Remittable Funds for the related
Group received by it from the Servicer pursuant to the Servicing Agreement, (ii)
any other funds from any deposits for such Group to be made by the Servicer
pursuant to the Servicing Agreement, (iii) any amount for such Group required to
be deposited in the related Note Account pursuant to Section 8.04, (iv) all
amounts received pursuant to Section 8.05, (v) amounts withdrawn from the
Reserve Account and deposited into such Note Account in accordance with Section
8.18 hereof and (vi) all other amounts received for deposit in the related Note
Account, including the payment of any Purchase Price received by the Indenture
Trustee. All amounts that are deposited from time to time in the related Note
Account are subject to withdrawal by the Indenture Trustee for the purposes set
forth in subsections (c) and (e) of this Section 8.02. All funds withdrawn from
the related Note Account pursuant to subsection (c) of this Section 8.02 for the
purpose of making payments to the Holders of Notes shall be applied in
accordance with Section 3.03.
(b) So long as no Default or Event of Default shall have occurred
and be continuing, amounts held in the Note Account (other than amounts received
pursuant to Section 8.05) shall be invested in Permitted Investments, which
Permitted Investments shall mature no later than the Business Day preceding the
immediately following Payment Date.
All income or other gains, if any, from investment of moneys
deposited in the Note Account shall be for the benefit of the Issuer and on each
Payment Date, any such amounts may be released from the Note Account and paid to
the Issuer for deposit in the Certificate Distribution Account established and
maintained pursuant to the Trust Agreement. Any loss resulting from such
investment of moneys deposited in a Note Account shall be reimbursed immediately
as incurred to such Note Account by the Issuer. Subject to Section 6.01 and the
preceding sentence, the Issuer shall not in any way be held liable by reason of
any insufficiency in such Note Account.
(c) On each Payment Date, the Indenture Trustee shall withdraw
amounts on deposit in each Note Account and pay on a PARI PASSU basis the Note
Insurer Premium, the Indenture Trustee Fee for the related Group, and, provided
notice is given to the Indenture Trustee no later than the 4th Business Day
prior to the Payment Date, amounts required to pay the Servicer any unpaid
related Servicing Fees then due and to reimburse the Servicer for related P&I
Advances and Servicing Advances previously made by and not previously reimbursed
to or retained by, the Servicer, which are so reimbursable to the Servicer
pursuant to the Servicing Agreement (as reported in writing by the Servicer to
the Indenture Trustee). After payment of such amounts, unless the Notes have
been declared due and payable pursuant to Section 5.02 and moneys collected by
the Indenture Trustee are being applied in accordance with Section 5.07,
Available Funds on deposit in the related Note Account on any Payment Date or
Redemption Date shall be withdrawn from the related Note Account (unless
otherwise specified herein), in the amounts required, for application on such
Payment Date as follows:
(i) first, to the payment to the Note Insurer, as subrogee to
the rights of the Noteholders, out of Total Available Funds for such
Class, the aggregate amount necessary to reimburse the Note Insurer for
any unreimbursed payments of Insured Payments and unpaid Note Insurer
Premiums (together with interest thereon at the Late Payment Rate
specified in the Insurance Agreement); PROVIDED, HOWEVER, that the Note
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Insurer shall be paid unreimbursed Insured Payments and unpaid related
Note Insurer Premiums (and any interest thereon) only after each Class of
Noteholders has received Note Interest and any Overcollateralization
Deficit with respect to such Payment Date;
(ii) second, to the Class A-1 or Class A-2 Noteholders, the
Note Interest for such Class out of amounts then on deposit in the related
Note Account, with respect to such Payment Date;
(iii) third, to the Noteholders of the other Class, out of
amounts then on deposit in the Note Account not related to the Class to be
paid, any Note Interest for such other Class remaining unpaid after
application of clause (ii) above;
(iv) fourth, to the Class A-1 or Class A-2 Noteholders, out of
amounts then on deposit in the other Note Account, an amount equal to any
Overcollateralization Deficit for such Class (computed as if the Monthly
Principal for such Class and Excess Cash for such Group on such Payment
Date had been paid) to reduce the related Note Balance of such Class until
such Note Balance is reduced to zero;
(v) fifth, to the Class A-1 or Class A-2 Noteholders, out of
amounts then on deposit in the Note Account for such Class, the amount of
applicable Monthly Principal for the Notes of such Class with respect to
such Payment Date, to reduce the related Note Balance until such Note
Balance is reduced to zero;
(vi) sixth, to the Note Insurer, any amounts due and owing
under the Insurance Agreement that are not described in clause (i) above;
(vii) seventh, to the Class A-1 or Class A-2 Noteholders, out
of amounts then on deposit in the Note Account for such Class, to reduce
the Note Balance for such Class, the amount, if any, equal to the lesser
of (A) Excess Cash with respect to the related Group for such Payment
Date, and (B) the lesser of (1) the amount necessary for the
Overcollateralization Amount for such Class to equal the Required
Overcollateralization Amount for such Class on such Payment Date (after
paying the Monthly Principal to the related Class for such Payment Date)
and (2) the amount necessary to reduce the related Note Balance to zero:
(viii) eighth, to the Reserve Account, in the event that the
Overcollateralization Amount with respect to Class A-1 or Class A-2 is
less than the Required Overcollateralization Amount for such Class, out of
amounts on deposit in the Note Account related to the other Class, to the
extent of any such shortfall;
(ix) ninth, to the Class A-1 or Class A-2 Noteholders, the
Available Funds Cap Carry Forward Amount related to such Class for such
Payment Date; and
(x) tenth, to the Class A-1 or Class A-2 Noteholders, any
amounts due them as a result of Prepayment Interest Shortfalls and
shortfalls in interest resulting from application of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended (the "Relief Act") with
respect to Mortgage Loans in the related Group;
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(xi) eleventh, to the Class A-1 or Class A-2 Noteholders, out
of amounts then on deposit on the other Note Account, an amount equal to
any remaining shortfall in the amounts described in clauses (ix) and (x)
preceding, in that order, with respect to such Class;
(xii) twelfth, to the Owner Trustee, the Servicer and the
Issuer, certain amounts reimbursable to them with respect to the related
Group pursuant to the Indenture, the Owner Trust Agreement, or the
Servicing Agreement.
(d) Upon the earlier to occur of (i) the March 25, 1999 Payment Date
and (ii) the satisfaction and discharge of this Indenture, the Indenture Trustee
shall withdraw any amount remaining in the Pre-Funding Accounts and pay such
amounts to the Noteholders of the related Class of Notes as a prepayment in
reduction of the Outstanding Note Balance of such Class.
(e) On or after each Payment Date, so long as the Indenture Trustee
shall have prepared a Payment Date Statement in respect of such Payment Date and
shall have made, or, in accordance with Section 3.03, set aside from amounts in
the Note Account an amount sufficient to make, the payments required to be made
as set forth in Section 8.02(c) as indicated in such Payment Date Statement, the
Available Funds with respect to the current Payment Date, if any, remaining in
the related Note Account, after application thereof in accordance Section
8.02(c)(i) - (xii), shall be withdrawn from the related Note Account by the
Indenture Trustee and, so long as no Default or Event of Default shall have
occurred and be continuing, shall be released from the lien of this Indenture
and paid by the Indenture Trustee to the related Certificate holders.
(f) Any payments made by the Indenture Trustee to the Issuer
pursuant to this Section 8.02 shall be remitted to the Certificate Distribution
Account established and maintained pursuant to the Trust Agreement.
(g) In the event the Indenture Trustee is required to establish a
Collection Account pursuant to the Servicing Agreement, the Indenture Trustee
shall establish and maintain such account in the manner required under the
Servicing Agreement. The Indenture Trustee shall reinvest amounts in the
Collection Account at the direction of the Servicer in Permitted Investments.
All income or other gains, if any, from investment of moneys deposited in the
Collection Account shall be for the benefit of the Servicer and on each Servicer
Remittance Date the Indenture Trustee shall release any such amounts from the
Collection Account to the Servicer.
SECTION 8.03. PRE-FUNDING ACCOUNTS.
(a) The Issuer hereby directs the Indenture Trustee to establish, at
the Corporate Trust Office, one or more accounts that shall collectively be the
"Pre-Funding Account" with respect to each Group, on or before the Closing Date.
The Indenture Trustee shall, promptly upon receipt, deposit in each Pre-Funding
Account and retain therein the related Original Pre-Funding Amount remitted on
the Closing Date to the Indenture Trustee by the Issuer.
(b) Amounts on deposit in the Pre-Funding Account with respect to
each Group shall be withdrawn by the Indenture Trustee as follows:
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(i) On any Additional Transfer Date, the Indenture Trustee,
upon written direction from the Issuer, shall withdraw from the related
Pre-Funding Account an amount equal to 100% of the aggregate Stated
Principal Balances of the Additional Mortgage Loans allocated to such
Group and Granted to the Indenture Trustee on such Additional Transfer
Date and pay such amount to or upon the order of the Issuer upon
satisfaction of the conditions with respect to such Grant set forth in
Section 2.14(b) above with respect to all Additional Mortgage Loans;
(ii) If the related Outstanding Pre-Funding Amount has not
been reduced to zero during the Funding Period, on the March 25, 1999
Payment Date, the Indenture Trustee shall effect the payment described in
Section 8.02(d) above;
and also, in no particular order of priority:
(iii) To withdraw any amount not required to be deposited in
the related Pre-Funding Account or deposited therein in error; and
(iv) To clear and terminate the related Pre-Funding Account
upon the earliest to occur of (A) the March 25, 1999 Payment Date and (B)
the satisfaction and discharge of this Indenture.
(c) So long as no Default or Event of Default shall have occurred
and be continuing, amounts held in each Pre-Funding Account shall be invested in
Permitted Investments, which Permitted Investments shall mature no later than
the Business Day preceding the immediately following Additional Transfer Date.
All income or other gains, if any, from investment of moneys deposited in each
Pre-Funding Account shall be for the benefit of the Issuer and on each Payment
Date, any such amounts may be released from a Pre-Funding Account and paid to
the Issuer for deposit in the Certificate Distribution Account established and
maintained pursuant to the Trust Agreement. Any loss resulting from such
investment of moneys deposited in a Pre-Funding Account shall be reimbursed
immediately as incurred to the Pre-Funding Account by the Issuer. Subject to
Section 6.01 and the preceding sentence, the Issuer shall not in any way be held
liable by reason of any insufficiency in a Pre-Funding Account.
SECTION 8.04. INTEREST COVERAGE ACCOUNTS.
(a) The Issuer hereby directs the Indenture Trustee to establish, at
the Corporate Trust Office, one or more accounts that shall collectively be the
"Interest Coverage Account" with respect to each Class of Notes, on or before
the Closing Date. The Indenture Trustee shall, promptly upon receipt, deposit in
each Interest Coverage Account and retain therein the Interest Coverage Amount
remitted on the Closing Date to the Indenture Trustee by the Issuer for such
Class. Funds deposited in each Interest Coverage Account shall be held in trust
by the Indenture Trustee for the benefit of the Noteholders of the related Class
of Notes and the Note Insurer for the uses and purposes set forth herein. All
income and gain realized from investment of funds deposited in each Interest
Coverage Account shall be for the sole and exclusive benefit of the Issuer and
shall be remitted by the Indenture Trustee to the Issuer on the first Business
Day following each Payment Date. The Issuer shall deposit in the related
Interest Coverage Account
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the amount of any net loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss.
(b) On the January 25, 1999 Payment Date, the Trustee shall withdraw
from each Interest Coverage Account and deposit in the related Note Account an
amount equal to (i) 44 days' interest on the related Original Pre-Funding Amount
calculated at a rate equal to the related Note Interest Rate for such Payment
date plus the Note Insurer Premium for such Payment date minus (ii) an amount
equal to the sum of (A) interest payments received on Additional Mortgage Loans
Granted to the Indenture Trustee for inclusion in the Trust Estate and allocated
to the related Group during the related Due Period (net of the related Servicing
Fee and Indenture Trustee Fee pro rated for the number of days such Mortgage
Loans were included in such Group) and (B) P&I Advances in respect of interest
portions of delinquent Monthly Payments on Additional Mortgage Loans in such
Group conveyed to the Indenture Trustee during the related Due Period.
(c) On the February 25, 1999 Payment Date, the Indenture Trustee
shall withdraw from each Interest Coverage Account and deposit in the related
Note Account an amount equal to (i) 31 days' interest on the related Original
Pre-Funding Amount minus the aggregate Stated Principal Balance of Additional
Mortgage Loans Granted to the Indenture Trustee for inclusion in the Trust
Estate and allocated to the related Group having a Due Date prior to January 1,
1999 at a rate equal to the related Note Interest Rate for such Payment date
plus the Note Insurer Premium for such Payment date minus (ii) an amount equal
to the sum of (A) interest payments received on Additional Mortgage Loans
Granted to the Indenture Trustee for inclusion in the Trust Estate and allocated
to such Group during the related Due Period (net of the related Servicing Fee
and Indenture Trustee Fee pro rated for the number of days such Mortgage Loans
were included in such Group) and (B) P&I Advances in respect of interest
portions of delinquent Monthly Payments on Additional Mortgage Loans in such
Group conveyed to the Indenture Trustee during the related Due Period.
(d) On the March 25, 1999 Payment Date, the Indenture Trustee shall
withdraw from each Interest Coverage Account and deposit in the related Note
Account an amount equal to (i) 28 days' interest on the related Original
Pre-Funding Amount minus the Aggregate Stated Principal Balance of Additional
Mortgage Loans Granted to the Indenture Trustee for inclusion in the Trust
Estate and allocated to the related Group having a Due Date prior to February 1,
1999 at a rate equal to the related Note Interest Rate for such Payment date
plus the Note Insurer Premium for such Payment date minus (ii) an amount equal
to the sum of (A) interest payments received on Additional Mortgage Loans
Granted to the Indenture Trustee for inclusion in the Trust Estate and allocated
to such Group during the related Due Period (net of the related Servicing Fee
and Indenture Trustee pro rated for the number of days such Mortgage Loans were
included in such Group) and (B) P&I Advances in respect of interest portions of
delinquent Monthly Payments on related Additional Mortgage Loans conveyed to the
Indenture Trustee during the related Due Period.
(e) On the date of Grant of an Additional Mortgage Loan to the
Indenture Trustee (for allocation to a Group), funds on deposit in the related
Interest Coverage Account in an amount equal to one-three hundred sixty-fifth
(1/365th) of the product of (i) the Stated Principal Balance of such Additional
Mortgage Loan and (ii) the weighted average Coupon Rate
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of the Cut-off Date Mortgage Loans in the related Group and (iii) the number of
days from the related Additional Cut-off Date to March 11, 1999, shall be
remitted immediately to RBMG.
(f) Upon the earlier of (i) the March 25, 1999 Payment Date, (ii)
the reduction of the related Note Balance to zero, (iii) the satisfaction and
discharge of this Indenture in accordance with Section 4.01, and (iv) the date
of the Grant of the last Additional Mortgage Loan to the Indenture Trustee (for
allocation to a Group), as set forth in a written letter of instruction by the
Issuer to the Indenture Trustee, any amount remaining on deposit in the related
Interest Coverage Account after payments pursuant to Sections 8.04(b), 8.04(c)
and 8.04(d) above shall be withdrawn by the Indenture Trustee and paid to the
Issuer.
(g) So long as no Default or Event of Default shall have occurred
and be continuing, amounts held in each Interest Coverage Account shall be
invested in Permitted Investments, which Permitted Investments shall mature no
later than the Business Day preceding the immediately following Payment Date.
All income or other gains, if any, from investment of moneys deposited in each
Note Account shall be for the benefit of the Issuer and on each Payment Date,
any such amounts may be released from the Interest Coverage Account and paid to
the Issuer. Any loss resulting from such investment of moneys deposited in the
Interest Coverage Account shall be reimbursed immediately as incurred to the
Interest Coverage Account by the Issuer. Subject to Section 6.01 and the
preceding sentence, the Issuer shall not in any way be held liable by reason of
any insufficiency in each Interest Coverage Account.
SECTION 8.05. CLAIMS AGAINST THE MBIA INSURANCE POLICY.
(a) The Indenture Trustee shall (A) receive as attorney-in-fact of
each Noteholder any Insured Payment from the Note Insurer or on behalf of the
Note Insurer and (B) disburse such Insured Payment to such Noteholders in
accordance with Section 8.02(c) hereof for the benefit of the related
Noteholders. Any Insured Payment received by the Indenture Trustee shall be held
by the Indenture Trustee uninvested. Insured Payments disbursed by the Indenture
Trustee from proceeds of the MBIA Insurance Policy shall not be considered
payment by the Issuer with respect to the Notes, nor shall such payments
discharge the obligation of the Issuer with respect to such Notes, and the Note
Insurer shall become the owner of such unpaid amounts due from the Issuer in
respect of such Insured Payments as the deemed assignee and subrogee of such
Noteholders and shall be entitled to receive the reimbursement in respect
thereof. The Indenture Trustee hereby agrees on behalf of each Noteholder (and
each Noteholder and Beneficial Owner, by acceptance of a Note or a beneficial
interest in a Note agrees) for the benefit of the Note Insurer that it
recognizes that to the extent the Note Insurer makes Insured Payments for the
benefit of the Noteholders, the Note Insurer will be entitled to receive the
related reimbursement in accordance with the priority of distributions
referenced in Section 8.02(c) hereof.
(i) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, relating to a
Preference Amount in respect of any payment made on the Notes. Each Noteholder
that pays any amount in respect of a Preference Amount theretofore received by
such Noteholder on account of a Note will be entitled to receive reimbursement
for such amounts from the Note Insurer in accordance with the terms of the
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MBIA Insurance Policy. Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that, the Note Insurer (so long as no Note
Insurer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Amount direct all matters relating to such
Preference Amount, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Amount and (ii) the posting of
any surety, supersedes or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Note Insurer shall be subrogated to
the rights of the Indenture Trustee and each Noteholder with respect to any such
Preference Amount, including, without limitation, all rights of any party to any
adversary proceeding action with respect to any court order issued in connection
with any such Preference Amount.
(ii) Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that, unless an Note Insurer Default exists and
is continuing, the Note Insurer shall have the right to direct all matters
relating to the Notes in any proceeding in a bankruptcy of the Issuer, including
without limitation any proceeding relating to a Preference Amount and the
posting of any surety or bond pending any such appeal.
(iii) With respect to a Preference Amount, the Indenture
Trustee shall be responsible for procuring and delivering the items set forth in
the MBIA Insurance Policy to the Note Insurer.
(b) Unless a Note Insurer Default exists and is continuing, the
Indenture Trustee shall cooperate at the Note Insurer's expense in all respects
with any reasonable request by the Note Insurer for action to preserve or
enforce the Note Insurer's rights or interests hereunder without limiting the
rights or affecting the interests of the Noteholders as otherwise set forth
herein and the Note Insurer shall reimburse the Indenture Trustee for all costs
incurred by its cooperation with such request.
(c) The Indenture Trustee shall surrender the MBIA Insurance Policy
to the Note Insurer for cancellation upon the expiration of the term of the MBIA
Insurance Policy as provided in the MBIA Insurance Policy.
(d) With respect to any Payment Date on which an Insured Payment is
required to be made, the Indenture Trustee shall deliver to the Note Insurer a
Notice of Claim by no later than noon on the third Business Day prior to such
Payment Date in the manner set forth in the MBIA Insurance Policy.
(e) The Issuer hereby directs the Indenture Trustee to establish one
or more accounts that shall collectively be the "Policy Payments Account", on or
before the Closing Date. Upon receipt of an Insured Payment from the Note
Insurer, the Indenture Trustee shall promptly deposit such Insured Payment in
the Policy Payments Account. All amounts on deposit in the Policy Payments
Account shall remain uninvested. On each Payment Date, the Indenture Trustee
shall (i) transfer an amount equal to the Insured Payment with respect to such
Payment Date to the Note Account and (ii) return any money in the Policy
Payments Account which does not constitute on Insured Payment to the Note
Insurer. The Indenture Trustee shall distribute on each Payment Date, to the
Noteholders, the Insured Payment for such Payment Date from the Note Account in
accordance with the priorities set forth in Section 8.02.
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SECTION 8.06. GENERAL PROVISIONS REGARDING THE NOTE ACCOUNT AND
MORTGAGE LOANS.
(a) Each Note Account shall relate solely to the related Class of
Notes and to the related Group of Mortgage Loans, Permitted Investments and
other property securing such Notes. Funds and other property in each Note
Account shall not be commingled with any other moneys or property of the Issuer
or any Affiliate thereof. Notwithstanding the foregoing, the Indenture Trustee
may hold any funds or other property received or held by it as part of a Note
Account in collective accounts maintained by it in the normal course of its
business and containing funds or property held by it for other Persons (which
may include the Issuer or an Affiliate), provided that such accounts are under
the sole control of the Indenture Trustee and the Indenture Trustee maintains
adequate records indicating the ownership of all such funds or property and the
portions thereof held for credit to the Note Account.
(b) If any amounts are needed for payment from the Note Account and
sufficient uninvested funds are not available therein to make such payment, the
Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in the Note Account.
(c) The Indenture Trustee shall, at all times while any Notes are
Outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Indenture
Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Note Account. The Indenture Trustee shall relinquish
possession of such items, or direct its agent to do so, only for purposes of
collecting the final payment receivable on such investment or certificate or, in
connection with the sale of any investment held in the Note Account, against
delivery of the amount receivable in connection with any sale.
(d) The Indenture Trustee shall not invest any part of the Trust
Estate in Permitted Investments that constitute uncertificated securities (as
defined in Section 8-102 of the Uniform Commercial Code, as enacted in the
relevant jurisdiction) or in any other book-entry securities unless it has
received an Opinion of Counsel reasonably satisfactory in form and substance to
the Indenture Trustee setting forth, with respect to each type of security for
which authority to invest is being sought, the procedures that must be followed
to maintain the lien and security interest created by this Indenture with
respect to the Trust Estate. The cost of obtaining such Opinion of Counsel shall
not be borne by the Indenture Trustee.
SECTION 8.07. RELEASES OF DEFECTIVE MORTGAGE LOANS.
(a) In the event a Responsible Officer of the Indenture Trustee has
actual knowledge, or written notice is received by the Indenture Trustee at the
Corporate Trust Office (and such notice references the Notes generally, the
Issuer, the Trust Estate or this Indenture), of any materially defective
document in, or that a document is missing from (and never constituted part of)
a Mortgage File, or of the breach by Funding Co. of any representation, warranty
or covenant under the Funding Co. Sale Agreement, the breach by the Depositor of
any representation, warranty or covenant under the Depositor Sale Agreement, the
breach by the Company of any representation, warranty or covenant under the
Company Sale Agreement, or of the breach by RBMG of any representation, warranty
or covenant under the Loan Contribution Agreement in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the
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Noteholders of the related Class of Notes or the Note Insurer, the Indenture
Trustee shall promptly notify RBMG, the Company, Funding Co., the Depositor,
the Servicer, or the Indenture Trustee if there is no Custodian, and the Note
Insurer and direct the party breaching such representation, warranty or covenant
to either (i) within 30 days after Funding Co., the Company, the Depositor, or
RBMG (each a "Transferor") receives actual knowledge of such incorrectness,
eliminate or otherwise cure the circumstance or condition in respect of which
such representation or warranty was incorrect as of the time made, (ii) withdraw
such Defective Mortgage Loan from the lien of this Indenture following the
expiration of such 30-day period by depositing to the related Note Account an
amount equal to the Purchase Price, plus the amount of any related Realized Loss
resulting from a Deficiency Valuation, for such Mortgage Loan or (iii)
substitute a Qualified Replacement Mortgage Loan for such Defective Mortgage
Loan and deposit any Purchase Price, plus the amount of any Realized Loss
resulting from a Deficiency Valuation, required to be paid in connection with
such substitution pursuant to Section 7 of the Funding Co. Sale Agreement,
Section 7 of the Depositor Sale Agreement, Section 7 of the Company Sale
Agreement or Section 7 of the Loan Contribution Agreement. Upon any purchase of
or substitution for a Defective Mortgage Loan by either Funding Co., the
Depositor, the Company, or RBMG as set forth above, the Indenture Trustee shall
deliver or cause the Custodian to deliver, the Mortgage File relating to such
Defective Mortgage Loan to Funding Co., the Depositor, the Company or RBMG, as
the case may be, and the Issuer and the Indenture Trustee shall execute such
instruments of transfer as are necessary to convey title to such Defective
Mortgage Loan to Funding Co., the Depositor, the Company, or RBMG, as the case
may be, from the lien of this Indenture.
(b) Upon substitution of a Qualified Replacement Mortgage Loan, the
Indenture Trustee or a Custodian on its behalf, shall acknowledge receipt of
such Qualified Replacement Mortgage Loan or Loans and, (i) within ten Business
Days thereafter, review such documents as specified in Section 6.15(c) and
deliver to the Issuer, RBMG, the Company, Funding Co., the Depositor, the Note
Insurer and the Servicer a certification substantially in the form of the
Initial Certification described in Section 6.15(a) with respect to such
Qualified Replacement Mortgage Loan or Loans and, (ii) within 270 days after
such substitution, review such documents as specified in Section 6.15(c) and
deliver to the parties set forth in clause (i) a certification substantially in
the form of the Final Certification described in Section 6.15(b) with respect to
such Qualified Replacement Mortgage Loan or Loans.
(c) Monthly Payments due with respect to Qualified Replacement
Mortgage Loans in the month of substitution shall be retained by the Transferor.
For the month of substitution, the Indenture Trustee on behalf of the
Noteholders and the Note Insurer shall be entitled to receive the Monthly
Payment due on such Deleted Mortgage Loan, and the Transferor shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. Upon such substitution, such Qualified Replacement
Mortgage Loan or Loans shall be subject in all respects to the terms of this
Indenture, including, all applicable representations and warranties included
herein in each case as of the date of substitution.
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Section 8.08. REPORTS BY INDENTURE TRUSTEE TO NOTEHOLDERS; ACCESS TO
CERTAIN INFORMATION.
On each Payment Date, the Indenture Trustee shall deliver the
written report required by Section 2.08(d) to Noteholders of record as of the
related Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Noteholder or any person
identified to the Indenture Trustee as a prospective Noteholder, originals or
copies of the following items: (a) the Indenture and any amendments thereto, (b)
all Payment Date Statements delivered to the Issuer since the Closing Date, (c)
any Officers' Certificates delivered to the Indenture Trustee since the Closing
Date as described in the Indenture, (d) any statements of compliance delivered
to the Indenture Trustee since the Closing Date as required under the Servicing
Agreement, (e) any Collection Account report statements delivered to the
Indenture Trustee as required under the Servicing Agreement and (f) any
Accountants' servicing reports delivered to the Indenture Trustee since the
Closing Date as required under the Servicing Agreement. Copies of any and all of
the foregoing items will be available from the Indenture Trustee upon request;
however, the Indenture Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such copies
and shall not be required to provide such copies without reasonable assurances
that such sum will be paid.
SECTION 8.09. TRUST ESTATE MORTGAGE FILES.
(a) The Indenture Trustee shall release, or cause the Custodian to
release Mortgage Files or portions thereof to the Servicer on the terms
specified in the Servicing Agreement.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding, release all of the Trust Estate to the Issuer when all of the
conditions of Section 4.01 have been satisfied.
SECTION 8.10. AMENDMENT TO SERVICING AGREEMENT.
The Indenture Trustee may, without the consent of any Holder, enter
into or consent to any amendment or supplement to the Servicing Agreement for
the purpose of increasing the obligations or duties of any party other than the
Indenture Trustee or the Holders of the Notes. The Indenture Trustee may, in its
discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation from the Rating Agencies that the then-current implied
ratings on the Notes (without taking into account the MBIA Insurance Policy)
would not be adversely affected by such supplement or amendment or (ii) if its
own rights, duties or immunities would be adversely affected.
SECTION 8.11. DELIVERY OF THE MORTGAGE FILES PURSUANT TO SERVICING
AGREEMENT.
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As is appropriate for the servicing or foreclosure of any Mortgage
Loan, the Indenture Trustee shall deliver, or cause the Custodian to deliver, to
the Servicer the Mortgage Files for such Mortgage Loan upon receipt by the
Indenture Trustee on or prior to the date such release is to be made of:
(a) such Officers' Certificates, if any, as are required by the
Servicing Agreement; and
(b) a "Request for Release" in the form prescribed by the Servicing
Agreement, executed by the Servicer, providing that the Servicer will hold
or retain the Mortgage Files in trust for the benefit of the Indenture
Trustee, the Note Insurer and the Noteholders.
SECTION 8.12. SERVICER AS AGENT.
In order to facilitate the servicing of the Mortgage Loans by the
Servicer, the Servicer has been appointed by the Issuer to retain, in accordance
with the provisions of the Servicing Agreement and this Indenture, all
Remittable Funds on such Mortgage Loans prior to their deposit into the Note
Account on or prior to the related Servicer Remittance Date.
SECTION 8.13. TERMINATION OF SERVICER.
In accordance with the Servicing Agreement, in the event of an event
of default specified in Section 5.01 of the Servicing Agreement, the Indenture
Trustee may, with the consent of the Note Insurer, and shall, upon the direction
of the Note Insurer, (or as otherwise provided in the Servicing Agreement)
terminate the Servicer as provided in Section 5.01 and Section 5.02 of the
Servicing Agreement. If the Indenture Trustee terminates the Servicer, the
Indenture Trustee or the initial Sub-Servicer as applicable shall, pursuant to
Section 5.02 of the Servicing Agreement, assume the duties of the Servicer or
appoint a successor servicer acceptable to the Issuer, the Note Insurer and the
Rating Agencies and meeting the requirements set forth in the Servicing
Agreement.
SECTION 8.14. INVESTMENT OF FUNDS IN THE NOTE ACCOUNTS, THE
PRE-FUNDING ACCOUNTS AND THE INTEREST COVERAGE ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred
and be continuing, the Issuer may direct any depository institution maintaining
the Note Accounts, the Pre-Funding Accounts, and the Interest Coverage Accounts
(each, for purposes of this Section 8.14, an "Investment Account"), to invest
the funds in such Investment Account in one or more Permitted Investments. All
such Permitted Investments shall be held to maturity, unless payable on demand.
Any investment of funds in an Investment Account shall be made in the name of
the Indenture Trustee (in its capacity as such) or in the name of a nominee of
the Indenture Trustee. The Indenture shall be entitled to sole possession
(except with respect to investment direction of funds held in such Investment
Account) over each such investment and the income thereon, and any certificate
or other instrument evidencing any such investment shall be delivered directly
to the Indenture Trustee or its agent, together with any document of transfer
necessary to transfer title to such investment to the Indenture Trustee or its
nominee. If no investment direction is made as to any Investment Account, the
Indenture Trustee shall invest all funds on deposit in
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Permitted Investments described in Paragraph (g) of the definition of "Permitted
Investments". In the event amounts on deposit in an Investment Account are at
any time invested in a Permitted Investment payable on demand, the Indenture
Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Indenture
Trustee that such Permitted Investment would not constitute a
Permitted Investment in respect of funds thereafter on deposit
in the Investment Account.
(b) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, upon the request of the Note Insurer or the
Holders of Notes evidencing more than 50% of the Outstanding Note Balance, shall
take such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings.
SECTION 8.15. APPOINTMENT OF CUSTODIANS.
(a) Notwithstanding anything to the contrary in this Indenture, the
parties hereto and each Noteholder by its acceptance of its Note acknowledge
that the functions of the Indenture Trustee with respect to the custody,
acceptance, inspection, review and release of the Mortgage Files pursuant to
this Indenture and the related Initial Certification and Final Certification
shall be performed by LaSalle National Bank, as Custodian, pursuant to the
Custodial Agreement and that the Indenture Trustee shall in no way be liable for
any acts or omissions of the Custodian. The fees and expenses of the Custodian
shall be paid by the Servicers.
(b) The Servicer may, at the expense of the Servicer or the
successor Servicer, with the consent of the Issuer, the Indenture Trustee and
the Note Insurer (which consent shall not be unreasonably withheld), appoint a
successor Custodian to hold all or a portion of the Mortgage Files as agent for
the Indenture Trustee. Each successor Custodian shall (i) be a financial
institution supervised and regulated by the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, the Office of Thrift
Supervision, or the FDIC; (ii) have combined capital and surplus of at least
$10,000,000; (iii) be equipped with secure, fireproof storage facilities, and
have adequate controls on access to assure the safety and security of the
Mortgage Files; (iv) utilize in its custodial function employees who are
knowledgeable in the handling of mortgage documents and of the functions of a
mortgage document custodian; and (v) satisfy any other reasonable requirements
that the Issuer may from time to time deem necessary to protect the interests of
Noteholders and the Note Insurer in the Mortgage Files. Each successor Custodian
shall be subject to the same obligations and standard of care as would be
imposed on the Indenture Trustee hereunder assuming the Indenture Trustee
retained the
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Mortgage Files directly. The appointment of one or more additional Custodians
shall not relieve the Indenture Trustee from any of its obligations hereunder,
and the Indenture Trustee shall remain responsible for all acts and omissions of
any such Custodian. If the Servicer is appointed as Custodian in accordance with
this Section 8.15, it shall fulfill its servicing and custodial duties and
obligations through separate departments and, if it maintains a trust
department, shall fulfill its custodial duties and obligations through such
trust department. The appointment of a succesor Custodian shall be evidenced by
a Custodial Agreement, substantially in the form of Exhibit E hereto.
SECTION 8.16. RIGHTS OF THE NOTE INSURER TO EXERCISE RIGHTS OF
NOTEHOLDERS.
By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Noteholders under this Indenture without any further consent of
the Noteholders, including, without limitation:
(a) the right to require the Servicer to effect foreclosures upon
Mortgage Loans upon failure of the Servicer to do so;
(b) the right to require RBMG to repurchase or substitute for
Defective Mortgage Loans pursuant to Section 8.07;
(c) the right to direct the actions of the Indenture Trustee during
the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer
Default exists, the rights specifically set forth above may be exercised by the
Noteholders only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.05 and notwithstanding any
provision in this Indenture to the contrary, so long as a Note Insurer Default
has occurred and is continuing, the Note Insurer shall have no rights to
exercise any voting rights of the Noteholders (other than as the deemed assignee
and subrogee of the Noteholders to the extent the Note Insurer has made Insured
Payments for the benefit of the Noteholders) hereunder, nor shall the Indenture
Trustee be required to obtain the consent of, or act at the direction of, the
Note Insurer.
SECTION 8.17. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE NOTE
INSURER.
The Indenture Trustee shall hold the Trust Estate and the Mortgage
Files for the benefit of the Noteholders and the Note Insurer and all references
in this Indenture and in the Notes to the benefit of Holders of the Notes shall
be deemed to include the Note Insurer (provided there does not exist a Note
Insurer Default).
All notices, statements, reports, certificates or opinions required
by this Agreement to be sent to any other party hereto or to the Noteholders
shall also be sent to the Note Insurer.
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SECTION 8.18. RESERVE ACCOUNT
(a) The Issuer hereby directs the Indenture Trustee to establish at
the Corporate Trust Office one or more accounts with respect to both Classes of
Notes that shall collectively be the "Reserve Account". On each Payment Date the
Indenture Trustee shall deposit to the Reserve Account the amounts, if any,
described in Section 8.02(c)(viii) hereof. The amount so deposited from
Available Funds with respect to Class A-1 shall be the "CLASS A-2 CASH O/C
Amount," and the amount so deposited from the Available Funds with respect to
Class A-2 shall be the "CLASS A-1 CASH O/C AMOUNT."
(b)(i) If, on any Payment Date, and after taking into account the
application of the Class A-1 Available Funds plus any Crossover Amount available
from Group II (but not the proceeds of any Insured Payment), the full amount of
the Class A-1 Note Interest has not been paid, and/or a Class A-1
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the Class A-1 Cash O/C Amount then on deposit in the Reserve Account and
deposit in the Note Account for the Class A-1 Notes an amount equal to the
lesser of (x) the Class A-1 Cash O/C Amount then on deposit in the Reserve
Account and (y) the amount of such shortfall in the amount of the Class A-1 Note
Interest and the amount of such Class A-1 Overcollateralization Deficit.
(ii) If, on any Payment Date, and after taking into account, the
application of the Class A-2 Available Funds plus any Crossover Amount available
from the Group I (but not the proceeds of any Insured Payment), the full amount
of the Class A-2 Note Interest has not been paid, and/or a Class A-2
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the Class A-2 Cash O/C Amount then on deposit in the Reserve Account and
deposit in the Note Account for the Class A-2 Notes an amount equal to the
lesser of (x) the Class A-2 O/C Cash Amount then on deposit in the Reserve
Account and (y) the amount of such shortfall in the amount of the Class A-2 Note
Interest and the amount of such Class A-2 Overcollateralization Deficit.
(iii) If, on any Payment Date, and after taking into account the
application of the Class A-1 Available Funds plus any Crossover Amount available
from Group II (but not the proceeds of any Insured Payment), the full amount of
the Class A-1 Note Interest has not been paid, and/or a Class A-1
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the remaining Class A-2 Cash O/C Amount then on deposit in the Reserve
Account and deposit in the Note Account for the Class A-1 Notes an amount equal
to the lesser of (x) the remaining Class A-2 Cash O/C Amount then on deposit in
the Reserve Account and (y) the amount of such shortfall in the amount of the
Class A-1 Note Interest and the amount of such Class A-1 Overcollateralization
Deficit.
(iv) If, on any Payment Date, and after taking into account, the
application of the Class A-2 Available Funds plus any Crossover Amount available
from the Group I (but not the proceeds of any Insured Payment), the full amount
of the Class A-2 Note Interest has not been paid, and/or a Class A-2
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the remaining Class A-1 Cash O/C Amount then on deposit in the Reserve
Account and deposit in the Note Account for the Class A-2 Notes an amount equal
to the lesser of (x) the remaining Class A-1 O/C Cash Amount then on deposit in
the Reserve Account and
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(y) the amount of such shortfall in the amount of the Class A-2 Note Interest
and the amount of such Class A-2 Overcollateralization Deficit.
(c)(i) If, on any Payment Date, (A) the sum of (x) the Class A-1
Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Class A-1
Overcollateralization Surplus, plus (y) the Class A-1 Cash O/C Amount on deposit
in the Reserve Account, after taking into account any withdrawals therefrom
pursuant to clause (b)(i) above, exceeds (B) the Class A-1 Required
Overcollateralization Amount for such Payment Date (such excess being a "CLASS
A-1 AGGREGATE O/C SURPLUS AMOUNT"), the lesser of (I) such Class A-1 Aggregate
O/C Surplus Amount and (II) the Class A-1 Cash O/C Amount shall be released from
the Reserve Account and distributed to the related Certificateholders as a
distribution with respect to Group I.
(ii) If, on any Payment Date, (A) the sum of (x) the Class A-2
Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Class A-2
Overcollateralization Surplus plus (y) the Class A-2 Cash O/C Amount on deposit
in the Reserve Account after taking into account any withdrawals therefrom
pursuant to clause (b)(ii) above exceeds (B) the Class A-2 Required
Overcollateralization Amount for such Payment Date (such excess being a "CLASS
A-2 AGGREGATE O/C SURPLUS AMOUNT"), the lesser of (I) such Class A-2 Aggregate
O/C Surplus Amount and (II) the Class A-2 Cash O/C Amount shall be released from
the Reserve Account and distributed to the related Certificateholders as a
distribution with respect to Group II.
(d)(i) As of any Payment Date, the lesser of (A) the excess of (I)
the Class A-1 Aggregate O/C Surplus Amount over (II) the amount of the Class A-1
Cash O/C Amount released from the Reserve Account pursuant to clause (c)(i)
above and (B) the Class A-1 Monthly Principal Available for such Payment Date is
the "CLASS A-1 OVERCOLLATERALIZATION SURPLUS" for such Payment Date.
(ii) As of any Payment Date, the lesser of (A) the excess of (I) the Class A-2
Aggregate O/C Surplus Amount over (II) the amount of the Class A-2 Cash O/C
Amount released from the Reserve Account pursuant to clause (c)(ii) above and
(B) the Class A-2 Monthly Principal Available for such Payment Date is the
"CLASS A-2 OVERCOLLATERALIZATION SURPLUS" for such Payment Date.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS.
With the consent of the Note Insurer and without the consent of the
Holders of any Notes, the Issuer and the Indenture Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(a) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(b) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Notes;
(c) to evidence the succession of another Person to the Issuer to
the extent permitted herein, and the assumption by any such successor of
the covenants of the Issuer herein and in the Notes contained;
(d) to add to the covenants of the Issuer, for the benefit of the
Holders of all Notes and the Note Insurer or to surrender any right or
power herein conferred upon the Issuer; or
(e) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision
herein, or to amend any other provisions with respect to matters or
questions arising under this Indenture, which shall not be inconsistent
with the provisions of this Indenture, provided that such action shall not
adversely affect in any material respect the interests of the Holders of
the Notes; and provided, further, that the amendment shall be deemed not
to adversely affect in any material respect the interests of the Holders
of the Notes and the Note Insurer if the Person requesting the amendment
obtains letters from the Rating Agencies that the amendment would not
result in the downgrading or withdrawal of the implied ratings then
assigned to the Notes (without taking into account the MBIA Insurance
Policy).
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
With the consent of the Note Insurer and with the consent of Holders
of Notes representing not less than a majority of the Note Balance of all
Outstanding Notes of both Classes by Act of said Holders delivered to the Issuer
and the Indenture Trustee, the Issuer and the Indenture Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
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(a) change any Payment Date or the Final Maturity Date of the Notes
or reduce the principal amount thereof, the Note Interest Rate thereon or
the Redemption Price with respect thereto, change the earliest date on
which any Note may be redeemed at the option of the Issuer, change any
place of payment where, or the coin or currency in which, any Note or any
interest thereon is payable, or impair the right to institute suit for the
enforcement of the payment of any installment of interest due on any Note
on or after the Final Maturity Date thereof or for the enforcement of the
payment of the entire remaining unpaid principal amount of any Note on or
after the Final Maturity Date (or, in the case of redemption, on or after
the applicable Redemption Date);
(b) reduce the percentage of the Note Balance of the Outstanding
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver of compliance with provisions of this Indenture or Defaults
hereunder and their consequences provided for in this Indenture;
(c) modify any of the provisions of this Section, Section 5.13 or
Section 5.17(b), except to increase any percentage specified therein or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(d) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(e) permit the creation of any lien other than the lien of this
Indenture with respect to any part of the Trust Estate (except for
encumbrances permitted under the Depositor Sale Agreement) or terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security afforded by the lien of
this Indenture;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the Required Payment Amount for any Payment
Date (including the calculation of any of the individual components of
such Required Payment Amount) or to affect rights of the Holders of the
Notes to the benefits of any provisions for the mandatory redemption of
Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would cause
the Issuer or the Trust Estate to be treated as a "taxable mortgage pool"
within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
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It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Holders of the Notes to which such supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Indenture Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise. The Issuer shall cause executed copies of any
Supplemental Indentures to be delivered to the Rating Agencies.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes to which such supplemental indenture relates that have theretofore been
or thereafter are authenticated and delivered hereunder shall be bound thereby.
SECTION 9.05. [RESERVED].
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
SECTION 9.07. AMENDMENTS TO GOVERNING DOCUMENTS.
The Indenture Trustee shall, upon Issuer Request, consent to any
proposed amendment to the Issuer's governing documents, or an amendment to or
waiver of any provision of any other document relating to the Issuer's governing
documents, such consent to be given
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without the necessity of obtaining the consent of the Holders of any Notes upon
receipt by the Indenture Trustee of:
(a) an Officers' Certificate, to which such proposed amendment or
waiver shall be attached, stating that such attached copy is a true copy
of the proposed amendment or waiver and that all conditions precedent to
such consent specified in this Section 9.07 have been satisfied; and
(b) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect their implied ratings of the Notes (without taking into account the
MBIA Insurance Policy).
Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver of
any provision of any document where the making of such amendment or the giving
of such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. REDEMPTION.
(a) Each Class of Notes may be redeemed in whole, but not in part,
on the Redemption Date at the Redemption Price at the option of the Servicer or
the Note Insurer (in that order of priority); PROVIDED, HOWEVER, that funds in
an amount equal to the Redemption Price, plus any amounts owed to the Note
Insurer under the Insurance Agreement, any unreimbursed Nonrecoverable Advances
and any unreimbursed amounts due and owing to the Indenture Trustee hereunder,
shall have been deposited with the Indenture Trustee prior to the Indenture
Trustee's giving notice of such redemption pursuant to Section 10.02, or the
Issuer shall have complied with the requirements for satisfaction and discharge
of the Notes specified in Section 4.01. Notice of the election to redeem the
Notes shall be furnished to the Indenture Trustee not later than thirty (30)
days prior to the Payment Date selected for such redemption, whereupon all such
Notes shall be due and payable on such Payment Date upon the furnishing of a
notice pursuant to Section 10.02 to each Holder of such Notes and the Note
Insurer. Any expenses associated with the compliance of the provisions hereof in
connection with a redemption of the Notes shall be paid by the Servicer or the
Note Insurer or the Issuer, depending upon which party is electing to redeem the
related Class of Notes.
(b) Upon receipt of the notice from the Servicer or the Note Insurer
of its election to redeem the Notes pursuant to Section 10.01(a), the Indenture
Trustee shall prepare and deliver to such party, no later than the related
Redemption Date, a Payment Date Statement stating therein that it has determined
that the conditions to redemption at the option of such party have been
satisfied and setting forth the amount, if any, to be withdrawn from the related
Note Account and paid to the Servicer as reimbursement for Nonrecoverable
Advances and such other information as may be required to accomplish such
redemption.
(c) Upon payment of the Redemption Price to the Noteholders of the
related Class of Notes and all amounts owed under Section 10.01(a), the
Indenture Trustee shall promptly release to the party redeeming such Notes the
Mortgage Files for the remaining Mortgage Loans in the related Group, and the
Indenture Trustee shall execute without recourse all assignments, endorsements
and other instruments necessary to effectuate such transfer and as are necessary
to convey title to the related Mortgage Loans and to evidence the release of the
related Mortgage Loans from the lien of this Indenture. Any funds remaining in
the related Note Account after all payments due hereunder have been made shall
be remitted to the related Certificate Distribution Account established pursuant
to the Trust Agreement for the benefit of the Issuer.
SECTION 10.02. FORM OF REDEMPTION NOTICE.
Notice of redemption shall be given by the Indenture Trustee in the
name of and at the expense of the party electing to redeem the related Class of
Notes by first class mail, postage prepaid, mailed not less than ten days prior
to the Redemption Date to each Holder of Notes to be redeemed, such Holders
being determined as of the Record Date for such Payment Date, and to the Note
Insurer.
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All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price at which the Notes will be redeemed,
(c) the fact of payment in full on such Notes, the place where such
Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as provided
in Section 3.02), and that no interest shall accrue on such Note for any
period after the date fixed for redemption.
Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
SECTION 10.03. NOTES PAYABLE ON OPTIONAL REDEMPTION.
Notice of redemption having been given as provided in Section 10.02,
the related Class of Notes to be redeemed shall, on the applicable Redemption
Date, become due and payable at the Redemption Price and (unless the party
electing to redeem shall default in the payment of the Redemption Price) no
interest shall accrue on such Redemption Price for any period after such
Redemption Date; provided, however, that if such Redemption Price is not paid on
the Redemption Date, the related Note Balance shall, until paid, bear interest
from the Redemption Date at the related Note Interest Rate.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel, if requested
by the Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
(b) Every certificate, opinion or letter with respect to compliance
with a condition or covenant provided for in this Indenture, including one
furnished pursuant to specific requirements of this Indenture relating to a
particular application or request shall include the following:
(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
(c) In furnishing any such certificate on behalf of the Issuer,
opinion or letter, an Authorized Officer of the Owner Trustee may, without
conducting any independent investigation, rely solely on a corresponding
certificate, opinion or letter of the Servicer, the Depositor, Funding Co., or
any Certificateholder.
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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Any certificate or opinion of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such counsel
believes that such counsel and the Indenture Trustee may reasonably rely upon
the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(2).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d).
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
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(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not notation
of such action is made upon such Notes.
SECTION 11.04. NOTICES, ETC. TO INDENTURE TRUSTEE, THE NOTE INSURER
AND Issuer.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Indenture Trustee at its
Corporate Trust Office; or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder (except as provided in Section
5.01(3) and (4)) if in writing and mailed, first-class postage prepaid, to
the Issuer addressed to it at RBMG Funding Co. Mortgage Loan Trust 1998-2,
in care of Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to
the Indenture Trustee by the Issuer; or
(c) the Note Insurer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder (unless specifically
provided otherwise herein) if in writing and mailed, first-class, postage
prepaid, to MBIA Insurance Corporation addressed to it at 113 King Street,
Armonk, New York 10504, Attention: Insured Portfolio Management-SF
(IPM-SF) (RBMG Funding Co. Mortgage Loan Trust 1998-2), or at any other
address previously furnished in writing to the Indenture Trustee by the
Note Insurer; or
(d) Funding Co. by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage paid, to RBMG Funding Co., 2820 West Charleston
Boulevard, Las Vegas, Nevada 89102, Attention: Sheldon Stern or at any
other address previously furnished in writing to the Indenture Trustee by
Funding Co.; or
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(e) the Company by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage paid, to RBMG Asset Management Company, Inc., 2820
West Charleston Boulevard, Las Vegas, Nevada 89102, Attention: Sheldon
Stern, President or at any other address previously furnished in writing
to the Indenture Trustee by the Company; or
(f) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to Wheat First Securities, Inc., acting
through First Union Capital Markets Corp., a division of Wheat First
Securities, 301 South College Street, Charlotte, North Carolina 28288; or
(g) the Depositor by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to Residential Asset Funding Corporation c/o
Wheat First Securities Inc., acting through First Union Capital Markets
Corp., a division of Wheat First Securities, Inc., 301 South College
Street, Charlotte, North Carolina 28288.
Notices required to be given to the Rating Agencies by the Issuer or
the Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of Moody's, at the following
address: Moody's Investors Service, Inc., Residential Mortgage Monitoring
Department, 99 Church Street, New York, New York 10007 and (ii) in the case of
Standard & Poor's, at the following address: Standard & Poor's Ratings Services,
a Division of The McGraw-Hill Companies, Inc., 26 Broadway (15th Floor), New
York, New York, 10004, Attention: Asset-Backed Surveillance Department; or as to
each of the foregoing, at such other address as shall be designed by written
notice to the other parties.
SECTION 11.05. NOTICES AND REPORTS TO NOTEHOLDERS; WAIVER OF
NOTICES.
Where this Indenture provides for notice to Noteholders of any event
or the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
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In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
SECTION 11.06. RULES BY INDENTURE TRUSTEE.
The Indenture Trustee may make reasonable rules for any meeting of
Noteholders.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.
SECTION 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 11.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.
SECTION 11.10. SEPARABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.11. BENEFITS OF INDENTURE.
Other than as provided in Section 11.20 herein, nothing in this
Indenture or in the Notes, expressed or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, any separate trustee or
Co-trustee appointed under Section 6.14 and the Noteholders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12. LEGAL HOLIDAYS.
In any case where the date of any Payment Date, Redemption Date or
any other date on which principal of or interest on any Note is proposed to be
paid shall not be a Business Day, then (notwithstanding any other provision of
the Notes or this Indenture) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the nominal date of any such Payment Date, Redemption Date or other date
for the payment of principal of or interest on any Note and no interest shall
accrue for
116
<PAGE>
the period from and after any such nominal date (except in the case of payment
of Note Interest on a Payment Date), provided such payment is made in full on
such next succeeding Business Day.
SECTION 11.13. GOVERNING LAW.
IN VIEW OF THE FACT THAT NOTEHOLDERS ARE EXPECTED TO RESIDE IN MANY
STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY
THAT THIS INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL
AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN, THIS
INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 11.14. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 11.15. RECORDING OF INDENTURE.
This Indenture is subject to recording in any appropriate public
recording offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.11(c) or 3.06.
SECTION 11.16. ISSUER OBLIGATION.
No recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.
SECTION 11.17. NO PETITION.
117
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The Indenture Trustee, by entering into this Indenture, and each
Noteholder and Beneficial Owner, by accepting a Note, hereby covenant and agree
that they will not at any time institute against RBMG, the Company, Funding Co.,
the Depositor, or the Issuer, or join in any institution against RBMG, the
Company, Funding Co., the Depositor, or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents. In addition, the Indenture Trustee will on behalf of the
holders of the Notes, (a) file a written objection to any motion or other
proceeding seeking the substantive consolidation of the Issuer with RBMG,
Funding Co., the Depositor, or the Company, (b) file an appropriate memorandum
of points and authorities or other brief in support of such objection, or (c)
endeavor to establish at the hearing on such objection that the substantive
consolidation of such entity would be materially prejudicial to the Noteholders.
This Section 11.17 will survive for one year AND ONE DAY following
the termination of this Indenture.
SECTION 11.18. INSPECTION.
The Issuer agrees that, on reasonable prior notice, it will permit
any representative of the Indenture Trustee and the Note Insurer, during the
Issuer's normal business hours, to examine all of books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent Accountants selected by the
Indenture Trustee or the Note Insurer, as the case may be, and to discuss its
affairs, finances and accounts with its officers, employees and Independent
Accountants (and by this provision the Issuer hereby authorizes its Accountants
to discuss with such representatives such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested. Any
expense incident to the exercise by the Indenture Trustee of any right under
this Section 11.18 shall be borne by the Issuer.
SECTION 11.19. USURY.
The amount of interest payable or paid on any Note under the terms
of this Indenture shall be limited to an amount that shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the
United States or the State of New York (whichever shall permit the higher rate),
that could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Note exceeds the Highest
Lawful Rate, the Issuer stipulates that such excess amount will be deemed to
have been paid as a result of an error on the part of both the Indenture
Trustee, acting on behalf of the Holder of such Note, and the Issuer, and the
Holder receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Issuer or the Indenture Trustee, refund
the amount of such excess or, at the option of the Indenture Trustee, apply the
excess to the payment of principal of such Note, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of Holders of Notes for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Notes.
118
<PAGE>
Section 11.20. THIRD-PARTY BENEFICIARY.
The Note Insurer is intended as a third party beneficiary of this
Indenture and the provisions of this Indenture shall be binding upon and inure
to the benefit of the Note Insurer; PROVIDED that, notwithstanding the
foregoing, for so long as a Note Insurer Default is continuing with respect to
its obligations under the MBIA Insurance Policy, the Noteholders shall succeed
to the Note Insurer's rights hereunder. Without limiting the generality of the
foregoing, all covenants and agreements in this Indenture that expressly confer
rights upon the Note Insurer shall be for the benefit of and run directly to the
Note Insurer, and the Note Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Indenture.
SECTION 11.21. LIMITATION ON LIABILITY OF OWNER TRUSTEE.
This Indenture, and any Notes issued in connection herewith, have
been or will be executed on behalf of the Issuer, a Delaware business trust, by
Wilmington Trust Company solely in its capacity as trustee of such trust, and
not in its individual capacity. In no case shall Wilmington Trust Company (or
any entity acting as successor or additional trustee) be personally liable for
or on account of any of the statements, representatives, warranties, covenants
or obligations of the Issuer hereunder, any right to assert any such liabilities
against Wilmington Trust Company (or any entity acting as successor or
additional trustee) being hereby waived by the other parties hereto; provided,
however, that such waiver shall not effect the liability of Wilmington Trust
Company (or any entity acting as successor or additional trustee) to any Person
under any other agreement to the extent expressly agreed to in its individual
capacity thereunder.
119
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
By: Wilmington Trust Company,
not in its individual capacity,
but solely as Owner Trustee
By: /s/ Emmett R. Harmon
_____________________________
Authorized Signatory
Name: Emmett R. Harmon
Title: Vice President
THE BANK OF NEW YORK
as Indenture Trustee
By: /s/ Franklin B. Austin
_____________________________
Name: Franklin B. Austin
Title: Assistant Vice President
120
<PAGE>
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
On the 2nd day of December, 1998 before me, a notary public in and
for said State, personally appeared Emmett R. Harmon, known to me to be Vice
President of Wilmington Trust Company, a corporation, not in its individual
capacity, but solely as Owner Trustee, that executed the within instrument
acting not in its individual capacity, but solely as trustee of RBMG Funding Co.
Mortgage Loan Trust 1998-2, and also known to me to be the person who executed
it on behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument on behalf of said trust.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Kathleen A. Pedeleni
----------------------------------
Notary Public
[Notarial Seal]
121
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 11th day of December, 1998 before me, a notary public in and
for said State, personally appeared Franklin Austin, known to me to be an
Assistant Vice President of The Bank of New York, a New York banking corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said banking corporation and acknowledged to me that
such banking corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Kevin C. Bell
----------------------------------
Notary Public
[Notarial Seal]
122
<PAGE>
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2,
ISSUER
AND
THE BANK OF NEW YORK,
INDENTURE TRUSTEE
---------------------------------------
INDENTURE
DATED AS OF DECEMBER 1, 1998
---------------------------------------
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
ASSET-BACKED NOTES, CLASS A-1 AND CLASS A-2
SERIES 1998-2
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................2
SECTION 1.01. GENERAL DEFINITIONS......................................2
"A Risk Mortgage Loans"..........................................2
"A- Risk Mortgage Loans".........................................2
"Accountant".....................................................2
"Act"............................................................2
"Addition Notice"................................................3
"Additional Cut-off Date"........................................3
"Additional Mortgage Loans"......................................3
"Additional Transfer Date".......................................3
"Additional Transfer Instrument".................................3
"Adjustable-Rate Mortgage Loan"..................................3
"Adjustment Date"................................................3
"Administrative Fee Amount"......................................3
"Affiliate"......................................................4
"Agent"..........................................................4
"Aggregate Scheduled Principal Balance"..........................4
"Aggregate Stated Principal Balance".............................4
"Assignment".....................................................4
"Authenticating Agent"...........................................4
"Authorized Officer".............................................4
"Available Funds"................................................5
"Available Funds Cap Rate".......................................6
"Available Funds Cap Rate Carry Forward Amount"..................6
"B Risk Mortgage Loans"..........................................6
"B- Risk Mortgage Loans".........................................7
"Bankruptcy Code"................................................7
"Basic Documents"................................................7
"Beneficial Owner"...............................................7
"Best Efforts"...................................................7
"Book-Entry Notes"...............................................7
"Book-Entry Custodian"...........................................7
"Book-Entry Termination".........................................7
"Business Day"...................................................8
"C Risk Mortgage Loans"..........................................8
"Cash-Out Refinancing"...........................................8
"Cedel"..........................................................8
"Certificate"....................................................8
"Certificate Distribution Account"...............................8
"Certificateholders".............................................8
"Class"..........................................................8
"Class A-1 Noteholder"...........................................9
<PAGE>
"Class A-1 Notes"................................................9
"Class A-2 Noteholder"...........................................9
"Class A-2 Notes"...............................................10
"Class A-2 Required Overcollateralization Amount"...............10
"Clearing Agency"...............................................10
"Clearing Agency Participants"..................................10
"Closing Date"..................................................10
"Code"..........................................................10
"Collection Account"............................................10
"Collection Period".............................................10
"Commission"....................................................11
"Company".......................................................11
"Company Sale Agreement"........................................11
"Compensating Interest Payments"................................11
"Corporate Trust Office"........................................11
"Coupon Rate"...................................................11
"Cumulative Insured Payments"...................................12
"Crossover Amount"..............................................12
"Custodial Agreement"...........................................12
"Custodian".....................................................12
"Cut-off Date"..................................................12
"Cut-off Date Mortgage Loan"....................................12
"D Risk Mortgage Loans".........................................12
"Default".......................................................13
"Defective Mortgage Loan".......................................13
"Deficiency Event"..............................................13
"Deficient Valuation"...........................................13
"Definitive Notes"..............................................13
"Deleted Mortgage Loan".........................................13
"Delinquency Amount"............................................13
"Delinquency Loss Factor".......................................13
"Delinquency Percentage"........................................13
"Depositor".....................................................14
"Depositor Sale Agreement"......................................14
"Determination Date"............................................14
"Due Date"......................................................14
"Due Period"....................................................14
"Eligible Account"..............................................14
"Euroclear".....................................................15
"Event of Default"..............................................15
"Excess Cash"...................................................15
"Excess Cash Payment"...........................................15
"Expense Adjusted Coupon Rate"..................................15
"FDIC"..........................................................15
"FHLMC".........................................................16
"Final Certification"...........................................16
ii
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"Final Maturity Date"...........................................16
"First Mortgage Loan"...........................................16
"FNMA"..........................................................16
"Full Prepayment"...............................................16
"Funding Co. "..................................................16
"Funding Co. Sale Agreement"....................................16
"Funding Period"................................................16
"Grant".........................................................17
"Gross Margin"..................................................17
"Group".........................................................17
"Group I".......................................................17
"Group I Initial Mortgage Loan".................................17
"Group I Mortgage Loans"........................................17
"Group II"......................................................17
"Group II Initial Mortgage Loan"................................18
"Group II Mortgage Loans".......................................18
"Group I Original Pre-Funding Amount"...........................18
"Group II Original Pre-Funding Amount"..........................18
"Highest Lawful Rate"...........................................18
"Indenture".....................................................18
"Indenture Trustee".............................................18
"Indenture Trustee's Fee".......................................18
"Independent"...................................................18
"Index".........................................................19
"Individual Note"...............................................19
"Initial Certification".........................................19
"Initial Cut-off Date"..........................................19
"Initial Mortgage Loans"........................................19
"Indemnification Agreement".....................................20
"Insurance Agreement"...........................................20
"Insurance Policies"............................................20
"Insurance Proceeds"............................................20
"Insured Payments"..............................................20
"Interest Coverage Account".....................................20
"Interest Coverage Amount"......................................20
"Interest Determination Date"...................................20
"Interest Period"...............................................21
"Interim Certification".........................................21
"Issuer"........................................................21
"Issuer Order" and "Issuer Request".............................21
"Letter Agreement"..............................................21
"Liquidated Mortgage Loan"......................................21
"Liquidation Date"..............................................21
"Liquidation Event".............................................21
"Liquidation Proceeds"..........................................21
"Loan Contribution Agreement"...................................21
iii
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"Loan-To-Value Ratio"...........................................22
"London Business Day"...........................................22
"Majority Certificateholder"....................................22
"Management Agreement"..........................................22
"Manager".......................................................22
"Maturity"......................................................22
"Maximum Rate"..................................................22
"MBIA Insurance Policy".........................................22
"MBIA Payment Default"..........................................22
"Minimum Rate"..................................................23
"Minimum Spread"................................................23
"Monthly Payment"...............................................23
"Monthly Principal".............................................23
"Monthly Principal Available"...................................23
"Moody's".......................................................23
"Mortgage"......................................................24
"Mortgage File".................................................24
"Mortgage Loan".................................................24
"Mortgage Loan Schedule"........................................24
"Mortgage Note".................................................26
"Mortgaged Property"............................................26
"Mortgagor".....................................................26
"Net Liquidation Proceeds"......................................26
"Nonrecoverable P&I Advance"....................................26
"Note Account"..................................................26
"Note Balance"..................................................27
"Note Factor"...................................................27
"Noteholder" or "Holder"........................................27
"Note Formula Rate".............................................27
"Note Insurer"..................................................27
"Note Insurer Commitment Letter"................................28
"Note Insurer Default"..........................................28
"Note Insurer Premium"..........................................28
"Note Insurer Premium Rate".....................................29
"Note Interest".................................................29
"Note Interest Rate"............................................29
"Note Register".................................................29
"Notes".........................................................29
"Notice of Claim"...............................................29
"Officers' Certificate".........................................30
"One-Month Libor"...............................................30
"Opinion Of Counsel"............................................30
"Original Note Balance".........................................30
"Original Pre-Funding Amount"...................................31
"Outstanding"...................................................31
"Outstanding Note Balance"......................................31
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<PAGE>
"Outstanding Pre-Funding Amount"................................32
"Overcollateralization Amount"..................................32
"Overcollateralization Deficit".................................32
"Overcollaterization Surplus"...................................32
"Owner Trustee".................................................32
"P&I Advance"...................................................32
"Paying Agent"..................................................33
"Payment Ahead".................................................33
"Payment Date"..................................................33
"Payment Date Statement"........................................33
"Percentage Interest"...........................................35
"Periodic Rate Cap".............................................35
"Permitted Investments".........................................35
"Person"........................................................37
"Policy Payments Account".......................................37
"Predecessor Notes".............................................37
"Preference Amount".............................................37
"Pre-Funding Account"...........................................37
"Prepayment Interest Shortfall".................................37
"Principal Prepayment"..........................................37
"Proceeding"....................................................38
"Prospectus Supplement".........................................38
"Purchase Price"................................................38
"Qualified Replacement Mortgage Loan"...........................38
"Rate/Term Refinancing".........................................39
"Rating Agencies"...............................................39
"RBMG"..........................................................39
"RBMG Guidelines"...............................................39
"Realized Loss".................................................39
"Record Date"...................................................40
"Redemption Date"...............................................40
"Redemption Price"..............................................40
"Reference Banks"...............................................40
"Refinanced Mortgage Loan"......................................40
"Release Date"..................................................40
"Relief Act Interest Shortfall".................................41
"Remittable Funds"..............................................41
"REO Imputed Interest"..........................................41
"REO Principal Amortization"....................................41
"REO Property"..................................................41
"Required Overcollateralization Amount".........................41
"Required Payment Amount".......................................42
"Reserve Account"...............................................42
"Reserve Interest Rate".........................................42
"Residential Dwelling"..........................................42
"Responsible Officer"...........................................42
v
<PAGE>
"Sale"..........................................................43
"Scheduled Principal Balance"...................................43
"Securities Act"................................................43
"Servicer"......................................................44
"Servicer Remittance Date"......................................44
"Servicer Remittance Report"....................................44
"Servicing Advance".............................................44
"Servicing Agreement"...........................................44
"Servicing Fee".................................................44
"Servicing Fee Rate"............................................44
"Standard & Poor's".............................................44
"Stated Principal Balance"......................................44
"Stayed Funds"..................................................45
"Sub-Servicer"..................................................45
"Sub-Servicing Agreement".......................................45
"TIA"...........................................................45
"Three Month Rolling Average Delinquency Percentage"............46
"Total Available Funds".........................................46
"Total Expected Losses".........................................46
"Transferor"....................................................46
"Trust Agreement"...............................................46
"Trust Estate"..................................................46
"Trust Paying Agent"............................................46
"Twelve Month Loss Amount"......................................46
"Underwriter"...................................................47
"U.S. Bankruptcy Code"..........................................47
"Value".........................................................47
"Vice President"................................................47
ARTICLE II THE NOTES........................................................48
Section 2.01. Forms Generally..................................48
Section 2.02. Forms of Certificate of Authentication...........48
Section 2.03. General Provisions With Respect to Principal and
Interest Payments..............................48
Section 2.04. Denominations....................................49
Section 2.05. Execution, Authentication, Delivery and Dating...49
Section 2.06. Registration, Registration of Transfer and
Exchange.......................................50
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes.......51
Section 2.08. Payments of Principal and Interest...............52
Section 2.09. Persons Deemed Owners............................54
Section 2.10. Cancellation.....................................54
Section 2.11. Authentication and Delivery of Notes.............54
vi
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Section 2.12. Book-Entry Notes.................................56
Section 2.13. Termination of Book Entry System.................58
Section 2.14. Conveyance of Additional Mortgage Loans..........58
Section 1.15. Certain Available Information....................64
ARTICLE III COVENANTS.......................................................65
Section 3.01. Payment of Notes.................................65
Section 3.02. Maintenance of Office or Agency..................65
Section 3.03. Money for Note Payments to be Held in Trust......65
Section 3.04. Existence of Issuer..............................67
Section 3.05. Protection of Trust Estate.......................68
Section 3.06. Opinions as to Trust Estate......................68
Section 3.07. Performance of Obligations; Servicing Agreement..69
Section 3.08. Investment Company Act...........................69
Section 3.09. Negative Covenants...............................69
Section 3.10. Annual Statement as to Compliance................70
Section 3.11. Restricted Payments..............................71
Section 3.12. Treatment of Notes as Debt for Tax Purposes......71
Section 3.13. Notice of Events of Default......................71
Section 3.14. Further Instruments and Acts.....................71
ARTICLE IV SATISFACTION AND DISCHARGE.......................................72
Section 4.01. Satisfaction and Discharge of Indenture..........72
Section 4.02. Application of Trust Money.......................73
ARTICLE V DEFAULTS AND REMEDIES.............................................74
Section 5.01. Event of Default.................................74
Section 5.02. Acceleration of Maturity; Rescission and
Annulment......................................75
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee...............76
Section 5.04. Remedies.........................................76
Section 5.05. Indenture Trustee May File Proofs of Claim.......77
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes............................78
Section 5.07. Application of Money Collected...................78
vii
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Section 5.08. Limitation on Suits..............................79
Section 5.09. Unconditional Right of Noteholders to Receive
Principal and Interest.........................................80
Section 5.10. Restoration of Rights and Remedies...............80
Section 5.11. Rights and Remedies Cumulative...................81
Section 5.12. Delay or Omission Not Waiver.....................81
Section 5.13. Control by Noteholders...........................81
Section 5.14. Waiver of Past Defaults..........................81
Section 5.15. Undertaking for Costs............................83
Section 5.16. Waiver of Stay or Extension Laws.................83
Section 5.17. Sale of Trust Estate.............................83
Section 5.18. Action on Notes..................................85
Section 5.19. No Recourse to Other Trust Estates or Other
Assets of the Issuer...........................................85
Section 5.20. Application of the Trust Indenture Act...........85
ARTICLE VI THE INDENTURE TRUSTEE............................................86
Section 6.01. Duties of Indenture Trustee......................86
Section 6.02. Notice of Default................................87
Section 6.03. Rights of Indenture Trustee......................88
Section 6.04. Not Responsible for Recitals or
Issuance of Notes.............................................88
Section 6.05. May Hold Notes...................................88
Section 6.06. Money Held in Trust..............................89
Section 6.07. Eligibility; Disqualification....................89
Section 6.08. Indenture Trustee's Capital and Surplus..........89
Section 6.09. Resignation and Removal; Appointment of
Successor.....................................................89
Section 6.10. Acceptance of Appointment by Successor...........91
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee..............................91
Section 6.12. Preferential Collection of Claims against
Issuer.........................................................91
Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees.......................................................92
Section 6.14. Authenticating Agents............................93
Section 6.15. Review of Mortgage Files.........................94
Section 6.16. Indenture Trustee Fees and Expenses..............96
ARTICLE VII NOTEHOLDERS' LISTS..................................97
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Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders.......................................97
Section 7.02. Preservation of Information; Communications
to Noteholders.................................................97
Section 7.03. Reports by Indenture Trustee.....................97
Section 7.04. Reports by Issuer................................98
RTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND
RELEASES..................................................................99
Section 8.01. Collection of Moneys.............................99
Section 8.02. Establishment of Accounts;.......................99
Section 8.03. Pre-Funding Accounts............................102
Section 8.04. Interest Coverage Accounts......................103
Section 8.05. Claims Against the MBIA Insurance Policy........105
Section 8.06. General Provisions Regarding the Note Account
and Mortgage Loans............................................107
Section 8.07. Releases of Defective Mortgage Loans............107
Section 8.08. Reports by Indenture Trustee to Noteholders;
Access to Certain Information.................................109
Section 8.09. Trust Estate Mortgage Files.....................109
Section 8.10. Amendment to Servicing Agreement................109
Section 8.11. Delivery of the Mortgage Files Pursuant to
Servicing Agreement...........................................109
Section 8.12. Servicer as Agent...............................110
Section 8.13. Termination of Servicer.........................110
Section 8.14. Investment of Funds in the Note Accounts,
the Pre-Funding Accounts and the Interest Coverage Accounts..110
Section 8.15. Appointment of Custodians.......................111
Section 8.16. Rights of the Note Insurer to Exercise Rights
of Noteholders................................................112
Section 8.17. Trust Estate and Accounts Held for Benefit of
the Note Insurer..............................................112
Section 8.18. Reserve Account.................................113
ARTICLE IX SUPPLEMENTAL INDENTURES.............................115
Section 9.01. Supplemental Indentures without Consent of
Noteholders...................................................115
Section 9.02. Supplemental Indentures with Consent of
Noteholders...................................................115
Section 9.03. Execution of Supplemental Indentures............117
Section 9.04. Effect of Supplemental Indentures...............117
IX
<PAGE>
Section 9.05. [Reserved]......................................117
Section 9.06. Reference in Notes to Supplemental Indentures...117
Section 9.07. Amendments to Governing Documents...............117
ARTICLE X REDEMPTION OF NOTES..............................................119
Section 10.01. Redemption.....................................119
Section 10.02. Form of Redemption Notice......................119
Section 10.03. Notes Payable on Optional Redemption...........120
ARTICLE XI MISCELLANEOUS...................................................121
Section 11.01. Compliance Certificates and Opinions...........121
Section 11.02. Form of Documents Delivered to Indenture
Trustee.......................................................121
Section 11.03. Acts of Noteholders............................122
Section 11.04. Notices, etc. to Indenture Trustee, the Note
Insurer and Issuer............................................123
Section 11.05. Notices and Reports to Noteholders; Waiver of
Notices.......................................................124
Section 11.06. Rules by Indenture Trustee.....................125
Section 11.07. Conflict With Trust Indenture Act..............125
Section 11.08. Effect of Headings and Table of Contents.......125
Section 11.09. Successors and Assigns.........................125
Section 11.10. Separability...................................125
Section 11.11. Benefits of Indenture..........................125
Section 11.12. Legal Holidays.................................125
Section 11.13. Governing Law..................................126
Section 11.14. Counterparts...................................126
Section 11.15. Recording of Indenture.........................126
Section 11.16. Issuer Obligation..............................126
Section 11.17. No Petition....................................126
Section 11.18. Inspection.....................................127
Section 11.19. Usury..........................................127
Section 11.20. Third-Party Beneficiary........................128
Section 11.21. Limitation on Liability of Owner Trustee.......128
X
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I........Mortgage Loan Schedule
Exhibit A.........Form of Note
Exhibit B.........Form of Addition Notice
Exhibit C.........Form of Officer's Certificate
Exhibit D.........Form of Servicing Agreement
Exhibit E.........Form of Custodial Agreement
xi
<PAGE>
CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.1
TRUST INDENTURE ACT OF 1939 INDENTURE SECTION
--------------------------- -----------------
Section 310
(a) (1)......................................... 6.07
(a) (2)......................................... 6.07, 6.08
(a) (3)......................................... 6.13
(a) (4)......................................... Not Applicable
(a) (5)......................................... 6.07
(b)............................................. 6.07, 6.09
(c)............................................. Not Applicable
Section 311
(a)............................................. 6.12
(b)............................................. 6.12
(c)............................................. Not Applicable
Section 312
(a)............................................. 7.01(a), 7.02(a)
(b)............................................. 7.02(b)
(c)............................................. 7.02(c)
Section 313
(a)............................................. 7.03(a)
(b)............................................. 7.03(a)
(c)............................................. 11.05
(d)............................................. 7.03(b)
Section 314
(a)(1).......................................... 7.04
(a)(2).......................................... 7.04
(a)(3).......................................... 7.04
(a)(4).......................................... 7.04
(b)(1).......................................... 2.11(c), 11.01
(b)(2).......................................... 3.06
(c)(1).......................................... 2.11(d), 4.01,
8.02(e), 11.01
(c)(2).......................................... 2.11(c), 4.01,
8.02(e), 11.01
(c)(3).......................................... 8.02(e)
(d)(1).......................................... 11.01(a)
(d)(2).......................................... 11.01(a)
(d)(3).......................................... 11.01(a)
(e)............................................. 11.0 1(b)
Section 315
- - --------
(1) This Cross-Reference Table is not part of the Indenture.
<PAGE>
(a).............................................6.01(b), 6.01(c)(i)
(b)............................................. 6.02, 11.05
(c)............................................. 6.01(a)
(d)(1).......................................... 6.01(b), 6.01(c)
(d)(2).......................................... 6.01(c)(ii)
(d)(3).......................................... 6.01(c)(iii)
(e)............................................. 5.15
Section 316
(a)............................................. 5.20
(b)............................................. 5.09
(c)............................................. 5.20
Section 317
(a)(1).......................................... 5.03
(a)(2).......................................... 5.05
(b)............................................. 3.01
Section 318
(a)............................................. 11.07
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT A-1
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR 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.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN OCWEN FEDERAL BANK
FSB, THE BANK OF NEW YORK, MBIA INSURANCE CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS NOTE NOR ANY OF THE UNDERLYING MORTGAGE LOANS, WITH
LIMITED EXCEPTIONS, IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
Date of Indenture: As of December 1, 1998
First Payment Date: January 25, 1999
Denomination: $107,500,000
Original Note Balance: $107,500,000
CUSIP No.: 74925XAA2
Note No.: A-1-1
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
ASSET-BACKED NOTES, SERIES 1998-2
RBMG Funding Co. Mortgage Loan Trust 1998-2, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ONE HUNDRED AND SEVEN MILLION FIVE
HUNDRED THOUSAND DOLLARS ($107,500,000) payable on each Payment Date in an
amount equal to the result obtained by multiplying (i) a fraction the numerator
of which is $107,500,000 and the denominator of which is $107,500,000 (this
Note's "Percentage Interest") by (ii) the aggregate amount, if any, payable from
the related Note
A-1-1
<PAGE>
Account in respect of principal on the Class A-1 Notes pursuant to the Indenture
dated as of December 1, 1998 (the "Indenture"), between the Issuer and The Bank
of New York, a New York banking corporation, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in April, 2030 (the "Final Maturity Date"), (ii) the Redemption Date,
if any, pursuant to Article X of the Indenture or (iii) the date on which an
Event of Default shall have occurred and be continuing, if the related Class of
Notes have been declared to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the 25th
day of each month or, if such day is not a Business Day, on the Business Day
immediately following such 25th day (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the amounts to be paid on the Class A-1 Notes with respect to
such Payment Date, all as more specifically set forth in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-1-2
<PAGE>
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a policy
containing the following provisions, such policy being on file at The Bank of
New York, as indenture trustee, New York, New York.
The Insurer, in consideration of the payment of the premium and subject
to the terms of the Financial Guaranty Insurance Policy (the "Policy"), thereby
unconditionally and irrevocably guarantees to any Owner (as defined below) that
an amount equal to each full and complete Insured Payment (as defined below)
will be received from the Insurer by The Bank of New York or its successors, as
indenture trustee for the Owners (the "Indenture Trustee"), on behalf of the
Owners, for distribution by the Indenture Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations under the
Policy with respect to a particular Insured Payment shall be discharged to the
extent funds equal to the applicable Insured Payment are received by the
Indenture Trustee, whether or not such funds are properly applied by the
Indenture Trustee. Insured Payments shall be made only at the time set forth in
the Policy and no accelerated Insured Payments shall be made regardless of any
acceleration of the Obligations, unless such acceleration is at the sole option
of the Insurer.
"Obligations" shall mean:
$170,000,000
RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset-Backed Notes, Series 1998-2, Class A-1 and Class A-2
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the Indenture
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or
<PAGE>
interest paid on the Obligations to such receiver or trustee in bankruptcy, in
which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the third Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); provided that
if such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim hereunder it shall be deemed not to
have been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Indenture Trustee and the Indenture Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Indenture Trustee on behalf of the Owners
by wire transfer of immediately available funds in the amount of the Insured
Payment less, in respect of Insured Payments related to Preference Amounts, any
amount held by the Indenture Trustee for the payment of such Insured Payment and
legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited, sufficient funds to
make payments due under this Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive payments under the Obligations to the
extent of any payment by the Insurer hereunder.
As used herein, the following terms shall have the following meanings:
"AGREEMENT" means the Indenture dated as of December 1, 1998 between
RBMG Funding Co. Mortgage Loan Trust 1998-2, as Issuer, and the Indenture
Trustee, as indenture trustee, without regard to any amendment or supplement
thereto.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which the Insurer is closed or banking institutions in New York
City or in the city in which the corporate trust office of the Indenture Trustee
under the Agreement is located are authorized or obligated by law or executive
order to close.
"DEFICIENCY AMOUNT" means, with respect to a Class of Notes and any
Payment Date, the sum of (a) the related Note Interest for such Payment Date
minus Total Available Funds for the related Group, and (b) the then existing
Overcollateralization Deficit for the related Group, if any, after the
application of Total Available Funds for the related Group to reduce the Note
Balance on such Payment Date.
2
<PAGE>
"INSURED PAYMENT" means (i) as of any Payment Date, the Deficiency
Amount and (ii) any Preference Amount.
"NOTICE" means the telephonic or telegraphic notice, promptly confirmed
in writing by telecopy substantially in the form of Exhibit A attached hereto,
the original of which is subsequently delivered by registered or certified mail,
from the Indenture Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"OWNER" means each Holder (as defined in the Agreement) (other than the
Indenture Trustee, RBMG, the Issuer, Funding Co., the Company, the Depositor,
the Servicer or the Sub-Servicer) who, on the applicable Payment Date, is
entitled under the terms of the applicable Obligations to payment thereunder.
"PREFERENCE AMOUNT" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this Policy
is not refundable for any reason including payment, or provision being made for
payment, prior to maturity of the Obligations.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: December 11, 1998
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee under the Trust Agreement
By:_____________________________________
Authorized Signatory
A-1-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
Date: December 11, 1998
THE BANK OF NEW YORK,
as Authenticating Agent
By:______________________________________
Authorized Signatory
A-1-5
<PAGE>
[Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Asset-Backed Notes, Series 1998-2, Class A-1 (herein called
the "Class A-1 Notes"), issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. Also issued under the Indenture are the
Asset-Backed Notes, Series 1998-2, Class A-2 (herein called the "Class A-2
Notes" and collectively with the Class A-1 Notes, the "Notes"). To the extent
that any provision of this Note contradicts or is inconsistent with the
provisions of the Indenture, the provisions of the Indenture shall control and
supersede such contradictory or inconsistent provision herein. The Notes are
subject to all terms of the Indenture.
The Class A-1 Notes are and will be equally and ratably secured by the
Mortgage Loans in Group I of the Trust Estate and the other collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Payment Date in
an amount described on the face hereof.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Maturity Date and the Redemption
Date, if any, pursuant to Article X of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Class A-1 Notes shall be
due and payable on the date on which an Event of Default shall have occurred and
be continuing and the indenture Trustee, at the direction or upon the prior
written consent of MBIA Insurance Corporation (the "Note Insurer") in the
absence of a Note Insurer Default, or the Holders of the Class A-1 Notes
representing not less than 50% of the Note Balance of the Outstanding Notes of
the related Class of Notes with the prior written consent of the Note Insurer in
the absence of a Note Insurer Default have declared the related Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the Class A-1 Noteholders entitled thereto.
The Note Insurer has issued a MBIA Insurance Policy in the name of the
Indenture Trustee for the benefit of the Noteholders, which policy guarantees
payments on each Payment Date to the Indenture Trustee for the benefit of the
Noteholders of the related Noteholders' Percentage Interest in the Required
Payment Amount for such Payment Date. Unless a Note Insurer Default shall be
continuing, subject to Section 8.16 of the Indenture, the Note Insurer shall be
deemed to be the Holder of 100% of the Note Balance of the Outstanding Notes of
the related Class of Notes for the purpose of exercising the rights, including
voting rights, of the Noteholders of the related Class of Notes under the
Indenture. In addition, on each Payment Date, after the Noteholders of the
related Class of Notes have been paid all amounts to which they are entitled,
the Note Insurer will be entitled to be reimbursed for any unreimbursed Insured
Amounts and any other amounts owed under the MBIA Insurance Policy.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made
A-1-6
<PAGE>
by check mailed to the Person whose name appears as the Holder of this Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Holder hereof as of the Record Date preceding such
Payment Date by notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New York.
As provided in the Indenture, each Class of Notes may be redeemed in
whole, but not in part, at the option of the Servicer or the Note Insurer on any
Payment Date on and after the date on which the Note Balance of the related
Class of Notes is less than 10% of the Outstanding Note Balance of such Class as
of the Closing Date.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Beneficial Owner, by acceptance of a beneficial interest in a Note,
shall be deemed to represent either (i) that it is not (A) an employee benefit
plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) that is subject to the provisions of Title I of
ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) that is subject to Section 4975 of the
Code (each of the foregoing, a "Benefit Plan"), and is not acting on behalf of
or investing the assets of a Benefit Plan, or (ii) that its acquisition and
continued holding of such beneficial interest will be covered by a U.S.
Department of Labor Prohibited Transaction Class Exemption.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or
A-1-7
<PAGE>
the Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign
of the Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that by accepting the benefits of the Indenture that such Noteholder or
Beneficial Owner will not at any time institute against the Depositor, the
Company, Funding Co., RBMG or the Issuer, or join in any institution against the
Depositor, the Company, Funding Co., RBMG or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture, the Depositor Sale Agreement,
the Company Sale Agreement, the Funding Co. Sale Agreement, the Loan
Contribution Agreement or the Servicing Agreement (the "Basic Documents").
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer, the Note Insurer
or the Indenture Trustee may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Issuer, the Note Insurer, the Indenture
Trustee or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the related Class of Notes under the
Indenture at any time by the Issuer with the consent of the Note Insurer and the
Holders of the Notes of the related Class representing a majority of the Note
Balance of all Outstanding Notes of such Class. The Indenture also contains
provisions permitting the Holders of Notes representing specified percentages of
the Note Balance of Outstanding Notes of the related Class of Notes, on behalf
of the Holders of all the Notes of such Class, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon
A-1-8
<PAGE>
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the amendment thereof, in certain limited circumstances,
or the waiver of certain terms and conditions set forth in the Indenture without
the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer, the Company, Funding Co. or
RBMG, the Owner Trustee in its individual capacity, any owner of a beneficial
interest in the Issuer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-1-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
-----------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated:
44056.3
A-1-10
<PAGE>
EXHIBIT A-2
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR 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.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN OCWEN FEDERAL BANK
FSB, THE BANK OF NEW YORK, MBIA INSURANCE CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS NOTE NOR ANY OF THE UNDERLYING MORTGAGE LOANS, WITH
LIMITED EXCEPTIONS, IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
Date of Indenture: As of December 1, 1998
First Payment Date: January 25, 1999
Denomination: $62,500,000
Original Note Balance: $62,500,000
CUSIP No.: 74925XAB0
Note No.: A-2- 1
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
ASSET-BACKED NOTES, SERIES 1998-2
RBMG Funding Co. Mortgage Loan Trust 1998-2, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of SIXTY TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($62,500,000) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is
$62,500,000 and the denominator of which is $62,500,000 (this Note's "Percentage
Interest") by (ii) the aggregate amount, if any, payable from the related Note
Account in respect
A-2-1
<PAGE>
of principal on the Class A-2 Notes pursuant to the Indenture dated as of
December 1, 1998 (the "Indenture"), between the Issuer and The Bank of New York,
a New York banking corporation, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of (i) the Payment Date occurring in April , 2030
(the "Final Maturity Date"), (ii) the Redemption Date, if any, pursuant to
Article X of the Indenture or (iii) the date on which an Event of Default shall
have occurred and be continuing, if the Notes have been declared to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined in Article
I of the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the 25th
day of each month or, if such day is not a Business Day, on the Business Day
immediately following such 25th day (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the amounts to be paid on the Class A-2 Notes with respect to
such Payment Date, all as more specifically set forth in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-2-2
<PAGE>
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a policy
containing the following provisions, such policy being on file at The Bank of
New York, as indenture trustee, New York, New York.
The Insurer, in consideration of the payment of the premium and subject
to the terms of the Financial Guaranty Insurance Policy (the "Policy"), thereby
unconditionally and irrevocably guarantees to any Owner (as defined below) that
an amount equal to each full and complete Insured Payment (as defined below)
will be received from the Insurer by The Bank of New York or its successors, as
indenture trustee for the Owners (the "Indenture Trustee"), on behalf of the
Owners, for distribution by the Indenture Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations under the
Policy with respect to a particular Insured Payment shall be discharged to the
extent funds equal to the applicable Insured Payment are received by the
Indenture Trustee, whether or not such funds are properly applied by the
Indenture Trustee. Insured Payments shall be made only at the time set forth in
the Policy and no accelerated Insured Payments shall be made regardless of any
acceleration of the Obligations, unless such acceleration is at the sole option
of the Insurer.
"Obligations" shall mean:
$170,000,000
RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset-Backed Notes, Series 1998-2, Class A-1 and Class A-2
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the Indenture
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or
<PAGE>
interest paid on the Obligations to such receiver or trustee in bankruptcy, in
which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the third Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); provided that
if such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim hereunder it shall be deemed not to
have been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Indenture Trustee and the Indenture Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Indenture Trustee on behalf of the Owners
by wire transfer of immediately available funds in the amount of the Insured
Payment less, in respect of Insured Payments related to Preference Amounts, any
amount held by the Indenture Trustee for the payment of such Insured Payment and
legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited, sufficient funds to
make payments due under this Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive payments under the Obligations to the
extent of any payment by the Insurer hereunder.
As used herein, the following terms shall have the following meanings:
"AGREEMENT" means the Indenture dated as of December 1, 1998 between
RBMG Funding Co. Mortgage Loan Trust 1998-2, as Issuer, and the Indenture
Trustee, as indenture trustee, without regard to any amendment or supplement
thereto.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which the Insurer is closed or banking institutions in New York
City or in the city in which the corporate trust office of the Indenture Trustee
under the Agreement is located are authorized or obligated by law or executive
order to close.
"DEFICIENCY AMOUNT" means, with respect to a Class of Notes and any
Payment Date, the sum of (a) the related Note Interest for such Payment Date
minus Total Available Funds for the related Group, and (b) the then existing
Overcollateralization Deficit for the related Group, if any, after the
application of Total Available Funds for the related Group to reduce the Note
Balance on such Payment Date.
2
<PAGE>
"INSURED PAYMENT" means (i) as of any Payment Date, the Deficiency
Amount and (ii) any Preference Amount.
"NOTICE" means the telephonic or telegraphic notice, promptly confirmed
in writing by telecopy substantially in the form of Exhibit A attached hereto,
the original of which is subsequently delivered by registered or certified mail,
from the Indenture Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"OWNER" means each Holder (as defined in the Agreement) (other than the
Indenture Trustee, RBMG, the Issuer, Funding Co., the Company, the Depositor,
the Servicer or the Sub-Servicer) who, on the applicable Payment Date, is
entitled under the terms of the applicable Obligations to payment thereunder.
"PREFERENCE AMOUNT" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
This Policy is not cancelable for any reason. The premium on this Policy
is not refundable for any reason including payment, or provision being made for
payment, prior to maturity of the Obligations.
3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: December 11, 1998
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee under the Trust Agreement
By:_____________________________________
Authorized Signatory
A-2-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
Date: December 11, 1998
THE BANK OF NEW YORK,
as Authenticating Agent
By:______________________________________
Authorized Signatory
A-2-5
<PAGE>
[Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Asset-Backed Notes, Series 1998-2, Class A-2 (herein called
the "Class A-2 Notes"), issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. Also issued under the Indenture are the
Asset-Backed Notes, Series 1998-2, Class A-1 (herein called the "Class A-1
Notes" and collectively with the Class A-2 Notes, the "Notes"). To the extent
that any provision of this Note contradicts or is inconsistent with the
provisions of the Indenture, the provisions of the Indenture shall control and
supersede such contradictory or inconsistent provision herein. The Notes are
subject to all terms of the Indenture.
The Class A-2 Notes are and will be equally and ratably secured by the
Mortgage Loans in Group II of the Trust Estate and the other collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Payment Date in
an amount described on the face hereof.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Maturity Date and the Redemption
Date, if any, pursuant to Article X of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Class A-2 Notes shall be
due and payable on the date on which an Event of Default shall have occurred and
be continuing and the indenture Trustee, at the direction or upon the prior
written consent of MBIA Insurance Corporation (the "Note Insurer") in the
absence of a Note Insurer Default, or the Holders of the Notes representing not
less than 50% of the Note Balance of the Outstanding Notes of the related Class
of Notes with the prior written consent of the Note Insurer in the absence of a
Note Insurer Default have declared the related Notes to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture. All principal
payments on the Class A-2 Notes shall be made pro rata to the Class A-2
Noteholders entitled thereto.
The Note Insurer has issued a MBIA Insurance Policy in the name of the
Indenture Trustee for the benefit of the Noteholders, which policy guarantees
payments on each Payment Date to the Indenture Trustee for the benefit of the
Noteholders of the related Noteholders' Percentage Interest in the Required
Payment Amount for such Payment Date. Unless a Note Insurer Default shall be
continuing, subject to Section 8.16 of the Indenture, the Note Insurer shall be
deemed to be the Holder of 100% of the Note Balance of the Outstanding Notes of
the related Class of Notes for the purpose of exercising the rights, including
voting rights, of the Noteholders of the related Class of Notes under the
Indenture. In addition, on each Payment Date, after the Noteholders of the
related Class of Notes have been paid all amounts to which they are entitled,
the Note Insurer will be entitled to be reimbursed for any unreimbursed Insured
Amounts and any other amounts owed under the MBIA Insurance Policy.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made
A-2-6
<PAGE>
by check mailed to the Person whose name appears as the Holder of this Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Holder hereof as of the Record Date preceding such
Payment Date by notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New York.
As provided in the Indenture, the Notes may be redeemed in whole, but not
in part, at the option of the Servicer or the Note Insurer on any Payment Date
on and after the date on which the related Note Balance is less than 10% of the
Outstanding Note Balance of such Class as of the Closing Date.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Beneficial Owner, by acceptance of a beneficial interest in a Note,
shall be deemed to represent either (i) that it is not (A) an employee benefit
plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) that is subject to the provisions of Title I of
ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) that is subject to Section 4975 of the
Code (each of the foregoing, a "Benefit Plan"), and is not acting on behalf of
or investing the assets of a Benefit Plan, or (ii) that its acquisition and
continued holding of such beneficial interest will be covered by a U.S.
Department of Labor Prohibited Transaction Class Exemption.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or
A-2-7
<PAGE>
the Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign
of the Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that by accepting the benefits of the Indenture that such Noteholder or
Beneficial Owner will not at any time institute against the Depositor, the
Company, Funding Co., RBMG or the Issuer, or join in any institution against the
Depositor, the Company, Funding Co., RBMG or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture, the Depositor Sale Agreement,
the Company Sale Agreement, the Funding Co. Sale Agreement, the Loan
Contribution Agreement or the Servicing Agreement (the "Basic Documents").
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer, the Note Insurer
or the Indenture Trustee may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Issuer, the Note Insurer, the Indenture
Trustee or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes of the related Class of Notes
under the Indenture at any time by the Issuer with the consent of the Note
Insurer and the Holders of the related Class of Notes representing a majority of
the Note Balance of all Outstanding Notes of such Class. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Note Balance of Outstanding Notes of the related Class of
Notes, on behalf of the Holders of all the Notes of such Class, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes) shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon
A-2-8
<PAGE>
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the amendment thereof, in certain limited circumstances,
or the waiver of certain terms and conditions set forth in the Indenture without
the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer, the Company, Funding Co. or
RBMG, the Owner Trustee in its individual capacity, any owner of a beneficial
interest in the Issuer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-2-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
-----------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated:
A-2-10
<PAGE>
EXHIBIT B
FORM OF ADDITION NOTICE
[Date]
[Indenture Trustee]
Re: Indenture, dated as of December 1, 1998, between RBMG Funding
Co. Mortgage Loan Trust 1998-2 and The Bank of New York, as
Indenture Trustee, relating to RBMG Funding Co. Mortgage Loan
Trust 1998-2, Asset-Backed Notes, Series 1998-2, Class A-1 and
Class A-2
Ladies and Gentlemen:
Pursuant to Section 2.14 of the above-captioned Indenture, the Issuer has
designated Additional Mortgage Loans to be Granted to the Indenture Trustee for
inclusion in the Trust Estate on ________________, 199_, with an aggregate
principal balance of $________________ with respect to those Mortgage Loans
allocated to Group I, and an aggregate principal balance of $________________
with respect to those Mortgage Loans allocated to Group II. Capitalized terms
not otherwise defined herein have the meaning set forth in the Indenture.
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
By: Wilmington Trust Company,
not its individual capacity,
but solely as Owner Trustee
By:____________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
[Indenture Trustee]
By:____________________________
Name:
Title:
B-1
<PAGE>
EXHIBIT C
OFFICER'S CERTIFICATE
RBMG Funding Co. Mortgage Loan Trust 1998-2 (the "Issuer"), hereby
certifies, as follows:
Each condition precedent specified in Section 2.14 of the Indenture,
dated as of December 1, 1998 (the "Indenture") between RBMG Funding
Co. Mortgage Loan Trust 1998-2 and The Bank of New York, as
Indenture Trustee and each condition precedent specified in the
Additional Transfer Instrument has been satisfied by the Issuer.
Capitalized terms not otherwise defined herein have the meanings set forth
in the Indenture.
IN WITNESS WHEREOF, I have hereunto signed my name.
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
By: Wilmington Trust Company,
not its individual capacity,
but solely as Owner Trustee
By:____________________________
Name:
Title:
Dated: December 11, 1998
C-1
<PAGE>
EXHIBIT D
FORM OF INVESTMENT LETTER (ERISA)
[Date]
The Bank of New York
101 Barclay Street, 12th floor
New York, New York 10068
Attention:
Re: Indenture, dated as of December 1, 1998, between RBMG Funding
Co. Mortgage Loan Trust 1998-2 and The Bank of New York, as
Indenture Trustee, relating to RBMG Funding Co. Mortgage Loan
Trust 1998-2, Asset-Backed Notes, Series 1998-2.
Ladies and Gentlemen:
__________________________ (the "Transferee") has today purchased in a
private sale from $____________ of ___________ Asset Backed Notes, issued by
RBMG Funding Co. Mortgage Loan Trust 1998-2 pursuant to an Indenture, dated as
of December 1, 1998, between RBMG Funding Co. Mortgage Loan Trust 1998-2 and The
Bank of New York, as Indenture Trustee, relating to RBMG Funding Co. Mortgage
Loan Trust 1998-2, Asset-Backed Notes, Series 1998-2, (the "Indenture").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Indenture. The undersigned hereby certifies and agrees on behalf of the
Purchaser either:
1. The transferee is not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA or (B) a plan
(as defined in Section 4975(e)(i) of the Internal Revenue Code of 1986, as
amended (the "Code")) that is subject to Section 4975 of the Code (each of the
foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the
assets of a Benefit Plan; or
2. The transferee's acquisition and continued holding of the Note will be
covered by a U.S. Department of Labor Prohibited Transaction Class Exemption.
Very truly yours,
NAME OF PURCHASER
By:____________________________
Name:
Title:
D-1
Exhibit 8.1
December 11, 1998
To the Parties Listed on
the Attached Annex A:
Re: RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset Backed Notes, Series 1998-2
Ladies and Gentlemen:
We have acted as special tax counsel in connection with the issuance
and delivery of certain notes denominated as RBMG Funding Co. Mortgage Loan
Trust 1998-2 Asset Backed Notes, Series 1998-2 Notes, Class A-1 and Class A-2
(the "Notes") pursuant to the terms of the Indenture (the "Indenture"), dated as
of December 1, 1998, between the RBMG Funding Co. Mortgage Loan Trust 1998-2
(the "Issuer") and The Bank of New York, as indenture trustee (the "Indenture
Trustee"). Capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Indenture.
As special tax counsel, we have examined such documents as we have
deemed appropriate for the purposes of rendering the opinions set forth below,
including the following: (a) an executed copy of the Indenture and the exhibits
attached thereto and (b) certain representations and warranties made to us by
RBMG and certain information provided by the Underwriter.
In our examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
We have examined the question of whether the Notes will be treated
as indebtedness for federal income tax purposes. Our analysis is based on the
provisions of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder as in effect on the date hereof and on
existing judicial and administrative interpretations thereof. These authorities
are subject to change and to
<PAGE>
differing interpretations, which could apply retroactively. The opinion of
special tax counsel is not binding on the courts or the Internal Revenue Service
(the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a transaction constitutes the issuance of
indebtedness for federal income tax purposes, which we have reviewed as they
apply to this transaction.
Based on the foregoing, and such legal and factual investigations as
we have deemed appropriate, while no transaction closely comparable to that
contemplated in the Operative Documents has been the subject of any Treasury
regulation, revenue ruling or judicial decision, and therefore the matter is
subject to interpretation, we are of the opinion that for federal income tax
purposes:
(1) The Notes will properly be treated as indebtedness for federal
income tax purposes;
(2) The Trust will not constitute an association (or a publicly
traded partnership) taxable as a corporation or a taxable mortgage pool.
We express no opinion on any matter not discussed in this letter.
This opinion is rendered as of the Closing Date, for the sole benefit of the
addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
Very truly yours,
/s/ Dewey Ballantine LLP
2
<PAGE>
ANNEX A
<TABLE>
<CAPTION>
<S> <C>
First Union Capital Markets Standard & Poor's Ratings Services
301 South College Street, TW-06 25 Broadway
Charlotte, North Carolina 28288-0610 New York, New York 10004
Moody's Investors Service, Inc. Resource Bancshares Mortgage Group, Inc.
99 Church Street 7909 Parklane Road
New York, New York 10007 Columbia, South Carolina 29223
RBMG Asset Management Company, Inc. RBMG Funding Co.
2820 West Charleston Boulevard, Suite 17 2820 West Charleston Boulevard, Suite 17
Las Vegas, Nevada 89102 Las Vegas, Nevada 89102
MBIA Insurance Corporation The Bank of New York
113 King Street 101 Barclay Street, 12E
Armonk, New York 10504 New York, New York 10286
</TABLE>
3
Exhibit 10.1
<PAGE>
EXECUTION COPY
================================================================================
MBIA INSURANCE CORPORATION,
as Insurer
RESOURCE BANCSHARES MORTGAGE GROUP, INC.,
OCWEN FEDERAL BANK FSB,
as Sub-Servicer
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor
FIRST UNION CORPORATION
and
WHEAT FIRST SECURITIES, INC.
acting through FIRST UNION CAPITAL MARKETS,
a division of WHEAT FIRST SECURITIES, INC.
as Underwriter
INDEMNIFICATION AGREEMENT
$170,000,000
RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset-Backed Notes
Series 1998-2, Class A-1 and Class A-2
Dated as of December 1, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definitions......................................................1
Section 2. Representations and Warranties of the Insurer....................3
Section 3. Agreements, Representations and Warranties of the Underwriter....4
Section 4. Agreements, Representations and Warranties of RBMG...............4
Section 5. Agreements, Representations and Warranties of the Sub-Servicer...5
Section 6. Agreements, Representations and Warranties of the Depositor......5
Section 7. Indemnification..................................................5
Section 8. Notice To Be Given...............................................6
Section 9. Contribution.....................................................8
Section 10. Notices........................................................10
Section 11. Governing Law, Etc.............................................11
Section 12. Insurance Agreement; Underwriting Agreement; Servicing
Agreement.......................................................11
Section 13. Limitations....................................................11
Section 14. Counterparts...................................................11
Section 15. Non-petition...................................................11
TESTIMONIUM.....................................................SIGNATURE PAGE
SIGNATURES AND SEALS............................................SIGNATURE PAGE
<PAGE>
INDEMNIFICATION AGREEMENT
This Agreement, dated as of December 1, 1998, is by and among MBIA
Insurance Corporation, as Insurer, (the "Insurer"), as the Insurer under the
Financial Guaranty Insurance Policy (the "Policy") issued in connection with the
Offered Obligations described below, Resource Bancshares Mortgage Group, Inc.
("RBMG"), Ocwen Federal Bank FSB, as Sub-Servicer, (the "Sub-Servicer"),
Residential Asset Funding Corporation, as Depositor (the "Depositor"), First
Union Corporation ("First Union") and Wheat First Securities, Inc. acting
through First Union Capital Markets, a division of Wheat First Securities, Inc.,
as Underwriter (the "Underwriter").
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings stated herein, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate.
Capitalized terms used in this Agreement but not otherwise defined herein will
have the meanings ascribed to such terms in the Indenture (as described below).
"Act" means the Securities Act of 1933, as amended, together with all
related rules and regulations.
"Agreement" means this Indemnification Agreement by and among the Insurer,
RBMG, the Sub-Servicer, the Depositor, First Union and the Underwriter.
"Company" means RBMG Asset Management Company, Inc., a Nevada corporation,
or its successors in interest.
"Contribution Agreement" means the Loan Contribution Agreement dated as of
December 1, 1998 between RBMG and the Company.
"Depositor Party" means the Depositor and its respective parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 7 below, as the context requires.
"Indemnifying Party" means any party required to provide indemnification
pursuant to Section 7 below, as the context requires.
"Indenture" means the Indenture dated as of December 1, 1998 between the
Issuer and the Indenture Trustee.
"Indenture Trustee" means The Bank of New York and its permitted
successors and assigns.
<PAGE>
"Insurance Agreement" means the Insurance Agreement, dated as of December
1, 1998, by and among the Insurer, RBMG, in its individual capacity and as
Servicer, the Sub-Servicer, RBMG Funding Co., as Funding Co. and as residual
holder, the Company, the Issuer, the Depositor, First Union and the Indenture
Trustee, as indenture trustee.
"Insurer Party" means the Insurer and its respective parents, subsidiaries
and affiliates and any shareholder, director, officer, employee, agent or any
"controlling person" (as such term is used in the Act) of any of the foregoing.
"Issuer" means RBMG Funding Co. Mortgage Loan Trust 1998-2.
"Losses" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"Offered Obligations" means the RBMG Funding Co. Mortgage Loan Trust
1998-2, Asset-Backed Notes, Series 1998-2, Class A-1 and Class A-2, issued
pursuant to the Indenture.
"Person" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization or any government or agency or political
subdivision thereof.
"Prospectus" means the form of final Prospectus included in the
Registration Statement on each date that the Registration Statement and any
post-effective amendment or amendments thereto became effective.
"Prospectus Supplement" means the final Prospectus Supplement dated
December 9, 1998 with respect to the Offered Obligations and filed with the
Securities and Exchange Commission on December 9, 1998, and any amendment or
supplement thereto.
"RBMG Party" means RBMG, each of its parents, subsidiaries and affiliates
and any shareholder, director, officer, employee, agent or any "controlling
person" (as such term is used in the Act) of any of the foregoing.
"Registration Statement" means the Registration Statement on Form S-3 of
the Depositor (No. 333-64775) relating to the Offered Obligations, and any
pre-and post-effective amendment thereto, including the Prospectus, the
Prospectus Supplement and all exhibits thereto.
"Sub-Servicer" means Ocwen Federal Bank FSB, as Sub-Servicer.
"Sub-Servicer Party" means the Sub-Servicer, each of its parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
2
<PAGE>
"Underwriter Party" means the Underwriter and its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Act) of any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement by and between
the Depositor and the Underwriter, dated December 9, 1998.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE INSURER. The Insurer
represents and warrants to the Underwriter, First Union, the Depositor and RBMG
as follows:
(a) Organization and Licensing. The Insurer is a duly incorporated
and existing New York stock insurance company licensed to do business in
the State of New York and is in good standing under the laws of such
state.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policy and execute and deliver this Agreement and
the Insurance Agreement and to perform all of its obligations hereunder
and thereunder.
(c) Authorization; Approvals. The issuance of the Policy and the
execution, delivery and performance of this Agreement and the Insurance
Agreement have been duly authorized by all necessary corporate
proceedings. No further approvals or filings of any kind, including,
without limitation, any further approvals of or further filings with any
governmental agency or other governmental authority, or any approval of
the Insurer's board of directors or stockholders, are necessary for the
Policy, this Agreement and the Insurance Agreement to constitute the
legal, valid and binding obligations of the Insurer.
(d) Enforceability. The Policy, when issued, and this Agreement and
the Insurance Agreement will each constitute a legal, valid and binding
obligation of the Insurer, enforceable in accordance with its terms,
subject to applicable laws affecting the enforceability of creditors'
rights generally.
(e) Financial Information. The consolidated financial statements of
the Insurer as of December 31, 1997 and December 31, 1996 and for each of
the three years in the period ended December 31, 1997 incorporated by
reference in the Prospectus Supplement (the "Insurer Audited Financial
Statements"), fairly present in all material respects the financial
condition of the Insurer as of such date and for the period covered by
such statements in accordance with generally accepted accounting
principles consistently applied. The consolidated financial statements of
the Insurer and its subsidiaries as of September 30, 1998 and for the
nine-month periods ending September 30, 1998 and September 30, 1997
incorporated by reference in the Prospectus Supplement (the "Insurer
Unaudited Financial Statements" and, collectively with the Insurer Audited
Financial Statements, the "Insurer Financial Statements") present fairly
in all material respects the financial condition of the Insurer as of such
date and for the period covered by such statements in accordance with
generally accepted accounting principles applied in a manner consistent
with the accounting principles used in preparing the Insurer Audited
Financial Statements, and, since September 30, 1998 there has been
3
<PAGE>
no material change in such financial condition of the Insurer which would
materially and adversely affect its ability to perform its obligations
under the Policy.
(f) Insurer Information. The information in the Prospectus
Supplement as of the date hereof under the caption "THE INSURANCE POLICY
AND THE NOTE INSURER" (other than the information under the sub-caption
"--CREDIT ENHANCEMENT DOES NOT APPLY TO PREPAYMENT RISK" as to which the
Insurer makes no representation or warranty) (the "Insurer Information")
is limited and does not purport to provide the scope of disclosure
required to be included in a prospectus for a registrant under the Act, in
connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, the Insurer
Information does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its condition
(financial or otherwise) or operations of it or would materially and
adversely affect its ability to perform its obligations under this
Agreement, the Policy or the Insurance Agreement.
SECTION 3. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE Underwriter.
The Underwriter represents and warrants to and agrees with RBMG and the Insurer
that the statements in the Prospectus Supplement made in reliance upon and in
conformity with written information relating to the Underwriter furnished
specifically for use in the preparation of the Prospectus Supplement, it being
acknowledged that the only such information is that set forth under the heading
"UNDERWRITING" and any information relating to market making (referred to herein
as the "Underwriter Information"), are true and correct in all material
respects.
SECTION 4. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF RBMG. RBMG
represents and warrants to and agrees with the Insurer, the Sub-Servicer, First
Union, the Depositor and the Underwriter as follows:
(a) Registration Statement. The information in the Prospectus
Supplement, under the headings "SUMMARY--PARTIES--RBMG or Resource
Bancshares Mortgage Group, Inc.," "SUMMARY--MORTGAGE LOAN POOL,"
"DESCRIPTION OF THE MORTGAGE POOL," "RBMG," "RBMG FUNDING CO" and
"SERVICING OF THE MORTGAGE LOANS" (other than information under the
sub-heading "--THE SUB-SERVICER") (collectively, the "RBMG Information")
is true and correct in all material respects and does not contain any
untrue statement of a fact that is material or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Organization. RBMG is duly incorporated and existing under the
laws of the State of Delaware and is in good standing as a foreign
corporation in each jurisdiction
4
<PAGE>
in which the nature of its business, or the properties owned or leased by
it, makes such qualification necessary.
(c) Corporate Power. RBMG has the corporate power and authority to
execute and deliver this Agreement, the Contribution Agreement and the
Insurance Agreement and to perform all of its obligations hereunder and
thereunder in all material respects.
(d) Authorization; Approvals. The execution, delivery and
performance of this Agreement, the Contribution Agreement and the
Insurance Agreement by RBMG have been duly authorized by all necessary
corporate proceedings. No further approvals or filings of any kind,
including, without limitation, any further approvals of or further filing
with any governmental agency or other governmental authority, or any
approval of RBMG's board of directors or stockholders, are necessary for
this Agreement, the Contribution Agreement and the Insurance Agreement to
constitute the legal, valid and binding obligations of RBMG.
(e) Enforceability. This Agreement, the Contribution Agreement and
the Insurance Agreement will each constitute a legal, valid and binding
obligation of RBMG, each enforceable in accordance with its terms,
subject, as to the enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the event of
the bankruptcy, insolvency or reorganization of RBMG and to general
principles of equity.
(f) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of RBMG's knowledge, threatened
against it at law or in equity or before any court, governmental agency,
board or commission or any arbitrator which, if decided adversely, would
materially and adversely affect its condition (financial or otherwise) or
its operations or would materially and adversely affect its ability to
perform its obligations under this Agreement, the Contribution Agreement
or the Insurance Agreement.
SECTION 5. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE Sub-Servicer.
The Sub-Servicer represents and warrants to and agrees with RBMG, First Union,
the Depositor and the Underwriter that the information in the Prospectus
Supplement set forth under the heading "SERVICING OF THE MORTGAGE LOANS--THE
SUB-SERVICER" (the "Sub-Servicer Information") does not contain any untrue
statement of a material fact and does not omit to state a material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
SECTION 6. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor represents and warrants to and agrees with the Insurer that the
information in the Registration Statement, other than the Insurer Information,
the Sub-Servicer Information, the Underwriter Information and the RBMG
Information (the "Depositor Information"), is true and correct in all material
respects and does not contain any untrue statement of a fact that is material
5
<PAGE>
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 7. INDEMNIFICATION. (a) The Insurer hereby agrees, upon the terms
and subject to the conditions of this Agreement, to indemnify, defend and hold
harmless each RBMG Party, each Depositor Party, First Union and each Underwriter
Party against any and all Losses incurred by them with respect to the offer and
sale of any of the Offered Obligations which result from the Insurer's breach of
any of its representations and warranties (including, without limitation, with
respect to the Insurer Information) set forth in Section 2 of this Agreement.
(b) The Underwriter hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by it with respect to the
offer and sale of any of the Offered Obligations which result from the
Underwriter's breach of its representation and warranty with respect to the
Underwriter Information set forth in Section 3 of this Agreement.
(c) RBMG hereby agrees, upon the terms and subject to the conditions of
this Agreement, to indemnify, defend and hold harmless each Insurer Party and
each Sub-Servicer Party against any and all Losses incurred by them with respect
to the offer and sale of any of the Offered Obligations which result from RBMG's
breach of any of its representations and warranties (including, without
limitation, with respect to the RBMG Information) set forth in Section 4 of this
Agreement or resulting from the Depositor's breach of any of its representations
and warranties set forth in Section 6 of this Agreement with respect to
information in the Prospectus Supplement under the headings
"SUMMARY--DESCRIPTION OF THE NOTES," "RISK FACTORS" (other than information
under the sub-headings "--Book-Entry Registration May Reduce the Liquidity of
the Notes," "--An Investment in the Notes May Be an Illiquid Investment," and
"--Year 2000 Issue May Adversely Affect The Distribution to Noteholders"),
"DESCRIPTION OF THE NOTES" (other than information under the sub-heading
"--BOOK-ENTRY REGISTRATION AND DEFINITIVE NOTES") and "CERTAIN PREPAYMENT AND
YIELD CONSIDERATIONS" (other than information under the sub-heading "--WEIGHTED
AVERAGE LIFE OF THE NOTES").
(d) The Sub-Servicer hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each RBMG
Party, First Union, each Depositor Party and each Underwriter Party against any
and all Losses incurred by it with respect to the offer and sale of any of the
Offered Obligations which result from the Sub-Servicer's breach of any of its
representations and warranties (including, without limitation, with respect to
the Sub-Servicer Information) set forth in Section 5 of this Agreement.
(e) First Union hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by it with respect to the
offer and sale of any of the Offered Obligations which result from the
Depositor's breach of any of its representations and warranties set forth in
Section 6 of this Agreement other than Losses for which RBMG has agreed to
indemnify the Insurer Parties pursuant to Section 7(c) of this Agreement. First
Union, the Underwriter and the Depositor shall
6
<PAGE>
not be liable hereunder with respect to the Insurer Information, the RBMG
Information and the Sub-Servicer Information.
(f) Upon the incurrence of any Losses entitled to indemnification
hereunder, the Indemnifying Party shall reimburse the Indemnified Party promptly
upon establishment by the Indemnified Party to the Indemnifying Party of the
Losses incurred.
SECTION 8. NOTICE TO BE GIVEN. (a) Except as provided in Section 9 below
with respect to contribution, the indemnification provided herein by the
Indemnifying Party shall be the exclusive remedy of each Indemnified Party for
the Losses resulting from the Indemnifying Party's breach of a representation,
warranty or agreement hereunder; provided, however, that each Indemnified Party
shall be entitled to pursue any other remedy at law or in equity for any such
breach so long as the damages sought to be recovered shall not exceed the Losses
incurred thereby resulting from such breach.
(b) In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Indemnified Party to be
indemnified under this Agreement, such party shall give the Indemnifying Party
written or facsimile notice of such action or claim reasonably promptly after
receipt of written notice thereof.
(c) Upon request of the Indemnified Party, the Indemnifying Party shall
retain counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. The Indemnifying Party may, at its option, at any time upon
written notice to the Indemnified Party, assume the defense of any proceeding
and may designate counsel reasonably satisfactory to the Indemnified Party in
connection therewith provided that the counsel so designated would have no
actual or potential conflict of interest in connection with such representation.
Unless it shall assume the defense of any proceeding, the Indemnifying Party
shall not be liable for any settlement of any proceeding, effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. The Indemnifying Party shall be entitled to participate
in the defense of any such action or claim in reasonable cooperation with, and
with the reasonable cooperation of, each Indemnified Party.
(d) The Indemnified Party will have the right to employ its own counsel in
any such action, but the fees and expenses of such counsel will be at the
expense of such Indemnified Party unless (1) the employment of counsel by the
Indemnified Party at the Indemnifying Party's expense has been authorized in
writing by the Indemnifying Party, (2) the Indemnifying Party has not in fact
employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action or (3) the named
parties to any such action include the Indemnifying Party on the one hand and,
on the other hand, the Indemnified Party, and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense
7
<PAGE>
of the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action or proceeding on such Indemnified Party's
behalf), in each of which cases the reasonable fees and expenses of counsel
(including local counsel) will be at the expense of the Indemnifying Party, and
all such fees and expenses will be reimbursed promptly as they are incurred. In
the event that any expenses so paid by the Indemnifying Party are subsequently
determined to not be required to be borne by the Indemnifying Party hereunder,
the party which received such payment shall promptly refund to the Indemnifying
Party the amount so paid by such Indemnifying Party. Notwithstanding the
foregoing, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, the Indemnifying Party shall not be liable
for the fees and expenses of more than one counsel for all RBMG Parties, more
than one counsel for all Underwriter Parties and more than one counsel for all
Insurer Parties, as applicable.
(e) The Indemnified Parties shall cooperate with the Indemnifying Parties
in resolving any event which would give rise to an indemnity obligation pursuant
to Section 6 hereof in the most efficient manner.
(f) No settlement of any such claim or action shall be entered into
without the consent of each Indemnified Party who is subject to such claim or
action, on the one hand, and each Indemnifying Party who is subject to such
claim or action, on the other hand; provided, however, that the consent of such
Indemnified Party shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such
Indemnified Party.
(g) Any failure by an Indemnified Party to comply with the provisions of
this Section shall relieve the Indemnifying Party of liability only if such
failure is materially prejudicial to any legal pleadings, grounds, defenses or
remedies in respect thereof or the Indemnifying Party's financial liability
hereunder, and then only to the extent of such prejudice.
SECTION 9. CONTRIBUTION. (a) To provide for just and equitable
contribution if the indemnification provided by the Insurer is determined to be
unavailable for any Underwriter Party (other than pursuant to Section 7 or 8 of
this Agreement), or if the indemnification provided by the Underwriter is
determined to be unavailable for any Insurer Party (other than pursuant to
Section 7 or 8 of this Agreement), the Insurer and the Underwriter shall
contribute to the aggregate costs of liabilities arising from any breach of
their respective representations and warranties set forth in this Agreement on
the basis of the relative fault of all Insurer Parties and all Underwriter
Parties.
(b) To provide for just and equitable contribution if the indemnification
provided by the Insurer is determined to be unavailable for any RBMG Party
(other than pursuant to Section 7 or 8 of this Agreement), or if the
indemnification provided by RBMG is determined to be unavailable for any Insurer
Party (other than pursuant to Section 7 or 8 of this Agreement), the Insurer and
RBMG shall contribute to the aggregate cost of liabilities arising from any
breach of their respective representations and warranties set forth in this
Agreement on the basis of the relative fault of all Insurer Parties and all RBMG
Parties.
8
<PAGE>
(c) To provide for just and equitable contribution if the indemnification
provided by RBMG is determined to be unavailable for any Sub-Servicer Party
(other than pursuant to Section 7 or 8 of this Agreement), or if the
indemnification provided by the Sub-Servicer is determined to be unavailable for
any RBMG Party (other than pursuant to Section 7 or 8 of this Agreement), RBMG
and the Sub-Servicer shall contribute to the aggregate cost of liabilities
arising from any breach of their respective representation and warranties set
forth in this Agreement on the basis of the related fault of all RBMG Parties
and all Sub-Servicer Parties.
(d) To provide for just and equitable contribution if the indemnification
provided by Insurer is determined to be unavailable for any Depostor Party or
for First Union (other than pursuant to Section 7 or 8 of this Agreement), or if
the indemnification provided by First Union is determined to be unavailable for
any Insurer Party (other than pursuant to Section 7 or 8 of this Agreement), the
Insurer and First Union shall contribute to the aggregate cost of liabilities
arising from any breach of their respective representation and warranties set
forth in this Agreement on the basis of the related fault of all Insurer Parties
on the one hand, and First Union and all Depositor Parties on the other hand.
(e) To provide for just and equitable contribution if the indemnification
provided by the Sub-Servicer is determined to be unavailable for First Union
(other than pursuant to Section 7 or 8 of this Agreement), First Union and the
Sub-Servicer shall contribute to the aggregate cost of liabilities arising from
any breach of their respective representation and warranties set forth in this
Agreement on the basis of the related fault of First Union and all Depositor
Parties on the one hand, and all Sub-Servicer Parties on the other hand.
(f) The relative fault of each Indemnifying Party, on the one hand, and of
each Indemnified Party, on the other hand, shall be determined by reference to,
among other things, whether the breach of, or alleged breach of, any of its
representations and warranties set forth in Section 2, 3, 4, 5 or 6 of this
Agreement relates to information supplied by, or action within the control of,
the Indemnifying Party or the Indemnified Party and the Parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such breach.
9
<PAGE>
(g) The Parties agree that the Insurer shall be solely responsible for the
Insurer Information and for the Insurer Financial Statements, that RBMG shall be
solely responsible for the RBMG Information and the Depositor Information for
which RBMG has agreed to indemnify the Insurer Parties and the Sub-Servicer
Parties pursuant to Section 7(c) of this Agreement, that the Sub-Servicer shall
be solely responsible for the Sub-Servicer Information, that the Underwriter
shall be solely responsible for the Underwriter Information and that the
Depositor shall be responsible for all other information in the Prospectus
Supplement.
(h) No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(i) The indemnity and contribution agreements contained in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Depositor, any Underwriter Party, any
RBMG Party, any Sub-Servicer Party or any Insurer Party, (ii) the issuance of
any Offered Obligations or the Policy or (iii) any termination of this
Agreement.
(j) Upon the incurrence of any Losses entitled to contribution hereunder,
the contributor shall reimburse the party entitled to contribution promptly upon
establishment by the party entitled to contribution to the contributor of the
Losses incurred.
SECTION 10. NOTICES. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Insurer: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management--
Structured Finance (IPM-SF)
If to RBMG: Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, SC 29223
Attention: Larry Reed
If to the Underwriter: Wheat First Securities, Inc.
acting through First Union Capital Markets,
a division of Wheat First Securities, Inc.,
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Evan Peverley
10
<PAGE>
If to the Sub-Servicer: Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd.
West Palm Beach, FL 33401
Attention: Secretary
If to First Union: First Union Corporation
301 South College Street
Charlotte, NC 28288
Attention: Shanker Merchant
If to the Depositor: Residential Asset Funding Corporation
c/o Wheat First Securities, Inc.
acting through First Union Capital Markets,
a division of Wheat First Securities, Inc.,
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Evan Peverley
SECTION 11. GOVERNING LAW, ETC. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Insurer, RBMG, the Sub-Servicer,
the Depositor, First Union and the Underwriter.
SECTION 12. INSURANCE AGREEMENT; UNDERWRITING AGREEMENT; SERVICING
AGREEMENT. This Agreement in no way limits or otherwise affects the
indemnification obligations of RBMG, the Underwriter, the Depositor, First Union
or the Sub-Servicer, as applicable, under (a) the Insurance Agreement, (b) the
Underwriting Agreement (c) the Servicing Agreement, or (d) the Sub-Servicing
Agreement. To the extent that this Agreement conflicts with or does not address
the relative rights of the Underwriter and the Depositor as between themselves
as set forth in the Underwriting Agreement, the Underwriting Agreement shall
govern.
SECTION 13. LIMITATIONS. Nothing in this Agreement shall be construed as a
representation or undertaking by the Insurer concerning maintenance of the
rating currently assigned to its claims-paying ability by Moody's Investors
Service, Inc. ("Moody's") and/or Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc. ("S&P") or any other rating agency.
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
SECTION 15. NON-PETITION. So long as the Insurance Agreement is in effect,
and for one year and one day following its termination, none of the parties
hereto will file any involuntary
11
<PAGE>
petition or otherwise institute any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceeding under any federal or
state bankruptcy or similar law against RBMG Funding Co., RBMG Funding Co.
Mortgage Loan Trust 1998-2 or RBMG Asset Management Company, Inc.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Indemnification
Agreeement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the date first above written.
MBIA INSURANCE CORPORATION
By: /s/ Ann D. McKenna
------------------------------
Title: Assistant Secretary
------------------------------
RESOURCE BANCSHARES MORTGAGE
GROUP, INC.
By: /s/ Larry W. Reed
------------------------------
Title: Executive Vice President
------------------------------
WHEAT FIRST SECURITIES, INC., doing business as
FIRST UNION CAPITAL MARKETS, a division
of WHEAT FIRST SECURITIES, INC.
By: /s/ Peter Perna
------------------------------
Title: Vice President
------------------------------
OCWEN FEDERAL BANK FSB.
By: /s/ Jon E. Voigtman
------------------------------
Title: Vice President
------------------------------
RESIDENTIAL ASSET FUNDING CORPORATION
By: /s/ Shanker Merchant
------------------------------
Title: Senior Vice President
------------------------------
FIRST UNION CORPORATION
By: /s/ Brian Simpson
------------------------------
Title: Senior Vice President
------------------------------
Exhibit 10.2
EXECUTION COPY
================================================================================
MBIA INSURANCE CORPORATION,
as Insurer
OCWEN FEDERAL BANK FSB,
as Sub-Servicer
RESOURCE BANCSHARES MORTGAGE GROUP, INC.,
as RBMG and Servicer
RBMG FUNDING CO.,
as Funding Co. and Residual Holder
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1998-2
as Issuer
RBMG ASSET MANAGEMENT COMPANY, INC.,
as Company
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor
FIRST UNION CORPORATION
and
THE BANK OF NEW YORK
as Indenture Trustee
INSURANCE AGREEMENT
$170,000,000
RBMG Funding Co. Mortgage Loan Trust 1998-2
Asset-Backed Notes
Series 1998-2, Class A-1 and Class A-2
Dated as of December 1, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be a part of this Insurance Agreement. All capitalized terms
used in this Insurance Agreement and not otherwise defined shall have the
meanings set forth in Article I of this Insurance Agreement.)
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I........................................................................................................1
DEFINITIONS......................................................................................................1
ARTICLE II.......................................................................................................6
REPRESENTATIONS, WARRANTIES AND COVENANTS........................................................................6
Section 2.01. Representation and Warranties of RBMG, the Servicer, the Company and Funding
Co......................................................................................................6
Section 2.02. Affirmative Covenants of RBMG, the Servicer, the Company and Funding Co..........................10
Section 2.03. Negative Covenants of RBMG, the Servicer, the Company and Funding Co.............................16
Section 2.04. Representation and Warranties of the Sub-Servicer................................................17
Section 2.05. Affirmative Covenants of the Sub-Servicer........................................................20
Section 2.06. Negative Covenants of the Sub-Servicer...........................................................24
Section 2.07. Representations, Warranties and Covenants of Indenture Trustee...................................25
Section 2.08 Representations, Warranties and Covenants of the Issuer..........................................27
Section 2.09. Affirmative Covenants of the Issuer..............................................................29
Section 2.10. Negative Covenants of the Issuer.................................................................30
Section 2.11. Representation and Warranties of the Depositor...................................................31
Section 2.12. Affirmative Covenants of the Depositor...........................................................33
Section 2.13. Negative Covenants of the Depositor..............................................................34
ARTICLE III.....................................................................................................35
THE POLICY; REIMBURSEMENT.......................................................................................35
Section 3.01. Issuance of the Policy...........................................................................35
Section 3.02. Payment of Fees and Bond Insurer Premium.........................................................37
Section 3.03. Reimbursement and Additional Payment Obligation..................................................38
Section 3.04. Indemnification by RBMG, the Servicer, the Company and Funding Co.; Limitation
of Liability...........................................................................................40
<PAGE>
<CAPTION>
<S> <C> <C>
Section 3.05. Indemnification by Sub-Servicer; Limitation of Liability.........................................42
Section 3.06. Indemnification by Indenture Trustee; Limitation of Liability....................................43
Section 3.07. Indemnification by First Union; Limitation of Liability..........................................43
Section 3.08. Payment Procedure................................................................................45
ARTICLE IV......................................................................................................45
FURTHER AGREEMENTS..............................................................................................45
Section 4.01. Effective Date; Term of the Insurance Agreement..................................................45
Section 4.02. Further Assurances and Corrective Instruments....................................................45
Section 4.03. Obligations Absolute.............................................................................46
Section 4.04. Assignments; Reinsurance; Third-Party Rights.....................................................47
Section 4.05. Liability of the Insurer.........................................................................48
Section 4.06. Parties Will Not Institute Insolvency Proceedings................................................48
Section 4.07. Parties to Join in Enforcement Action............................................................48
ARTICLE V.......................................................................................................49
DEFAULTS; REMEDIES..............................................................................................49
Section 5.01. Defaults.........................................................................................49
Section 5.02. Remedies; No Remedy Exclusive....................................................................50
Section 5.03. Waivers..........................................................................................51
ARTICLE VI......................................................................................................51
MISCELLANEOUS...................................................................................................51
Section 6.01. Amendments, Etc..................................................................................51
Section 6.02. Notices..........................................................................................51
Section 6.03. Severability.....................................................................................54
Section 6.04. Governing Law....................................................................................54
Section 6.05. Consent to Jurisdiction..........................................................................54
Section 6.06. Consent of the Insurer...........................................................................55
Section 6.07. Counterparts.....................................................................................55
Section 6.08. Headings.........................................................................................55
Section 6.09. Trial by Jury Waived.............................................................................55
Section 6.10. Limited Liability................................................................................56
Section 6.11. Entire Agreement.................................................................................56
ii
<PAGE>
Section 6.12 Covenant of the Residual Holder...................................................................56
</TABLE>
iii
<PAGE>
INSURANCE AGREEMENT
INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of December
1, 1998 by and among RESOURCE BANCSHARES MORTGAGE GROUP, INC., in its individual
capacity (together with its permitted successors and assigns, "RBMG") and as
Servicer under the Servicing Agreement described below (together with its
permitted successors and assigns, the "Servicer"), OCWEN FEDERAL BANK FSB, in
its capacity as Sub-Servicer under the Sub-Servicing Agreement described below
(together with its permitted successors and assigns, the "Sub-Servicer"), RBMG
FUNDING CO., in its individual capacity ("Funding Co.") and as the Residual
Holder (the "Residual Holder"), MBIA INSURANCE CORPORATION (the "Insurer"), RBMG
FUNDING CO. MORTGAGE LOAN TRUST 1998-2, as the Issuer (the "Issuer"), RBMG ASSET
MANAGEMENT COMPANY, INC., as the Company (the "Company"), RESIDENTIAL ASSET
FUNDING CORPORATION, as the Depositor (the "Depositor"), FIRST UNION CORPORATION
("First Union") THE BANK OF NEW YORK, as Indenture Trustee (together with its
permitted successors and assigns, the "Indenture Trustee").
WHEREAS, the Indenture dated as of December 1, 1998 by and between the
Issuer and the Indenture Trustee (the "Indenture") relating to the RBMG Funding
Co. Mortgage Loan Trust 1998-2 Asset-Backed Notes, Series 1998-2, Class A-1 and
Class A-2 (the "Obligations") provides for, among other things, the issuance of
asset-backed notes, representing non-recourse debt obligations of the Issuer
which are secured by the trust estate established thereby and the Insurer has
issued its financial guaranty insurance policy (the "Policy") that guarantees
certain payments due from the Trust Estate on the Obligations;
WHEREAS, the Insurer shall be paid an insurance premium pursuant to the
Indenture, and the details of such premium are set forth herein; and
WHEREAS, the Servicer, RBMG, Funding Co., the Company, the
Sub-Servicer, the Depositor and the Issuer have undertaken certain obligations
in consideration for the Insurer's issuance of the Policy;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I, in the first paragraph of this
Insurance Agreement and in the Whereas clauses shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate. Unless the
context clearly requires otherwise, all capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture. All
<PAGE>
words used herein shall be construed to be of such gender or number as the
circumstances require. This "Insurance Agreement" shall mean this Insurance
Agreement as a whole and as the same may, from time to time hereafter, be
amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to
this Insurance Agreement as a whole and not to any particular paragraph, clause
or other subdivision hereof, unless otherwise specifically noted.
"BOND INSURER PREMIUM" means the Bond Insurer Premium payable in
accordance with Section 3.02 hereof.
"BOND INSURER PREMIUM RATE" shall have the meaning ascribed to such
term in Section 3.02 hereof.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which the Insurer is closed or banking institutions in New York
City or Nevada or in the city in which the corporate trust officer of the
Indenture Trustee under the Indenture is located are authorized or obligated by
law or executive order to close.
"CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"COMMISSION" means the Securities and Exchange Commission.
"COMMITMENT" means the letter of commitment from the Insurer to RBMG
dated December 10, 1998.
"COMPANY SALE AGREEMENT" means the Loan Sale Agreement dated as of
December 1, 1998 between Funding Co. and the Company as the same may be amended
and supplemented in accordance with the terms thereof.
"CONTRIBUTION AGREEMENT" means the Loan Contribution Agreement dated as
of December 1, 1998, between RBMG and the Company as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"DATE OF ISSUANCE" means the date on which the Policy is issued as
specified therein.
"DEFAULT" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"DEPOSITOR INFORMATION" shall have the meaning assigned to such term in
Section 6 of the Indemnification Agreement.
"DEPOSITOR SALE AGREEMENT" means the Loan Sale Agreement dated as of
December 1, 1998 between the Depositor and the Issuer as the same may be amended
and supplemented from time to time in accordance with the terms thereof.
2
<PAGE>
"EVENT OF DEFAULT" means any event of default specified in Section 5.01
hereof.
"FINANCIAL STATEMENTS" means, with respect to RBMG, the Servicer, the
Company and the Sub-Servicer, the balance sheets and the statements of income,
retained earnings and cash flows and the notes thereto which have been provided
to the Insurer.
"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policy.
"FUNDING CO. SALE AGREEMENT" means the Loan Sale Agreement dated as of
December 1, 1998 between Funding Co. and the Depositor as the same may be
amended and supplemented from time to time in accordance with the terms thereof.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated
as of December 1, 1998, between the Insurer, RBMG, the Sub-Servicer, the
Depositor, First Union and the Underwriter as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"INDENTURE TRUSTEE" means The Bank of New York, a New York banking
corporation, as Indenture Trustee under the Indenture, and any successor to the
Indenture Trustee under the Indenture.
"INSURED PAYMENT" means a payment by the Insurer under the Policy.
"INSURER INFORMATION" means the information set forth in the Offering
Document under the caption "THE INSURANCE POLICY AND THE NOTE INSURER"
(excluding the information under the sub-caption "--CREDIT ENHANCEMENT DOES NOT
APPLY TO PREPAYMENT RISK"), or in the financial statements of the Insurer,
including any information in any amendment or supplement to the Offering
Document furnished by the Insurer in writing expressly for use therein that
amends or supplements such information.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"LATE PAYMENT RATE" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"LIABILITIES" shall have the meaning ascribed to such term in Section
3.04(a) hereof.
3
<PAGE>
"LOSSES" means (i) any actual out-of-pocket loss paid by the Insurer or
its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term is
used in the Securities Act) of any of the foregoing, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"MANAGEMENT AGREEMENT" means the Management Agreement dated as of
December 1, 1998 by and among the Issuer, RBMG, as Manager, and the Company, as
Back-up Manager, as the same may be amended and supplemented from time to time
in accordance with the terms thereof.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"MOODY'S" means Moody's Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized rating agency
designated by the Insurer.
"OBLIGOR" means the original obligor under each Mortgage Loan,
including any guarantor of such obligor and their respective successors.
"OFFERING DOCUMENT" means the Prospectus dated November 10, 1998 and
the Prospectus Supplement of the Issuer in respect of the Obligations (and any
amendment or supplement thereto) and any other offering document in respect of
the Obligations prepared by the Servicer, RBMG, the Company, the Issuer, the
Sub-Servicer or the Depositor that makes reference to the Policy.
"OPINION FACTS AND ASSUMPTIONS" means the facts and assumptions
contained in the insolvency opinions dated December 11, 1998 by Graham & James
LLP under the heading "Assumptions of Fact" insofar as they relate to RBMG, the
Company and Funding Co. and the facts and assumptions contained in the
insolvency opinion dated December 11, 1998 by Dewey Ballantine LLP insofar as
they relate to the Depositor.
"OWNER TRUSTEE" means Wilmington Trust Company, as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"OWNERS" means registered holders of Obligations.
"PERSON" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
limited liability company, partnership or other organization or entity (whether
governmental or private).
4
<PAGE>
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement dated
December 9, 1998 with respect to the Obligations.
"RBMG INFORMATION" shall have the meaning assigned to such term in
Section 2.01(k) hereof.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-3
of the Depositor (No. 333-64775) relating to the Offered Obligations, and any
pre- and post-effective amendment thereto, including the Prospectus, the
Prospectus Supplement and all exhibits thereto.
"RESIDUAL HOLDER" shall have the meaning ascribed to the term
"Certificateholder" in the Trust Agreement.
"SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"SERVICER INFORMATION" shall have the meaning set forth in Section
2.04(k) hereof.
"SERVICING AGREEMENT" means the Servicing Agreement dated as of
December 1, 1998 by and among the Servicer, the Issuer and the Indenture Trustee
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"SUB-SERVICER INFORMATION" shall have the meaning assigned to such term
in Section 2.04(k) hereof.
"SUB-SERVICING AGREEMENT" means the Sub-Servicing Agreement dated as of
December 1, 1998 between the Servicer and the Sub-Servicer as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"TERM OF THE INSURANCE AGREEMENT" shall be determined as provided in
Section 4.01 hereof.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"TRANSACTION DOCUMENTS" means this Insurance Agreement, the Commitment,
the Offering Document, the Obligations, the Indemnification Agreement, the
Indenture, the
5
<PAGE>
Management Agreement, the Custodial Agreement, the Servicing Agreement, the
Sub-Servicing Agreement, the Contribution Agreement, the Company Sale Agreement,
the Funding Co. Sale Agreement, the Depositor Sale Agreement, the Trust
Agreement and the Underwriting Agreement.
"TRUST AGREEMENT" means the Deposit Trust Agreement dated as of
December 1, 1998 between the Depositor, the Owner Trustee and the Indenture
Trustee, as trust paying agent as the same may be amended and supplemented in
accordance with the terms thereof.
"TRUST ESTATE" means the trust estate created pursuant to the
Indenture.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"UNDERWRITER" means Wheat First Securities, Inc., acting through First
Union Capital Markets, a division of Wheat First Securities, Inc.
"UNDERWRITER INFORMATION" shall have the meaning ascribed to such term
in Section 3 of the Indemnification Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement between the
Underwriter and the Depositor with respect to the offer and sale of the
Obligations, as the same may be amended from time to time.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATION AND WARRANTIES OF RBMG, THE SERVICER, THE
COMPANY AND FUNDING CO. RBMG, the Servicer, the Company and Funding Co.
represent, warrant and covenant as of the Date of Issuance, each as to those
matters relating to itself, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. RBMG, the Servicer,
the Company and Funding Co. are each a corporation, duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of RBMG, the Servicer, the Company
and Funding Co. is duly qualified to do business, is in good standing
and has obtained all licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its
business as currently conducted and as described in the Offering
Document and the performance of its obligations under the Transaction
Documents, in each jurisdiction in which the failure to be so qualified
or to obtain such approvals would render any Transaction Document
unenforceable in any respect or would have a material adverse effect
upon the Transaction, the Owners or the Insurer.
6
<PAGE>
(b) POWER AND AUTHORITY. Each of RBMG, the Servicer, the
Company and Funding Co. has all necessary corporate power and authority
to conduct its business as currently conducted and, as described in the
Offering Document, to execute, deliver and perform its obligations
under the Transaction Documents and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and
performance of the Transaction Documents by RBMG, the Servicer, the
Company and Funding Co. have been duly authorized by all necessary
corporate action and do not require any additional approvals or
consents, or other action by or any notice to or filing with any
Person, including, without limitation, any governmental entity or
RBMG's, the Servicer's, the Company's or Funding Co.'s stockholders,
which have not previously been obtained or given by RBMG, the Servicer,
the Company or Funding Co.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents by RBMG, the Servicer, the Company or Funding
Co., the consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of incorporation
or bylaws of RBMG, the Servicer, the Company or Funding Co. or
any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to RBMG, the Servicer, the Company or Funding
Co. or any of their material properties, including regulations
issued by an administrative agency or other governmental
authority having supervisory powers over RBMG, the Servicer,
the Company or Funding Co.;
(ii) constitutes a default by RBMG, the Servicer, the
Company or Funding Co. under or a breach of any material
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which RBMG, the Servicer, the
Company or Funding Co. is a party or by which any of its or
their respective properties, which are individually or in the
aggregate material to RBMG, the Servicer, the Company or
Funding Co., is or may be bound or affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of RBMG, the Servicer, the
Company or Funding Co., except as contemplated by the
Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting RBMG, the Servicer, the
Company, Funding Co. or any of its or their subsidiaries, or any
properties or rights of RBMG, the Servicer, the Company, Funding Co. or
any of its or their subsidiaries, pending or, to RBMG's, the
Servicer's, the Company's or Funding
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Co.'s knowledge after reasonable inquiry, threatened, which, in any
case, could reasonably be expected to result in a Material Adverse
Change with respect to RBMG, the Servicer, the Company or Depositor.
(f) VALID AND BINDING OBLIGATIONS. The Obligations, when
executed, authenticated and issued in accordance with the Indenture,
and the Transaction Documents (other than the Obligations), when
executed and delivered by RBMG, the Servicer, the Company and Funding
Co., will constitute the legal, valid and binding obligations of RBMG,
the Servicer, Funding Co. and the Issuer, as applicable, enforceable in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. None of
RBMG, the Servicer, the Company or Funding Co. will at any time in the
future deny that the Transaction Documents constitute the legal, valid
and binding obligations of RBMG, the Servicer, Funding Co., the Company
or the Issuer, as applicable.
(g) FINANCIAL STATEMENTS. The Financial Statements of RBMG,
the Servicer and Funding Co., copies of which have been furnished to
the Insurer, (i) are, as of the dates and for the periods referred to
therein, complete and correct in all material respects, (ii) present
fairly the financial condition and results of operations of RBMG, the
Servicer and Funding Co. as of the dates and for the periods indicated
and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein
(subject as to interim statements to normal year-end adjustments).
Since the date of the most recent Financial Statements, there has been
no Material Adverse Change in respect of RBMG, the Servicer or Funding
Co. Except as disclosed in the Financial Statements, none of RBMG, the
Servicer or Funding Co. are subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material
possibility of causing a Material Adverse Change in respect of RBMG,
the Servicer or Funding Co.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by RBMG, the Servicer, the
Company or Funding Co. in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to any of
them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to RBMG, the Servicer, the Company
or Funding Co. None of RBMG, the Servicer, the Company or Funding Co.
are in breach of or in default under any applicable law or
administrative regulation of its respective jurisdiction of
incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which RBMG, the Servicer, the Company or Funding Co. is a
party or is otherwise subject which, if enforced, would have a material
adverse effect on the ability of RBMG, the Servicer, the Company or
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Funding Co., as the case maybe, to perform its respective obligations
under the Transaction Documents.
(i) TAXES. RBMG, the Servicer, the Company, Funding Co. and
RBMG's, the Servicer's, the Company's and Funding Co.'s parent company
or companies have filed prior to the date hereof all federal and state
tax returns that are required to be filed and paid all taxes, including
any assessments received by them that are not being contested in good
faith, to the extent that such taxes have become due, except for any
failures to file or pay that, individually or in the aggregate, would
not result in a Material Adverse Change with respect to RBMG, the
Servicer, the Company or Depositor.
(j) ACCURACY OF INFORMATION. Neither the Transaction
Documents, nor other information relating to the Mortgage Loans, the
operations of RBMG, the Servicer, the Company or Funding Co. (including
servicing or origination of loans) or the financial condition of RBMG,
the Servicer, the Company or Funding Co. (collectively, the
"Documents"), as amended, supplemented or superseded, furnished to the
Insurer by RBMG, the Servicer, the Company or Funding Co. contain any
statement of a material fact by RBMG, the Servicer, the Company or
Depositor which was untrue or misleading in any material adverse
respect when made. None of RBMG, the Servicer, the Company or Funding
Co. has any knowledge of circumstances that could reasonably be
expected to cause a Material Adverse Change with respect to RBMG, the
Servicer, the Company or Funding Co. Since the furnishing of the
Documents, there has been no change nor any development or event
involving a prospective change known to RBMG, the Servicer, the Company
or Funding Co. that would render any of the Documents untrue or
misleading in a material respect.
(k) COMPLIANCE WITH SECURITIES LAWS. The information in the
Offering Document, under the headings "SUMMARY--PARTIES--RBMG or
Resource Bancshares Mortgage Group, Inc.," "SUMMARY--MORTGAGE LOAN
POOL," "DESCRIPTION OF THE MORTGAGE POOL," "RBMG," "RBMG FUNDING CO."
and "SERVICING OF THE MORTGAGE LOANS" (other than information under the
sub-heading "--THE SUB-SERVICER") (collectively, the "RBMG
Information") is true and correct in all material respects and does not
contain any untrue statement of a fact that is material or omit to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(l) TRANSACTION DOCUMENTS. Each of the representations and
warranties of RBMG, the Servicer, the Company and Funding Co. contained
in the Transaction Documents is true and correct in all material
respects, and RBMG, the Servicer, the Company and Funding Co. hereby
make each such representation and warranty to, and for the benefit of,
the Insurer as if the same were set forth in full herein.
(m) SOLVENCY. RBMG, the Servicer, the Company and Funding Co.
are solvent and will not be rendered insolvent by the Transaction and,
after giving effect to
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the Transaction, none of RBMG, the Servicer, the Company or Funding Co.
will be left with an unreasonably small amount of capital with which to
engage in its business, nor does RBMG, the Servicer, the Company or
Funding Co. intend to incur, or believe that it has incurred, debts
beyond its ability to pay as they mature. None of RBMG, the Servicer,
the Company or Funding Co. contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment
of a receiver, liquidator, conservator, trustee or similar official in
respect of RBMG, the Servicer, the Company or Funding Co. or any of
their assets.
(n) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of RBMG is located in Columbia, South Carolina, the principal
place of business of the Servicer is located in Columbia, South
Carolina, the principal place of business of Funding Co. is located in
Las Vegas, Nevada and the principal place of business of the Company is
located in Las Vegas, Nevada.
(o) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and
Assumptions insofar as they relate to RBMG, the Company and Funding Co.
are true and correct as of the Date of Issuance.
Section 2.02. AFFIRMATIVE COVENANTS OF RBMG, THE SERVICER, THE COMPANY
AND FUNDING CO. RBMG, the Servicer, the Company and Funding Co. hereby agree
that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. RBMG, the
Servicer, the Company and Funding Co. shall not be in default under the
Transaction Documents and shall comply with all material requirements
of any law, rule or regulation applicable to it. None of RBMG, the
Servicer, the Company or Funding Co. shall agree to any amendment to or
modification of the terms of any Transaction Documents unless the
Insurer shall have given its prior written consent, which consent will
not be unreasonably withheld.
(b) CORPORATE EXISTENCE. RBMG, its successors and assigns, the
Servicer, its successors and assigns, the Company, its successors and
assigns and Funding Co., its successors and assigns, shall maintain
their corporate existence and shall at all times continue to be duly
organized under the laws of its respective jurisdiction of
incorporation and duly qualified and duly authorized (as described in
subsections 2.01(a), (b) and (c) hereof) and shall conduct its business
in accordance with the terms of its certificate or articles of
incorporation and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER
INFORMATION. RBMG, the Servicer, the Company and Funding Co. shall keep
or cause to be kept in reasonable detail books and records of account
of their assets and business, including, but not limited to, books and
records relating to the Transaction. The Servicer, RBMG and the Company
shall furnish or cause to be furnished to the Insurer:
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(i) ANNUAL FINANCIAL STATEMENTS. As soon as
available, and in any event within 120 days after the close of
each fiscal year of the Servicer and RBMG (and the Company in
the event that the Company prepares financial statements which
are not consolidated with RBMG), the audited consolidated
balance sheets of the Servicer and RBMG (and the Company in
the event that the Company prepares financial statements which
are not consolidated with RBMG) and their subsidiaries as of
the end of such fiscal year and the related audited
consolidated statements of income, changes in shareholders'
equity and cash flows for such fiscal year, all in reasonable
detail and stating in comparative form the respective figures
for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied
by the audit opinion of the Servicer's and RBMG's (and the
Company's, in the event that the Company prepares financial
statements which are not consolidated with RBMG) independent
accountants (which shall be a nationally recognized
independent public accounting firm) and by the certificate
specified in Section 2.02(e) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within 90 days after each of the
first three fiscal quarters of each fiscal year of the
Servicer and RBMG (and the Company in the event that the
Company prepares financial statements which are not
consolidated with RBMG), the unaudited consolidated balance
sheets of the Servicer and RBMG (and the Company in the event
that the Company prepares financial statements which are not
consolidated with RBMG) and their subsidiaries as of the end
of such fiscal quarter and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash
flows for such fiscal quarter, all in reasonable detail and
stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.02(e) hereof.
(iii) INITIAL AND CONTINUING REPORTS. On or before
the Closing Date, the Servicer will deliver or cause to be
delivered to the Insurer a copy of the magnetic tape to be
delivered to the Indenture Trustee on the Closing Date setting
forth as to each Mortgage Loan, the information required under
the definition of "Mortgage Loan Schedule" in Section 1.01 of
the Indenture. On each Additional Transfer Date the Servicer
will deliver or cause to be delivered to the Insurer a copy of
the magnetic tape to be delivered to the Indenture Trustee on
such date pursuant to Section 2.14 of the Indenture. After the
Closing Date, the Servicer shall deliver, or shall cause the
Sub-Servicer to deliver, to the Insurer not later than 12:00
noon, New York City time, on the Business Day following each
Determination Date the report required by Section 3.01 of the
Servicing Agreement.
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(iv) COMPUTER DISKETTE. Beginning in March 1999, the
Servicer shall deliver, or cause the Sub-Servicer to deliver,
to the Insurer on a quarterly basis, a computer diskette
containing a quarterly summary of the information provided to
the Insurer pursuant to clause (iii) of this subsection
2.02(c) and also containing information similar to the
information provided in the Mortgage Loan Schedule delivered
to the Indenture Trustee pursuant to the Indenture and
described in Schedule I of the Indenture.
(v) CERTAIN INFORMATION. Upon the reasonable request
of the Insurer, RBMG, the Servicer, the Company and Funding
Co. shall promptly provide copies of any requested proxy
statements, financial statements, reports and registration
statements which RBMG, the Servicer, the Company or Funding
Co. files with, or delivers to, the Commission or any national
securities exchange.
(vi) OTHER INFORMATION. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by RBMG, the Servicer,
the Company or Funding Co. pursuant to the terms of the
Indenture or the Servicing Agreement and, promptly upon
request, such other data as the Insurer may reasonably
request.
All financial statements specified in clause (i) of this
subsection 2.02(c) shall be furnished in consolidated form for RBMG and
its subsidiaries in the event RBMG shall consolidate its financial
statements with its subsidiaries, and for the Servicer and its
subsidiaries in the event the Servicer shall consolidate its financial
statements with its subsidiaries unless the Servicer's financial
statements are consolidated with those of RBMG.
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports and
other information delivered by RBMG, the Servicer, the Company or
Funding Co. pursuant to this subsection 2.02(c) to the extent provided
in subsection 2.02(f) hereof.
(d) [RESERVED]
(e) COMPLIANCE CERTIFICATE. The Servicer, RBMG and the Company
shall deliver to the Insurer, concurrently with the delivery of the
financial statements required pursuant to subsection 2.02(c)(i) and
(ii) hereof, one or more certificates signed by an officer of the
Servicer, an officer of RBMG and an officer of the Company authorized
to execute such certificates on behalf of the Servicer, RBMG and the
Company stating that:
(i) in the event that the Sub-Servicing Agreement has
been terminated, a review of the Servicer's performance under
the Transaction Documents during such period has been made
under such officer's supervision;
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(ii) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or Event of Default has
occurred, specifying the nature thereof and the steps, if any,
being taken to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such
Default or Event of Default relates;
(iii) the attached financial statements submitted in
accordance with subsection 2.02(c)(i) or (ii) hereof, as the
case may be, are complete and correct in all material respects
and present fairly the financial condition and results of
operations of the Servicer, RBMG and the Company as of the
dates and for the periods indicated, in accordance with
generally accepted accounting principles consistently applied;
and
(iv) in the event that the Sub-Servicing Agreement
has been terminated, the Servicer has in full force and effect
a blanket fidelity bond (or direct surety bond) and an errors
and omissions insurance policy in accordance with the terms
and requirements of Section 2.13 of the Servicing Agreement.
(f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND
ACCOUNTANTS. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Servicer, RBMG and the Company shall, upon the
reasonable request of the Insurer, permit the Insurer or its authorized
agents:
(i) to inspect the books and records of the Servicer,
RBMG and the Company as they may relate to the Obligations,
the obligations of the Servicer, RBMG and the Company under
the Transaction Documents, and the Transaction;
(ii) to discuss the affairs, finances and accounts of
the Servicer, RBMG or of the Company with the chief operating
officer and the chief financial officer of the Servicer, RBMG
or of the Company; and
(iii) with the Servicer's, RBMG's or the Company's
consent, as applicable, which consent shall not be
unreasonably withheld, to discuss the affairs, finances and
accounts of the Servicer, RBMG or of the Company with the
Servicer's, RBMG's or the Company's independent accountants,
provided that an officer of the Servicer, RBMG or the Company
shall have the right to be present during such discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of RBMG or the Servicer. The books and records of RBMG and the Servicer
shall be maintained at the address of RBMG or the Servicer, as
applicable, designated herein for receipt of notices, unless RBMG or
the Servicer shall otherwise advise the parties hereto in writing.
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The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter of
which it becomes aware through such inspections or discussions (unless
readily available from public sources), except as may be otherwise
required by regulation, law or court order or requested by appropriate
governmental authorities or as necessary to preserve its rights or
security under or to enforce the Transaction Documents, provided that
the foregoing shall not limit the right of the Insurer to make such
information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
(g) NOTICE OF MATERIAL EVENTS. RBMG, the Servicer, the Company
and Funding Co. shall be obligated (which obligation shall be satisfied
as to each if performed by RBMG, the Servicer, the Company or Funding
Co.) promptly to inform the Insurer in writing of the occurrence of any
of the following to the extent any of the following relate to it:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against RBMG, the Servicer, the Company or
Funding Co. that (A) could be required to be disclosed to the
Commission or to RBMG's, the Servicer's, the Company's or
Funding Co.'s shareholders or (B) could result in a Material
Adverse Change with respect to RBMG, the Servicer, the Company
or Funding Co., or the promulgation of any proceeding or any
proposed or final rule which would result in a Material
Adverse Change with respect to RBMG, the Servicer, the Company
or Funding Co.;
(ii) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation in any federal, state or local court or
before any arbitration board, or any such proceeding
threatened by any government agency, which, if adversely
determined, would have a material adverse effect on the
Issuer, the Owners or the Insurer;
(iii) any change in the location of RBMG's, the
Servicer's, the Company's or Funding Co.'s principal offices
or any change in the location of RBMG's, the Company's or
Funding Co.'s books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or against
RBMG, the Servicer, the Company or Funding Co. under any
applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall
have been, or may be, appointed or requested for RBMG, the
Servicer, the Company or Funding Co. or any of its or their
assets; or
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(vi) the receipt of notice that (A) RBMG, the
Servicer, the Company or Funding Co. is being placed under
regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of RBMG's,
the Servicer's, the Company's or Funding Co.'s business is to
be, or may be suspended or revoked, or (C) RBMG, the Servicer,
the Company or Funding Co. is to cease and desist any
practice, procedure or policy employed by RBMG, the Servicer,
the Company or Funding Co. in the conduct of its business, and
such cessation may result in a Material Adverse Change with
respect to RBMG, the Servicer, the Company or Funding Co.
(h) FINANCING STATEMENTS AND FURTHER ASSURANCES. RBMG will
cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Indenture Trustee in the Trust Estate. RBMG, the
Servicer, the Company and Funding Co. shall, upon the request of the
Insurer, from time to time, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, within ten days of such
request, such amendments hereto and such further instruments and take
such further action as may be reasonably necessary to effectuate the
intention, performance and provisions of the Transaction Documents. In
addition, each of RBMG, the Servicer, the Company and Funding Co. agree
to cooperate with S&P and Moody's in connection with any review of the
Transaction that may be undertaken by S&P and Moody's after the date
hereof and to provide all information reasonably requested by S&P or
Moody's.
(i) MAINTENANCE OF LICENSES. RBMG, the Servicer, the Company
and Funding Co., respectively, or any successors thereof shall maintain
or cause to be maintained all licenses, permits, charters and
registrations which are material to the conduct of its business.
(j) REDEMPTION OF OBLIGATIONS. RBMG, the Servicer, the Company
and Funding Co. shall instruct the Indenture Trustee, upon redemption
or payment of all of the Obligations pursuant to the Indenture or
otherwise, to furnish to the Insurer a notice of such redemption and,
upon a redemption or payment of all of the Obligations, to surrender
the Policy to the Insurer for cancellation.
(k) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Obligations shall clearly disclose that the Policy is
not covered by the property/casualty insurance security fund specified
in Article 76 of the New York Insurance Law.
(l) SERVICING OF MORTGAGE LOANS; ADMINISTRATION. The Servicer,
the Company and RBMG shall perform such actions with respect to the
Mortgage Loans and note administration as are required by or provided
in the Indenture, the Contribution
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Agreement or the Management Agreement. The Servicer and RBMG will
provide the Insurer with written notice of any change or amendment to
any Transaction Document as currently in effect.
(m) MAINTENANCE OF TRUST. On or before each December 1
beginning in 1999, so long as any of the Obligations are outstanding,
RBMG shall furnish to the Insurer and the Indenture Trustee an
officers' certificate either stating that such action has been taken
with respect to the recording, filing, rerecording and refiling of any
financing statements and continuation statements as is necessary to
maintain the interest of the Indenture Trustee created by the Indenture
with respect to the Trust Estate and reciting the details of such
action or stating that no such action is necessary to maintain such
interests. Such officers' certificate shall also describe the
recording, filing, rerecording and refiling of any financing statements
and continuation statements that will be required to maintain the
interest of the Indenture Trustee in the Trust Estate until the date
such next officers' certificate is due.
(n) CLOSING DOCUMENTS. RBMG and Funding Co. shall provide or
cause to be provided to the Insurer a bound volume or volumes of the
Transaction Documents and an executed original copy of each document
executed in connection with the Transaction within 60 days after the
date of closing. Upon the request of the Insurer, RBMG and Funding Co.
shall use reasonable efforts to provide or cause to be provided to the
Insurer a copy of each of the Transaction Documents on computer
diskette in a format acceptable to the Insurer.
(o) PREFERENCE PAYMENTS. With respect to any Preference Amount
(as defined in the Policy), the Servicer shall provide to the Insurer
upon the request of the Insurer:
(i) a certified copy of the final nonappealable order
of a court having competent jurisdiction ordering the recovery
by a trustee in bankruptcy as voidable preference amounts
included in previous distributions under Section 8.02(c) or
Section 5.07 of the Indenture to any Owner pursuant to the
United States Bankruptcy Code, 11 U.S.C. ss.ss. 101 et seq.,
as amended (the "Bankruptcy Code");
(ii) an opinion of counsel reasonably satisfactory to
the Insurer, and upon which the Insurer shall be entitled to
rely, stating that such order is final and is not subject to
appeal; and
(iii) an assignment in such form as reasonably
required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Servicer, the Sub-Servicer, the
Indenture Trustee and any Owner relating to or arising under
the Mortgage Loan against the debtor which made such
preference payment or otherwise with respect to such
preference amount; and
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(iv) appropriate instruments to effect (when executed
by the affected party) the appointment of the Insurer as agent
for the Indenture Trustee and any owner in any legal
proceeding relating to such preference payment being in a form
satisfactory to the Insurer.
(p) YEAR 2000 PROGRAM. In the event that the Sub-Servicing
Agreement has been terminated, the Servicer has taken, or will by
January 1, 1999 have taken, all steps necessary and appropriate to
prevent any problems in its computer and information systems arising
from or in connection with the information processing challenges
associated with the Year 2000, and will provide to the Insurer such
information and reports as the Insurer may reasonably request from time
to time with respect to such steps as have or will be taken with
respect thereto.
Section 2.03. NEGATIVE COVENANTS OF RBMG, THE SERVICER, THE COMPANY AND
FUNDING CO. RBMG, the Servicer, the Company and Funding Co. hereby agree that
during the Term of the Insurance Agreement, unless the Insurer shall otherwise
expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. None of RBMG, the Servicer, the
Company or Funding Co. shall take any action, or fail to take any
action, if such action or failure to take action may result in a
material adverse change as described in clause (ii) of the definition
of Material Adverse Change with respect to RBMG, the Servicer, the
Company or Funding Co., or may interfere with the enforcement of any
rights of the Insurer under or with respect to the Transaction
Documents. RBMG, the Servicer, the Company or Funding Co. shall give
the Insurer written notice of any such action or failure to act on the
earlier of: (i) the date upon which any publicly available filing or
release is made with respect to such action or failure to act or (ii)
promptly prior to the date of consummation of such action or failure to
act. RBMG, the Servicer, the Company and Funding Co. shall furnish to
the Insurer all information requested by it that is reasonably
necessary to determine compliance with this subsection (a).
(b) ADVERSE SELECTION PROCEDURE. RBMG, the Servicer, the
Company and Funding Co. have not and shall not use any adverse
selection procedure in selecting Mortgage Loans to be transferred to
the Indenture Trustee from the outstanding mortgage loans that qualify
under the Indenture for inclusion in the Trust.
(c) WAIVER, AMENDMENTS, ETC. None of RBMG, the Servicer, the
Company or Funding Co. shall waive, modify or amend, or consent to any
waiver, modification or amendment of, any of the terms, provisions or
conditions of any of the Transaction Documents without the prior
written consent of the Insurer.
(d) MORTGAGE LOAN AGREEMENTS; CHARGE-OFF POLICY. Except as
otherwise permitted in the Indenture and the Servicing Agreement, RBMG,
the Servicer, the Company and Funding Co. shall not alter or amend any
Mortgage Loan, their respective
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collection policies or their respective charge-off policies in a manner
that materially adversely affects the Insurer unless the Insurer shall
have previously given its consent, which consent shall not be withheld
unreasonably.
Section 2.04. REPRESENTATION AND WARRANTIES OF THE SUB-SERVICER. The
Sub-Servicer represents, warrants and covenants as of the Date of Issuance as
follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Sub-Servicer is
duly organized, validly existing and in good standing as a federal
savings bank under the laws of the United States. The Sub-Servicer is
duly qualified to do business, is in good standing and has obtained all
licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and as described in the Offering Document and the performance
of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction,
the Owners or the Insurer.
(b) POWER AND AUTHORITY. The Sub-Servicer has all necessary
corporate power and authority to conduct its business as currently
conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents and
to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by the Sub-Servicer have been duly
authorized by all necessary corporate action and does not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Sub-Servicer's stockholders, which have not
previously been obtained or given by the Sub-Servicer.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents by the Sub-Servicer, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the charter or bylaws of the
Sub-Servicer or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently
in effect having applicability to the Sub-Servicer or any of
its material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Sub-Servicer;
(ii) constitutes a default by the Sub-Servicer under
or a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Sub-Servicer is a party or by which any of its properties,
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which are individually or in the aggregate material to the
Sub-Servicer, is or may be bound or affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of the Sub-Servicer, except
as contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Sub-Servicer or any of
its subsidiaries, or any properties or rights of the Sub-Servicer or
any of its subsidiaries, pending or, to the Sub-Servicer's knowledge
after reasonable inquiry, threatened, which, in any case, could
reasonably be expected to result in a Material Adverse Change with
respect to the Sub-Servicer.
(f) VALID AND BINDING OBLIGATIONS. The Transaction Documents
(other than the Obligations), when executed and delivered by the
Sub-Servicer, will constitute the legal, valid and binding obligations
of the Sub-Servicer, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and public
policy considerations as to rights of indemnification for violations of
federal securities laws. The Sub-Servicer will not at any time in the
future deny that the Transaction Documents constitute the legal, valid
and binding obligations of the Sub-Servicer.
(g) FINANCIAL STATEMENTS. The Financial Statements of the
Sub-Servicer, copies of which have been furnished to the Insurer, (i)
are, as of the dates and for the periods referred to therein, complete
and correct in all material respects, (ii) present fairly the financial
condition and results of operations of the Sub-Servicer as of the dates
and for the periods indicated and (iii) have been prepared in
accordance with generally accepted accounting principles consistently
applied, except as noted therein (subject as to interim statements to
normal year-end adjustments). Since the date of the most recent
Financial Statements, there has been no Material Adverse Change in
respect of the Sub-Servicer. Except as disclosed in the Financial
Statements, the Sub-Servicer is not subject to any contingent
liabilities or commitments that, individually or in the aggregate, have
a material possibility of causing a Material Adverse Change in respect
of the Sub-Servicer.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Sub-Servicer in the
conduct of its business violates any law, regulation, judgment,
agreement, order or decree applicable to it that, if enforced, could
reasonably be expected to result in a Material Adverse Change with
respect to the Sub-Servicer. The Sub-Servicer is not in breach of or in
default under any applicable law or administrative regulation of any
department, division, agency or instrumentality of the United States or
of any state, or any applicable judgment or decree or any loan
agreement,
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note, resolution, certificate, agreement or other instrument to which
the Sub-Servicer is a party or is otherwise subject which, if enforced,
would have a material adverse effect on the ability of the Sub-Servicer
to perform its respective obligations under the Transaction Documents.
(i) TAXES. The Sub-Servicer and the Sub-Servicer's parent
company or companies have filed prior to the date hereof all federal
and state tax returns that are required to be filed and paid all taxes,
including any assessments received by them that are not being contested
in good faith, to the extent that such taxes have become due, except
for any failures to file or pay that, individually or in the aggregate,
would not result in a Material Adverse Change with respect to the
Sub-Servicer.
(j) ACCURACY OF INFORMATION. Neither the Transaction
Documents, nor other information relating to the Mortgage Loans, the
operations of the Sub-Servicer (including servicing or origination of
loans) or the financial condition of the Sub-Servicer (collectively,
the "Documents"), as amended, supplemented or superseded, furnished to
the Insurer by the Sub-Servicer contain any statement of a material
fact by the Sub-Servicer which was untrue or misleading in any material
adverse respect when made. The Sub-Servicer has no knowledge of
circumstances that could reasonably be expected to cause a Material
Adverse Change with respect to the Sub-Servicer. Since the furnishing
of the Documents, there has been no change nor any development or event
involving a prospective change known to the Sub-Servicer that would
render any of the Documents untrue or misleading in a material respect.
.(k) COMPLIANCE WITH SECURITIES LAWS. The information in the
Offering Document set forth under the heading "SERVICING OF THE
MORTGAGE LOANS--THE SUB-SERVICER" (the "Sub-Servicer Information") does
not contain any untrue statement of a material fact and does not omit
to state a material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading.
(l) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Sub-Servicer contained in the Transaction Documents
is true and correct in all material respects, and the Sub-Servicer
hereby makes each such representation and warranty to, and for the
benefit of, the Insurer as if the same were set forth in full herein.
(m) SOLVENCY. The Sub-Servicer is solvent and will not be
rendered insolvent by the Transaction and, after giving effect to the
Transaction, the Sub-Servicer will not be left with an unreasonably
small amount of capital with which to engage in its business, nor does
the Sub-Servicer intend to incur, or believe that it has incurred,
debts beyond its ability to pay as they mature. The Sub-Servicer does
not contemplate the commencement of insolvency, bankruptcy, liquidation
or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of the
Sub-Servicer or any of its assets.
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(n) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Sub-Servicer is located in West Palm Beach, Florida.
Section 2.05. AFFIRMATIVE COVENANTS OF THE SUB-SERVICER. The
Sub-Servicer hereby agrees that during the Term of the Insurance Agreement,
unless the Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The
Sub-Servicer shall not be in default under the Transaction Documents
and shall comply with all material requirements of any law, rule or
regulation applicable to it. The Sub-Servicer shall not agree to any
amendment to or modification of the terms of any Transaction Documents
unless the Insurer shall have given its prior written consent.
(b) MAINTENANCE OF EXISTENCE. The Sub-Servicer and its
successors and assigns shall maintain its existence and shall at all
times continue to be duly organized under the laws of the United States
and duly qualified and duly authorized (as described in subsections
2.04(a), (b) and (c) hereof) and shall conduct its business in
accordance with the terms of its charter or bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER
INFORMATION. The Sub-Servicer shall keep or cause to be kept in
reasonable detail books and records of account of their assets and
business, including, but not limited to, books and records relating to
the Transaction. The Sub-Servicer shall furnish to the Insurer, within
30 days of receipt of written request of the Insurer:
(i) ANNUAL FINANCIAL STATEMENTS. The audited
consolidated balance sheets of the Sub-Servicer and its
subsidiaries as of the end of a fiscal year and the related
audited consolidated statements of income, changes in
shareholders' equity and cash flows for such fiscal year, all
in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by the audit opinion of the
Sub-Servicer's independent accountants (which shall be a
nationally recognized independent public accounting firm) and
by a certificate signed by an officer of the Sub-Servicer
authorized to execute such certificate on behalf of the
Sub-Servicer stating that the attached financial statements
are complete and correct in all material respects and present
fairly the financial condition and results of operations of
the Sub-Servicer as of the dates and for the periods
indicated, in accordance with generally accepted accounting
principles consistently applied..
(ii) QUARTERLY FINANCIAL STATEMENTS. The unaudited
consolidated balance sheets of the Sub-Servicer and its
subsidiaries as of the end of a fiscal quarter and the related
unaudited consolidated statements of income, changes in
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shareholders' equity and cash flows for such fiscal quarter,
all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by a certificate signed by an officer
of the Sub-Servicer authorized to execute such certificate on
behalf of the Sub-Servicer stating that the attached financial
statements are complete and correct in all material respects
and present fairly the financial condition and results of
operations of the Sub-Servicer as of the dates and for the
periods indicated, in accordance with generally accepted
accounting principles consistently applied.
(iii) INITIAL AND CONTINUING REPORTS. The
Sub-Servicer shall deliver to the Insurer not later than 12:00
noon, New York City time, on the Business Day following each
Determination Date the report required by Section 3.01 of the
Servicing Agreement.
(iv) COMPUTER DISKETTE. Beginning in March 1999, the
Sub-Servicer will deliver to the Insurer on a quarterly basis,
a computer diskette containing a quarterly summary of the
information provided to the Insurer pursuant to clause (iii)
of this subsection 2.05(c) and also containing information
similar to the information provided in the Mortgage Loan
Schedule delivered to the Indenture Trustee pursuant to the
Indenture and described in Schedule I of the Indenture.
(v) CERTAIN INFORMATION. Upon the reasonable request
of the Insurer, the Sub-Servicer shall promptly provide copies
of any requested proxy statements, financial statements,
reports and registration statements which the Sub-Servicer
files with, or delivers to, the Commission or any national
securities exchange.
(vi) OTHER INFORMATION. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Sub-Servicer
pursuant to the terms of the Sub-Servicing Agreement and,
promptly upon request, such other data as the Insurer may
reasonably request.
All financial statements specified in clause (i) of this
subsection 2.05(c) shall be furnished in consolidated form for the
Sub-Servicer and all its subsidiaries in the event the Sub-Servicer
shall consolidate its financial statements with its subsidiaries.
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports and
other information delivered by the Sub-Servicer pursuant to this
subsection 2.05(c) to the extent provided in subsection 2.05(e) hereof.
(d) COMPLIANCE CERTIFICATE. The Sub-Servicer shall deliver to
the Insurer the officer's certificate of compliance pursuant to the
terms of Section 3.9 of the
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Sub-Servicing Agreement and Section 2.19 of the Servicing Agreement;
provided, however, in the event that S&P changes or withdraws the
Sub-Servicer's designation as a special servicer for residential
mortgages, the Sub-Servicer shall deliver to the Insurer such officer's
certificates within 30 days after the end of each calendar quarter.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND
ACCOUNTANTS. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Sub-Servicer shall, upon the reasonable request of
the Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the
Sub-Servicer as they may relate to the Obligations, the
obligations of the Sub-Servicer under the Transaction
Documents, and the Transaction;
(ii) to discuss the affairs, finances and accounts of
the Sub-Servicer with the chief operating officer and the
chief financial officer of the Sub-Servicer; and
(iii) with the Sub-Servicer's consent, which consent
shall not be unreasonably withheld, to discuss the affairs,
finances and accounts of the Sub-Servicer with the
Sub-Servicer's independent accountants, provided that an
officer of the Sub-Servicer shall have the right to be present
during such discussions.
Such inspections and discussions shall be conducted upon
reasonable notice and during normal business hours and shall not
unreasonably disrupt the business of the Sub-Servicer. The books and
records of the Sub-Servicer shall be maintained at the address of the
Sub-Servicer designated herein for receipt of notices, unless the
Sub-Servicer shall otherwise advise the parties hereto in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter of
which it becomes aware through such inspections or discussions (unless
readily available from public sources), except as may be otherwise
required by regulation, law or court order or requested by appropriate
governmental authorities or as necessary to preserve its rights or
security under or to enforce the Transaction Documents, provided that
the foregoing shall not limit the right of the Insurer to make such
information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
(f) NOTICE OF MATERIAL EVENTS. The Sub-Servicer shall be
obligated promptly to inform the Insurer in writing of the occurrence
of any of the following to the extent any of the following relate to
it:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or
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disciplinary proceeding by or against the Sub-Servicer that
(A) is required to be disclosed to the Commission or to the
Sub-Servicer's shareholders or (B) is likely to result in a
Material Adverse Change with respect to the Sub-Servicer, or
the promulgation of any proceeding or any proposed or final
rule which would result in a Material Adverse Change with
respect to the Sub-Servicer;
(ii) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation in any federal, state or local court or
before any arbitration board, or any such proceeding
threatened by any government agency, which, if adversely
determined, would have a material adverse effect on the
Issuer, the Owners or the Insurer;
(iii) any change in the location of the
Sub-Servicer's principal offices or any change in the location
of the Sub-Servicer's books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or against
the Sub-Servicer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Sub-Servicer or any of its
assets; or
(vi) the receipt of notice that (A) the Sub-Servicer
is being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Sub-Servicer's business is to be, or may be,
suspended or revoked, or (C) the Sub-Servicer is to cease and
desist any practice, procedure or policy employed by the
Sub-Servicer in the conduct of its business, and such
cessation may result in a Material Adverse Change with respect
to the Sub-Servicer.
(h) [RESERVED]
(i) MAINTENANCE OF LICENSES. The Sub-Servicer or any
successors thereof shall maintain or cause to be maintained all
licenses, permits, charters and registrations which are material to the
conduct of its business.
(j) [RESERVED]
(k) SERVICING OF MORTGAGE LOANS. The Sub-Servicer shall
perform such actions with respect to the Mortgage Loans as are required
by or provided in the Sub-Servicing Agreement. The Sub-Servicer will
provide the Insurer with written notice
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of any change or amendment to any Transaction Document to which it is a
party as currently in effect.
(l) [RESERVED]
(m) [RESERVED]
(n) YEAR 2000 PROGRAM. On the basis of a comprehensive review
and assessment of the Sub-Servicer's systems and equipment and inquiry
made of Sub-Servicer's material suppliers, vendors and customers, the
Sub-Servicer reasonaby believes that the "Year 2000 Problem" (that is,
the inability of computers, as well as embedded microchips in
non-computing devices, to perform properly, including performance of
date-sensitive functions with respect to certain dates prior to and
after December 31, 1999), including costs of remediation, could not
reasonably be expected to result in an Event of Default. The
Sub-Servicer has developed feasible contingency plans adequately to
ensure uninterrupted and unimpaired business operation in the event of
failure of its own or a third party's systems or equipment due to the
Year 2000 problem, including those of vendors, customers and suppliers,
as well as a general failure of or interruption in its communications
and delivery infrastructure. Except for any reprogramming referred to
above, the computer systems of the Sub-Servicer are and, with ordinary
course upgrading and maintenance, will continue for the term of this
Agreement to be, sufficient for the conduct of their business as
currently conducted. The Sub-Servicer will provide to the Insurer such
information and reports as the Insurer may reasonably request from time
to time with respect to such steps as have or will be taken with
respect thereto.
Section 2.06. NEGATIVE COVENANTS OF THE SUB-SERVICER. The Sub-Servicer
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Sub-Servicer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Sub-Servicer or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Sub-Servicer shall give the Insurer written notice of any such action
or failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Sub-Servicer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this subsection (a).
(b) WAIVER, AMENDMENTS, ETC. The Sub-Servicer shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the Insurer.
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(d) MORTGAGE LOAN AGREEMENTS; CHARGE-OFF POLICY. Except as
otherwise permitted in the Sub-Servicing Agreement, the Sub-Servicer
shall not alter or amend any Mortgage Loan, its collection policies or
its charge-off policies in a manner that materially adversely affects
the Insurer unless the Insurer shall have previously given its consent,
which consent shall not be withheld unreasonably.
Section 2.07. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INDENTURE
TRUSTEE. The Indenture Trustee represents and warrants to, as of the Date of
Issuance, and covenants with the other parties hereto as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Indenture Trustee
is a corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Indenture
Trustee is duly qualified to do business, is in good standing and has
obtained all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction,
the Owners or the Insurer.
(b) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by the Indenture Trustee have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Indenture Trustee's stockholders, which have
not previously been obtained or given by the Indenture Trustee.
(c) VALID AND BINDING OBLIGATIONS. The Indenture, the
Servicing Agreement, the Custodial Agreement, the Trust Agreement and
this Insurance Agreement, when executed and delivered by the Indenture
Trustee, will constitute the legal, valid and binding obligations of
the Indenture Trustee, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles. The
Indenture Trustee will not at any time in the future deny that the
Transaction Documents to which it is a party constitute the legal,
valid and binding obligations of the Indenture Trustee.
Section 2.08 REPRESENTATIONS AND WARRANTIES OF THE ISSUER. As of the
date hereof or such other date specified below, the Issuer represents, warrants
and covenants as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Issuer is a
Delaware business trust, duly organized, validly existing and in good
standing under the laws of its jurisdiction. The Issuer is duly
qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals
(together,
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"approvals") necessary for the conduct of its business as currently
conducted and as described in the Offering Document and the performance
of its obligations under the Transaction Documents to which it is a
party, in each jurisdiction in which the failure to be so qualified or
to obtain such approvals would render any Transaction Document to which
it is a party unenforceable in any respect or would have a material
adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Issuer has all necessary power
and authority to conduct its business as currently conducted and, as
described in the Offering Document, to execute, deliver and perform its
obligations under the Transaction Documents to which it is a party and
to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents to which it is a party by the Issuer has
been duly authorized by all necessary action and does not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity, which have not previously been obtained or given
by the Issuer.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents to which it is a party by the Issuer, the
consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents
to which it is a party:
(i) conflicts with or results in any breach or
violation of any provision of the Trust Agreement or its
Certificate of Trust or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Issuer or any
of its material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Issuer;
(ii) constitutes a default by the Issuer under or a
breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the Issuer
is a party or by which any of its properties, which are
individually or in the aggregate material to the Issuer, is or
may be bound or affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of the Issuer except as
contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Issuer or any properties
or rights of the Issuer pending or, to the Issuer's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably be
expected to result in a Material Adverse Change with respect to the
Issuer.
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(f) VALID AND BINDING OBLIGATIONS. The Obligations, when
executed, authenticated and issued in accordance with the Indenture and
the Trust Agreement, and the Transaction Documents (other than the
Obligations), when executed and delivered by the Issuer, will
constitute the legal, valid and binding obligations of the Issuer
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles and public policy
considerations as to rights of indemnification for violations of
federal securities laws. The Issuer will not at any time in the future
deny that the Transaction Documents or the Obligations constitute the
legal, valid and binding obligations of the Issuer.
(g) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Issuer in the conduct of
its business violates any law, regulation, judgment, agreement, order
or decree applicable to any of them that, if enforced, could reasonably
be expected to result in a Material Adverse Change with respect to the
Issuer.
(h) TAXES. The Issuer has filed prior to the date hereof all
federal and state tax returns that are required to be filed and paid
all taxes, including any assessments received by it that are not being
contested in good faith, to the extent that such taxes have become due,
except for any failures to file or pay that, individually or in the
aggregate, would not result in a Material Adverse Change with respect
to the Issuer.
(i) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Issuer contained in the Transaction Documents is true
and correct in all material respects, and the Issuer hereby makes each
such representation and warranty to, and for the benefit of, the
Insurer as if the same were set forth in full herein; provided that the
remedy for any breach of this paragraph shall be limited to the
remedies specified in the related Transaction Document.
(j) SOLVENCY. The Issuer is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the
Transaction, the Issuer will not be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Issuer intend to incur, or believe that it has incurred, debts beyond
its ability to pay as they mature. The Issuer does not contemplate the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of the Issuer or any of its
assets.
(k) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Issuer is located in Wilmington, Delaware, and the
principal place of business of the Owner Trustee is located in
Wilmington, Delaware.
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Section 2.09. AFFIRMATIVE COVENANTS OF THE ISSUER. The Issuer
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Issuer
shall not be in default under the Transaction Documents and shall
comply with all material requirements of any law, rule or regulation
applicable to it. The Issuer shall not agree to any material amendment
to or modification of the terms of any Transaction Documents unless the
Insurer shall have otherwise consented.
(b) MAINTAIN EXISTENCE. The Issuer, its successors and
assigns, shall maintain its existence and shall at all times continue
to be duly organized under the laws of its respective jurisdiction and
duly qualified and duly authorized and shall conduct its business in
accordance with the terms of its organizational documents.
(c) NOTICE OF MATERIAL EVENTS. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of
the following to the extent any of the following relate to it and to
the extent that it receives actual notice of the occurrence of any of
the following events:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against the Issuer that (A) could be required
to be disclosed to the Commission or to the Owners or (B)
could result in a Material Adverse Change with respect to the
Issuer, or the promulgation of any proceeding or any proposed
or final rule which would result in a Material Adverse Change
with respect to the Issuer;
(ii) any change in the location of the Issuer's or
the Owner Trustee's principal offices or any change in the
location of the Issuer's books and records;
(iii) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(iv) the commencement of any proceedings by or
against the Issuer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Issuer or any of its assets; or
(v) the receipt of notice that (A) the Issuer is
being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Issuer's business is to be, or may be suspended
or revoked, or (C) the Issuer is to cease and desist any
practice, procedure or policy
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employed by the Issuer in the conduct of its business, and
such cessation may result in a Material Adverse Change with
respect to the Issuer.
(d) FINANCING STATEMENTS AND FURTHER ASSURANCES. To the extent
provided in the Indenture and the Servicing Agreement, the Issuer will
cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Indenture Trustee in the Trust Estate. The Issuer
shall, upon the request of the Insurer, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, within 15 days of such request, such amendments hereto and
such further instruments and take such further action as may be
reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents to which it is a party. In
addition, the Issuer agrees to cooperate with S&P and Moody's in
connection with any review of the Transaction that may be undertaken by
S&P and Moody's after the date hereof.
(e) MAINTENANCE OF LICENSES. The Issuer, or any successors
thereof, shall maintain all licenses, permits, charters and
registrations which are material to the conduct of its business.
Section 2.10. NEGATIVE COVENANTS OF THE ISSUER. The Issuer
hereby agrees that during the Term of the Insurance Agreement, unless
the Insurer shall otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Issuer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Issuer, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The Issuer
shall give the Insurer written notice of any such action or failure to
act on the earlier of: (i) the date upon which any publicly available
filing or release is made with respect to such action or failure to act
or (ii) promptly prior to the date of consummation of such action or
failure to act. The Issuer shall furnish to the Insurer all information
requested by it that is reasonably necessary to determine compliance
with this paragraph.
(b) WAIVER, AMENDMENTS, ETC. The Issuer shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the material terms, provisions or conditions of the
Transaction Documents without the consent of the Insurer which consent
shall not unreasonably be withheld. Except upon the prior written
consent of the Insurer which consent shall not unreasonably be
withheld, the Issuer shall not allow the transfer, modification or
amendment, nor consent to any transfer, modification or amendment of
the Certificate of Trust issued pursuant to the Trust Agreement.
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Section 2.11. REPRESENTATION AND WARRANTIES OF THE DEPOSITOR. The
Depositor represents, warrants and covenants as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Depositor is a
corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Depositor is
duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Depositor has all necessary
corporate power and authority to conduct its business as currently
conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents to
which it is a party and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by the Depositor have been duly authorized
by all necessary corporate action and do not require any additional
approvals or consents, or other action by or any notice to or filing
with any Person, including, without limitation, any governmental entity
or the Depositor's stockholders, which have not previously been
obtained or given by the Depositor.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents to which it is a party by the Depositor the
consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of incorporation
or bylaws of the Depositor or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to the
Depositor or any of their material properties, including
regulations issued by an administrative agency or other
governmental authority having supervisory powers over the
Depositor;
(ii) constitutes a default by the Depositor or a
breach of any provision of any material loan agreement,
mortgage, indenture or other material agreement or instrument
to which the Depositor is a party or by which any of its or
their respective properties, which are individually or in the
aggregate material to the Depositor, is or may be bound or
affected; or
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(iii) results in or requires the creation of any lien
upon or in respect of any assets of the Depositor, except as
contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Depositor, or any of its
subsidiaries, or any properties or rights of the Depositor, or any of
its subsidiaries, pending or, to the Depositor's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably be
expected to result in a Material Adverse Change with respect to the
Depositor.
(f) VALID AND BINDING OBLIGATIONS. The Transaction Documents
to which the Depositor is a party, when executed and delivered by the
Depositor, will constitute the legal, valid and binding obligations of
the Depositor, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles and public policy
considerations as to rights of indemnification for violations of
federal securities laws. The Depositor will not at any time in the
future deny that the Transaction Documents constitute the legal, valid
and binding obligations of the Depositor.
(g) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Depositor in the conduct
of its business violates any law, regulation, judgment, agreement,
order or decree applicable to it that, if enforced, could reasonably be
expected to result in a Material Adverse Change with respect to the
Depositor. The Depositor is not in breach of or in default under any
applicable law or administrative regulation of its jurisdiction of
incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which the Depositor is a party or is otherwise subject
which, if enforced, would have a material adverse effect on the ability
of the Depositor to perform its respective obligations under the
Transaction Documents.
(h) TAXES. The Depositor and the Depositor's parent company
have filed prior to the date hereof all federal and state tax returns
that are required to be filed and paid all taxes, including any
assessments received by it that are not being contested in good faith,
to the extent that such taxes have become due, except for any failures
to file or pay that, individually or in the aggregate, would not result
in a Material Adverse Change with respect to the Depositor.
(i) [RESERVED]
(j) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
Obligations comply in all material respects with all requirements of
law, including all registration requirements of applicable securities
laws. Without limitation of the foregoing, the
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Offering Document does not contain any untrue statement of a material
fact and does not omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading; provided, however, that no representation is
made with respect to the Insurer Information, to the Underwriter
Information, to the RBMG Information or to the Sub-Servicer
Information. Neither the offer nor the sale of the Obligations has been
or will be in violation of the Securities Act or any other federal or
state securities laws. The Issuer is not required to be registered as
an "investment company" under the Investment Company Act.
(k) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the tepositor contained in the Transaction Documents is
true and correct in all material respects, and the Depositor hereby
makes each such representation and warranty to, and for the benefit of,
the Insurer as if the same were set forth in full herein.
(l) SOLVENCY. The Depositor is solvent and will not be
rendered insolvent by the Transaction and, after giving effect to the
Transaction, the Depositor will not be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Depositor intend to incur, or believe that it has incurred, debts
beyond its ability to pay as they mature. The Depositor does not
contemplate the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of the Depositor or
any of its assets.
(m) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Depositor is located in Charlotte, North Carolina.
(n) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and
Assumptions insofar as they relate to the Depositor are true and
correct as of the Date of Issuance.
Section 2.12. AFFIRMATIVE COVENANTS OF THE DEPOSITOR. The Depositor
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The
Depositor shall not be in default under the Transaction Documents and
shall comply with all material requirements of any law, rule or
regulation applicable to it. The Depositor shall not agree to any
amendment to or modification of the terms of any Transaction Documents
unless the Insurer shall have given its prior written consent, which
consent will not be unreasonably withheld.
(b) CORPORATE EXISTENCE. The Depositor, and its successors and
assigns, shall maintain its corporate existence and shall at all times
continue to be duly organized under the laws of its jurisdiction of
incorporation and duly qualified and duly authorized (as described in
subsections 2.11(a), (b) and (c) hereof) and shall conduct its business
in accordance with the terms of its certificate or articles of
incorporation and bylaws.
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(c) FINANCIAL STATEMENTS. The Depositor shall keep or cause to
be kept in reasonable detail books and records of account of its assets
and business, including, but not limited to, books and records relating
to the Transaction.
(d) THE DEPOSITOR SHAREHOLDER MEETINGS. The Depositor shall
have annual shareholder meetings and at least annual board of director
meetings and shall prepare income and franchise tax returns as
appropriate. The Depositor shall deliver to the Insurer copies of the
minutes of such meetings no later than April 30 of each year and such
tax returns promptly upon filing but in no event later than August 31
of each year, beginning in 1999.
(e) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Obligations shall clearly disclose that the Policy is
not covered by the property/casualty insurance security fund specified
in Article 76 of the New York Insurance Law.
(f) MAINTENANCE OF LICENSES. The Depositor, or any of its
successors shall maintain or cause to be maintained all licenses,
permits, charters and registrations which are material to the conduct
of its business.
Section 2.13. NEGATIVE COVENANTS OF THE DEPOSITOR. The Depositor hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Depositor shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Depositor, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Depositor shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any publicly
available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of
such action or failure to act. The Depositor shall furnish to the
Insurer all information requested by it that is reasonably necessary to
determine compliance with this subsection (a).
(b) ADVERSE SELECTION PROCEDURE. The Depositor has not and
shall not use any adverse selection procedure in selecting Mortgage
Loans to be transferred to the Indenture Trustee from the outstanding
mortgage loans that qualify under the Indenture for inclusion in the
Trust.
(c) WAIVER, AMENDMENTS, ETC. The Depositor shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the Insurer.
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(d) AMENDMENT OF DEPOSITOR'S CERTIFICATE OF INCORPORATION. The
Depositor shall not amend its certificate of incorporation if such
amendment would have an adverse impact on the Transaction without the
Insurer's prior written consent.
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. ISSUANCE OF THE POLICY. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) PAYMENT OF INITIAL BOND INSURER PREMIUM AND EXPENSES. The
Insurer shall have been paid, by RBMG and the Depositor, that portion
of a nonrefundable Bond Insurer Premium payable on the Date of Issuance
and RBMG shall agree to reimburse or pay directly other fees and
expenses identified in Section 3.02 hereof as payable.
(b) TRANSACTION DOCUMENTS. The Insurer shall have received a
fully executed copy of the Commitment and a copy of each of the
Transaction Documents, in form and substance satisfactory to the
Insurer, duly authorized, executed and delivered by each party thereto.
(c) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Insurer shall
have received a copy of (i) the certificate or articles of
incorporation and bylaws of the Servicer, RBMG, the Sub-Servicer, the
Company, Funding Co. and the Depositor and (ii) the resolutions of
RBMG's, the Company's, Funding Co.'s and the Depositor's Board of
Directors authorizing the sale of the Mortgage Loans and (iii) the
execution, delivery and performance by the Servicer, the Issuer, RBMG,
the Sub-Servicer, the Company, Funding Co. and the Depositor of the
Transaction Documents and the transactions contemplated thereby,
certified by the Secretary or an Assistant Secretary of the Servicer,
RBMG, the Sub-Servicer, the Company, Funding Co. and the Depositor
(which certificate shall state that such certificate or articles of
incorporation, bylaws and resolutions are in full force and effect
without modification on the Date of Issuance).
(d) THE CERTIFICATE OF TRUST OF THE ISSUER. The Insurer shall
have received a copy of the Certificate of Trust of the Issuer.
(e) INCUMBENCY CERTIFICATE. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of the Servicer,
RBMG, the Sub-Servicer, the Company, Funding Co., the Indenture Trustee
and the Depositor certifying the names and signatures of the officers
of the Servicer, RBMG, the Sub-Servicer, the Company, Funding Co., the
Indenture Trustee and the Depositor authorized to execute and deliver
the Transaction Documents and that shareholder consent to the execution
and delivery of such documents is not necessary.
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(f) REPRESENTATIONS AND WARRANTIES; CERTIFICATE. The
representations and warranties of the Servicer, RBMG, the Sub-Servicer,
the Company, Funding Co., the Indenture Trustee and the Depositor set
forth or incorporated by reference in this Insurance Agreement shall be
true and correct as of the Date of Issuance as if made on the Date of
Issuance and the Insurer shall have received a certificate of
appropriate officers of the Servicer, RBMG, the Sub-Servicer, the
Company, Funding Co., the Indenture Trustee and the Depositor to that
effect.
(g) OPINIONS OF COUNSEL.
(i) The general counsel of RBMG and the Servicer
shall have issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of RBMG and the Servicer and
the validity and enforceability of the Transaction Documents
against RBMG and the Servicer. The general counsel of RBMG
shall have issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of Funding Co. and the
Company and the validity and enforceability of the Transaction
Documents against Funding Co. and the Company. The law firm of
Dewey Ballantine LLP shall have issued its favorable opinion,
in form and substance acceptable to the Insurer and its
counsel, regarding the corporate existence and authority of
the Depositor, First Union and the validity and enforceability
of the Transaction Documents against the Depositor.
(ii) The law firm of Graham & James LLP shall have
furnished its opinions, in form and substance acceptable to
the Insurer and its counsel, regarding the sale of the
Mortgage Loans
(iii) The law firm of Dewey Ballantine LLP shall have
furnished its opinions in form and substance acceptable to the
Insurer and its counsel regarding the sale of Mortgage Loans
and the tax treatment of payments on the Obligations under
federal and New York tax laws.
(iv) The Insurer shall have received such other
opinions of counsel, in form and substance reasonably
acceptable to the Insurer and its counsel, addressing such
other matters as the Insurer may reasonably request. Each
opinion of counsel delivered in connection with the
Transaction shall be addressed to and delivered to the
Insurer.
(h) APPROVALS, ETC. The Insurer shall have received true and
correct copies of all approvals, licenses and consents, if any,
including, without limitation, any required approval of the
shareholders of the Servicer, RBMG, the Sub-Servicer the Company,
Funding Co. and the Depositor, required in connection with the
Transaction.
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(i) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall
be pending or threatened before any court or governmental agency in
which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the Transaction Documents or the
consummation of the Transaction.
(j) LEGALITY. No statute, rule, regulation or order shall have
been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
transactions contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.
(k) ISSUANCE OF RATINGS. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes an
investment grade risk by S&P and Moody's, and that the Obligations,
when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(l) NO DEFAULT. No Default or Event of Default shall have
occurred.
(m) ADDITIONAL ITEMS. The Insurer shall have received such
other documents, instruments, approvals or opinions requested by the
Insurer or its counsel as may be reasonably necessary to effect the
Transaction, including, but not limited to, evidence satisfactory to
the Insurer and its counsel that the conditions precedent, if any, in
the Transaction Documents have been satisfied.
(n) CONFORM TO DOCUMENTS. The Insurer and its counsel shall
have determined that all documents, certificates and opinions to be
delivered in connection with the Obligations conform to the terms of
the Transaction Documents.
(o) COMPLIANCE WITH COMMITMENT. All other terms, conditions
and requirements of the Commitment shall have been satisfied.
(p) SATISFACTION OF CONDITIONS OF THE UNDERWRITER AGREEMENT.
All conditions in the Underwriter Agreement relating to the
Underwriter's obligation to purchase the Obligations shall have been
satisfied.
(q) UNDERWRITER AGREEMENT. The Insurer shall have received
copies of each of the documents, and shall be entitled to rely on each
of the documents, required to be delivered to the Underwriter pursuant
to the Underwriter Agreement.
Section 3.02. PAYMENT OF FEES AND BOND INSURER PREMIUM.
(a) LEGAL AND ACCOUNTING FEES. RBMG, the Servicer, the
Company, Funding Co. and the Depositor shall pay or cause to be paid,
on the Date of Issuance, legal fees and disbursements incurred by the
Insurer in connection with the issuance of the Policy and any fees of
the Insurer's auditors in accordance with the terms of the Commitment.
Any fees of the Insurer's auditors payable in respect of any amendment
or supplement to
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the Offering Document or any other Offering Document incurred after the
Date of Issuance shall be paid by RBMG, the Company, Funding Co. and
the Depositor on demand.
(b) BOND INSURER PREMIUM. In consideration of the issuance by
the Insurer of the Policy, the Insurer shall be entitled to receive the
Bond Insurer Premium as and when due in accordance with the terms of
the Commitment (i) in the case of Bond Insurer Premium due on or before
the Date of Issuance, directly from RBMG, the Servicer, the Company,
Funding Co. and the Depositor and (ii) in the case of Bond Insurer
Premium due after the Date of Issuance, FIRST, pursuant to the
Indenture, and SECOND, to the extent the amounts in subclause FIRST are
not sufficient, directly from RBMG. For purposes of the Indenture, the
term "Bond Insurer Premium Rate" shall be based upon the "Premium
Percentage" set forth in paragraph 1(a) of the Commitment. The Bond
Insurer Premium shall be calculated according to paragraph 1(a) of the
Commitment for the amount due on or before the Date of Issuance and
paragraph 1(b) of the Commitment for the amount due on each Payment
Date. The Bond Insurer Premium paid hereunder or under the Indenture
shall be nonrefundable without regard to whether the Insurer makes any
payment under the Policy or any other circumstances relating to the
Obligations or provision being made for payment of the Obligations
prior to maturity. RBMG, the Servicer, the Company, Funding Co., the
Depositor and the Indenture Trustee shall make all payments of Bond
Insurer Premium to be made by them by wire transfer to an account
designated from time to time by the Insurer by written notice to RBMG,
the Servicer, the Company, Funding Co., the Depositor and the Indenture
Trustee.
Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. (a) In
accordance with the priorities established in Section 8.02(c) or Section 5.07,
as applicable, of the Indenture, the Insurer shall be entitled to reimbursement
for any payment made by the Insurer under the Policy, which reimbursement shall
be due and payable on the date that any amount is to be paid pursuant to a
Notice (as defined in the Policy), in an amount equal to the amount to be so
paid and all amounts previously paid that remain unreimbursed, together with
interest on any and all amounts remaining unreimbursed (to the extent permitted
by law, if in respect of any unreimbursed amounts representing interest) from
the date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(b) Notwithstanding anything in subsection 3.03(a) to the contrary, (i)
RBMG and the Company agree to reimburse the Insurer for payments made under the
Policy arising as a result of RBMG's or the Company's failure to repurchase any
Mortgage Loan required to be repurchased pursuant to Section 7 of the
Contribution Agreement, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect of any unreimbursed
amounts representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal to the
Late Payment Rate, (ii) in the event that the Sub-Servicing Agreement is
terminated, the Servicer agrees to reimburse the Bond Insurer for payments made
under the Policy, arising as a result of the Servicer's failure to deposit into
the Collection Account or the Note Account any amount required to be so
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deposited pursuant to the Servicing Agreement together with interest on any and
all amounts remaining unreimbursed (to the extent permitted by law, if in
respect to any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before judgment), at a
rate of interest equal to the Late Payment Rate and (iii) the Sub-Servicer
agrees to reimburse the Bond Insurer for payments made under the Policy, arising
as a result of the Sub-Servicer's failure to deposit into the Collection Account
(or any similar account established pursuant to the Sub-Servicing Agreement) or
the Note Account any amount required to be so deposited pursuant to the
Sub-Servicing Agreement together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect to any unreimbursed
amounts representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal to the
Late Payment Rate.
(c) RBMG, the Servicer and the Company agree to pay to the Insurer as
follows: any and all charges, fees, costs and expenses that the Insurer may
reasonably pay or incur, including, but not limited to, attorneys' and
accountants' fees and expenses, in connection with (i) any accounts established
to facilitate payments under the Policy to the extent the Insurer has not been
immediately reimbursed on the date that any amount is paid by the Insurer under
the Policy, (ii) the enforcement, defense or preservation of any rights in
respect of any of the Transaction Documents, including defending, monitoring or
participating in any litigation or proceeding (including any insolvency or
bankruptcy proceeding in respect of any Transaction participant or any affiliate
thereof) relating to any of the Transaction Documents, any party to any of the
Transaction Documents, in its capacity as such a party, or the Transaction,
(iii) any amendment, waiver or other action with respect to, or related to, any
Transaction Document, whether or not executed or completed, or (iv) preparation
of bound volumes of the Transaction documents; costs and expenses shall include
a reasonable allocation of compensation and overhead attributable to the time of
employees of the Insurer spent in connection with the actions described in
clause (ii) above, and the Insurer reserves the right to charge a reasonable fee
as a condition to executing any waiver or consent proposed in respect of any of
the Transaction Documents.
(d) The Sub-Servicer agrees to pay to the Insurer as follows: any and
all charges, fees, costs and expenses that the Insurer may reasonably pay or
incur, including, but not limited to, attorneys' and accountants' fees and
expenses in connection with an Event of Default by the Sub-Servicer.
(e) RBMG, the Servicer, the Company, Funding Co. and the Depositor
severally but not jointly, to the extent liable, agree to pay to the Insurer as
follows: interest on any and all amounts described in subsections (b), (c), (f)
and (g) of this Section 3.03 from the date payable or paid by such party until
payment thereof in full, and interest on any and all amounts described in
Section 3.02 hereof from the date due until payment thereof in full, in each
case, payable to the Insurer at the Late Payment Rate per annum. The
Sub-Servicer agrees to pay to the Insurer as follows: interest on any and all
amounts described in subsections (b)(iii), (d), (f)(ii) and (g)(ii) of this
Section 3.03 from the date payable or paid by such party until payment thereof
in full, payable to the Insurer at the Late Payment Rate per annum.
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(f) (i) RBMG, the Servicer, the Company, Funding Co. and the Depositor
severally but not jointly, to the extent liable, agree to pay to the Insurer as
follows: any payments made by the Insurer on behalf of, or advanced to, RBMG,
the Servicer, the Company, Funding Co. or the Depositor, respectively,
including, without limitation, any amounts payable by RBMG, the Servicer, the
Company, Funding Co. or the Depositor pursuant to the Obligations or any other
Transaction Documents.
(ii) The Sub-Servicer agrees to pay to the Insurer as follows:
any payments made by the Insurer on behalf of, or advanced to, the Sub-Servicer,
including, without limitation, any amounts payable by the Sub-Servicer pursuant
to the Transaction Documents to the extent such amounts were required to be paid
or advanced by the Sub-Servicer pursuant to the Transaction Documents.
(g) (i) Following termination of the Indenture pursuant to Section
10.01 or Section 4.01 thereof, RBMG agrees to reimburse the Insurer for any
Insured Payments required to be made pursuant to the Policy subsequent to the
date of such termination.
(ii) Following termination of the Indenture pursuant to
Section 10.01 or Section 5.02 thereof, the Sub-Servicer agrees to reimburse the
Insurer for any Insured Payments required to be made pursuant to the Policy
subsequent to the date of such termination attributable to an Event of Default
by the Sub-Servicer.
All such amounts are to be immediately due and payable without demand.
Section 3.04. INDEMNIFICATION BY RBMG, THE SERVICER, THE COMPANY AND
FUNDING CO.; LIMITATION OF LIABILITY. (a) In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, RBMG, the Servicer, the Company, Funding Co. and any successors
thereto agree to pay, and to protect, indemnify and save harmless, the Insurer
and its officers, directors, shareholders, employees, agents, and each person,
if any, who controls the Insurer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act from and against any
and all claims, Losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or reasonable expenses (including, without
limitation, reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) or obligations whatsoever paid by the
Insurer (herein collectively referred to as "Liabilities") of any nature arising
out of or relating to the transactions contemplated by the Transaction Documents
by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the RBMG Information and the Depositor
Information with respect to information in the Prospectus Supplement
under the headings "SUMMARY--DESCRIPTION OF THE NOTES," "RISK FACTORS"
(other than information under the sub-headings "--Book-Entry
Registration May Reduce the Liquidity of the Notes," "--An Investment
in the Notes May Be an Illiquid Investment," and "--Year 2000 Issue May
Adversely Affect The Distribution to Noteholders"), "DESCRIPTION OF THE
NOTES" (other than information under the sub-heading "--BOOK-ENTRY
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REGISTRATION AND DEFINITIVE NOTES") and "CERTAIN PREPAYMENT AND YIELD
CONSIDERATIONS" (other than information under the sub-heading
"--WEIGHTED AVERAGE LIFE OF THE NOTES") or in any amendment or
supplement thereto or in any preliminary offering document, or arising
out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(ii) to the extent not covered by clause (i) above, any act or
omission of RBMG, the Servicer, the Company or Funding Co., or the
allegation thereof, in connection with the offering, issuance, sale or
delivery of the Obligations other than by reason of false or misleading
information provided by the Insurer in writing for inclusion in the
Offering Document as specified in clause (i) above;
(iii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of RBMG,
the Servicer, the Company or Funding Co.;
(iv) the violation by the Company, Funding Co., the Servicer
or RBMG of any federal or state securities, banking or antitrust laws,
rules or regulations in connection with the issuance, offer and sale of
the Obligations or the transactions contemplated by the Transaction
Documents;
(v) the violation by the Company, Funding Co., the Servicer or
RBMG of any federal or state laws, rules or regulations relating to the
Transaction, including without limitation the maximum amount of
interest permitted to be received on account of any loan of money or
with respect to the Mortgage Loans;
(vi) the breach by the Company, Funding Co., the Servicer or
RBMG of any of its obligations under this Insurance Agreement or any of
the other Transaction Documents; and
(vii) the breach by RBMG, the Servicer, the Company or Funding
Co. of any representation or warranty on the part of RBMG, the
Servicer, the Company or Funding Co. contained in the Transaction
Documents or in any certificate or report furnished or delivered to the
Insurer thereunder.
This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.
(b) RBMG agrees to indemnify the Trust and the Insurer for any and all
Liabilities incurred by the Issuer and the Insurer due to any claim,
counterclaim, rescission, setoff or defense asserted by an Obligor under any
Mortgage Loan subject to the Federal Trade Commission regulations provided in 16
C.F.R. Part 433 and under any Mortgage Loan which is a "mortgage" as such term
is defined in 15 U.S.C. ss.1602(aa).
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(c) Any party which proposes to assert the right to be indemnified
under this Section 3.04 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against RBMG, the Servicer, the Company or Funding Co. under this
Section 3.04, notify RBMG, the Servicer, the Company or Funding Co. of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served. In case any action, suit or proceeding shall be brought against any
indemnified party and it shall notify RBMG, the Servicer, the Company or Funding
Co. of the commencement thereof, RBMG, the Servicer, the Company or Funding Co.
shall be entitled to participate in, and, to the extent that it shall wish, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from RBMG, the Servicer, the Company or Funding Co. to such
indemnified party of its election so to assume the defense thereof, RBMG, the
Servicer, the Company or Funding Co. shall not be liable to such indemnified
party for any legal or other expenses other than reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action the defense of which is assumed by RBMG, the
Servicer, the Company or Funding Co. in accordance with the terms of this
subsection (c), but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of counsel by such
indemnified party has been authorized by RBMG, the Servicer, the Company or
Funding Co. RBMG, the Servicer, the Company or Funding Co. shall not be liable
for any settlement of any action or claim effected without its consent.
Section 3.05. INDEMNIFICATION BY SUB-SERVICER; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification or any other rights of
the Insurer pursuant hereto or under law or equity, the Sub-Servicer and any
successors thereto agree to pay, and to protect, indemnify and save harmless,
the Insurer and its officers, directors, shareholders, employees, agents, and
each person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act
from and against any and all claims, Losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or obligations
whatsoever paid by the Insurer (herein collectively referred to as
"Liabilities") of any nature arising out of or relating to the transactions
contemplated by the Transaction Documents by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Sub-Servicer Information or in any
amendment or supplement thereto or in any preliminary offering
document, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(ii) the misfeasance or malfeasance of, or negligence or theft
committed by, any director, officer, employee or agent of the
Sub-Servicer;
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(iii) the violation by the Sub-Servicer of any federal or
state securities, banking or antitrust laws, rules or regulations in
connection with the transactions contemplated by the Transaction
Documents;
(iv) the violation by the Sub-Servicer of any federal or state
laws, rules or regulations relating to the Transaction;
(v) the breach by the Sub-Servicer of any of its obligations
under this Insurance Agreement or any of the other Transaction
Documents; and
(vi) the breach by the Sub-Servicer of any representation or
warranty on the part of the Sub-Servicer contained in the Transaction
Documents or in any certificate or report furnished or delivered to the
Insurer thereunder.
This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.
(b) Any party which proposes to assert the right to be indemnified
under this Section 3.05 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against the Sub-Servicer under this Section 3.05, notify the
Sub-Servicer of the commencement of such action, suit or proceeding, enclosing a
copy of all papers served. In case any action, suit or proceeding shall be
brought against any indemnified party and it shall notify the Sub-Servicer of
the commencement thereof, the Sub-Servicer shall be entitled to participate in,
and, to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the Sub-Servicer to such indemnified party of its election so to assume the
defense thereof, the Sub-Servicer shall not be liable to such indemnified party
for any legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action the defense of which is assumed by the Sub-Servicer in accordance
with the terms of this subsection (b), but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless the employment of
counsel by such indemnified party has been authorized by the Sub-Servicer. The
Sub-Servicer shall not be liable for any settlement of any action or claim
effected without its consent.
Section 3.06. [RESERVED]
Section 3.07. INDEMNIFICATION BY FIRST UNION; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification or any other rights of
the Insurer pursuant hereto or under law or equity, First Union and any
successors thereto agree to pay, and to protect, indemnify and save harmless,
the Insurer and its officers, directors, shareholders, employees, agents, and
each person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities and Exchange Act of 1934, as amended, from and against any and all
claims, losses, liabilities (including penalties), actions, suits,
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judgments, demands, damages, costs or reasonable expenses (including, without
limitation, reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) or obligations whatsoever paid by the
Insurer (herein collectively referred to as "Liabilities") of any nature arising
out of or relating to the transactions contemplated by the Transaction Documents
by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or Offering
Document, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon the
Insurer Information, RBMG Information, the Underwriter Information or
the Sub-Servicer Information, or as such Liabilities arise out of or
are based upon any such untrue statement or omission or allegation
thereof based upon the Depositor Information for which RBMG, the
Servicer, the Company and Funding Co. have agreed to indemnify the
Insurer pursuant to Section 3.04 hereof;
(ii) to the extent not covered by clause (i) above, any act or
omission of the Depositor in connection with the offering, issuance,
sale or delivery of the Obligations other than by reason of false or
misleading information provided by the Insurer, the Underwriter, the
Servicer, RBMG, Funding Co., the Company or the Sub-Servicer in writing
for inclusion in the Offering Document or as specified in clause (i)
above or the allegation thereof;
(iii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of the
Depositor;
(iv) the violation by the Depositor of any federal or state
securities, banking or antitrust laws, rules or regulations in
connection with the issuance, offer and sale of the Obligations or the
transactions contemplated by the Transaction Documents;
(v) the breach by the Depositor of any of its obligations
under this Insurance Agreement or any of the Transaction Documents to
which the Depositor is a party; and
(vi) the breach by the Depositor of any representation or
warranty on the part of the Depositor contained in the Transaction
Documents to which the Depositor is a party or in any certificate or
report furnished or delivered to the Insurer thereunder.
This indemnity provision shall survive the termination of this Agreement and
shall survive until the statute of limitations has run on any causes of action
which arise from one of these reasons and until all suits filed as a result
thereof have been finally concluded.
(b) Any party which proposes to assert the right to be indemnified
under this Section 3.07 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against First Union under
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this Section 3.07, notify First Union of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served. In case any action, suit
or proceeding shall be brought against any indemnified party and it shall notify
First Union of the commencement thereof, First Union shall be entitled to
participate in, and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from First Union to such indemnified party of its election so to assume the
defense thereof, First Union shall not be liable to such indemnified party for
any legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action the defense of which is assumed by First Union in accordance with
the terms of this subsection (b), but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless the employment of
counsel by such indemnified party has been authorized by First Union. First
Union shall not be liable for any settlement of any action or claim effected
without its consent.
Section 3.08. PAYMENT PROCEDURE. In the event of any payment by the
Insurer, the Indenture Trustee, RBMG, the Servicer, the Company, Funding Co.,
First Union, the Sub-Servicer and the Depositor agree to accept objective
evidence of payment as prima facie evidence of the propriety thereof and the
liability therefor to the Insurer. All payments to be made to the Insurer under
this Insurance Agreement shall be made to the Insurer in lawful currency of the
United States of America in immediately available funds at the notice address
for the Insurer as specified in Section 6.02 hereof on the date when due or as
the Insurer shall otherwise direct by written notice to the other parties
hereto. In the event that the date of any payment to the Insurer or the
expiration of any time period hereunder occurs on a day which is not a Business
Day, then such payment or expiration of time period shall be made or occur on
the next succeeding Business Day with the same force and effect as if such
payment was made or time period expired on the scheduled date of payment or
expiration date. Payments to be made to the Insurer under this Insurance
Agreement shall bear interest at the Late Payment Rate from the date when due to
the date paid.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co. First Union or the Depositor or from any other source under
the Transaction Documents and all amounts payable under the Obligations have
been paid in full; provided, however, that the provisions of Sections 3.02,
3.03, 3.04, 3.05, 3.06, 3.07 and 4.06 hereof shall survive any termination of
this Insurance Agreement.
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Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. (a)
Excepting at such times as a default in payment under the Policy shall exist or
shall have occurred, none of the Servicer, the Indenture Trustee, RBMG, the
Sub-Servicer, the Issuer, the Company, Funding Co. or the Depositor shall grant
any waiver of rights under any of the Transaction Documents to which any of them
is a party without the prior written consent of the Insurer, and any such waiver
without the prior written consent of the Insurer shall be null and void and of
no force or effect.
(b) To the extent permitted by law, the Servicer, the Indenture
Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union and the Depositor agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as the Insurer may request
and as may be required in the Insurer's judgment to effectuate the intention of
or facilitate the performance of this Insurance Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE. (a) The obligations of the
Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union and the Depositor hereunder shall be absolute
and unconditional and shall be paid or performed strictly in accordance with
this Insurance Agreement under all circumstances irrespective of:
(i) any lack of validity or enforceability of, or any
amendment or other modifications of, or waiver, with respect to any of
the Transaction Documents, the Obligations or the Policy;
(ii) any exchange or release of any other obligations
hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that the Servicer, the Indenture Trustee,
RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union or the Depositor may have at any time against the Insurer or any
other Person;
(iv) any document presented in connection with the Policy
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) any payment by the Insurer under the Policy against
presentation of a certificate or other document that does not strictly
comply with terms of the Policy;
(vi) any failure of the Servicer, the Indenture Trustee, RBMG,
the Sub-Servicer, the Issuer, the Company, Funding Co., First Union or
the Depositor to receive the proceeds from the sale of the Obligations;
or
(vii) any breach by the Servicer, the Indenture Trustee, RBMG,
the Sub-Servicer, the Issuer, the Company, Funding Co. or the Depositor
of any representation, warranty or covenant contained in any of the
Transaction Documents.
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(b) The Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the
Depositor, First Union, the Issuer, the Company, Funding Co. and any and all
others who are now or may become liable for all or part of the obligations of
the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor under this Insurance
Agreement agree to be bound by this Insurance Agreement and (i) to the extent
permitted by law, waive and renounce any and all redemption (other than as
expressly provided for in the Transaction Documents) and exemption rights and
the benefit of all valuation and appraisement privileges against the
indebtedness and obligations evidenced by any Transaction Document or by any
extension or renewal thereof; (ii) waive presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor and notice of
protest; (iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of any payment hereunder, except as required by the Transaction
Documents; (iv) waive all rights of abatement, diminution, postponement or
deduction, or any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction Documents, by
any party thereto or any beneficiary thereof, or out of any obligation at any
time owing to the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the
Issuer, the Company, Funding Co., First Union or the Depositor; (v) agree that
its liabilities hereunder shall, except as otherwise expressly provided in this
Section 4.03, be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall operate
only for such event and not for any subsequent event; (vii) consent to any and
all extensions of time that may be granted by the Insurer with respect to any
payment hereunder or other provisions hereof and to the release of any security
at any time given for any payment hereunder, or any part thereof, with or
without substitution, and to the release of any Person or entity liable for any
such payment; and (viii) consent to the addition of any and all other makers,
endorsers, guarantors and other obligors for any payment hereunder, and to the
acceptance of any and all other security for any payment hereunder, and agree
that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co.,
First Union or the Depositor from pursuing any rights or remedies it may have
against any other Person in a separate legal proceeding.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS. (a) This
Insurance Agreement shall be a continuing obligation of the parties hereto and
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. None of the Servicer, the Indenture
Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union or the Depositor may assign its rights under this Insurance Agreement, or
delegate any of its duties hereunder, without the prior written consent of the
Insurer. Any assignment made in violation of this Insurance Agreement shall be
null and void.
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(b) The Insurer shall have the right to give participations in its
rights under this Insurance Agreement and to enter into contracts of reinsurance
with respect to the Policy upon such terms and conditions as the Insurer may in
its discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve the Insurer of any of its
obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or pledge to
any bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any rights
of the Insurer under the Transaction Documents or with respect to any real or
personal property or other interests pledged to the Insurer, or in which the
Insurer has a security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right, remedy
or claim, express or implied, upon any Person, including, particularly, any
Owner, other than the Insurer against the Servicer, the Indenture Trustee, RBMG,
the Sub-Servicer, the Issuer, the Company, Funding Co., First Union or the
Depositor, and all the terms, covenants, conditions, promises and agreements
contained herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and permitted assigns. Neither the Indenture Trustee
nor any Owner shall have any right to payment from any Bond Insurer Premiums
paid or payable hereunder or under the Indenture or from any other amounts paid
by the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor pursuant to Section 3.02,
3.03, 3.04, 3.05, 3.06 or 3.07 hereof.
(e) The Servicer, the Company, Funding Co., RBMG, the Sub-Servicer, the
Depositor, the Issuer and the Indenture Trustee agree that the Insurer shall
have all rights of a third-party beneficiary in respect of the Indenture, the
Servicing Agreement, the Sub-Servicing Agreement, the Trust Agreement and each
other Transaction Document to which it is not a signing party and hereby
incorporate and restate their representations, warranties and covenants as set
forth therein for the benefit of the Insurer.
Section 4.05. LIABILITY OF THE INSURER. Neither the Insurer nor any of
its officers, directors or employees shall be liable or responsible for: (a) the
use that may be made of the Policy by the Indenture Trustee or for any acts or
omissions of the Indenture Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer (or
its Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
the Insurer shall have actual knowledge thereof). In furtherance and not in
limitation of the foregoing, the Insurer (or its Fiscal Agent) may accept
documents that appear on their face to be in order, without responsibility for
further investigation.
Section 4.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS. So
long as this Agreement is in effect, and for one year following its termination,
none of the parties hereto will
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file any involuntary petition or otherwise institute any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law against the
Company, Funding Co., the Depositor, the Issuer or the Residual Holder.
Section 4.07. PARTIES TO JOIN IN ENFORCEMENT ACTION. To the extent
necessary to enforce any right of the Insurer in or remedy of the Insurer under
any Mortgage Loan, the Indenture Trustee, the Depositor, RBMG, the Sub-Servicer,
the Issuer, the Company, Funding Co., First Union and the Servicer agree to join
in any action initiated by the Trust or the Insurer for the protection of such
right or exercise of such remedy.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Any representation or warranty made by the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co. or the Depositor hereunder or under the Transaction
Documents, or in any certificate furnished hereunder or under the
Transaction Documents, shall prove to be untrue or incomplete in any
material respect;
(b)(i) The Servicer, , RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor shall fail to pay
when due any amount payable by the Servicer, RBMG, the Sub-Servicer,
the Issuer, the Company, Funding Co., First Union or the Depositor
hereunder or (ii) a legislative body has enacted any law that declares
or a court of competent jurisdiction shall find or rule that any
Transaction Document is not valid and binding on the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co., First Union or the Depositor;
(c) The occurrence and continuance of a "Servicer Event of
Default" under the Servicing Agreement (as defined therein);
(d) Any failure on the part of the Servicer, the Indenture
Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co.
or the Depositor duly to observe or perform in any material respect any
other of the covenants or agreements on the part of the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co. or the Depositor contained in this Insurance Agreement or
in any other Transaction Document which continues unremedied for a
period of 30 days with respect to this Insurance Agreement, or, with
respect to any other Transaction Document, beyond any cure period
provided for therein, after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Indenture Trustee, the Servicer, RBMG, the Sub-Servicer, the
Issuer, the Company, Funding Co. or the
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Depositor, as applicable, by the Insurer (with a copy to the Indenture
Trustee) or by the Indenture Trustee (with a copy to the Insurer);
(e) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor and such decree or
order shall have remained in force undischarged or unstayed for a
period of 90 consecutive days;
(f) The Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor shall consent to the
appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer,
RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union or the Depositor or of or relating to all or substantially all of
the property of either;
(g) The Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of or otherwise voluntarily commence
a case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations; or
(h) The occurrence and continuance of an "Event of Default"
under the Indenture (as defined therein);
(i) The occurrence and continuance of a "Event of Default"
under the Sub-Servicing Agreement (as defined therein);
(j) the failure of RBMG, the Company, Funding Co. or the
Depositor to comply with, or maintain the accuracy of, the Opinion
Facts and Assumptions.
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE. (a) Upon the occurrence of
an Event of Default, the Insurer may exercise any one or more of the rights and
remedies set forth below:
(i) declare all indebtedness of every type or description then
owed by the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer,
the Issuer, the Company, Funding Co., First Union or the Depositor to
the Insurer to be immediately due and payable, and the same shall
thereupon be immediately due and payable;
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(ii) exercise any rights and remedies under the Transaction
Documents in accordance with the terms of the Transaction Documents or
direct the Indenture Trustee or the Issuer to exercise such remedies in
accordance with the terms of the Transaction Documents; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due
under the Transaction Documents or to enforce performance and
observance of any obligation, agreement or covenant of the Servicer,
the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co., First Union or the Depositor under the Transaction
Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies given
under the Transaction Documents or existing at law or in equity. No delay or
omission to exercise any right or power accruing under the Transaction Documents
upon the happening of any event set forth in Section 5.01 hereof shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Insurer to exercise any remedy
reserved to the Insurer in this Article, it shall not be necessary to give any
notice, other than such notice as may be required in this Article V.
Section 5.03. WAIVERS. (a) No failure by the Insurer to exercise, and
no delay by the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein to
the Insurer are declared in every case to be cumulative and not exclusive of any
remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Insurer and
delivered to the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the
Issuer, the Company, Funding Co., First Union and the Depositor. Unless such
writing expressly provides to the contrary, any waiver so granted shall extend
only to the specific event or occurrence which gave rise to the Event of Default
so waived and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, ETC. This Insurance Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. The Servicer agrees to promptly provide a copy of any
amendment to this Insurance Agreement to the Indenture Trustee, S&P and Moody's.
No act or course of dealing shall be deemed to constitute an amendment,
modification or termination hereof.
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Section 6.02. NOTICES. All demands, notices and other communications to
be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured
Finance (IPM-SF)
(RBMG Funding Co. Mortgage Loan Trust
1998-2 Asset-Backed Notes, Series 1998-2)
Telecopy No.: (914) 765-3810
Confirmation: (914) 273-4545
(in each case in which notice or other communication
to the Insurer refers to an Event of Default, a claim
on the Policy or with respect to which failure on the
part of the Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to
the attention of each of the general counsel and the
Insurer and shall be marked to indicate "URGENT
MATERIAL ENCLOSED.")
(b) To RBMG:
Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, SC 29223
Telecopy No.: (803) 741-3733
Confirmation: (803) 741-3333
(c) To the Sub-Servicer:
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 1002
West Palm Beach, FL 33401
Attention: Secretary
Telecopy No.: 561-681-8177
Confirmation: 561-681-8157
. with copy to:
52
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Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 532
West Palm Beach, FL 33401
Attention: Senior V.P., Law Dept.
Telecopy No.: 561-681-8163
Confirmation: 561-682-8820
(d) To the Indenture Trustee:
The Bank of New York
101 Barclay Street-- 12E
New York, NY 10286
Attention: Corporate Trust
Telecopy No.: (212) 815-5309
Confirmation No. (212) 815-2297
(e) To Funding Co.:
RBMG Funding Co.
2820 West Charleston Blvd.
Suite 17
Las Vegas, NV 89102
Attention: Sheldon Stern
Telecopy No.: (702) 259-9591
Confirmation: (702) 658-2810
(f) To the Residual Holder:
RBMG Funding Co.
2820 West Charleston Blvd.
Suite 17
Las Vegas, NV 89102
Attention: Sheldon Stern
Telecopy No.: (702) 259-9591
Confirmation: (702) 658-2810
(g) To the Issuer:
RBMG Funding Co. Mortgage Loan Trust 1998-2
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Corporate Trust Administration
Telecopy No.: (302) 651-8882
53
<PAGE>
(h) To the Company:
RBMG Asset Management Company, Inc.:
2820 West Charleston Blvd.
Suite 17
Las Vegas, NV 89102
Attention: Sheldon Stern
Telecopy No.: (702) 259-9591
Confirmation: (702) 658-2810
(i) To the Depositor:
Residential Asset Funding Corporation
c/o First Union Capital Markets
301 South College Street
Charlotte, NC 28288
Telecopy No.: (704) 383-8121
(j) To First Union:
First Union Corporation
301 South College Street
Charlotte, NC 28288
Telecopy No.: (704) 383-8121
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 6.04. GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CHOICE OF LAW PROVISIONS.
54
<PAGE>
Section 6.05. CONSENT TO JURISDICTION. (a) The parties hereto hereby
irrevocably submit to the jurisdiction of the United States District Court for
the Southern District of New York and any court in the State of New York located
in the City and County of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and to or in connection with
any of the Transaction Documents or the transactions contemplated thereunder or
for recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York state court or,
to the extent permitted by law, in such federal court. The parties hereto agree
that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. To the extent permitted by applicable law, the
parties hereto hereby waive and agree not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the related documents or the
subject matter thereof may not be litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties hereto shall
not seek and hereby waive the right to any review of the judgment of any such
court by any court of any other nation or jurisdiction which may be called upon
to grant an enforcement of such judgment.
(c) Except as provided in Section 4.06 herein, nothing contained in
this Insurance Agreement shall limit or affect the Insurer's right to serve
process in any other manner permitted by law or to start legal proceedings
relating to any of the Transaction Documents against any party hereto or its or
their property in the courts of any jurisdiction.
Section 6.06. CONSENT OF THE INSURER. In the event that the consent of
the Insurer is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by the
Insurer in its sole discretion without any implied duty towards any other
Person.
Section 6.07. COUNTERPARTS. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
Section 6.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives, to
the fullest extent permitted by law, any right to a trial by jury in respect of
any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in
55
<PAGE>
the event of litigation, seek to enforce the foregoing waiver and (B)
acknowledges that it has been induced to enter into the Transaction Documents to
which it is a party by, among other things, this waiver.
Section 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
trustee, officer, employee, director, affiliate or shareholder of any party
hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Transaction Documents, the Obligations or the Policy, it being expressly
agreed and understood that each Transaction Document is solely a corporate
obligation of each party hereto, or, in the case of the Issuer, as a separate
legal entity, and not of the Owner Trustee and that any and all personal
liability, either at common law or in equity, or by statute or constitution, of
every such officer, employee, director, affiliate or shareholder for breaches by
any party hereto of any obligations under any Transaction Document is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Insurance Agreement.
Section 6.11. ENTIRE AGREEMENT. The Transaction Documents and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Insurance Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.
Section 6.12 COVENANT OF THE RESIDUAL HOLDER. During the Term of this
Insurance Agreement, the Residual Holder hereby covenants and agrees that it
shall not amend its Articles of Incorporation without the prior consent of the
Insurer.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Insurance Agreement,
all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION, as Insurer
By /s/ Ann D. McKenna
---------------------------------------
Title ASSISTANT SECRETARY
------------------------------------
RBMG ASSET MANAGEMENT COMPANY, INC., as
Company
By /s/ Sheldon Stern
---------------------------------------
Title PRESIDENT
------------------------------------
OCWEN FEDERAL BANK FSB, as Sub-Servicer
By /s/ Jon E. Voigtman
---------------------------------------
Title VICE PRESIDENT
------------------------------------
RBMG FUNDING CO. MORTGAGE LOAN TRUST
1998-2, as Issuer
By Wilmington Trust Company, not in its
individual capacity, but solely as
Owner Trustee
By /s/ Emmett R. Harmon
---------------------------------------
Title VICE PRESIDENT
------------------------------------
RBMG FUNDING CO., in its individual
capacity and as Residual Holder
By /s/ Sheldon Stern
---------------------------------------
Title PRESIDENT
------------------------------------
<PAGE>
RESIDENTIAL ASSET FUNDING
CORPORATION,
as Depositor
By /s/ Shanker Merchant
---------------------------------------
Title SENIOR VICE PRESIDENT
------------------------------------
RESOURCE BANCSHARES MORTGAGE
GROUP, INC., in its individual capacity
and as Servicer
By /s/ Larry W. Reed
---------------------------------------
Title EXECUTIVE VICE PRESIDENT
------------------------------------
THE BANK OF NEW YORK, as Indenture Trustee
By /s/ Franklin Austin
---------------------------------------
Title Assistant Vice President
------------------------------------
FIRST UNION CORPORATION
By /s/ Brian Simpson
---------------------------------------
Title SENIOR VICE PRESIDENT
------------------------------------
56
<PAGE>
differing interpretations, which could apply retroactively. The opinion of
special tax counsel is not binding on the courts or the Internal Revenue Service
(the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a transaction constitutes the issuance of
indebtedness for federal income tax purposes, which we have reviewed as they
apply to this transaction.
Based on the foregoing, and such legal and factual investigations as
we have deemed appropriate, while no transaction closely comparable to that
contemplated in the Operative Documents has been the subject of any Treasury
regulation, revenue ruling or judicial decision, and therefore the matter is
subject to interpretation, we are of the opinion that for federal income tax
purposes:
(1) The Notes will properly be treated as indebtedness for federal
income tax purposes;
(2) The Trust will not constitute an association (or a publicly
traded partnership) taxable as a corporation or a taxable mortgage pool.
We express no opinion on any matter not discussed in this letter.
This opinion is rendered as of the Closing Date, for the sole benefit of the
addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
Very truly yours,
/s/ Dewey Ballantine LLP
<PAGE>
Noteholders of the related Class of Notes or the Note Insurer, the Custodian, or
the Indenture Trustee if there is no Custodian, shall promptly notify RBMG, the
Company, Funding Co., the Depositor, the Servicer, or the Indenture Trustee, if
there is no Custodian, and the Note Insurer and direct the party breaching such
representation, warranty or covenant to either (i) within 30 days after Funding
Co., the Company, the Depositor, or RBMG (each a "Transferor") receives actual
knowledge of such incorrectness, eliminate or otherwise cure the circumstance or
condition in respect of which such representation or warranty was incorrect as
of the time made, (ii) withdraw such Defective Mortgage Loan from the lien of
this Indenture following the expiration of such 30-day period by depositing to
the related Note Account an amount equal to the Purchase Price, plus the amount
of any related Realized Loss resulting from a Deficiency Valuation, for such
Mortgage Loan or (iii) substitute a Qualified Replacement Mortgage Loan for such
Defective Mortgage Loan and deposit any Purchase Price, plus the amount of any
Realized Loss resulting from a Deficiency Valuation, required to be paid in
connection with such substitution pursuant to Section 7 of the Funding Co. Sale
Agreement, Section 7 of the Depositor Sale Agreement, Section 7 of the Company
Sale Agreement or Section 7 of the Loan Contribution Agreement. Upon any
purchase of or substitution for a Defective Mortgage Loan by either Funding Co.,
the Depositor, the Company, or RBMG as set forth above, the Indenture Trustee
shall deliver or cause the Custodian to deliver, the Mortgage File relating to
such Defective Mortgage Loan to Funding Co., the Depositor, the Company or RBMG,
as the case may be, and the Issuer and the Indenture Trustee shall execute such
instruments of transfer as are necessary to convey title to such Defective
Mortgage Loan to Funding Co., the Depositor, the Company, or RBMG, as the case
may be, from the lien of this Indenture.
(b) Upon substitution of a Qualified Replacement Mortgage Loan, the
Indenture Trustee or a Custodian on its behalf, shall acknowledge receipt of
such Qualified Replacement Mortgage Loan or Loans and, (i) within ten Business
Days thereafter, review such documents as specified in Section 6.15(c) and
deliver to the Issuer, RBMG, the Company, Funding Co., the Depositor, the Note
Insurer and the Servicer a certification substantially in the form of the
Initial Certification described in Section 6.15(a) with respect to such
Qualified Replacement Mortgage Loan or Loans and, (ii) within 270 days after
such substitution, review such documents as specified in Section 6.15(c) and
deliver to the parties set forth in clause (i) a certification substantially in
the form of the Final Certification described in Section 6.15(b) with respect to
such Qualified Replacement Mortgage Loan or Loans.
(c) Monthly Payments due with respect to Qualified Replacement
Mortgage Loans in the month of substitution shall be retained by the Transferor.
For the month of substitution, the Indenture Trustee on behalf of the
Noteholders and the Note Insurer shall be entitled to receive the Monthly
Payment due on such Deleted Mortgage Loan, and the Transferor shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. Upon such substitution, such Qualified Replacement
Mortgage Loan or Loans shall be subject in all respects to the terms of this
Indenture, including, all applicable representations and warranties included
herein in each case as of the date of substitution.
<PAGE>
Issuer's right, title and interest in and to (i) the Additional Mortgage Loans
identified on the related Mortgage Loan Schedule attached to the related
Additional Transfer Instrument, (and allocated to Group I or Group II) delivered
by the Issuer on such Additional Transfer Date, (ii) principal and interest due
on the Additional Mortgage Loans after the related Additional Cut-off Date and
all other proceeds received in respect of such Additional Mortgage Loans after
the applicable Cut-off Date for each such Additional Mortgage Loan and (iii) all
items with respect to such Additional Mortgage Loans to be delivered pursuant to
Section 3(b) of the Depositor Sale Agreement and the other items in the related
Mortgage Files; provided, however, that the Issuer reserves and retains all
right, title and interest in and to principal (including Principal Prepayments)
and interest due on the Additional Mortgage Loans on or prior to the related
Additional Cut-off Date.
The Indenture Trustee shall release from the related Pre-Funding Account an
amount equal to one-hundred percent (100%) of the aggregate principal balances
as of the applicable Additional Cut-off Date of the Additional Mortgage Loans so
Granted; provided, however, that if the aggregate principal balance as of the
applicable additional cut-off date is greater than the amount on deposit in the
applicable pre-funding account, the indenture trustee shall release an amount
not greater than the amount on deposit in such pre-funding account.
(b) The Issuer shall Grant to the Indenture Trustee the Additional
Mortgage Loans and the other property and rights related thereto described in
Section 3(b) of the Depositor Sale Agreement and the Indenture Trustee shall
release funds from the related Pre-Funding Account, only upon the satisfaction
of each of the following conditions on or prior to the related Additional
Transfer Date:
(A) the Issuer shall have provided the Indenture Trustee and
the Note Insurer with a timely Addition Notice and shall have provided any
information reasonably requested by the Indenture Trustee or the Note
Insurer with respect to the Additional Mortgage Loans;
(B) the Issuer shall have delivered to the Indenture Trustee a
duly executed Additional Transfer Instrument, which shall include a
Mortgage Loan Schedule, listing the Additional Mortgage Loans and
allocated to Group I or Group II;
(C) as of each Additional Transfer Date, the Issuer shall not
be insolvent nor shall it have been made insolvent by such Grant nor shall
it be aware of any pending insolvency;
(D) the Issuer shall have delivered to the Indenture Trustee
an Opinion of Counsel confirming that such Grant shall not result in a
material adverse tax consequence to the Trust Estate or the Noteholders;
(E) the Funding Period shall not have terminated;
(F) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate, confirming the satisfaction of each condition
precedent and the representations specified in this Section 2.14(b) and
Section 2.14(c) and in the related Additional Transfer Instrument;
(G) the Servicer has deposited into the Collection Account all
collections on the Additional Mortgage Loans since the Additional Cut-off
Date;
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return to us two counterparts hereof, and upon acceptance hereof by
you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
Yours truly,
RESIDENTIAL ASSET FUNDING CORPORATION
By: /s/ Shanker Merchant
----------------------
Name: Shanker Merchant
Title: Senior Vice President
Accepted as of the date hereof:
WHEAT FIRST SECURITIES, INC.
acting through FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /s/ Peter Perna
------------------------
Name: Peter Perna
Title: Vice President
[Signature Page to Underwriting Agreement]
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement of
RBMG Funding Co. Mortgage Loan Trust 1998-2 relating to Asset Backed Notes,
Series 1998-2, of our report dated February 3, 1998, on our audits of the
consolidated financial statements of MBIA Insurance Corporation and Subsidiaries
as of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997. We also consent to the reference to our firm under the
caption "Experts".
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
December 8, 1998
