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) June 29, 1998
Home Equity Securitization Corp.
(Exact name of registrant as specified in its charter)
North Carolina 333-44409 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
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code (704) 374-4868
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Home Equity Loans
Home Equity Securitization Corp. 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. 333-44409) (the "Registration Statement").
Pursuant to the Registration Statement, RBMG Funding Co. Home Equity Loan Trust
1998-1 (the "Issuer") issued $125,000,000 in aggregate principal amount of its
Asset Backed Notes, Series 1998-1 (the "Notes"), on June 29, 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 June 1, 1998, between RBMG Funding
Co. Home Equity Loan Trust 1998-1, and Bankers Trust Company, 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. Bankers Trust Company will serve as
indenture trustee with respect to the Notes.
The assets of the Trust consist of (i) a pool of fixed and
adjustable rate, residential one- to four-family, first lien mortgage loans (the
"Home Equity 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 Home Equity Loans (other than any principal or interest payments on the
Home Equity 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 Account, and funds on deposit therein and (vi) certain other
property.
Interest distributions on the Notes are based on the aggregate
principal balance thereof and the then applicable Note Interest Rate thereof.
The Note Interest Rate is LIBOR plus 0.18% for each Interest Period prior to the
Redemption Date and LIBOR plus 0.36% for each Interest Period thereafter.
As of June 1, 1998, the Home Equity Loans possessed the
characteristics described in the Prospectus dated June 9, 1997 and the
Prospectus Supplement dated June 24, 1998 filed pursuant to Rule 424(b)(2) of
the Act on June 30, 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 June 24, 1998,
between Home Equity Securitization Corp. and Wheat First
Securities, Inc. doing business as First Union Capital Markets, a
division of Wheat First Securities, Inc.
Exhibit 4.1. Indenture, dated as of June 1, 1998, between the Issuer
and the Indenture Trustee.
Exhibit 8.1. Opinion of Dewey Ballantine LLP regarding tax matters,
dated June 29, 1998.
Exhibit 10.1. MBIA Insurance Policy, dated June 29, 1998.
Exhibit 23.1. Consent of Coopers & Lybrand 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.
HOME EQUITY SECURITIZATION CORP.,
as Depositor and on behalf of RBMG Funding Co. Home
Equity Loan Trust 1998-1
Registrant
By: /S/ WALLACE SAUNDERS
Name: Wallace Saunders
Title: Assistant Vice President
Dated: June 29, 1998
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EXHIBIT INDEX
Exhibit No. Description
Exhibit 1.1. Underwriting Agreement, dated June 24, 1998, between Home
Equity Securitization Corp and Wheat First Securities,
Inc. doing business as First Union Capital Markets, a
division of Wheat First Securities, Inc.
Exhibit 4.1. Indenture, dated as of June 1, 1998, between the Issuer
and the Indenture Trustee.
Exhibit 8.1. Opinion of Dewey Ballantine LLP regarding tax matters,
dated June 29, 1998.
Exhibit 10.1 MBIA Insurance Policy, dated June 29, 1998.
Exhibit 23.1. Consent of Coopers & Lybrand L.L.P. regarding financial
statements of the MBIA Insurance Corporation and
Subsidiaries.
EXHIBIT 1.1
RBMG FUNDING CO. HOME EQUITY LOAN TRUST 1998-1
ASSET BACKED NOTES
SERIES 1998-1
UNDERWRITING AGREEMENT
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UNDERWRITING AGREEMENT
First Union Capital Markets Corp.
301 South College Street
Charlotte, North Carolina 28202-6001
June 24, 1998
Dear Sirs:
Home Equity Securitization Corp. (the "Depositor") proposes, subject
to the terms and conditions stated herein and in the attached Underwriting
Agreement Standard Provisions, dated June 24, 1998 (the "Standard Provisions"),
between the Depositor and First Union Capital Markets Corp. ("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,
HOME EQUITY SECURITIZATION CORP.
By: /S/ WALLACE SAUNDERS
Name: Wallace Saunders
Title: Assistant Vice President
Accepted as of the date hereof:
WHEAT FIRST SECURITIES, INC.
doing business as FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /S/ SHANKER MERCHANT
Name: Shanker Merchant
Title: Managing Director
[Signature Page to Underwriting Agreement]
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SCHEDULE I
Issuer: RBMG Funding Co. Home Equity Loan Trust 1998-1
Title of Offered RBMG Funding Co. Home Equity Loan Trust
Securities: 1998-1, Asset Backed Notes, Series 1998-1
Terms of Offered The Offered Securities shall have the terms
Securities: set 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 June 1, 1998 among the Issuer and
Bankers Trust Company, as indenture trustee.
Purchase Commitment: First Union Capital Markets Corp.:
$125,000,000
Purchase Price: The purchase price for the Offered Securities
shall be 100.00% of the aggregate principal
balance of the Notes, as of the Closing Date,
plus accrued interest from June 1, 1998 to,
but not including, June 29, 1998.
Specified funds for Federal Funds (immediately available funds).
payment of Purchase
Price:
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's Ratings Services
Closing Date: On or about June 29, 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: First Union
Capital Corp.
Address for Notices, etc.: First Union Capital Markets Corp.
One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6001
Attn: _________________________
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
June 24, 1998
From time to time, Home Equity Securitization Corp., 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 "Home Equity Loans") and certain related property. The Securities
will be issued pursuant to an indenture (the "Indenture") dated as of June 1,
1998 by and between the Issuer and Bankers Trust Company, 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 Home Equity Loans to RBMG Asset
Management Company, Inc. (the "Company"). The Company has conveyed its interest
in the Home Equity 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 Home Equity Loans to the Depositor which will in turn convey the
Home Equity Loans to the Issuer. The Home Equity Loans are to be serviced
pursuant to a Servicing Agreement dated as of June 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 June 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
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Agreement into which this Agreement is incorporated are herein referred to as
the "Offered Securities."
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 333-44409),
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
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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, 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.
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(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.
(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.
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(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.
(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 December 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
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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 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
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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 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.
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(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 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
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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 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.
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(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 June 1,
1998, among the Depositor, the Owner Trustee and Bankers Trust Company, as trust
paying agent (the "Deposit Trust Agreement"), Loan Sale Agreement, dated as of
June 1, 1998, between Funding Co. and the Depositor (the "Loan Sale Agreement)
and the Loan Transfer Agreement, dated as of June 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
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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 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 Home Equity
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 Home Equity Loans, or the
Additional Home Equity Loans, as the case may be, being transferred to the
Issuer pursuant to the Loan Transfer Agreement, or the Additional Home Equity
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 Home Equity Loans, or the Additional
Home Equity Loans, as the case may be, or in such Loan Transfer Agreement, the
Depositor will have the power and authority to transfer such Initial Home Equity
Loans, or Additional Home Equity 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 Home Equity Loans, or the
Additional Home Equity 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.
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(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 First Union
Capital Markets Corp. 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 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 Home Equity Loans except to the extent that the
Depositor has been indemnified by RBMG. 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
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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 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 First Union Capital Markets Corp., 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.
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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.
(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:
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(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
(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 Home Equity Securitization Corp., 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
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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,
HOME EQUITY SECURITIZATION CORP.
By: /S/ WALLACE SAUNDERS
Name: Wallace Saunders
Title: Assistant Vice President
Accepted as of the date hereof:
WHEAT FIRST SECURITIES, INC.
doing business as FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: /S/ SHANKER MERCHANT
Name: Shanker Merchant
Title: Managing Director
[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
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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 Home Equity 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
B-1-1
<PAGE>
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-1-2
<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 Home Equity 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
B-2-1
<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-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 Home Equity 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
B-3-1
<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-3-2
<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
RBMG FUNDING CO. HOME EQUITY LOAN TRUST 1998-1,
ISSUER
AND
BANKERS TRUST COMPANY,
INDENTURE TRUSTEE
INDENTURE
DATED AS OF JUNE 1, 1998
RBMG FUNDING CO. HOME EQUITY LOAN TRUST 1998-1
ASSET-BACKED NOTES
SERIES 1998-1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................2
Section 1.01. General Definitions.....................................2
"A Risk Home Equity Loans".......................................2
"A- Risk Home Equity Loans"......................................2
"Accountant".....................................................2
"Act"............................................................3
"Addition Notice"................................................3
"Additional Cut-off Date"........................................3
"Additional Home Equity Loans"...................................3
"Additional Transfer Date".......................................3
"Additional Transfer Instrument".................................3
"Adjustable-Rate Home Equity Loan"...............................3
"Adjustment Date"................................................3
"Administrative Fee Amount"......................................4
"Affiliate"......................................................4
"Agent"..........................................................4
"Aggregate Scheduled Principal Balance"..........................4
"Aggregate Stated Principal Balance".............................4
"Assignment".....................................................4
"Authenticating Agent"...........................................4
"Authorized Officer".............................................5
"Available Funds"................................................5
"Available Funds Cap Rate".......................................6
"Available Funds Cap Rate Carry Forward Amount"..................6
"B Risk Home Equity Loans".......................................7
"B- Risk Home Equity 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".........................................8
"Business Day"...................................................8
"C Risk Home Equity Loans".......................................8
"Cash-Out Refinancing"...........................................8
"Cedel"..........................................................8
"Certificate"....................................................8
"Certificate Distribution Account"...............................8
"Certificateholders".............................................8
<PAGE>
"Clearing Agency"................................................8
"Clearing Agency Participants"...................................9
"Closing Date"...................................................9
"Code"...........................................................9
"Collection Account".............................................9
"Collection Period"..............................................9
"Commission".....................................................9
"Company"........................................................9
"Company Sale Agreement".........................................9
"Compensating Interest Payments".................................9
"Corporate Trust Office"........................................10
"Coupon Rate"...................................................10
"Cumulative Insured Payments"...................................10
"Custodial Agreement"...........................................10
"Custodian".....................................................11
"Cut-off Date"..................................................11
"Cut-off Date Home Equity Loan".................................11
"D Risk Home Equity Loans"......................................11
"Default".......................................................11
"Defective Home Equity Loan"....................................11
"Deficiency Event"..............................................11
"Deficient Valuation"...........................................11
"Definitive Notes"..............................................12
"Deleted Home Equity Loan"......................................12
"Delinquency Amount"............................................12
"Delinquency Loss Factor".......................................12
"Delinquency Percentage"........................................12
"Depositor".....................................................12
"Depositor Sale Agreement"......................................12
"Determination Date"............................................12
"Due Date"......................................................13
"Due Period"....................................................13
"Eligible Account"..............................................13
"Euroclear".....................................................13
"Event of Default"..............................................14
"Excess Cash"...................................................14
"Excess Cash Payment"...........................................14
"Expense Adjusted Coupon Rate"..................................14
"Extraordinary Trust Estate Expenses"...........................14
"FDIC"..........................................................14
"FHLMC".........................................................14
"Final Certification"...........................................14
"Final Maturity Date"...........................................15
"FNMA"..........................................................15
"Full Prepayment"...............................................15
ii
<PAGE>
"Funding Co. "..................................................15
"Funding Co. Sale Agreement"....................................15
"Funding Period"................................................15
"Grant".........................................................15
"Gross Margin"..................................................16
"Highest Lawful Rate"...........................................16
"Home Equity Loan"..............................................16
"Home Equity Loan Schedule".....................................16
"Indenture".....................................................18
"Indenture Trustee".............................................19
"Indenture Trustee's Fee".......................................19
"Independent"...................................................19
"Index".........................................................19
"Individual Note"...............................................20
"Initial Certification".........................................20
"Initial Cut-off Date"..........................................20
"Initial Home Equity Loans".....................................20
"Indemnification Agreement".....................................20
"Insurance Agreement"...........................................20
"Insurance Policies"............................................20
"Insured Payments"..............................................20
"Insurance Proceeds"............................................21
"Interest Coverage Account".....................................21
"Interest Coverage Amount"......................................21
"Interest Determination Date"...................................21
"Interest Period"...............................................21
"Interim Certification".........................................21
"Issuer"........................................................21
"Issuer Order" and "Issuer Request".............................21
"Letter Agreement"..............................................22
"Liquidated Home Equity Loan"...................................22
"Liquidation Date"..............................................22
"Liquidation Event".............................................22
"Liquidation Proceeds"..........................................22
"Loan Contribution Agreement"...................................22
"Loan-To-Value Ratio"...........................................22
"London Business Day"...........................................22
"Majority Certificateholder"....................................22
"Management Agreement"..........................................22
"Manager".......................................................23
"Maturity"......................................................23
"Maximum Rate"..................................................23
"MBIA Insurance Policy".........................................23
"MBIA Payment Default"..........................................23
"Minimum Rate"..................................................23
iii
<PAGE>
"Minimum Spread"................................................23
"Monthly Payment"...............................................23
"Monthly Principal".............................................24
"Moody's".......................................................24
"Mortgage"......................................................24
"Mortgage File".................................................24
"Mortgage Note".................................................24
"Mortgaged Property"............................................24
"Mortgagor".....................................................24
"Net Liquidation Proceeds"......................................24
"Nonrecoverable P&I Advance"....................................25
"Note Account"..................................................25
"Note Balance"..................................................25
"Note Factor"...................................................25
"Noteholder" or "Holder"........................................25
"Note Formula Rate".............................................25
"Note Insurer"..................................................25
"Note Insurer Commitment Letter"................................26
"Note Insurer Default"..........................................26
"Note Insurer Premium"..........................................27
"Note Insurer Premium Rate".....................................27
"Note Interest".................................................27
"Note Interest Rate"............................................27
"Note Register".................................................27
"Note Registrar"................................................27
"Notes".........................................................27
"Notice of Claim"...............................................27
"Officers' Certificate".........................................28
"One-Month Libor"...............................................28
"Opinion Of Counsel"............................................28
"Original Note Balance".........................................28
"Original Pre-Funding Amount"...................................29
"Outstanding"...................................................29
"Outstanding Note Balance"......................................30
"Outstanding Pre-Funding Amount"................................30
"Overcollateralization Amount"..................................30
"Overcollateralization Deficit".................................30
"Overcollateralization Surplus".................................30
"Owner Trustee".................................................30
"P&I Advance"...................................................31
"Paying Agent"..................................................31
"Payment Ahead".................................................31
"Payment Date"..................................................31
"Payment Date Statement"........................................31
"Percentage Interest"...........................................33
iv
<PAGE>
"Periodic Rate Cap".............................................33
"Permitted Investments".........................................33
"Person"........................................................35
"Policy Payments Account".......................................35
"Predecessor Notes".............................................35
"Preference Amount".............................................35
"Pre-Funding Account"...........................................35
"Prepayment Interest Shortfall".................................36
"Principal Prepayment"..........................................36
"Proceeding"....................................................36
"Prospectus Supplement".........................................36
"Purchase Price"................................................36
"Qualified Replacement Home Equity Loan"........................37
"Rate/Term Refinancing".........................................37
"Rating Agencies"...............................................37
"RBMG"..........................................................37
"RBMG Guidelines"...............................................38
"Realized Loss".................................................38
"Record Date"...................................................38
"Redemption Date"...............................................38
"Redemption Price"..............................................38
"Reference Banks"...............................................38
"Refinanced Home Equity Loan"...................................39
"Release Date"..................................................39
"Relief Act Interest Shortfall".................................39
"Remittable Funds"..............................................39
"REO Imputed Interest"..........................................39
"REO Principal Amortization"....................................39
"REO Property"..................................................39
"Required Overcollateralization Amount".........................39
"Required Payment Amount".......................................40
"Reserve Interest Rate".........................................40
"Residential Dwelling"..........................................41
"Responsible Officer"...........................................41
"Sale"..........................................................41
"Scheduled Principal Balance"...................................41
"Securities Act"................................................42
"Servicer"......................................................42
"Servicer Remittance Date"......................................42
"Servicer Remittance Report"....................................42
"Servicing Advance".............................................42
"Servicing Agreement"...........................................42
"Servicing Fee".................................................42
"Servicing Fee Rate"............................................42
"Standard & Poor's".............................................43
v
<PAGE>
"Stated Principal Balance"......................................43
"Stayed Funds"..................................................43
"Subsequent Home Equity Loans"..................................43
"Sub-Servicer"..................................................44
"Sub-Servicing Agreement".......................................44
"TIA"...........................................................44
"Three Month Rolling Average Delinquency Percentage"............44
"Total Expected Losses".........................................44
"Transferor"....................................................44
"Trust Agreement"...............................................44
"Trust Estate"..................................................44
"Trust Paying Agent"............................................44
"Twelve Month Loss Amount"......................................45
"Underwriter"...................................................45
"U.S. Bankruptcy Code"..........................................45
"Value".........................................................45
"Vice President"................................................45
ARTICLE II THE NOTES........................................................47
Section 2.01. Forms Generally........................................47
Section 2.02. Forms of Certificate of Authentication.................47
Section 2.03. General Provisions With Respect to Principal and
Interest Payments.....................................47
Section 2.04. Denominations..........................................48
Section 2.05. Execution, Authentication, Delivery and Dating.........48
Section 2.06. Registration, Registration of Transfer and
Exchange..............................................49
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes.............50
Section 2.08. Payments of Principal and Interest.....................51
Section 2.09. Persons Deemed Owners..................................53
Section 2.10. Cancellation...........................................53
Section 2.11. Authentication and Delivery of Notes...................53
Section 2.12. Book-Entry Notes.......................................55
Section 2.13. Termination of Book Entry System.......................57
Section 2.14. Conveyance of Additional Home Equity Loans.............58
Section 2.15. Certain Available Information..........................62
Section 2.16. Characteristics of the Subsequent Home Equity
Loans.................................................62
ARTICLE III COVENANTS.......................................................63
vi
<PAGE>
Section 3.01. Payment of Notes.......................................63
Section 3.02. Maintenance of Office or Agency........................63
Section 3.03. Money for Note Payments to be Held in Trust............63
Section 3.04. Existence of Issuer....................................65
Section 3.05. Protection of Trust Estate.............................66
Section 3.06. Opinions as to Trust Estate............................67
Section 3.07. Performance of Obligations; Servicing Agreement........67
Section 3.08. Investment Company Act.................................67
Section 3.09. Negative Covenants.....................................68
Section 3.10. Annual Statement as to Compliance......................68
Section 3.11. Restricted Payments....................................69
Section 3.12. Treatment of Notes as Debt for Tax Purposes............69
Section 3.13. Notice of Events of Default............................69
Section 3.14. Further Instruments and Acts...........................69
ARTICLE IV SATISFACTION AND DISCHARGE.......................................71
Section 4.01. Satisfaction and Discharge of Indenture................71
Section 4.02. Application of Trust Money.............................72
ARTICLE V DEFAULTS AND REMEDIES.............................................73
Section 5.01. Event of Default.......................................73
Section 5.02. Acceleration of Maturity; Rescission and Annulment.....74
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee......................75
Section 5.04. Remedies...............................................75
Section 5.05. Indenture Trustee May File Proofs of Claim.............76
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes...................................77
Section 5.07. Application of Money Collected.........................77
Section 5.08. Limitation on Suits....................................78
Section 5.09. Unconditional Right of Noteholders to Receive
Principal and Interest................................79
Section 5.10. Restoration of Rights and Remedies.....................79
Section 5.11. Rights and Remedies Cumulative.........................79
vii
<PAGE>
Section 5.12. Delay or Omission Not Waiver...........................79
Section 5.13. Control by Noteholders.................................80
Section 5.14. Waiver of Past Defaults................................80
Section 5.15. Undertaking for Costs..................................81
Section 5.16. Waiver of Stay or Extension Laws.......................81
Section 5.17. Sale of Trust Estate...................................81
Section 5.18. Action on Notes........................................82
Section 5.19. No Recourse to Other Trust Estates or Other Assets
of the Issuer.........................................83
ARTICLE VI THE INDENTURE TRUSTEE............................................84
Section 6.01. Duties of Indenture Trustee............................84
Section 6.02. Notice of Default......................................85
Section 6.03. Rights of Indenture Trustee............................85
Section 6.04. Not Responsible for Recitals or Issuance of Notes......86
Section 6.05. May Hold Notes.........................................86
Section 6.06. Money Held in Trust....................................86
Section 6.07. Eligibility; Disqualification..........................86
Section 6.08. Indenture Trustee's Capital and Surplus................86
Section 6.09. Resignation and Removal; Appointment of Successor......87
Section 6.10. Acceptance of Appointment by Successor.................88
Section 6.11. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee.........................89
Section 6.12. Preferential Collection of Claims against Issuer.......89
Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees..............................................89
Section 6.14. Authenticating Agents..................................90
Section 6.15. Review of Mortgage Files...............................91
Section 6.16. Indenture Trustee Fees and Expenses....................94
ARTICLE VII NOTEHOLDERS' LISTS..............................................95
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders..............................95
Section 7.02. Preservation of Information; Communications to
Noteholders...........................................95
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES.....96
viii
<PAGE>
Section 8.01. Collection of Moneys...................................96
Section 8.02. Note Account; Collection Account.......................96
Section 8.03. Pre-Funding Account....................................99
Section 8.04. Interest Coverage Account.............................100
Section 8.05. Claims Against the MBIA Insurance Policy..............101
Section 8.06. General Provisions Regarding the Note Account and
Home Equity Loans....................................103
Section 8.07. Releases of Defective Home Equity Loans...............104
Section 8.08. Reports by Indenture Trustee to Noteholders;
Access to Certain Information........................105
Section 8.09. Trust Estate Mortgage Files...........................106
Section 8.10. Amendment to Servicing Agreement......................106
Section 8.11. Delivery of the Mortgage Files Pursuant to
Servicing Agreement..................................106
Section 8.12. Servicer as Agent.....................................106
Section 8.13. Termination of Servicer...............................107
Section 8.14. Investment of Funds in the Note Account, the
Pre-Funding Account and the Interest Coverage
Account..............................................107
Section 8.15. Appointment of Custodians.............................108
Section 8.16. Rights of the Note Insurer to Exercise Rights of
Noteholders..........................................108
Section 8.17. Trust Estate and Accounts Held for Benefit of the
Note Insurer.........................................109
ARTICLE IX SUPPLEMENTAL INDENTURES.........................................110
Section 9.01. Supplemental Indentures without Consent of
Noteholders..........................................110
Section 9.02. Supplemental Indentures with Consent of
Noteholders..........................................110
Section 9.03. Execution of Supplemental Indentures..................112
Section 9.04. Effect of Supplemental Indentures.....................112
Section 9.05. [Reserved]............................................112
Section 9.06. Reference in Notes to Supplemental Indentures.........112
Section 9.07. Amendments to Governing Documents.....................112
ARTICLE X REDEMPTION OF NOTES..............................................114
Section 10.01. Redemption...........................................114
Section 10.02. Form of Redemption Notice............................114
Section 10.03. Notes Payable on Optional Redemption.................115
ix
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ARTICLE XI MISCELLANEOUS...................................................116
Section 11.01. Compliance Certificates and Opinions.................116
Section 11.02. Form of Documents Delivered to Indenture Trustee.....116
Section 11.03. Acts of Noteholders..................................117
Section 11.04. Notices, etc. to Indenture Trustee, the Note
Insurer and Issuer...................................118
Section 11.05. Notices and Reports to Noteholders; Waiver of
Notices..............................................119
Section 11.06. Rules by Indenture Trustee...........................120
Section 11.07. [Reserved]...........................................120
Section 11.08. Effect of Headings and Table of Contents.............120
Section 11.09. Successors and Assigns...............................120
Section 11.10. Separability.........................................120
Section 11.11. Benefits of Indenture................................120
Section 11.12. Legal Holidays.......................................120
Section 11.13. Governing Law........................................121
Section 11.14. Counterparts.........................................121
Section 11.15. Recording of Indenture...............................121
Section 11.16. Issuer Obligation....................................121
Section 11.17. No Petition..........................................122
Section 11.18. Inspection...........................................122
Section 11.19. Usury................................................122
Section 11.20. Third-Party Beneficiary..............................123
Section 11.21. Limitation on Liability of Owner Trustee.............123
SCHEDULES AND EXHIBITS
Schedule I........Home Equity Loan Schedule
Exhibit A.........Form of Note
Exhibit B.........Form of Notice of Additional Home Equity Loan
Exhibit C.........Form of Officer's Certificate
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EX. 4.1
THIS INDENTURE, dated as of June 1, 1998 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between RBMG
FUNDING CO. HOME EQUITY LOAN TRUST 1998-1, a Delaware business trust (together
with its permitted successors and assigns, the "Issuer") and BANKERS TRUST
COMPANY, 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 1998-1 (the "Notes"),
issuable 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 Home Equity Loans, the
Subsequent Home Equity Loans, the Additional Home Equity Loans (as from time to
time may be Granted by the Issuer) and all Qualified Replacement Home Equity
Loans (as from time to time may be Granted by the Issuer) (including property
that secures a Home Equity 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 Home Equity Loan and all other
proceeds received in respect of such Home Equity Loans, (b) the MBIA Insurance
Policy, (c) the Servicing Agreement, (d) Sections 2, 3, 4, 5, 6, 7, 10, 11, 15
and 19 of the Company Sale Agreement, (e) Sections 2, 3, 4, 5, 6, 7, 10, 11, 15
and 19 of the Depositor Sale Agreement, (f) Sections 2, 3, 4, 5, 6, 7, 10, 11,
15 and 19 of the Funding Co. Sale Agreement, (g) Sections 2, 3, 4, 5, 6, 7, 10,
11, 15 and 19 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 Account, the Pre-Funding Account and the
Interest Coverage Account, 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 Account, 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 Account,
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
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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 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 Home Equity Loans": Home Equity Loans graded in the "A" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"A- Risk Home Equity Loans" Home Equity 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 Home Equity
Loans to the Trust Estate pursuant to Section 2.14 of this Indenture, a notice,
substantially in the form
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of Exhibit K, which shall be given not later than two Business Days prior to the
related Additional Transfer Date, of the Issuer's designation of Additional Home
Equity Loans being Granted to the Indenture Trustee for inclusion in the Trust
Estate.
"Additional Cut-off Date": With respect to any Additional Home Equity 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 Home Equity Loans": The Home Equity Loans Granted by the
Issuer to the Indenture Trustee pursuant to Section 2.14, such Home Equity Loans
being identified on the related Home Equity Loan Schedules attached to the
related Additional Transfer Instruments.
"Additional Transfer Date": Each date on which an Additional Home Equity
Loan is Granted to the Indenture Trustee, none of which dates shall be later
than September 27, 1998.
"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 Home Equity Loans are Granted to the Indenture Trustee.
"Adjustable-Rate Home Equity Loan": A Home Equity 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 Home Equity Loan on the Home
Equity Loan Schedule.
"Adjustment Date": With respect to each Adjustable-Rate Home Equity Loan,
each Adjustment Date, which is the first day of the month in which the Coupon
Rate of an Adjustable-Rate Home Equity Loan changes pursuant to the related
Mortgage Note. The first Adjustment Date following the Cut-off Date as to each
Adjustable-Rate Home Equity Loan is set forth in the Home Equity Loan Schedule.
"Administrative Fee Amount": For any Payment Date, the sum of the
Servicing Fee, the Indenture Trustee's Fee and the Note Insurer Premium, 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.
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"Aggregate Scheduled Principal Balance": On any date of determination, the
aggregate of the Scheduled Principal Balances of the Home Equity Loans and REO
Properties on such date.
"Aggregate Stated Principal Balance": On any date of determination, the
aggregate of the Stated Principal Balances of the Home Equity Loans and REO
Properties on such date.
"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 the Notes and any Payment Date, the sum
of the amounts described in clauses (a) through (h) below, less (i) the
Administrative Fee Amount in respect of such Payment Date, (ii) P&I Advances and
Servicing Advances previously made that are reimbursable to the Servicer (other
than those included in liquidation expenses for any Liquidated Home Equity Loan
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 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, (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),
and (vi) Extraordinary Trust Estate Expenses to be paid to the Indenture
Trustee:
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(a) all scheduled payments of interest received with respect to the
Home Equity Loans and due during the related Due Period and all other
interest payments on or in respect of the Home Equity Loans 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 Home Equity 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
related Home Equity Loans and any net income from related REO Properties
for such Collection Period;
(b) all scheduled payments of principal received with respect to the
Home Equity Loans 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 Home
Equity Loans;
(c) the aggregate of any Insurance Proceeds collected by the
Servicer during the related Collection Period;
(d) the aggregate of any Net Liquidation Proceeds collected by the
Servicer during the related Collection Period;
(e) the aggregate of the Purchase Prices received in respect of any
Home Equity Loans 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 made by the Servicer for such
Payment Date;
(g) the aggregate of amounts deposited in the Note Account during
such Collection Period in connection with redemption of the Notes pursuant
to Article X; and
(h) with respect to the July 1998, August 1998 and September 1998
Payment Dates only, the amount applied by the Indenture Trustee from funds
on deposit in the Interest Coverage Account to cover shortfalls in the
amount of Note Interest and Note Insurer Premium due on such Payment Date.
"Available Funds Cap Rate": For 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 Home Equity Loans and REO Properties times the weighted average
of the Expense Adjusted Coupon Rates on the then outstanding Home Equity Loans
and REO Properties minus (B) the amount of the Note Insurer
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Premium for such Payment Date, and the denominator of which is (ii) an amount
equal to (x) the Note Balance on such Payment Date multiplied by (y) the actual
number of days elapsed in the related Interest Period divided by 360.
"Available Funds Cap Rate Carry Forward Amount": For any Payment Date for
which the Note Interest Rate was equal to the Available Funds Cap Rate, the
difference between the amount of Note Interest that would have accrued had the
Note Interest Rate equaled the Note Formula Rate, minus the amount of Note
Interest that did accrue for such Payment Date, plus interest accrued on such
difference from such Payment Date at the 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 Home Equity Loans": Home Equity Loans graded in the "B" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"B- Risk Home Equity Loans": Home Equity 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)
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"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 Delaware, or the city in which the Corporate 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 Home Equity Loans": Home Equity Loans graded in the "C" risk
category under the RBMG Guidelines, as more fully described in the Prospectus
Supplement.
"Cash-Out Refinancing": A Refinanced Home Equity 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.
"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 securities brokers and dealers, banks and trust companies and
clearing corporations and certain other organizations.
"Closing Date": June 29, 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 any Payment Date and any Home Equity
Loan, the calendar month immediately preceding the month in which such Payment
Date occurs
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(or, in the case of the first Payment Date after a Home Equity Loan constitutes
part of the Trust Estate, the period beginning on the day following the
applicable Cut-off Date for such Home Equity 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
June 1, 1998, between Funding Co. and the Company pursuant to which the Home
Equity 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 3 Park Plaza, 16th Floor, Irvine,
California 92614 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 Home Equity Loan, the annual rate at
which interest accrues on such Home Equity Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (i) in the case of
each Home Equity Loan other than an Adjustable-Rate Home Equity Loan shall
remain constant at the rate set forth in the Home Equity Loan Schedule as the
Coupon Rate in effect immediately following the Cut-off Date and (ii) in the
case of each Adjustable-Rate Home Equity 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 Home Equity Loan Schedule as the Coupon
Rate in effect immediately following the applicable Cut-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 Home Equity
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 Home Equity 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.
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"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 June 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 Home Equity Loan or a
Subsequent Home Equity Loan, the Initial Cut-off Date, with respect to an
Additional Home Equity Loan, the related Additional Cut-off Date, and with
respect to the Qualified Substitute Home Equity Loans, their respective dates of
substitution.
"Cut-off Date Home Equity Loan": Any Initial Home Equity Loan or any
Subsequent Home Equity Loan.
"D Risk Home Equity Loans": Home Equity 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.
"Defective Home Equity Loan": Any Home Equity 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 make 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 Home Equity Loan": A Home Equity Loan replaced or to be replaced
by a Qualified Replacement Home Equity Loan.
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"Delinquency Amount": As of any Payment Date, the product of the
Delinquency Percentage and the Aggregate Stated Principal Balance of the Home
Equity Loans and REO Properties as of the Determination Date relating to such
Payment Date.
"Delinquency Loss Factor": As of any Payment Date, the sum of (i) the
aggregate Stated Principal Balance of all Home Equity Loans 30-59 days
delinquent multiplied by 10.75%, (ii) the Aggregate Stated Principal Balance of
all Home Equity Loans 60-89 days delinquent multiplied by 21.50% and (iii) the
aggregate Stated Principal Balance of all Home Equity Loans 90 or more days
delinquent multiplied by 43%.
"Delinquency Percentage": With respect to 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 Home Equity Loans 90 or more days
delinquent on a contractual basis (including those in bankruptcy) plus (ii) Home
Equity Loans in foreclosure, plus all Home Equity Loans purchased pursuant to
Section 2.15(c) of the Servicing Agreement for so long as such Home Equity Loans
are not 90 days delinquent plus (iv) Home Equity Loans converted to REO
Properties, and the denominator of which is (y) the then Aggregate Stated
Principal Balance of the Home Equity Loans.
"Depositor": Home Equity Securitization Corp., a North Carolina
corporation, and its successors and permitted assigns.
"Depositor Sale Agreement": That certain Loan Sale Agreement, dated as of
June 1, 1998, between the Depositor and the Issuer, pursuant to which the Home
Equity 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.
"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 Home Equity 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 Home Equity Loan constitutes part of the Trust Estate, commencing the day
following the applicable Cut-off Date for such Home Equity 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
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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 any Payment Date, the amount, if any, by
which Available Funds for such Payment Date exceed the sum of (i) any amounts
payable to the Note Insurer for Insured Payments paid on prior Payment Dates and
not yet reimbursed and for any unpaid Note Insurer Premiums for prior Payment
Dates (in each case with interest thereon at the "Late Payment Rate" (as defined
in the Insurance Agreement)), (ii) the Note Interest for the related Payment
Date, (iii) the Monthly Principal for the related Payment Date.
"Excess Cash Payment": As defined in clause fourth of Section 8.02(c).
"Expense Adjusted Coupon Rate": With respect to any Home Equity Loan, the
then applicable Coupon Rate thereon minus the sum of (i) the Minimum Spread and
(ii) the Servicing Fee Rate.
"Extraordinary Trust Estate Expenses": Other expenses of the Trust Estate
consisting of amounts reimbursed to the Indenture Trustee by the Trust Estate
pursuant to Section 6.16(b) hereof and any other costs, expenses, liabilities
and losses borne by the Trust Estate for which the Trust Estate has not obtained
and, in the reasonable good faith judgment of the Indenture Trustee shall not
obtain, reimbursement or indemnification from any other Person. Extraordinary
Trust Estate Expenses shall be incurred by the Indenture Trustee taking into
account its fiduciary responsibilities to the Noteholders and the Note Insurer.
In the event that the Trust Estate will bear any such unanticipated costs,
expenses, liabilities and losses, the Indenture Trustee (to the extent
reasonably practicable) shall notify the Note Insurer of the manner in which it
intends to address such unanticipated costs, expenses, liabilities and losses
and shall permit the Note Insurer to direct the Indenture Trustee's actions in
response thereto;
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PROVIDED that, indemnity, reasonably satisfactory to the Indenture Trustee,
shall have been provided to the Indenture Trustee by the Note Insurer, the Trust
Estate or any other Person.
"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 October, 2029.
"FNMA": The Federal National Mortgage Association or any successor
thereto.
"Full Prepayment": With respect to any Home Equity 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 Home Equity Loan, together
with all accrued and unpaid interest thereon at the Coupon Rate on such Home
Equity Loan, (ii) payment is made to the Indenture Trustee of the Purchase Price
of such Home Equity Loan in connection with the purchase of such Home Equity
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 Home
Equity Loan.
"Funding Co. ": RBMG Funding Co., a Nevada corporation.
"Funding Co. Sale Agreement": That certain Loan Sale Agreement, dated as
of June 1, 1998, between the Depositor and Funding Co., pursuant to which the
Home Equity 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 September 27, 1998.
"Grant": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Home Equity
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
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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 Home Equity 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 Home Equity Loan.
"Highest Lawful Rate": As defined in Section 11.19.
"Home Equity 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 Home Equity Loans,
the Additional Home Equity Loans, the Subsequent Home Equity Loans, the
Qualified Replacement Home Equity Loans, and any property that secures a Home
Equity Loan that becomes REO Property.
"Home Equity Loan Schedule": As of any date, the schedule, provided in
computer readable format, of Home Equity Loans included in the Trust Estate.
Schedule I hereto identifies the Initial Home Equity Loans and the Subsequent
Home Equity Loans being Granted to the Indenture Trustee on the Closing Date.
The Issuer shall deliver the initial Home Equity Loan Schedule to the Indenture
Trustee in both physical and computer-readable form.
The Home Equity Loan Schedule shall set forth the following information
with respect to each Home Equity Loan:
(i) RBMG's Home Equity 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
Home Equity 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 Home Equity Loan;
(xv) the Scheduled Principal Balance of the Home Equity Loan as of
the close of business on the applicable Cut-off Date;
(xvi) in the case of each Adjustable-Rate Home Equity Loan, the
Adjustment Dates;
(xvii) in the case of each Adjustable-Rate Home Equity Loan, the
Gross Margin;
(xviii) a code indicating the purpose of the Home Equity Loan (i.e.,
purchase financing, Rate/Term Refinancing, Cash-Out Refinancing);
(xix) in the case of each Adjustable-Rate Home Equity Loan, the
Maximum Rate;
(xx) in the case of each Adjustable-Rate Home Equity Loan, the
Minimum Rate;
(xxi) the Coupon Rate at origination;
(xxii) in the case of each Adjustable-Rate Home Equity 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 Home Equity Loan, the
first Adjustment Date immediately following the applicable Cut-off Date;
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(xxvi) the risk grade;
(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 Home Equity Loan
as of the applicable Cut-off Date;
(xxx) a code indicating whether there is a prepayment penalty;
(xxxi) a code indicating whether the Home Equity Loan is an
Adjustable Rate Home Equity Loan;
(xxxii) the first payment date of the Home Equity Loan; and
(xxxiii) the first payment date of the Home Equity Loan immediately
succeeding the Cut-off Date.
The Home Equity Loan Schedule shall set forth the following information as
of the Initial Cut-off Date with respect to the Initial Home Equity Loans and
the Subsequent Home Equity Loans in the aggregate: (1) the number of Home Equity
Loans; (2) the current principal balance of the Home Equity Loans; (3) the
weighted average Coupon Rate of the Home Equity Loans; and (4) the weighted
average maturity of the Home Equity Loans. The Home Equity Loan Schedule shall
be amended from time to time by the Issuer upon each Grant of an Additional Home
Equity Loan or Qualified Replacement Home Equity Loan to set forth the
aforementioned information with respect to the Home Equity Loans as of the
applicable Additional Cut-off Date or Cut-off Date and the deletion of Home
Equity Loans.
"Indenture": This Indenture, dated as of June 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 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": Bankers Trust Company, 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.
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"Indenture Trustee's Fee": The Indenture Trustee's monthly fee, equal to
1/12th of 0.015% of the Aggregate Stated Principal Balance of the Home Equity
Loans 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 Home Equity 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.
"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 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 Home Equity Loan, and for any
Subsequent Home Equity Loan, June 1, 1998.
"Initial Home Equity Loans": The Home Equity Loans listed on the Home
Equity Loan Schedule annexed hereto as Schedule I and identified therein as
"Initial".
"Indemnification Agreement": As defined in the Insurance Agreement.
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"Insurance Agreement": The Insurance Agreement, dated as of June 1, 1998,
among the Note Insurer, the Issuer, the Servicer, the Sub-Servicer, the Company,
the Depositor, Funding Co., RBMG and the Indenture Trustee, as may be amended
from time to time.
"Insurance Policies": All insurance policies insuring any Home Equity Loan
or Mortgaged Property, to the extent the Issuer or the Indenture Trustee has any
interest therein.
"Insured Payments": As to any Payment Date, 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 is (a) for any Payment Date, the sum of (i) the Note
Interest for such Payment Date minus the Available Funds for such Payment Date
and (ii) the then existing Overcollateralization Deficit, if any (after
application of Available Funds for such Payment Date to reduce the Note Balance
on such Payment Date) and (b)any shortfall in the amount required to pay a
Preference Amount from any source other than the MBIA Insurance Policy.
"Insurance Proceeds": As defined in the Servicing Agreement.
"Interest Coverage Account": The account, which shall be an Eligible
Account, established and maintained pursuant to Section 8.04 and entitled
"Bankers Trust Company, as Indenture Trustee for RBMG Funding Co. Home Equity
Loan Trust 1998-1 Asset-Backed Notes, Series 1998-1, Interest Coverage Account"
on behalf of the Noteholders 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 $217,777.02.
"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.
"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 July 1998 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. Home Equity Loan Trust 1998-1, 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.
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"Letter Agreement": The Letter of Representations to The Depository Trust
Company from the Indenture Trustee and the Issuer dated June 29, 1998.
"Liquidated Home Equity Loan": As defined in the Servicing Agreement.
"Liquidation Date": With respect to any Home Equity Loan, the date of the
final receipt of all Liquidation Proceeds, Insurance Proceeds or other payments
with respect to such Home Equity 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 June 1, 1998, between the Company and RBMG, pursuant to which the
Home Equity Loans will be acquired from RBMG by the Company.
"Loan-To-Value Ratio": With respect to any Home Equity Loan as of any date
of determination, the fraction, expressed as a percentage, the numerator of
which is the principal balance of the related Home Equity 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
June 1, 1998, among the Issuer, the Manager and RBMG Asset Management Company,
Inc., as may be amended from time to time.
"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 Home Equity 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.
26888), dated June 29, 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.
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"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 Home Equity Loan, the percentage set
forth in the related Mortgage Note as the minimum Coupon Rate thereunder.
"Minimum Spread": With respect to each 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 any Payment Date, an amount equal to the lesser
of: (a) the excess of (i) the Available Funds, over (ii) the amounts payable
pursuant to Section 8.02(c)(i) and (ii); 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 Home Equity Loans and due
during the related Due Period and all other amounts collected, received or
otherwise recovered in respect of principal on the Home Equity 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 Note Account on the related Servicer Remittance Date by the
Issuer, the Majority Certificateholder, Funding Co., the Company, the Depositor,
RBMG, the Servicer or the Note Insurer in connection with a repurchase, release,
removal or substitution of any Home Equity Loans pursuant to this Indenture or
the Servicing Agreement, reduced by the amount of any Overcollateralization
Surplus with respect to such Payment Date.
"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 Home Equity
Loan.
"Mortgage File": The mortgage documents listed in Section 4(b) of the
Depositor Sale Agreement pertaining to a particular Home Equity Loan and any
additional documents pertaining to a Home Equity Loan required to be delivered
to the Issuer under the Depositor Sale Agreement.
"Mortgage Note": The note or other instrument evidencing the indebtedness
of a Mortgagor under the related Home Equity Loan.
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"Mortgaged Property": The underlying property securing a Home Equity 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": The segregated trust account, which shall be an Eligible
Account, established and maintained pursuant to Section 8.02 and entitled
"Bankers Trust Company, as Indenture Trustee for RBMG Funding Co. Home Equity
Loan Trust 1998-1 Asset-Backed Notes, Series 1998-1, Note Account" on behalf of
the Noteholders and the Note Insurer.
"Note Balance": With respect to all of the Notes, the aggregate of the
Outstanding Note Balances of all Notes Outstanding at the time of determination.
"Note Factor": With respect to the 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 Notes on such Payment Date
(after giving effect to any distributions of principal in reduction of the
aggregate Outstanding Note Balance of the Notes to be made on such Payment
Date), and the denominator of which is the 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": For any Interest Period ending prior to the
Redemption Date, a per annum rate equal to One-Month LIBOR plus 0.18% and, for
any Interest Period ending thereafter, a per annum rate equal to One-Month LIBOR
plus 0.36%.
"Note Insurer": MBIA Insurance Corporation, a New York stock insurance
company, and any successors thereto.
"Note Insurer Commitment Letter": The commitment letter dated June 29,
1998, from the Note Insurer to RBMG and the Issuer regarding the issuance of a
financial guaranty insurance policy.
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"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 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 July 27, 1998 and on each Payment Date thereafter, the Premium
Percentage specified in paragraph 1(b) thereof.
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"Note Interest": As to any Payment Date, the amount of interest payable to
Holders of the 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 Note Interest Rate on the Original Note Balance, and (b)
with respect to any subsequent Interest Period, interest for the number of days
in such Interest Period at the Note Interest Rate on the Note Balance as of the
preceding Payment Date (after giving effect to the payment, if any, in reduction
of principal made on the Notes on such preceding Payment Date) reduced by (i)
the aggregate Prepayment Interest Shortfall, if any, for such Payment Date, to
the extent not covered by Compensating Interest Payments, and (ii) the aggregate
amount of Relief Act Interest Shortfall, if any, for such Payment Date. All
calculations of interest on the 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
July 1998 Payment Date, 5.83625% per annum. With respect to each Interest Period
thereafter, a per annum rate equal to the lesser of (a)the Note Formula Rate and
(b) the Available Funds Cap Rate.
"Note Register": As defined in Section 2.06.
"Note Registrar": As defined in Section 2.06.
"Notes": Any notes 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, 5.65625% 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:
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(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
(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 $125,000,000.
"Original Pre-Funding Amount": The amount deposited by the Issuer in the
Pre-Funding Account on the Closing Date, which amount is $24,986,606.58.
"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;
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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, 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": As of any date of determination, the
amount on deposit in the Pre-Funding Account.
"Overcollateralization Amount": As to any Payment Date, the amount, if
any, by which (x) the sum of (a) the Aggregate Stated Principal Balance of the
Home Equity Loans 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, exceeds (y) the Note Balance 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 Note Balance on such Payment Date. If the sum of (a) the Aggregate Stated
Principal Balance of the Home Equity Loans 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, is less than the Note Balance for such Payment
Date, determined as provided above, the Overcollateralization Amount for such
Payment Date shall be zero.
"Overcollateralization Deficit": As to any Payment Date, the amount, if
any, by which the Note Balance on such Payment Date (after taking into account
any payments to be paid on such Payment Date in reduction of the Note Balance)
exceeds the sum of (a) the Aggregate Stated Principal Balance of the Home Equity
Loans 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) the Aggregate Stated Principal Balance of the Home Equity
Loans, and (b) the Outstanding Pre-Funding Amount (excluding any earnings in
respect thereof)
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is greater than the Note Balance for such Payment Date determined as provided
above, the Overcollateralization Deficit for such Payment Date shall be zero.
"Overcollateralization Surplus": As to any Payment Date, the amount, if
any, by which (x) the Overcollateralization Amount on such Payment Date exceeds
(y) the Required Overcollateralization Amount on such Payment Date.
"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
July 27, 1998.
"Payment Date Statement": The statement prepared pursuant to Section
2.08(d) with respect to collections on or in respect of the Home Equity Loans
and other assets of the Trust Estate and payments on or in respect of the Notes,
based 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 (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 allocable to (x)
Monthly Principal (separately setting forth Principal Prepayments) and (y)
any Excess Cash Payment;
(ii) the amount of such payment to Noteholders allocable to (x) Note
Interest and (y) the Available Funds Cap Rate Carry Forward Amount;
(iii) the Note Balance, 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 for such Payment Date and
the respective portions thereof allocable to principal and interest;
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(v) the 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 Home Equity Loans
and REO Properties as of the end of the related Due Period;
(vii) the amount of P&I Advances made with respect to 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
Home Equity Loans (including the Stated Principal Balances of all Home
Equity Loans in foreclosure) 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 Home Equity Loans in foreclosure or subject to other similar
proceedings, and the number and aggregate of the Stated Principal Balances
of Home Equity Loans 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 Home
Equity Loans 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 Home Equity Loans 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 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 Home
Equity Loans as of the related Due Date;
(xiv) with respect to any Home Equity Loan that became an REO
Property during the preceding calendar month, the loan number of such Home
Equity
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Loan, the unpaid principal balance and the Stated Principal Balance of
such Home Equity Loan as of the date it became an REO Property;
(xv) the book value of any REO Property 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 made during the
related Collection Period;
(xvii) the aggregate amount of Realized Losses incurred during the
related Collection Period;
(xviii) the aggregate amount of Extraordinary Trust Estate Expenses
withdrawn from the Collection Account or the Note Account for such Payment
Date;
(xix) the Note Factor for the Notes applicable to such Payment Date;
(xx) the aggregate amount of any Prepayment Interest Shortfalls for
such 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 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 Original Note Balance and
multiplying the result by 100.
"Periodic Rate Cap": With respect to each Adjustable Rate Home Equity 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
Home Equity 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;
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(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 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
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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.
"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
"Bankers Trust Company, as Indenture Trustee for RBMG Funding Co. Home Equity
Loan Trust 1998-1 Asset-Backed Notes, Series 1998-1, Pre-Funding Account" on
behalf of the Noteholders and the Note Insurer.
"Prepayment Interest Shortfall": As defined in the Servicing Agreement.
"Principal Prepayment": As to any Home Equity Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a Home
Equity 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 Home Equity Loan currently.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
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"Prospectus Supplement": The Issuer's Prospectus Supplement, dated June
24, 1998, relating to the Notes.
"Purchase Price": With respect to any Home Equity 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 Home Equity Loan, accrued interest on such
Stated Principal Balance (plus, in the case of a Defective Home Equity Loan, the
amount of any Related Loss resulting From a Deficient Valuation) at a rate equal
to the applicable Coupon Rate minus the 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 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 Home Equity Loan, the amount of any Related Loss resulting
from a Deficient Valuation) at a rate equal to the applicable Coupon Rate minus
the 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 Home Equity Loan or
REO Property, (iv) any amounts previously withdrawn from the Collection Account
in respect of such Home Equity Loan or REO Property pursuant to the Servicing
Agreement, and (v) in the case of a Home Equity 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 Home Equity Loan": A Home Equity Loan that is
substituted for a Deleted Home Equity 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 Home Equity Loan being substituted for such Deleted Home Equity
Loan), not in excess of and not ten percent less than the unpaid principal
balance of the Deleted Home Equity 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 Home Equity 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 Home Equity Loan, (iii) have a remaining
term to maturity not greater than (and not more than one year less than) that of
the Deleted Home Equity Loan, (iv) have a Loan-to-Value Ratio equal to or lower
than the Loan-to- Value Ratio of the Deleted Home Equity Loan, (v) have a first
lien priority, (vi) comply as of the
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date of substitution with each representation and warranty set forth in Section
4(b) of the Funding Co. Sale Agreement, Section 4(b) of the Company Sale
Agreement, Section 4(b) of the Depositor Sale Agreement or Section 4(b) of the
Loan Contribution Agreement (vii) have the same or better property type as the
Deleted Home Equity 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 Home Equity 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 Home Equity Loan.
"Rate/Term Refinancing": A Refinanced Home Equity 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 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 the Notes are
redeemed pursuant to Article X hereof, which date may occur on or after the
Payment Date on which the sum of (i) Aggregate Stated Principal Balance of the
Home Equity Loans and (ii) the Outstanding Pre-Funding Amount as of the related
Determination Date is less than 10% of the sum of (x) the Aggregate Stated
Principal Balance of the Initial Home Equity Loans and the
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Subsequent Home Equity Loans as of the Initial Cut-off Date and (y) the Original
Pre-Funding Amount.
"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": Bankers Trust Company, 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 Home Equity Loan": A Home Equity Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
"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
Home Equity Loan, any reduction in the amount of interest collectible on such
Home Equity 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
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 Home Equity 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:
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(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 Home Equity Loans as of the Initial Cut-off Date plus the
Original Pre-Funding Amount has been received by the Noteholders, the
greater of: (i) 4.50% of the Aggregate Stated Principal Balance of the
Home Equity Loans as of the Initial Cut-off Date plus the Original
Pre-Funding Amount and (ii) 75% of the Delinquency Amount.
(b) for any Payment Date occurring after the end of the period
described in clause (a) above, the greatest of (i) 9.00% of the Aggregate
Stated Principal Balance of the Home Equity Loans as of the Determination
Date relating to such Payment Date, (ii) 75% of the Delinquency Amount,
and (iii) the greater of (A) 0.75% of the Aggregate Stated Principal
Balance of the Home Equity Loans as of the Initial Cut-off Date plus the
Original Pre-Funding Amount and (B) the aggregate Stated Principal Balance
of the three Home Equity Loans 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 exceeds 10%, the Required Overcollateralization Amount shall be
no less than the 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 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 Home Equity Loans.
"Required Payment Amount": With respect to any Payment Date, the Note
Interest for such Payment Date plus the amount of any Overcollateralization
Deficit for such Payment Date.
"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
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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 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 Home Equity Loan: (a)
as of the applicable Cut-off Date, the outstanding principal balance of such
Home Equity Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such 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 Home
Equity Loan, the Scheduled Principal Balance of such Home Equity 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 Home Equity 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 Home Equity 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 Home Equity 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;
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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 June 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
Home Equity 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 I.
"Servicing Fee": As defined in the Servicing Agreement.
"Servicing Fee Rate": 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 Rating Services, a Division of
McGraw-Hill, Inc., and its successors in interest.
"Stated Principal Balance": With respect to any Home Equity 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 Home Equity
Loan would be distributed, the Scheduled Principal Balance of such Home Equity
Loan as of the applicable Cut-off Date, as shown in the Home Equity 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
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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 Home Equity 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 Home Equity 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.
"Subsequent Home Equity Loans": The Home Equity Loans listed on the Home
Equity Loan Schedule annexed hereto as Schedule I on the Closing Date and not
identified therein as "Initial".
"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.
"Sub-Servicing Agreement": The Sub-Servicing Agreement, dated as of June
1, 1998, between the Servicer and the Sub-Servicer, providing among other things
for the sub-servicing of the Home Equity 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 any
Payment Date, the average of the Delinquency Percentages 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 Expected Losses": As of any Payment Date, cumulative Realized
Losses occurring from the Closing Date through and including such Payment Date
plus the Delinquency Loss Factor as of such Payment Date.
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"Transferor": As defined in Section 8.07(a).
"Trust Agreement": That certain Deposit Trust Agreement, dated as of June
1, 1998, among the Depositor., as depositor, Bankers Trust Company, as Trust
Paying Agent, and the 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 Bankers Trust Company.
"Twelve Month Loss Amount": With respect to any Payment Date, an amount
equal to the aggregate of all Realized Losses during the previous twelve Due
Periods.
"Underwriter": Wheat First Securities, Inc., doing business as, First
Union Capital Markets, a division of Wheat First Securities, Inc. as underwriter
of the Notes pursuant to the Underwriting Agreement, dated June 29, 1998,
between the Underwriter and the Depositor.
"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 Home Equity Loan at the time of origination of the Home Equity
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 Home Equity Loan; PROVIDED,
HOWEVER, (A) in the case of a Refinanced Home Equity 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 Home Equity Loan at
the time of origination of such Refinanced Home Equity 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 Home Equity 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
Home Equity 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
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determined by an appraisal made for the originator of such Home Equity 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".
ARTICLE II
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THE NOTES
Section 2.01. Forms Generally.
The Notes shall be in substantially the form set forth on Exhibit A
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.
BANKERS TRUST COMPANY, 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 1998-1" of the Issuer.
The aggregate principal amount of Notes that may be authenticated
and delivered under the Indenture is limited to $125,000,000 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 one and only one class having
an Original Note Balance, Note Interest Rate for the initial Interest Period and
Final Maturity Date as follows:
Note Interest
Original Note Rate for the Initial Final
Balance Interest Period Maturity Date
- --------------------------- -------------------- -----------------------
$125,000,000.00 5.83625% October 25, 2029
==============
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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 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 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
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Agent shall authenticate and deliver such Notes as in this Indenture provided
and not otherwise.
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.
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(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 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 purchase or other acquisition of a Note or an interest
therein will be deemed a representation by the acquirer that either, (i) it is
not, and is not purchasing a Note for or on behalf of, or with assets of, a
"Benefit Plan Investor" as such term is defined in The Plan Asset Regulations of
the U.S. Department of Labor (29 C.F.R. Section 2510.3-101), or (ii) the
acquisition or holding of a bond by the acquirer qualifies for prohibited
transaction exemptive relief under any of the following prohibited transaction
class exemptions ("PTCE") issued by the U.S. Department of Labor, PTCE 95-60,
PTCE 96-23, PTCE 91-38, PTCE 90-1, PTCE 84-14 or some other applicable
exemption, or (iii) the acquisition of such Note will not otherwise result in a
prohibited transaction under ERISA or Section 4975 of the Code.
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 save 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
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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 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.
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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
(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 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 two Business Days prior to 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 Home Equity 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.
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(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.
(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
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(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 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.
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 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 Home Equity Loan, free
and clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Home Equity Loan (or, if any such
interest or participation has been assigned, it has been released) and has
the right to Grant each such Home Equity Loan to the Indenture Trustee;
(iii) the information set forth in the Home Equity Loan
Schedule attached as Schedule I to this Indenture is correct;
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(iv) the Issuer has Granted to the Indenture Trustee all of
its right, title and interest in each Home Equity 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.
(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-
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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 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
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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
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 (at which
time the Indenture Trustee shall use all reasonable efforts to promptly
notify each Beneficial Owner through the Clearing Agency of such Event of
Default), the Beneficial Owners of no less than 51% of the Note Balance 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
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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 Home Equity 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 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 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 Issuer's right, title and interest in and to (i) the Additional Home
Equity Loans identified on the related Home Equity Loan Schedule attached to the
related Additional Transfer Instrument, delivered by the Issuer on such
Additional Transfer Date, (ii) principal and interest due on the Additional Home
Equity Loans after the related Additional Cut-off Date and all other proceeds
received in respect of such Additional Home Equity Loans after the applicable
Cut-off Date for each such Additional Home Equity Loan and (iii) all items with
respect to such Additional Home Equity Loans to be delivered pursuant to Section
4(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 Home Equity Loans on or prior to the related Additional
Cut-off Date.
The purchase price paid by the Indenture Trustee from amounts
released from the Pre-Funding Account shall be one-hundred percent (100%) of the
aggregate principal balances as of the applicable Additional Cut-off Date of the
Additional Home Equity Loans so Granted.
(b) The Issuer shall Grant to the Indenture Trustee the Additional
Home Equity Loans and the other property and rights related thereto described in
Section 4(b) of the Depositor Sale Agreement and the Indenture Trustee shall
release funds from the 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
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reasonably requested by the Indenture Trustee or the Note Insurer with respect
to the Additional Home Equity Loans;
(B) the Issuer shall have delivered to the Indenture Trustee a
duly executed Additional Transfer Instrument, which shall include a Home
Equity Loan Schedule, listing the Additional Home Equity Loans;
(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)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, substantially in the form of Exhibit M,
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 Home Equity Loans since the Additional
Cut-off Date;
(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, tax, and corporate) with respect to
the Additional Home Equity 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 Indenture
Trustee, or a Custodian on its behalf, for review in order that the
Indenture Trustee, or a Custodian on its behalf, is able to deliver the
Initial Certification, as provided in Section 6.15(a) with respect to such
Additional Home Equity Loans.
(c) Any Grant of an Additional Home Equity Loan on an Additional
Transfer Date is subject to the following representations and warranties of the
Issuer with respect to the Additional Home Equity 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
Home Equity 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
Home Equity Loan,
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the Additional Home Equity Loans Granted hereunder shall have the following
characteristics, in the aggregate:
(A) the Additional Home Equity Loans shall have a weighted
average Loan-to-Value Ratio of not more than 79%;
(B) the weighted average Coupon Rate on the Additional Home
Equity Loans should be no less than 9.65%;
(C) the weighted average Gross Margin on the Additional Home
Equity Loans should be no less than 6.45%;
(D) the Additional Home Equity Loans will have a weighted
average Stated Principal Balance of not greater than $114,000, no more
than 1.8% of the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans will have a Stated Principal Balance greater
than $400,000, and no Additional Home Equity Loan will have a Stated
Principal Balance greater than $600,000;
(E) the first payment on each such Additional Home Equity Loan
shall be due no later than September 1, 1998;
(F) each Additional Home Equity Loan will have a stated
maturity of not more than 30 years;
(G) each Additional Home Equity Loan will be a fully
amortizing loan with level-payments not to exceed 30 years;
(H) the aggregate of the Stated Principal Balances of
Additional Home Equity Loans relating to Mortgaged Properties having the
same zip code will not exceed 1.30% of the aggregate Stated Principal
Balance of the Additional Home Equity Loans and the aggregate of the
Stated Principal Balances of Additional Home Equity Loans relating to
Mortgaged Properties located in California will not exceed 27.0% of the
aggregate Stated Principal Balance of the Additional Home Equity Loans;
(I) no Additional Home Equity Loan will be more than 30 days
delinquent.
(J) the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans that are A Risk Home Equity Loans will be no
less than 49% of the aggregate Stated Principal Balance of the Additional
Home Equity Loans;
(K) the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans that are A- Risk Home Equity Loans will be no
less than 23% of the aggregate Stated Principal Balance of the Additional
Home Equity Loans;
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(L) the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans that are B Risk Home Equity Loans will be no
less than 16% of the aggregate Stated Principal Balance of the Additional
Home Equity Loans;
(M) the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans that are C Risk Home Equity Loans will be no
less than 5% of the aggregate Stated Principal Balance of the Additional
Home Equity Loans;
(N) the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans that are D Risk Home Equity Loans will be no
greater than 1.0% of the aggregate Stated Principal Balance of the
Additional Home Equity Loans;
(O) the weighted average FICO of the Additional
Home Equity Loans shall be no less than 615;
(P) the aggregate Stated Principal Balance of the Additional
Home Equity Loans that are fixed rate loans shall not exceed 13.0% of the
aggregate Stated Principal Balance of the Additional Home Equity Loans;
(Q) The aggregate Stated Principal Balance of the Additional
Home Equity Loans that are six-month LIBOR Adjustable Rate Home Equity
Loans shall not exceed 6.0% of the aggregate Stated Principal Balance of
the Additional Home Equity Loans;
(R) the aggregate Stated Principal Balance of the Additional
Home Equity Loans that are 2/28 Adjustable Rate Home Equity Loans shall
not exceed 83% of the aggregate Stated Principal Balance of the Additional
Home Equity Loans;
(S) the aggregate Stated Principal Balance of the Additional
Home Equity Loans that are full documentation loans under the RBMG
Guidelines shall not be less than 67.0% of the aggregate Stated Principal
Balance of the Additional Home Equity Loans;
(T) the aggregate Stated Principal Balance of the Additional
Home Equity Loans that are investor loans shall not exceed 3.15% of the
aggregate Stated Principal Balance of the Additional Home Equity Loans;
(U) the aggregate Stated Principal Balance of the Additional
Home Equity Loans that are Cash-Out Refinancing loans shall not exceed
44.0% of the aggregate Stated Principal Balance of the Additional Home
Equity Loans;
(V) the aggregate Stated Principal Balance of the Additional
Home Equity Loans that are 15 year Balloon Loans shall not exceed 1.10% of
the aggregate Stated Principal Balance of the Additional Home Equity
Loans;
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(W) the aggregate of the Stated Principal Balance of the
Additional Home Equity Loans that are either A Risk Home Equity Loans or
A- Risk Home Equity Loans will be no less than 74% of the aggregate Stated
Principal Balance of the Additional Home Equity Loans; and
(X) the aggregate of the Stated Principal Balances of the
Additional Home Equity Loans which have existing "silent second loans"
secured by the related Mortgaged Properties will be no more than 19% of
the aggregate Stated Principal Balance of the Additional Home Equity
Loans.
In the sole discretion of the Note Insurer, Additional Home Equity
Loans 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 Home Equity 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.
Section 2.16. Characteristics of the Subsequent Home Equity
Loans.
The Subsequent Home Equity Loans which comprise the Trust Estate on
the Closing Date shall satisfy the aggregate characteristics set forth in
Section 2.14(c) as if such Subsequent Home Equity Loans were regarded as
Additional Home Equity Loans solely for this purpose.
ARTICLE III
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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 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 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
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becoming due (to the extent funds are then available for such purpose in the
Note 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 shall have been notified by the Indenture
Trustee in writing that such qualification 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
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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)).
(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 Home Equity 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 Home
Equity 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
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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 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.
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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;
(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.
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Not later than 90 days following the end of the fiscal year of the
Issuer beginning in 1998, 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
(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
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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.
ARTICLE IV
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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
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may be necessary to acknowledge the satisfaction and discharge of this
Indenture and shall pay, or assign or transfer and 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.
ARTICLE V
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DEFAULTS AND REMEDIES
Section 5.01. Event of Default.
"Event of Default", wherever used herein, means, with respect to
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 at the Note Formula Rate on each Payment
Date or Monthly Principal on any Note or fail to pay the Notes 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 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 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, 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 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.
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, shall, declare all the Notes to be immediately due and payable by a
notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), 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 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, 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 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
(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
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(b) all Events of Default, other than the nonpayment of the
principal of 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 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 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 Trust Estate
relative to the 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 the Notes may
be sought or obtained by the Indenture Trustee or any Noteholder 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 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 Notes representing not less than 50% of the
Note Balance of the Outstanding Notes 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 and the Note Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts then
payable on the 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;
(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;
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(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 and the Note Insurer hereunder; and
(e) refrain from selling the Trust Estate 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 the Notes shall then be due and payable as provided in
this Indenture or in the 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 the 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 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
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 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 Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder 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
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Holders of the 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 Notes have
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 such 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 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 Notes, upon presentation and surrender thereof:
(a) first, to the Indenture Trustee, any unpaid Indenture Trustee's
Fees then due and any other amounts payable and due to the Indenture
Trustee 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 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 Home Equity Loans or the final liquidation of the Trust
Estate, Servicing Advances 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 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, up to the amount of their respective Outstanding Note Balances,
ratably, without preference or priority of any kind;
(e) fifth, 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 unreimbursed Insured Payments 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 then due, together with
interest thereon at the "Late Payment Rate" specified in the Insurance
Agreement from the date such amounts were due and (C) any other amounts
due and owing to the Note Insurer under the Insurance Agreement;
(f) sixth, to the Noteholders, any amounts due them as a result of
Prepayment Interest Shortfalls and shortfalls in interest resulting from
application of the Relief Act;
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(g) seventh, to the payment of the entire outstanding Available
Funds Cap Rate Carry Forward Amount then due and unpaid upon the
Outstanding Notes through the day preceding the date on which such payment
is made; and
(h) eighth, to the Owner Trustee and the Issuer, certain amounts
reimbursable to them pursuant to the Indenture or the Trust Agreement;
(i) ninth, 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 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 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; and
(f) the consent of the Note Insurer shall have been obtained;
it being understood and intended that no one or more Holders 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 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 Notes.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 50% of the Note Balances of the Outstanding Notes,
the Indenture Trustee in its sole discretion may
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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.
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.
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Subject to Section 8.16 hereof, the Holders of Notes representing
more than 50% of the Note Balance of the Outstanding 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 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.
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
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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,
or to any suit instituted by any Noteholder 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 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.
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 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.
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(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 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 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.
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.
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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.
ARTICLE VI
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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) ofthis 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, 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.
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.
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.
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(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.
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.
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
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$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, the Servicer
and all Noteholders. 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,
delivered to the Indenture Trustee and to the Issuer.
(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)
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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 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 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.
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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.
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 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.
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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 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.
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
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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.
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 review, or shall cause a Custodian
on its behalf to review, for the benefit of the Noteholders and the Note
Insurer, each Mortgage File
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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 Home Equity 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 Home Equity Loan, and (C) based on its
examination and only as to the foregoing documents, the information set forth in
items __, __, __, and __ thereof on the related Home Equity Loan Schedule
accurately reflects information set forth in the related Mortgage File.
(b) On each of (i) the 180th 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 Home Equity 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
Home Equity Loan, and (C) based on its examination and only as to the foregoing
documents, the information set forth on the related Home Equity Loan Schedule
accurately reflects information set forth in the related Mortgage File.
(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)
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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);
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 September, 1998, 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 Home Equity 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
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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 from amounts deposited into the Note Account
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) The Indenture Trustee and its agents, directors, employees and
officers (each an "Indemnified Party") shall be indemnified as an Extraordinary
Trust Fund Expense reimbursable by the Trust Estate from, and held harmless
against, any and all losses and liabilities, damages, claims or expenses
(including reasonable attorneys' fees, expenses and disbursements), incurred,
arising in respect of or in connection with any legal action relating to this
Indenture or the Note, or the performance of any of the Indenture Trustee's
duties hereunder, other than any loss, liability or expense (i) incurred by
reason of the negligence, bad faith or intentional misconduct of the Indenture
Trustee, or (ii) that constitute a specific liability of the Indenture Trustee
under this Indenture. Notwithstanding the generality of the foregoing, if any
action, suit or other proceeding is brought against an Indemnified Party for
which the Indemnified Party seeks indemnification hereunder, the Indemnified
Party shall promptly notify the Issuer and the Note Insurer.
(c) 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.
ARTICLE VII
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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) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
ARTICLE VIII
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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 Home Equity 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 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. Note Account; Collection Account.
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(a) The Issuer hereby directs the Indenture Trustee to establish,
one or more accounts that shall collectively be the "Note Account", on or before
the Closing Date. The Indenture Trustee shall promptly deposit in the Note
Account (i) all Remittable Funds received by it from the Servicer pursuant to
the Servicing Agreement, (ii) any other funds from any deposits to be made by
the Servicer pursuant to the Servicing Agreement, (iii) any amount required to
be deposited in the Note Account pursuant to Section 8.04, (iv) all amounts
received pursuant to Section 8.05, and (v) all other amounts received for
deposit in the 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 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 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. Any loss resulting from such investment of moneys deposited in the
Note Account shall be reimbursed immediately as incurred to the 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 the Note
Account.
(c) On each Payment Date, the Indenture Trustee shall withdraw
amounts on deposit in the Note Account and pay on a PARI PASSU basis the Note
Insurer Premium, the Indenture Trustee Fee, Extraordinary Trust Estate Expenses,
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 Servicing Fees then due and to reimburse the Servicer for 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 Note Account on any Payment Date or Redemption Date shall be
withdrawn from the Note Account, 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, the aggregate amount necessary to reimburse
the Note Insurer for any unreimbursed Insured Payments 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
and the amount of any unpaid Note Insurer Premium for any prior Payment
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Date together with interest thereon at the "Late Payment Rate" specified
in the Insurance Agreement from the date such amounts were due; provided,
however, that the Note Insurer shall be paid such amounts only after the
Noteholders have received the Required Payment Amount with respect to such
Payment Date;
(ii) second, to the Noteholders, the Note Interest for such
Payment Date;
(iii) third, to the Noteholders, the Monthly Principal for
such Payment Date in reduction of the Note Balance until such Note Balance
is reduced to zero;
(iv) fourth, to the Note Insurer, any amounts due and owing
under the Insurance Agreement that are not described in clause (i) above;
(v) fifth, to the Noteholders, in reduction of the Note
Balance, the amount, if any, equal to the lesser of (A) Excess Cash with
respect to such Payment Date, and (B) the lesser of (1) the amount
necessary for the Overcollateralization Amount to equal the Required
Overcollateralization Amount on such Payment Date (after giving effect to
application of Monthly Principal for such Payment Date) and (2) the amount
necessary to reduce the Note Balance to zero (the "Excess Cash Payment");
(vi) sixth, to the Noteholders, any amounts due them as a
result of Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls;
(vii) seventh, to the Noteholders, the Available Funds Cap
Rate Carry Forward Amount outstanding on such Payment Date; and
(viii) eighth, to the Indenture Trustee, the Owner Trustee,
the Servicer and the Issuer, to reimburse for any expenses as provided in
this Indenture, the Trust Agreement, and the Servicing Agreement,
respectively.
(d) Upon the earlier to occur of (i) the September 27, 1998 Payment
Date and (ii) the satisfaction and discharge of this Indenture, the Indenture
Trustee shall withdraw any amount remaining in the Pre-Funding Account and pay
such amount to the Noteholders as a prepayment in reduction of the Outstanding
Note Balance.
(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 Note Account, after application thereof in accordance Section 8.02(c)(i) -
(viii), shall be withdrawn from the 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 Issuer.
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(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 Account.
(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", on or before the Closing Date. The Indenture Trustee
shall, promptly upon receipt, deposit in the Pre-Funding Account and retain
therein the 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 shall be
withdrawn by the Indenture Trustee as follows:
(i) On any Additional Transfer Date, the Indenture Trustee,
upon written direction from the Issuer, shall withdraw from the
Pre-Funding Account an amount equal to 100% of the aggregate Stated
Principal Balances of the Additional Home Equity Loans 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 Home Equity Loans;
(ii) If the Outstanding Pre-Funding Amount has not been
reduced to zero during the Funding Period, on the September 27, 1998
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 Pre-Funding Account or deposited therein in error; and
(iv) To clear and terminate the Pre-Funding Account upon the
earliest to occur of (A) the September 27, 1998 Payment Date and (B) the
satisfaction and discharge of this Indenture.
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(c) So long as no Default or Event of Default shall have occurred
and be continuing, amounts held in the 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 the
Pre-Funding Account shall be for the benefit of the Issuer and on each Payment
Date, any such amounts may be released from the Pre-Funding Account and paid to
the Issuer. Any loss resulting from such investment of moneys deposited in the
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 the Pre-Funding Account.
Section 8.04. Interest Coverage Account.
(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", on or before the Closing Date. The Indenture
Trustee shall, promptly upon receipt, deposit in the Interest Coverage Account
and retain therein the Interest Coverage Amount remitted on the Closing Date to
the Indenture Trustee by the Issuer. Funds deposited in the Interest Coverage
Account shall be held in trust by the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer for the uses and purposes set forth herein. All
income and gain realized from investment of funds deposited in the 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 the amount of any net loss incurred in respect of any
such Permitted Investment immediately upon realization of such loss.
(b) On the July 27, 1998 Payment Date, the Trustee shall withdraw
from the Interest Coverage Account and deposit in the Note Account an amount
equal to (i) 28 days' interest on the Original Pre-Funding Amount calculated at
a rate equal to the 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 Home Equity Loans Granted to the
Indenture Trustee for inclusion in the Trust Estate during the related Due
Period (net of the Servicing Fee and Indenture Trustee Fee pro rated for the
number of days such Home Equity Loans were included in the Trust Estate) and (B)
P&I Advances in respect of interest portions of delinquent Monthly Payments on
Additional Home Equity Loans conveyed to the Indenture Trustee during the
related Due Period.
(c) On the August 25, 1998 Payment Date, the Indenture Trustee shall
withdraw from the Interest Coverage Account and deposit in the Note Account an
amount equal to (i) 31 days' interest on the Original Pre-Funding Amount minus
the aggregate Stated Principal Balance of Additional Home Equity Loans Granted
to the Indenture Trustee for inclusion in the Trust Estate having a Due Date
prior to July 1, 1998 at a rate equal to the 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 Home Equity
Loans Granted to the Indenture Trustee for inclusion in the Trust Estate during
the related Due Period (net of the
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Servicing Fee and Indenture Trustee Fee pro rated for the number of days such
Home Equity Loans were included in the Trust Estate) and (B) P&I Advances in
respect of interest portions of delinquent Monthly Payments on Additional Home
Equity Loans conveyed to the Indenture Trustee during the related Due Period.
(d) On the September 27, 1998 Payment Date, the Indenture Trustee
shall withdraw from the Interest Coverage Account and deposit in the Note
Account an amount equal to (i) 33 days' interest on the Original Pre-Funding
Amount minus the Aggregate Stated Principal Balance of Additional Home Equity
Loans Granted to the Indenture Trustee for inclusion in the Trust Estate having
a Due Date prior to August 1, 1998 at a rate equal to the 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 Home
Equity Loans Granted to the Indenture Trustee for inclusion in the Trust Estate
during the related Due Period (net of the Servicing Fee and Indenture Trustee
pro rated for the number of days such Home Equity Loans were included in the
Trust Estate) and (B) P&I Advances in respect of interest portions of delinquent
Monthly Payments on Additional Home Equity Loans conveyed to the Indenture
Trustee during the related Due Period.
(e) On the date of Grant of an Additional Home Equity Loan to the
Indenture Trustee, funds on deposit in the 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 Home Equity Loan and (ii) the
weighted average Coupon Rate of the Cut-off Date Home Equity Loans as of the
Initial Cut-off Date and (iii) the number of days from the related Additional
Cut-off Date to March 18, 1998, shall be remitted immediately to the Issuer.
(f) Upon the earlier of (i) the September 27, 1998 Payment Date,
(ii) the reduction of the 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 Home Equity Loan to the Indenture Trustee,
as set forth in a written letter of instruction by the Issuer to the Indenture
Trustee, any amount remaining on deposit in the 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 the 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 the
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 the Interest Coverage Account.
Section 8.05. Claims Against the MBIA Insurance Policy.
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(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 MBIA
Insurance Policy. Each Noteholder, by its purchase of Notes, and the Indenture
Trustee hereby agree that, the Note Insurer (so long as no MBIA Payment 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 MBIA Payment 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.
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(b) Unless a Note Insurer Default exists and is continuing, the
Indenture Trustee shall cooperate 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.
(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.
Section 8.06. General Provisions Regarding the Note Account
and Home Equity Loans.
(a) The Note Account shall relate solely to the Notes and to the
Home Equity Loans, Permitted Investments and other property securing the Notes.
Funds and other property in the 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 the 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
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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.
Section 8.07. Releases of Defective Home Equity Loans.
(a) Upon notice or discovery 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 Home Equity
Loan which materially adversely affects the value of such Home Equity Loan or
the interest therein of the Noteholders or the Note Insurer, the Indenture
Trustee shall promptly notify RBMG, the Company, Funding Co., the Depositor, the
Servicer 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 Home Equity Loan from the lien of
this Indenture following the expiration of such 30-day period by depositing to
the Note Account an amount equal to the Purchase Price, plus the amount of any
Realized Loss resulting from a Deficiency Valuation, for such Home Equity Loan
or (iii) substitute a Qualified Replacement Home Equity Loan for such Defective
Home Equity 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, all as provided in
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, respectively. Upon any purchase of or substitution for a
Defective Home Equity Loan by either Funding Co., the Depositor, the Company, or
RBMG as set forth above, the Indenture Trustee shall deliver the Mortgage File
relating to such Defective Home Equity Loan to Funding Co., the Depositor, the
Company or RBMG, as the case may be, and the Issuer and
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the Indenture Trustee shall execute such instruments of transfer as are
necessary to convey title to such Defective Home Equity 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 Home Equity Loan,
the Indenture Trustee or a Custodian on its behalf, shall acknowledge receipt of
such Qualified Replacement Home Equity 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 Home Equity 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 Home Equity Loan or Loans.
(c) Monthly Payments due with respect to Qualified Replacement Home
Equity 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 Home Equity Loan, and the Transferor shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Home Equity Loan. Upon such substitution, such Qualified
Replacement Home Equity 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.
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
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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 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.
As is appropriate for the servicing or foreclosure of any Home
Equity Loan, the Indenture Trustee shall deliver to the Servicer the Mortgage
Files for such Home Equity 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 Home Equity 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 Home Equity Loans prior to their deposit into the Note
Account on or prior to the related Servicer Remittance Date.
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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 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 Account, the
Pre-Funding Account and the Interest Coverage Account.
(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 Account, the Pre-Funding Account, and the Interest Coverage Account
(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. 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 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
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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.
The Indenture Trustee may, at no additional cost to the Issuer, with
the consent of the Issuer and the Note Insurer, appoint one or more Custodians
to hold all or a portion of the Mortgage Files as agent for the Indenture
Trustee. Each 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 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 Mortgage Files directly. The appointment of
one or more 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 Custodian. If the Servicer is appointed as a
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 Custodian shall be evidenced
by a Custodial Agreement, substantially in the form of Exhibit F 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
Home Equity Loans upon failure of the Servicer to do so;
(b) the right to require RBMG to repurchase or substitute for
Defective Home Equity 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.
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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.
ARTICLE IX
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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 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;
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provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(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
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hereunder. The Indenture Trustee shall not be liable for any such determination
made in good faith.
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.
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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 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.
ARTICLE X
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REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) All the 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 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 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 and all
amounts owed under Section 10.01(a), the Indenture Trustee shall promptly
release to the party redeeming the Notes the Mortgage Files for the remaining
Home Equity Loans, 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 Home Equity Loans and to
evidence the release of the Home Equity Loans from the lien of this Indenture.
Any funds remaining in the Note Account after all payments due hereunder have
been made shall be remitted to the 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 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 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
Note Balance shall, until paid, bear interest from the Redemption Date at the
Note Interest Rate.
ARTICLE XI
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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
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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.
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
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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.
(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. Home Equity Loan Trust
1998-1, 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. Home Equity Loan Trust 1998-1), or at any other
address previously furnished in writing to the Indenture Trustee by the
Note Insurer; or
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(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
(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 First Union Capital Markets Corp., 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 Home Equity Securitization Corp. c/o
First Union Capital Markets Corp., 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.
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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.
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. [Reserved].
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
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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 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
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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.
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
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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.
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.
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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. HOME EQUITY LOAN TRUST
1998-1
By: Wilmington Trust Company,
not in its individual capacity,
but solely as Owner Trustee
By: /S/ DONALD G. MACKELCAN
Authorized Signatory
Name:
Title:
BANKERS TRUST COMPANY
as Indenture Trustee
By: /S/ MICHELLE ROOS
Name:
Title:
116
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of June, 1998 before me, a notary public in and for
said State, personally appeared Don MacKelcan, known to me to be Financial
Services Officer 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. Home Equity Loan Trust 1998-1, 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.
----------------------------------
Notary Public
[Notarial Seal]
117
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of June, 1998 before me, a notary public in and for
said State, personally appeared Michelle Roos, known to me to be Assistant Vice
President of Bankers Trust Company, 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.
----------------------------------
Notary Public
[Notarial Seal]
118
EXHIBIT 8.1
June 29, 1998
To the Parties Listed on
the Attached Annex A:
Re: RBMG Funding Co. Home Equity Loan Trust 1998-1
Asset Backed Notes, Series 1998-1
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. Home Equity Loan
Trust 1998-1 Asset Backed Notes, Series 1998-1 Notes (the "Notes") pursuant to
the terms of the Indenture (the "Indenture"), dated as of June 1, 1998, between
the RBMG Funding Co. Home Equity Loan Trust 1998-1 (the "Issuer") and Bankers
Trust Company, 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
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, 2820 West Charleston Boulevard,
Suite 17 Suite 17
Las Vegas, Nevada 89102 Las Vegas, Nevada 89102
3
EXHIBIT 10.1
FINANCIAL GUARANTY INSURANCE POLICY
OBLIGATIONS: $125,000,000 POLICY NUMBER: 26888
RBMG Funding Co. Home Equity Loan Trust 1998-1
Asset-Backed Notes, Series 1998-1
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Financial Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received from the Insurer by Bankers Trust Company or its
successors, as indenture trustee for the Owners (the "Trustee"), on behalf of
the Owners, for distribution by the Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations hereunder
with respect to a particular Insured Payment shall be discharged to the extent
funds equal to the applicable Insured Payment are received by the Trustee,
whether or not such funds are properly applied by the Trustee. Insured Payments
shall be made only at the time set forth in this 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.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the 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 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
<PAGE>
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 Trustee and the Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the 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 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.
As used herein, the following terms shall have the following meanings:
"AGREEMENT" means the Indenture dated as of June 1, 1998 between RBMG
Funding Co. Home Equity Loan Trust 1998-1, as Issuer, and the 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 Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"DEFICIENCY AMOUNT" means, with respect to any Payment Date, the sum of
(i) the Note Interest for such Payment Date minus Available Funds and (ii) the
then existing Overcollateralization Deficit, if any, after application of
Available Funds to reduce the Note Balance on such Payment Date.
"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 fax substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the 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
Trustee, RBMG, the Issuer, Funding Co., the Company, the Depositor, the Servicer
or the Sub-Servicer)
2
<PAGE>
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 Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the 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 Insurer has caused this Policy to be executed and
attested this 29th day of June, 1998.
MBIA INSURANCE CORPORATION
/s/ Richard Weill
--------------------------------
President
/s/ Pauline M. Cule
--------------------------------
Assistant Secretary
4
<PAGE>
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: 26888
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 26888
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
indenture trustee (the "Trustee"), hereby certifies to State Street Bank and
Trust Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Financial Guaranty Insurance Policy Number: 26888
(the "Policy") issued by the Insurer in respect of the $125,000,000 RBMG Funding
Co. Home Equity Loan Trust 1998-1 Asset-Backed Notes, Series 1998-1 (the
"Obligations"), that:
(i) the Trustee is the indenture trustee under the Indenture dated
as of June 1, 1998, among RBMG Funding Co. Home Equity Loan Trust 1998-1,
as Issuer, and the Trustee, as indenture trustee for the Owners;
(ii) the Note Interest due under clause (i) of the definition of
Deficiency Amount for the Payment Date occurring on [ ] (the "Applicable
Payment Date") is $[ ] (the "Note Interest");
(iii) the amount of the Available Funds for the Applicable Payment
Date is $[ ] (the "Available Funds");
(iv) the excess, if any, of the Note Interest in clause (ii) over
the Available Funds in clause (iii) is $[ ];
(v) the excess, if any, of the Available Funds in clause (iii) over
the Note Interest in clause (ii) is $[ ];
<PAGE>
(vi) the amount of the then existing Overcollateralization Deficit
before the application of Available Funds on the Applicable Payment Date
under clause (ii) of the definition of Deficiency Amount is $[ ]; (the
"Overcollateralization Deficit");
(vii) the excess, if any, of the Overcollateralization Deficit as
reported in clause (vi) over the amount in clause (v) is $[ ];
(viii) the sum of the amount in clause (iv) and the amount in clause
(vii) is $[ ] (the "Deficiency Amount");
(ix) the amount of previously distributed payments on the
Obligations 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 is $[ ] (the "Preference Amount");
(x) the total Insured Payment due is $[ ], which amount equals the
sum of the Deficiency Amount and the Preference Amount;
(xi) the Trustee is making a claim under and pursuant to the terms
of the Policy for the dollar amount of the Insured Payment set forth in
(viii) above to be applied to the payment of the Deficiency Amount for the
Applicable Payment Date in accordance with the Agreement and for the
dollar amount of the Insured Payment set forth in (ix) above to be applied
to the payment of any Preference Amount; and
(xii) the Trustee directs that payment of the Insured Payment be
made to the following account by bank wire transfer of federal or other
immediately available funds in accordance with the terms of the Policy:
[TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined herein
shall have the meaning assigned thereto in the Policy.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY
OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT TO A CIVIL
PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM
FOR EACH SUCH VIOLATION.
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the [ ] day of [ ], [ ].
[NAME OF TRUSTEE], as Trustee
By ________________________________
Title ________________________________
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
---------
We consent to the incorporation by reference in this Prospectus Supplement 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 "Report of Experts".
/s/ COOPERS & LYBRAND L.L.P.
-------------------------------------
COOPERS & LYBRAND L.L.P.
New York, New York
June 24, 1998
