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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 7, 1999
Residential Asset Funding Corporation
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(Exact name of registrant as specified in its charter)
<S> <C> <C>
North Carolina 333-64775 56-2064715
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(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
<S> <C>
301 South College Street
Charlotte, North Carolina 28288-0610
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (704) 374-4868
-----------------------
No Change
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(Former name or former address, if changed since last report)
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</TABLE>
<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
Residential Asset Funding Corporation registered issuances of
up to $500,000,000 principal amount of Asset Backed Notes and Asset Backed
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by the Registration Statements
on Form S-3 (Registration File No. 333-64775) (the "Registration Statement").
Pursuant to the Registration Statement, RBMG Funding Co. Mortgage Loan Trust
1999-1 (the "Issuer") issued $125,030,000 in aggregate principal amount of its
Asset Backed Notes, Class A-1 and Class A-2, Series 1999-1 (the "Notes"), on
June 7, 1999. 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, 1999, between
RBMG Funding Co. Mortgage Loan Trust 1999-1, and The Bank of New York, in its
capacity as indenture trustee (the "Indenture Trustee"). The Notes represent
non-recourse obligations of the Issuer, which obligations are secured by a
pledge of mortgage loans and certain related property. The Bank of New York will
serve as indenture trustee with respect to the Notes.
The assets of the Trust consist primarily of (i) two groups of
fixed and adjustable rate, residential one- to four-family, first lien mortgage
loans (the "Mortgage Loans") to be pledged to the Indenture Trustee for the
benefit of the holders of the Notes, (ii) all payments in respect of principal
and interest on the Mortgage Loans (other than any principal or interest
payments on the Mortgage Loans due prior to the Cut-Off Date), (iii) the
Issuer's rights under the Depositor Sale Agreement, the Servicing Agreement and
the Cap Agreement, (iv) the rights of the Indenture Trustee under the Insurance
Policy, (v) certain other property.
Interest distributions on each Class of Notes are based on the
aggregate principal balance thereof and the then applicable Note Interest Rate
thereof. With respect to the Class A-1 Notes, the Note Interest Rate is LIBOR
plus 0.26% for each Interest Period prior to the Redemption Date and LIBOR plus
0.52% for each Interest Period thereafter. With respect to the Class A-2 Notes,
the Note Interest Rate is LIBOR plus 0.29% for each Interest Period prior to the
Redemption Date and LIBOR plus 0.58% for each Interest Period thereafter.
As of June 1, 1999, the Mortgage Loans possessed the
characteristics described in the Prospectus dated November 10, 1998 and the
Prospectus Supplement dated June 2, 1999 filed pursuant to Rule 424(b)(2) of the
Act on June 8, 1999.
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 2, 1999,
between Residential Asset Funding Corporation and First Union
Capital Markets Corp.
Exhibit 4.1. Indenture, dated as of June 1, 1999, between the
Issuer and the Indenture Trustee.
Exhibit 8.1. Opinion of Dewey Ballantine LLP regarding tax
matters, dated June 7, 1999.
Exhibit 10.1. Indemnification Agreement, dated as of June 1,
1999, among MBIA Insurance Corporation, Resource Bancshares
Mortgage Group, Inc., Ocwen Federal Bank FSB, Residential
Asset Funding Corporation, First Union Corporation and First
Union Capital Markets Corp.
Exhibit 10.2. Insurance Agreement, dated as of June 1, 1999,
among MBIA Insurance Corporation, Ocwen Federal Bank FSB,
Resource Bancshares Mortgage Group, Inc., RBMG Funding Co.,
RBMG Funding Co. Mortgage Loan Trust 1999-1, RBMG Asset
Management Company, Inc., Residential Asset Funding
Corporation, First Union Corporation and The Bank of New York.
Exhibit 23.1. Consent of PricewaterhouseCoopers L.L.P.
regarding financial statements of the MBIA Insurance
Corporation and Subsidiaries.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunto duly authorized.
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor and on behalf of RBMG Funding Co.
Mortgage Loan Trust 1999-1
Registrant
By: /s/ Shanker Merchant
---------------------------------
Name: Shanker Merchant
Title: Senior Vice President
Dated: June 7, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
Exhibit 1.1. Underwriting Agreement, dated June 2, 1999, between
Residential Asset Funding Corporation and First Union
Capital Markets Corp.
Exhibit 4.1. Indenture, dated as of June 1, 1999, between the
Issuer and the Indenture Trustee.
Exhibit 8.1. Opinion of Dewey Ballantine LLP regarding tax
matters, dated June 7, 1999.
Exhibit 10.1. Indemnification Agreement, dated as of June 1, 1999,
among MBIA Insurance Corporation, Resource Bancshares
Mortgage Group, Inc., Ocwen Federal Bank FSB,
Residential Asset Funding Corporation, First Union
Corporation and First Union Capital Markets Corp.
Exhibit 10.2. Insurance Agreement, dated as of June 1, 1999, among
MBIA Insurance Corporation, Ocwen Federal Bank FSB,
Resource Bancshares Mortgage Group, Inc., RBMG
Funding Co., RBMG Funding Co. Mortgage Loan Trust
1999-1, RBMG Asset Management Company, Inc.,
Residential Asset Funding Corporation, First Union
Corporation and The Bank of New York.
Exhibit 23.1. Consent of PricewaterhouseCoopers L.L.P. regarding
financial statements of the MBIA Insurance
Corporation and Subsidiaries.
Exhibit 1.1
Execution Copy
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RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
ASSET BACKED NOTES
SERIES 1999-1
UNDERWRITING AGREEMENT
<PAGE>
UNDERWRITING AGREEMENT
First Union Capital Markets Corp.
301 South College Street
Charlotte, North Carolina 28202-6001
June 2, 1999
Dear Sirs:
Residential Asset Funding Corporation (the "Depositor")
proposes, subject to the terms and conditions stated herein and in the attached
Underwriting Agreement Standard Provisions, dated June 2, 1999 (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,
RESIDENTIAL ASSET FUNDING CORPORATION
By: /s/ Shanker Merchant
---------------------------------
Name: Shanker Merchant
Title: Senior Vice President
Accepted as of the date hereof:
FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Carolyn Eskridge
--------------------------------
Name: Carolyn Eskridge
Title: Senior Vice President
[Signature Page to Underwriting Agreement]
<PAGE>
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SCHEDULE I
<S> <C>
Issuer: RBMG Funding Co. Mortgage Loan Trust 1999-1
Title of Offered Securities: RBMG Funding Co. Mortgage Loan Trust 1999-1, Asset Backed Notes,
Series 1999-1, Class A-1 and Class A-2
Terms of Offered Securities: The Offered Securities shall have the terms 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, 1999 among the Issuer and
Bank of New York, as indenture trustee.
Purchase Commitment: First Union Capital Markets Corp.: $ 125,030,000
Purchase Price: The purchase price for the Offered Securities shall be 100.00% of the
aggregate principal balance of the Class A-1 Notes and the Class A-2
Notes, as of the Closing Date.
Specified funds for payment of
Purchase Price: Federal Funds (immediately available funds).
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's Ratings Services
Closing Date: On or about June 7, 1999 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 Markets Corp.
Address for Notices, etc.: First Union Capital Markets Corp.
One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6001
Attn: Evan Peverley
</TABLE>
I-1
<PAGE>
STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
June 2, 1999
From time to time, Residential Asset Funding Corporation, a
North Carolina corporation (the "Depositor") may enter into one or more
underwriting agreements (each, an "Underwriting Agreement") that provide for the
sale of designated securities to the several underwriters named therein (such
underwriters constituting the "Underwriter" with respect to such Underwriting
Agreement and the securities specified therein). The several underwriters named
in an Underwriting Agreement will be represented by one or more representatives
as named in such Underwriting Agreement (collectively, the "Representative").
The term "Representative" also refers to a single firm acting as sole
representative of the Underwriter and to Underwriter who act without any firm
being designated as their representative. The standard provisions set forth
herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. This Agreement shall not be construed as an obligation
of the Depositor to sell any securities or as an obligation of any of the
Underwriter to purchase such securities. The obligation of the Depositor to sell
any securities and the obligation of any of the Underwriter to purchase any of
the securities shall be evidenced by the Underwriting Agreement with respect to
the securities specified therein. An Underwriting Agreement shall be in the form
of an executed writing (which may be in counterparts), and may be evidenced by
an exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of the communications transmitted. The
obligations of the underwriters under this Agreement and each Underwriting
Agreement shall be several and not joint. Unless otherwise defined herein, the
terms defined in the Underwriting Agreement are used herein as defined in the
Prospectus referred to below.
SECTION 1. THE OFFERED SECURITIES. The Depositor proposes to
cause the Issuer to sell, pursuant to the Underwriting Agreement to the
Underwriter or Underwriters named therein, asset backed notes (the "Securities")
representing obligations of the Issuer, which obligations are secured by a
pledge of mortgage loans (the "Mortgage Loans") and certain related property.
The Securities will be issued pursuant to an indenture (the "Indenture") dated
as of June 1, 1999 by and between the Issuer and Bank of New York, a New York
banking corporation., as indenture trustee (the "Indenture Trustee"). The
underlying loans were originated or acquired by Resource Mortgage Bancshares
Group, Inc. ("RBMG"). RBMG has conveyed its interest in the Mortgage Loans to
RBMG Asset Management Company, Inc. (the "Company"). The Company has conveyed
its interest in the Mortgage Loans to RBMG Funding Co., a special purpose
corporation and a wholly-owned subsidiary of the Company, ("Funding Co.")
Funding Co., in turn, will convey the Mortgage Loans to the Depositor which will
in turn convey the Mortgage Loans to the Issuer. The Mortgage Loans are to be
serviced pursuant to a Servicing Agreement dated as of June 1, 1999 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, 1999 by and
among the Servicer and the Sub-Servicer.
The terms and rights of any particular issuance of Securities
shall be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Indenture identified in such Underwriting Agreement. The
Securities which are the subject of any particular Underwriting Agreement into
which this Agreement is incorporated are herein referred to as the "Offered
Securities."
<PAGE>
The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-64775), including a prospectus relating to the Securities under the
Securities Act of 1933, as amended (the "1933 Act"). The term "Registration
Statement" means such registration statement as amended to the date of the
Underwriting Agreement. The term "Base Prospectus" means the prospectus included
in the Registration Statement. The term "Prospectus" means the Base Prospectus
together with the prospectus supplement specifically relating to the Offered
Securities, as first filed with the Commission pursuant to Rule 424. The term
"Preliminary Prospectus" means a preliminary prospectus supplement specifically
relating to the Offered Securities together with the Base Prospectus.
SECTION 2. OFFERING BY THE UNDERWRITER. Upon the execution of
the Underwriting Agreement to any Offered Securities and the authorization by
the Representative of the release of such Offered Securities, the several
Underwriter propose to offer for sale to the public the Offered Securities at
the prices and upon the terms set forth in the Prospectus.
SECTION 3. PURCHASE, SALE AND DELIVERY OF THE OFFERED
SECURITIES. Unless otherwise specified in the Underwriting Agreement, payment
for the Offered Securities shall be made by certified or official bank check or
checks payable to the order of the Depositor in immediately available or next
day funds, at the time and place set forth in the Underwriting Agreement, upon
delivery to the Representative for the respective accounts of the several
Underwriter of the Offered Securities registered in definitive form and in such
names and in such denominations as the Representative shall request in writing
not less than five full business days prior to the date of delivery. The time
and date of such payment and delivery with respect to the Offered Securities are
herein referred to as the "Closing Date".
SECTION 4. CONDITIONS OF THE UNDERWRITER' OBLIGATIONS. The
respective obligations of the several Underwriter pursuant to the Underwriting
Agreement shall be subject, in the discretion of the Representative, to the
accuracy in all material respects of the representations and warranties of the
Depositor contained herein as of the date of the Underwriting Agreement and as
of the Closing Date as if made on and as of the Closing Date, to the accuracy in
all material respects of the statements of the officers of the Depositor and the
Servicer made in any certificates pursuant to the provisions hereof and of the
Underwriting Agreement, to the performance by the Depositor of its covenants and
agreements contained herein and to the following additional conditions
precedent:
(a) All actions required to be taken and all filings required
to be made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to the sale
of the Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for such purpose
shall be pending before or threatened by the Commission, or by any authority
administering any state securities or "Blue Sky" laws; (iii) any requests for
additional information on the part of the Commission shall have been complied
with to the Representative's reasonable satisfaction; (iv) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings,
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affairs, regulatory situation or business prospects of the Depositor; (v) there
are no material actions, suits or proceedings pending before any court or
governmental agency, authority or body or threatened, affecting the Depositor or
the transactions contemplated by the Underwriting Agreement; (vi) the Depositor
is not in violation of its charter or its by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it or its properties may be
bound, which violations or defaults separately or in the aggregate would have a
material adverse effect on the Depositor; and (vii) the Representative shall
have received, on the Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement,
there shall not have occurred any of the following: (i) if at or prior to the
Closing Date, trading in securities on the New York Stock Exchange shall have
been suspended or any material limitation in trading in securities generally
shall have been established on such exchange, or a banking moratorium shall have
been declared by New York or United States authorities; (ii) if at or prior to
the Closing Date, there shall have been an outbreak or escalation of hostilities
between the United States and any foreign power, or of any other insurrection or
armed conflict involving the United States which results in the declaration of a
national emergency or war, and, in the reasonable opinion of the Representative,
makes it impracticable or inadvisable to offer or sell the Offered Securities;
or (iii) if at or prior to the Closing Date, a general moratorium on commercial
banking activities in New York shall have been declared by either federal or New
York State authorities.
(d) The Representative shall have received, on the Closing
Date, a certificate dated the Closing Date and signed by an executive officer of
the Depositor to the effect that attached thereto is a true and correct copy of
the letter from each nationally recognized statistical rating organization (as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act) that rated the Offered Securities and confirming that, unless
otherwise specified in the Underwriting Agreement, the Offered Securities have
been rated in the highest rating categories by each such organization and that
each such rating has not been rescinded since the date of the applicable letter
substantially to the effect set forth in Exhibit E hereto.
(e) The Representative shall have received, on the Closing
Date, an opinion of Dewey Ballantine LLP, special counsel for the Depositor,
dated the Closing Date, in form and substance satisfactory to the Representative
and containing opinions substantially to the effect set forth in Exhibit A
hereto.
(f) The Representative shall have received, on the Closing
Date, an opinion of Graham & James LLP, counsel for RBMG, the Company and
Funding Co., dated the Closing Date, in form and substance satisfactory to the
Representative and counsel for the Underwriter and containing opinions
substantially to the effect set forth in Exhibits B-1, B-2 and B-3 hereto.
(g) The Representative shall have received, on the Closing
Date, an opinion of counsel for the Indenture Trustee, dated the Closing Date,
in form and substance satisfactory to the Representative and counsel for the
Underwriter and containing opinions substantially to the effect set forth in
Exhibit C hereto.
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(h) The Representative shall have received, on the Closing
Date, an opinion of Dewey Ballantine LLP, counsel for the Underwriter, dated the
Closing Date, with respect to the incorporation of the Depositor, the validity
of the Offered Securities, the Registration Statement, the Prospectus and other
related matters as the Underwriter may reasonably require, and the Depositor
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(i) The Representative shall have received, on the Closing
Date, such other opinions of Counsel in form and substance satisfactory to the
Representative and counsel to the Underwriter as the Representative shall
request.
(j) The Representative shall have received, on or prior to the
date of first use of each of the preliminary prospectus supplement and the
prospectus supplement relating to the Offered Securities, and on the Closing
Date if requested by the Representative, letters of independent accountants of
the Depositor in the form and reflecting the performance of the procedures
previously requested by the Representative.
(k) The Depositor shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of an
executive officer of the Depositor satisfactory to the Representative as to the
accuracy of the representations and warranties of the Depositor herein at and as
of such Closing Date as if made as of such date, as to the performance by the
Depositor of all of its obligations hereunder to be performed at or prior to
such Closing Date, and as to such other matters as the Representative may
reasonably request;
(l) The Servicer shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of officers of
the Servicer in form and substance reasonably satisfactory to the
Representative;
(m) The Sub-Servicer shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of officers of
the Sub-Servicer in form and substance reasonably satisfactory to the
Representative;
(n) The Note Guaranty Insurance Policy (the "Note Insurance
Policy") shall have been duly executed and issued at or prior to the Closing
Date and shall conform in all material respects to the description thereof in
the Prospectus Supplement.
(o) The Representative shall have received, on the Closing
Date, an opinion of counsel to MBIA Insurance Corporation. (the "Note Insurer"),
dated the Closing Date, in form and substance satisfactory to the Representative
and counsel for the Underwriter and containing opinions substantially to the
effect set forth in Exhibit D hereto.
(p) On or prior to the Closing Date there shall not have
occurred any downgrading, nor shall any notice have been given of (i) any
intended or potential downgrading or (ii) any review or possible change in
rating the direction of which has not been indicated, in the rating accorded the
Note Insurer's claims paying ability by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the 1933 Act.
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(q) There has not occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations, since September 31, 1997 of the Note
Insurer, that is in the Representative's judgment material and adverse and that
makes it in the Representative's judgment impracticable to market the Offered
Securities on the terms and in the manner contemplated in the Prospectus.
(r) The Representative shall have received, on the Closing
Date, a certificate dated the Closing Date and signed by the President, a senior
vice president or a vice president of the Note Insurer to the effect that the
signer of such certificate has carefully examined the Note Insurance Policy, the
Insurance Agreement dated the Closing Date (the "Insurance Agreement") among the
Note Insurer, the Issuer, the Servicer, the Depositor and the Indenture Trustee
and the related documents and that, to the best of his or her knowledge based on
reasonable investigation:
(i) there are no actions, suits or proceedings pending or
threatened against or affecting the Note Insurer which, if
adversely determined, individually or in the aggregate, would
adversely affect the Note Insurer's performance under the Note
Insurance Policy or the Insurance Agreement;
(ii) each person who, as an officer or representative of the
Note Insurer, signed or signs the Note Insurance Policy, the
Insurance Agreement or any other document delivered pursuant
hereto, on the date thereof, or on the Closing Date, in
connection with the transactions described in this Agreement
was, at the respective times of such signing and delivery, and
is now, duly elected or appointed, qualified and acting as
such officer or representative, and the signatures of such
persons appearing on such documents are their genuine
signatures;
(iii) the information contained in the Prospectus under the
caption "THE INSURANCE POLICY AND THE NOTE INSURER" is true
and correct in all material respects and does not omit to
state a material fact with respect to the description of the
Note Insurance Policy or the ability of the Note Insurer to
meet its payment obligations under the Note Insurance Policy;
(iv) the tables regarding the Note Insurer's capitalization
set forth under the heading " THE INSURANCE POLICY AND THE
NOTE INSURER" present fairly the capitalization of the Note
Insurer as of March 31, 1999;
(v) on or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended
or potential downgrading or (ii) any review or possible
changes in rating the direction of which has not been
indicated, in the rating accorded the claims paying ability of
the Note Insurer by any "nationally recognized statistical
rating organization," as such term is defined for purposes of
the 1933 Act;
(vi) the audited balance sheet of the Note Insurer as of
December 31, 1998 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
PricewaterhouseCoopers L.L.P., independent certified public
accountants, copies of which are incorporated by reference in
the Prospectus, fairly present in all material
5
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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 become
effective as promptly as possible. During the time when a Prospectus is required
to be delivered under the 1933 Act, the Depositor will comply so far as it is
able with all requirements imposed upon it by the 1933 Act and the rules and
regulations thereunder to the extent necessary to permit the continuance of
sales or of dealings in the Offered Securities in accordance with the provisions
hereof and of the Prospectus, and the Depositor will prepare and file with the
Commission, promptly upon request by the Representative, any amendments to the
Registration Statement or supplements to the Prospectus which may be necessary
or advisable in connection with the distribution of the Offered Securities by
the Underwriter, and will use its best efforts to cause the same to become
effective as promptly as possible. The Depositor will advise the
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Representative, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement or any amended Registration Statement
has become effective or any supplement to the Prospectus or any amended
Prospectus has been filed. The Depositor will advise the Representative,
promptly after it receives notice or obtains knowledge thereof, of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of any
preliminary Prospectus or the Prospectus, or the suspension of the qualification
of the Offered Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or of any
request made by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information, and the
Depositor will use its best efforts to prevent the issuance of any such stop
order or any order suspending any such qualification, and if any such order is
issued, to obtain the lifting thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary for any other reason to amend or supplement the Prospectus to comply
with the 1933 Act, to promptly notify the Representative thereof and upon their
request to prepare and file with the Commission, at the Depositor's own expense,
an amendment or supplement which will correct such statement or omission or any
amendment which will effect such compliance.
(d) During the period when a prospectus is required by law to
be delivered in connection with the sale of the Offered Securities pursuant to
the Underwriting Agreement, the Depositor will file, on a timely and complete
basis, all documents that are required to be filed by the Depositor with the
Commission pursuant to Sections 13, 14, or 15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale under
the securities or "Blue Sky" laws of such jurisdictions as the Representative
shall reasonably request and to pay all expenses (including fees and
disbursements of counsel) in connection with such qualification of the
eligibility of the Offered Securities for investment under the laws of such
jurisdictions as the Representative may designate provided that in connection
therewith the Depositor shall not be required to qualify to do business or to
file a general consent to service of process in any jurisdiction.
(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than eighteen months
after the date on which the filing of the Prospectus, as amended or
supplemented, pursuant to Rule 424 under the 1933 Act first occurs, an earnings
statement of the Depositor covering a twelve-month period beginning after the
date of the Underwriting Agreement, which shall satisfy the provisions of
Section 11(a) of the 1933 Act and the applicable rules and regulations of the
Commission thereunder (including, at the option of the Depositor, Rule 158).
(g) For so long as any of the Offered Securities remain
outstanding, to furnish to the Representative upon request in writing copies of
such financial statements and other periodic and special reports as the
Depositor may from time to time distribute generally to its creditors or the
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holders of the Offered Securities and to furnish to the Representative copies of
each annual or other report the Depositor shall be required to file with the
Commission.
(h) For so long as any of the Offered Securities remain
outstanding, the Depositor will, or will cause the Servicer to, furnish to the
Representative, as soon as available, a copy of (i) the annual statement of
compliance delivered by the Servicer to the Indenture Trustee under the
Servicing Agreement, (ii) the annual independent public accountants' servicing
report furnished to the Indenture Trustee pursuant to the Servicing Agreement,
(iii) each report regarding the Offered Securities mailed to the holders of such
Securities, and (iv) from time to time, such other information concerning such
Securities as the Representative may reasonably request.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor represents and warrants to, and agrees with, each Underwriter, as
of the date of the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus relating
to the Securities and the offering thereof from time to time in accordance with
Rule 415 under the 1933 Act has been filed with the Commission and such
Registration Statement, as amended to the date of the Underwriting Agreement,
has become effective. No stop order suspending the effectiveness of such
Registration Statement has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission. A prospectus supplement
specifically relating to the Offered Securities will be filed with the
Commission pursuant to Rule 424 under the 1933 Act; provided, however, that a
supplement to the Prospectus prepared pursuant to Section 5(b) hereof shall be
deemed to have supplemented the Base Prospectus only with respect to the Offered
Securities to which it relates. The conditions to the use of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions on Form S-3, and the conditions of Rule 415 under the 1933 Act,
have been satisfied with respect to the Depositor and the Registration
Statement. There are no contracts or documents of the Depositor that are
required to be filed as exhibits to the Registration Statement pursuant to the
1933 Act or the rules and regulations thereunder that have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Base Prospectus conformed in all material
respects to the requirements of the 1933 Act and the rules and regulations
thereunder, and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; on the date of the Underwriting Agreement
and as of the Closing Date, the Registration Statement and the Prospectus
conform, and as amended or supplemented, if applicable, will conform in all
material respects to the requirements of the 1933 Act and the rules and
regulations thereunder, and on the date of the Underwriting Agreement and as of
the Closing Date, neither of such documents, any Computational Materials nor any
ABS Term Sheets includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither of such documents as amended or
supplemented, if applicable, will include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the foregoing does not apply to statements or omissions in any of such documents
based upon written information furnished to the Depositor by any Underwriter
specifically for use therein. "Computational Materials" shall mean those
materials
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delivered within the meaning of the no-action letter dated May 20, 1994 issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I. Kidder, Peabody & Co., Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association for which the filing of such material is a condition of
the relief granted in such letters. "ABS Term Sheet" shall mean those materials
delivered in the form of "Structural Term Sheets" or "Collateral Term Sheets",
in each case within the meaning of the no-action letter dated February 13, 1995
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association for which the filing of such material is a condition of
the relief granted in such letter.
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change in the condition,
financial or otherwise, earnings, affairs, regulatory situation or business
prospects of the Depositor, whether or not arising in the ordinary course of the
business of the Depositor.
(d) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of North
Carolina.
(e) The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals, orders,
licenses, certificates and permits of and from all government or regulatory
officials and bodies to own its properties, to conduct its business as described
in the Registration Statement and the Prospectus and to execute, deliver and
perform this Agreement, the Underwriting Agreement, the Deposit Trust Agreement,
Loan Sale Agreement and the Loan Transfer Agreement, except such as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution by the Underwriter of the Offered Securities; all such
authorizations, approvals, orders, licenses, certificates are in full force and
effect and contain no unduly burdensome provisions; and, except as set forth or
contemplated in the Registration Statement or the Prospectus, there are no legal
or governmental proceedings pending or, to the best knowledge of the Depositor,
threatened that would result in a material modification, suspension or
revocation thereof.
(f) The Offered Securities have been duly authorized, and
when the Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly executed,
issued and delivered and will be entitled to the benefits provided by the
Indenture, subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity (regardless of whether
the entitlement to such benefits is considered in a proceeding in equity or at
law), and will conform in substance to the description thereof contained in the
Registration Statement and the Prospectus, and will in all material respects be
in the form contemplated by the Indenture.
(g) The execution and delivery by the Depositor of this
Agreement, the Underwriting Agreement, the Deposit Trust Agreement, dated as of
June 1, 1999, among the Depositor, the Owner Trustee and Bank of New York, as
trust paying agent (the "Deposit Trust Agreement"), Loan Sale Agreement, dated
as of June 1, 1999, between Funding Co. and the
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Depositor (the "Loan Sale Agreement) and the Loan Transfer Agreement, dated as
of June 1, 1999, between the Depositor and the Issuer (the "Loan Transfer
Agreement) (collectively, the "Depositor Agreements") are within the corporate
power of the Depositor and neither the execution and delivery by the Depositor
of the Depositor Agreements, nor the consummation by the Depositor of the
transactions therein contemplated, nor the compliance by the Depositor with the
provisions thereof, will conflict with or result in a breach of, or constitute a
default under, the charter or the by-laws of the Depositor or any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
binding on the Depositor or its properties, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the Depositor is a
party or by which it is bound, or will result in the creation or imposition of a
lien, charge or encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, contract or other instrument, except such as have
been obtained under the 1933 Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Offered
Securities by the Underwriter.
(h) The Underwriting Agreement has been, and at the Closing
Date the Deposit Trust Agreement, the Loan Sale Agreement and the Loan Transfer
Agreement will have been, duly authorized, executed and delivered by the
Depositor.
(i) At the Closing Date, each of the Depositor Agreements
will constitute a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor, in accordance with its terms, subject, as to
the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(j) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of, any court
or governmental authority or agency is required for the consummation by the
Depositor of the transactions contemplated by the Depositor Agreements, except
such as have been obtained and except such as may be required under the 1933
Act, the rules and regulations thereunder, or state securities or "Blue Sky"
laws, in connection with the purchase and distribution of the Offered Securities
by the Underwriter.
(k) The Depositor owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be, and to
operate, its properties and to carry on its business as presently conducted and
has received no notice of proceedings relating to the revocation of any such
license, permit, consent, order or approval, which singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
adversely affect the conduct of the business, results of operations, net worth
or condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the
Prospectus, there are no legal or governmental proceedings pending to which the
Depositor is a party or of which any property of the Depositor is the subject
which, if determined adversely to the Depositor would individually or in the
aggregate have a material adverse effect on the condition (financial or
otherwise), earnings, affairs, or business or business prospects of the
Depositor and, to the best of the Depositor's
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knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(m) Each of the Offered Securities will, when issued, be a
"mortgage related security" as such term is defined in Section 3(a)(41) of the
1934 Act.
(n) At the time of execution and delivery of the Loan
Transfer Agreement, the Depositor will have good and marketable title to the
Initial Mortgage Loans, being transferred to the Issuer pursuant to the Loan
Transfer Agreement, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest claiming through the
Depositor (collectively, "Liens"), and will not have assigned to any person any
of its right, title or interest in such Initial Mortgage Loans, or in such Loan
Transfer Agreement, the Depositor will have the power and authority to transfer
such Initial Mortgage Loans, to the Issuer and to cause the Issuer to transfer
the Offered Securities to each of the Underwriter, and upon execution and
delivery to the Issuer of the Loan Transfer Agreement and delivery to each of
the Underwriter of the Offered Securities, the Issuer will have good and
marketable title to the Initial Mortgage Loans, 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.
(o) 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.
(p) 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 RBMG or
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the Mortgage Loans, except to the extent that the Depositor has been indemnified
by RBMG or (3) information supplied by the Note Insurer. This indemnity
agreement will be in addition to any liability which the Depositor may otherwise
have.
(b) Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's officers
who signed the Registration Statement and each person, if any, who controls the
Depositor, within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities to which the Depositor, or any such director, officer or
controlling person may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, any Computational Materials, any ABS Term Sheets or
any amendment or supplement thereto, or any other prospectus relating to the
Offered Securities, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statements or alleged untrue
statements or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Depositor by any
Underwriter through the Representative specifically for use therein; and each
Underwriter will reimburse any legal or other expenses reasonably incurred by
the Depositor or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have. The Depositor acknowledges that the statements
set forth under the caption "UNDERWRITING" in the Prospectus Supplement
constitute the only information furnished to the Depositor by or on behalf of
any Underwriter for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus, and each of the several Underwriter represents and
warrants that such statements are correct as to it.
(c) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 7 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by 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
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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.
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
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the Underwriting Agreement to purchase the Offered Securities which such
defaulting Underwriter or Underwriter agreed but failed to purchase. If any
Underwriter or Underwriter so defaults or default and the aggregate principal
amount of the Offered Securities with respect to which such default or defaults
occurs or occur is more than ten percent of the aggregate principal amount,
notional amount or stated amount, as applicable, of Offered Securities to be
sold under the Underwriting Agreement, as the case may be, and arrangements
satisfactory to the Representative and the Depositor for the purchase of such
Offered Securities by other persons (who may include one or more of the
non-defaulting Underwriter including the Representative) are not made within 36
hours after any such default, the Underwriting Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Depositor except
for the expenses to be paid or reimbursed by the Depositor pursuant to Section
11 hereof. As used in the Underwriting Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
Nothing herein shall relieve a defaulting Underwriter from liability for its
default.
SECTION 11. EXPENSES. The Depositor agrees with the several
Underwriter that:
(a) whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement is
terminated, the Depositor will pay all fees and expenses incident to the
performance of its obligations under the Underwriting Agreement, including, but
not limited to, (i) the Commission's registration fee, (ii) the expenses of
printing and distributing the Underwriting Agreement and any related
underwriting documents, the Registration Statement, any Preliminary Prospectus,
the Prospectus, any amendments or supplements to the Registration Statement or
the Prospectus, and any Blue Sky memorandum or legal investment survey and any
supplements thereto, (iii) fees and expenses of rating agencies, accountants and
counsel for the Depositor, (iv) the expenses referred to in Section 5(e) hereof,
and (v) all miscellaneous expenses referred to in Item 30 of the Registration
Statement;
(b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriter in connection
with investigating, preparing to market and marketing the Offered Securities and
proposing to purchase and purchasing the Offered Securities under the
Underwriting Agreement will be borne and paid by the Depositor if the
Underwriting Agreement is terminated by the Depositor pursuant to Section 9(a)
hereof or by the Representative on account of the failure, refusal or inability
on the part of the Depositor to perform all obligations and satisfy all
conditions on the part of the Depositor to be performed or satisfied hereunder;
and
(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.
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SECTION 12. NOTICES. All communications under the
Underwriting Agreement shall be in writing and, if sent to the Underwriter,
shall be mailed, delivered or telegraphed and confirmed to the Representative at
the address and to the attention of the person specified in the Underwriting
Agreement, and, if sent to the Depositor, shall be mailed, delivered or
telegraphed and confirmed to Residential Asset Funding Corporation, One First
Union Center, 301 South College Street, Charlotte, North Carolina 28202-6001,
Attention: Managing Director - Asset Finance Group; provided, however, that any
notice to any Underwriter pursuant to the Underwriting Agreement shall be
mailed, delivered or telegraphed and confirmed to such Underwriter at the
address furnished by it.
SECTION 13. REPRESENTATIVE OF UNDERWRITER. Any Representative
identified in the Underwriting Agreement will act for the Underwriter of the
Offered Securities and any action taken by the Representative under the
Underwriting Agreement will be binding upon all of such Underwriter.
SECTION 14. SUCCESSORS. The Underwriting Agreement shall
inure to the benefit of and shall be binding upon the several Underwriter and
the Depositor and their respective successors and legal representatives, and
nothing expressed or mentioned herein or in the Underwriting Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of the Underwriting Agreement, or any
provisions herein contained, the Underwriting Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriter shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Offered Securities from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 15. TIME OF THE ESSENCE. Time shall be of the essence
of each Underwriting Agreement.
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SECTION 16. GOVERNING LAW. This Agreement and each
Underwriting Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
[Signature Page Follows]
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If the foregoing is in accordance with your understanding,
please sign and return two counterparts hereof.
Yours truly,
RESIDENTIAL ASSET FUNDING CORPORATION
By: /s/ Shanker Merchant
----------------------------------
Name: Shanker Merchant
Title: Senior Vice President
Accepted as of the date hereof:
FIRST UNION CAPITAL MARKETS CORP.,
By: /s/ Carolyn Eskridge
----------------------------------------
Name: Carolyn Eskridge
Title: Senior Vice President
[Signature Page to Underwriting Agreement Standard Provisions]
<PAGE>
Exhibit A
Opinions of Dewey Ballantine LLP,
special counsel for the Depositor
(1) Each of the Depositor Documents constitutes the valid,
legal and binding agreement of the Depositor, and is enforceable against the
Depositor in accordance with its terms.
(2) The Notes, assuming the due execution by the Indenture
Trustee and due authentication by the Indenture Trustee and payment therefor
pursuant to the Underwriting Agreement, are validly issued and outstanding and
are entitled to the benefits of the Indenture.
(3) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required under federal laws or the laws of the State of New York for the
execution, delivery and performance of the Documents or the offer, issuance,
sale or delivery of the Notes or the consummation of any other transaction
contemplated thereby by the Depositor, except such which have been obtained.
(4) The Registration Statement and the Prospectus (other than
the financial and statistical data included therein, as to which we are not
called upon to express any opinion), at the time the Registration Statement
became effective, as of the date of execution of the Underwriting Agreement and
as of the date hereof comply as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations thereunder, and the
Exchange Act and the rules and regulations thereunder, and we do not know of any
amendment to the Registration Statement required to be filed, or of any
contracts, indentures or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus, which has not been filed or described
as required.
(5) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended and the Issuer is not required to be
registered under the Investment Company Act of 1940.
(6) The statements in the Prospectus Supplement set forth
under the caption "DESCRIPTION OF THE NOTES," to the extent such statements
purport to summarize certain provisions of the Notes or of the Indenture, are
fair and accurate in all material respects.
A-1
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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 Mortgage Loans to the RBMG
Asset Management Company, Inc., nor the execution, delivery or performance by
the Company of the Company Agreements conflicts or will conflict with or results
or will result in a breach of, or constitutes or will constitute a default under
or violates or will violate, (i) any term or provision of the Articles of
Incorporation or By-laws of the Company; (ii) any term or provision of any
material agreement, contract, instrument or indenture, to which the Company or
any of its subsidiaries is a party or is bound; or (iii) any order, judgment,
writ, injunction or decree of any court or governmental agency or body or other
tribunal having jurisdiction over the Company or any of its properties.
(5) The endorsement and delivery of each Mortgage Note, and
the preparation, delivery and recording of an Assignment of Mortgage with
respect to each Mortgage is sufficient fully to transfer to [RBMG Asset
Management Company, Inc.] and its assignees all right, title and interest of the
Company in the Mortgage Note and Mortgage, as noteholder and mortgagee or
assignee thereof.
(6) No consent, approval, authorization or order of,
registration or qualification of or with or notice to, any courts, governmental
agency or body or other tribunal is required under the laws of New York or
Delaware, for the execution, delivery and performance of the RBMG Agreements or
the consummation of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company; (ii) the Company's ability to perform its obligations under, or the
validity or enforceability of, the Company Agreements; (iii) any Mortgage Note
or Mortgaged Property, or the title of any
B-1-1
<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-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 Mortgage Loans to Funding Co.,
nor the execution, delivery or performance by the Company of the Company
Agreements conflicts or will conflict with or results or will result in a breach
of, or constitutes or will constitute a default under or violates or will
violate, (i) any term or provision of the Articles of Incorporation or By-laws
of the Company; (ii) any term or provision of any material agreement, contract,
instrument or indenture, to which the Company or any of its subsidiaries is a
party or is bound; or (iii) any order, judgment, writ, injunction or decree of
any court or governmental agency or body or other tribunal having jurisdiction
over the Company or any of its properties.
(5) The endorsement and delivery of each Mortgage Note, and
the preparation, delivery and recording of an Assignment of Mortgage with
respect to each Mortgage is sufficient fully to transfer to the [RBMG Funding
Co.] and its assignees all right, title and interest of the Company in the
Mortgage Note and Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of,
registration or qualification of or with or notice to, any courts, governmental
agency or body or other tribunal is required under the laws of New York or
Nevada, for the execution, delivery and performance of the Company Agreements or
the consummation of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company; (ii) the Company's ability to perform its obligations under, or the
validity or enforceability of, the Company Agreements; (iii) any Mortgage Note
or Mortgaged Property, or the title of any Mortgagor to any Mortgaged Property;
or (B) which have not otherwise been disclosed in the
B-2-1
<PAGE>
Registration Statement and to the best of such counsel's knowledge, no such
proceedings or investigations are threatened or contemplated by governmental
authorities or threatened by others.
B-2-2
<PAGE>
Exhibit B-3
Opinions of Counsel to
RBMG Funding Co.
(1) RBMG Funding Co. ("the Company") has been duly organized
and is validly existing as a corporation in good standing under the State of
Nevada and is duly qualified to transact business in all states in which the
conduct of its business requires such qualification.
(2) the Company has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and perform and
observe the conditions of, the Basic Documents (as defined in the Indenture) to
which it is a party (collectively referred to herein as the "the Company
Agreements").
(3) The Company Agreements have been duly and validly
authorized, executed and delivered by the Company, all requisite corporate
action having been taken with respect thereto, and each constitutes the valid,
legal and binding agreement of the Company, and are enforceable against the
Company in accordance with their respective terms.
(4) Neither the transfer of the Mortgage Loans to the
Depositor, nor the execution, delivery or performance by the Company of the
Company Agreements conflicts or will conflict with or results or will result in
a breach of, or constitutes or will constitute a default under or violates or
will violate, (i) any term or provision of the Articles of Incorporation or
By-laws of the Company; (ii) any term or provision of any material agreement,
contract, instrument or indenture, to which the Company or any of its
subsidiaries is a party or is bound; or (iii) any order, judgment, writ,
injunction or decree of any court or governmental agency or body or other
tribunal having jurisdiction over the Company or any of its properties.
(5) The endorsement and delivery of each Mortgage Note, and
the preparation, delivery and recording of an Assignment of Mortgage with
respect to each Mortgage is sufficient fully to transfer to the Depositor and
its assignees all right, title and interest of the Company in the Mortgage Note
and Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of,
registration or qualification of or with or notice to, any courts, governmental
agency or body or other tribunal is required under the laws of New York or
Nevada, for the execution, delivery and performance of the Company Agreements or
the consummation of any other transaction contemplated thereby by the Company,
except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Company before any court, governmental agency or body or other tribunal (A)
which, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on (i) the consolidated financial
position, business prospects, stockholders' equity or results of operations of
the Company; (ii) the Company's ability to perform its obligations under, or the
validity or enforceability of, the Company Agreements; (iii) any Mortgage Note
or Mortgaged Property, or the title of any Mortgagor to any Mortgaged Property;
or (B) which have not otherwise been disclosed in the Registration Statement and
to the best of such counsel's knowledge, no such proceedings or investigations
are threatened or contemplated by governmental authorities or threatened by
others.
B-3-1
<PAGE>
Exhibit C
Opinions of Counsel to
the Indenture Trustee
(1) The Indenture Trustee is a banking corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the power and authority to enter into and to take all actions
required of it under the Indenture.
(2) The Indenture has been duly authorized, executed and
delivered by the Indenture Trustee and the Indenture constitutes the legal,
valid and binding obligation of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its terms, except as enforceability thereof
may be limited by (A) bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, as such laws
would apply in the event of a bankruptcy, insolvency or reorganization or
similar occurrence affecting the Indenture Trustee, and (B) general principles
of equity regardless of whether such enforcement is sought in a proceeding at
law or in equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Indenture Trustee in connection with its execution and delivery of the Indenture
or the performance of its obligations thereunder.
(4) The Notes have been duly executed, authenticated and
delivered by the Indenture Trustee.
(5) The execution and delivery of, and performance by the
Indenture Trustee of its obligations under, the Indenture do not conflict with
or result in a violation of any statute or regulation applicable to the
Indenture Trustee, or the charter or bylaws of the Indenture Trustee, or to the
best knowledge of such counsel, any governmental authority having jurisdiction
over the Indenture Trustee or the terms of any indenture or other agreement or
instrument to which the Indenture Trustee is a party or by which it is bound.
C-1
<PAGE>
Exhibit D
Opinions of Counsel
to the Note Insurer
(1) The Note Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New York. The
Note Insurer is validly licensed and authorized to issue the Note Insurance
Policy and perform its obligations under the Note Insurance Policy in accordance
with the terms thereof, under the laws of the State of New York.
(2) The execution and delivery by the Note Insurer of the Note
Insurance Policy, and the Indemnification Agreement are within the corporate
power of the Note Insurer and have been authorized by all necessary corporate
action on the part of the Note Insurer; the Note Insurance Policy has been duly
executed and is the valid and binding obligation of the Note Insurer enforceable
in accordance with its terms except that the enforcement of the Note Insurance
Policy may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity.
(3) The Note Insurer is authorized to deliver the
Indemnification Agreement, and the Indemnification Agreement has been duly
executed and is the valid and binding obligation of the Note Insurer enforceable
in accordance with its terms except that the enforcement thereof may be limited
by laws relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights generally and by
general principles of equity and by public policy considerations relating to
indemnification for securities law violations.
(4) No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required on the part of the
Note Insurer, the lack of which would adversely affect the validity or
enforceability of the Note Insurance Policy; to the extent required by
applicable legal requirements that would adversely affect validity or
enforceability of the Note Insurance Policy, the form of each Note Insurance
Policy has been filed with, and approved by, all governmental authorities having
jurisdiction over the Note Insurer in connection with such Note Insurance
Policy.
(5) To the extent the Note Insurance Policy constitutes a
security within the meaning of Section 2(1) of the 1933 Act, it is a security
that is exempt from the registration requirements of the Act.
(6) The information set forth under the captions "THE
INSURANCE POLICY AND THE NOTE INSURER" in the Prospectus insofar as such
statements constitute a description of the Note Insurance Policy, accurately
summarizes the Note Insurance Policy.
D-1
Exhibit 4.1
Execution Copy
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1,
ISSUER
AND
BANK OF NEW YORK,
INDENTURE TRUSTEE
---------------------------------------
INDENTURE
DATED AS OF JUNE 1, 1999
---------------------------------------
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
ASSET-BACKED NOTES, CLASS A-1 AND CLASS A-2
SERIES 1999-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
ARTICLE I DEFINITIONS ............................................................................................2
Section 1.01. General Definitions........................................................................2
"A Risk Mortgage Loans".........................................................................2
"A- Risk Mortgage Loans"........................................................................2
"Accountant"....................................................................................2
"Act"...........................................................................................2
"Adjustable-Rate Mortgage Loan".................................................................2
"Adjustment Date"...............................................................................2
"Administrative Fee Amount".....................................................................3
"Affiliate".....................................................................................3
"Agent".........................................................................................3
"Aggregate Scheduled Principal Balance".........................................................3
"Aggregate Stated Principal Balance"............................................................3
"Assignment"....................................................................................3
"Authenticating Agent"..........................................................................3
"Authorized Officer"............................................................................3
"Available Funds"...............................................................................3
"Available Funds Cap Rate"......................................................................5
"Available Funds Cap Rate Carry Forward Amount".................................................5
"B Risk Mortgage Loans".........................................................................5
"B- Risk Mortgage Loans"........................................................................5
"Bankruptcy Code"...............................................................................5
"Basic Documents"...............................................................................5
"Beneficial Owner"..............................................................................5
"Best Efforts"..................................................................................6
"Book-Entry Notes"..............................................................................6
"Book-Entry Custodian"..........................................................................6
"Book-Entry Termination"........................................................................6
"Business Day"..................................................................................6
"C Risk Mortgage Loans".........................................................................6
"Cap Agreement".................................................................................6
: That certain interest rate cap agreement held by the Indenture Trustee and made
between ________ and the Cap Provider...........................................................6
"Cap Payment"...................................................................................6
: Any payments received by the Indenture Trustee with respect to a Group and a
Payment Date under the Cap Agreement............................................................6
"Cap Provider"..................................................................................6
: Morgan Guaranty Trust Company of New York....................................................6
"Cash-Out Refinancing"..........................................................................6
"Cedel".........................................................................................6
"Certificate"...................................................................................6
"Certificate Distribution Account"..............................................................6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Certificateholders"............................................................................6
"Class".........................................................................................6
"Class A-1 Noteholder"..........................................................................7
"Class A-1 Notes"...............................................................................7
"Class A-2 Noteholder"..........................................................................7
"Class A-2 Notes"...............................................................................8
"Class A-2 Required Overcollateralization Amount"...............................................8
"Clearing Agency"...............................................................................8
"Clearing Agency Participants"..................................................................8
"Closing Date"..................................................................................8
"Code"..........................................................................................8
"Collection Account"............................................................................8
"Collection Period".............................................................................8
"Commission"....................................................................................8
"Company".......................................................................................9
"Company Sale Agreement"........................................................................9
"Compensating Interest Payments"................................................................9
"Corporate Trust Office"........................................................................9
"Coupon Rate"...................................................................................9
"Crossover Amount"..............................................................................9
"Cumulative Insured Payments"...................................................................9
"Custodial Agreement"..........................................................................10
"Custodian"....................................................................................10
"Cut-off Date".................................................................................10
"D Risk Mortgage Loans"........................................................................10
"Default"......................................................................................10
"Defective Mortgage Loan"......................................................................10
"Deficiency Event".............................................................................10
"Deficient Valuation"..........................................................................10
"Definitive Notes".............................................................................10
"Deleted Mortgage Loan"........................................................................10
"Delinquency Amount"...........................................................................10
"Delinquency Loss Factor"......................................................................10
"Delinquency Percentage".......................................................................11
"Depositor"....................................................................................11
"Depositor Sale Agreement".....................................................................11
"Determination Date"...........................................................................11
"Due Date".....................................................................................11
"Due Period"...................................................................................11
"Eligible Account".............................................................................11
"Euroclear"....................................................................................12
"Event of Default".............................................................................12
"Excess Cash"..................................................................................12
"Excess Cash Payment"..........................................................................12
"Expense Adjusted Coupon Rate".................................................................12
"FDIC".........................................................................................12
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"FHLMC"........................................................................................12
"Final Certification"..........................................................................12
"Final Maturity Date"..........................................................................12
"First Mortgage Loan"..........................................................................12
"FNMA".........................................................................................13
"Full Prepayment"..............................................................................13
"Funding Co. ".................................................................................13
"Funding Co. Sale Agreement"...................................................................13
"Grant"........................................................................................13
"Gross Margin".................................................................................13
"Group"........................................................................................13
"Group I"......................................................................................13
"Group I Mortgage Loans".......................................................................13
"Group II".....................................................................................13
"Group II Mortgage Loans"......................................................................14
"Highest Lawful Rate"..........................................................................14
"Indenture"....................................................................................14
"Indenture Trustee"............................................................................14
"Indenture Trustee Fee Rate"...................................................................14
: As of any Payment Date, 0.0175% per annum...................................................14
"Indenture Trustee's Fee"......................................................................14
"Independent"..................................................................................14
"Index"........................................................................................14
"Individual Note"..............................................................................15
"Initial Certification"........................................................................15
"Indemnification Agreement"....................................................................15
"Insurance Agreement"..........................................................................15
"Insurance Policies"...........................................................................15
"Insurance Proceeds"...........................................................................15
"Insured Payments".............................................................................15
"Interest Determination Date"..................................................................15
"Interest Period"..............................................................................15
"Interim Certification"........................................................................15
"Issuer".......................................................................................16
"Issuer Order" and "Issuer Request"............................................................16
"Letter Agreement".............................................................................16
"Liquidated Mortgage Loan".....................................................................16
"Liquidation Date".............................................................................16
"Liquidation Event"............................................................................16
"Liquidation Proceeds".........................................................................16
"Loan Contribution Agreement"..................................................................16
"Loan-To-Value Ratio"..........................................................................16
"London Business Day"..........................................................................16
"Majority Certificateholder"...................................................................16
"Management Agreement".........................................................................16
"Manager"......................................................................................16
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Maturity".....................................................................................16
"Maximum Rate".................................................................................17
"MBIA Insurance Policy"........................................................................17
"MBIA Payment Default".........................................................................17
"Minimum Rate".................................................................................17
"Minimum Spread"...............................................................................17
"Monthly Payment"..............................................................................17
"Monthly Principal"............................................................................17
"Monthly Principal Available"..................................................................17
"Moody's"......................................................................................17
"Mortgage".....................................................................................18
"Mortgage File"................................................................................18
"Mortgage Loan"................................................................................18
"Mortgage Loan Schedule".......................................................................18
"Mortgage Note"................................................................................20
"Mortgaged Property"...........................................................................20
"Mortgagor"....................................................................................20
"Net Liquidation Proceeds".....................................................................20
"Nonrecoverable P&I Advance"...................................................................20
"Note Account".................................................................................20
"Note Balance".................................................................................20
"Note Factor"..................................................................................21
"Noteholder" or "Holder".......................................................................21
"Note Formula Rate"............................................................................21
"Note Insurer".................................................................................21
"Note Insurer Commitment Letter"...............................................................21
"Note Insurer Default".........................................................................21
"Note Insurer Premium".........................................................................22
"Note Insurer Premium Rate"....................................................................22
"Note Interest"................................................................................22
"Note Interest Rate"...........................................................................23
"Note Register"................................................................................23
"Notes"........................................................................................23
"Notice of Claim"..............................................................................23
"Officers' Certificate"........................................................................23
"One-Month Libor"..............................................................................23
"Opinion Of Counsel"...........................................................................24
"Original Note Balance"........................................................................24
"Outstanding"..................................................................................24
"Outstanding Note Balance".....................................................................25
"Overcollateralization Amount".................................................................25
"Overcollateralization Deficit"................................................................25
"Overcollaterization Surplus"..................................................................25
"Owner Trustee"................................................................................25
"P&I Advance"..................................................................................25
"Paying Agent".................................................................................25
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Payment Ahead"................................................................................25
"Payment Date".................................................................................25
"Payment Date Statement".......................................................................26
"Percentage Interest"..........................................................................28
"Periodic Rate Cap"............................................................................28
"Permitted Investments"........................................................................28
"Person".......................................................................................29
"Policy Payments Account"......................................................................29
"Predecessor Notes"............................................................................29
"Preference Amount"............................................................................30
"Prepayment Interest Shortfall"................................................................30
"Principal Prepayment".........................................................................30
"Proceeding"...................................................................................30
"Prospectus Supplement"........................................................................30
"Purchase Price"...............................................................................30
"Qualified Replacement Mortgage Loan"..........................................................31
"Rate/Term Refinancing"........................................................................31
"Rating Agencies"..............................................................................31
"RBMG".........................................................................................31
"RBMG Guidelines"..............................................................................31
"Realized Loss"................................................................................31
"Record Date"..................................................................................32
"Redemption Date"..............................................................................32
"Redemption Price".............................................................................32
"Reference Banks"..............................................................................33
"Refinanced Mortgage Loan".....................................................................33
"Release Date".................................................................................33
"Relief Act Interest Shortfall"................................................................33
"Remittable Funds".............................................................................33
"REO Imputed Interest".........................................................................33
"REO Principal Amortization"...................................................................33
"REO Property".................................................................................33
"Required Overcollateralization Amount"........................................................33
"Required Payment Amount"......................................................................34
"Reserve Account"..............................................................................34
"Reserve Interest Rate"........................................................................34
"Residential Dwelling".........................................................................34
"Responsible Officer"..........................................................................34
"Sale".........................................................................................35
"Scheduled Principal Balance"..................................................................35
"Securities Act"...............................................................................35
"Servicer".....................................................................................35
"Servicer Remittance Date".....................................................................35
"Servicer Remittance Report"...................................................................35
"Servicing Advance"............................................................................35
"Servicing Agreement"..........................................................................36
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Servicing Fee"................................................................................36
"Servicing Fee Rate"...........................................................................36
"Standard & Poor's"............................................................................36
"Stated Principal Balance".....................................................................36
"Stayed Funds".................................................................................37
"Sub-Servicer".................................................................................37
"Sub-Servicing Agreement"......................................................................37
"TIA"..........................................................................................37
"Three Month Rolling Average Delinquency Percentage"...........................................37
"Total Available Funds"........................................................................37
"Total Expected Losses"........................................................................37
"Transferor"...................................................................................37
"Trust Agreement"..............................................................................37
"Trust Estate".................................................................................37
"Trust Paying Agent"...........................................................................37
"Twelve Month Loss Amount".....................................................................38
"Underwriter"..................................................................................38
"U.S. Bankruptcy Code".........................................................................38
"Value"........................................................................................38
"Vice President"...............................................................................38
ARTICLE II THE NOTES .........................................................................................39
Section 2.01. Forms Generally..........................................................................39
Section 2.02. Forms of Certificate of Authentication...................................................39
Section 2.03. General Provisions With Respect to Principal and Interest Payments.......................39
Section 2.04. Denominations............................................................................40
Section 2.05. Execution, Authentication, Delivery and Dating...........................................40
Section 2.06. Registration, Registration of Transfer and Exchange......................................41
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes...............................................42
Section 2.08. Payments of Principal and Interest.......................................................43
Section 2.09. Persons Deemed Owners....................................................................45
Section 2.10. Cancellation.............................................................................45
Section 2.11. Authentication and Delivery of Notes.....................................................45
Section 2.12. Book-Entry Notes.........................................................................47
Section 2.13. Termination of Book Entry System.........................................................49
Section 2.14. [Reserved]...............................................................................49
Section 2.15. Certain Available Information............................................................49
ARTICLE III COVENANTS .........................................................................................50
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 3.01. Payment of Notes.........................................................................50
Section 3.02. Maintenance of Office or Agency..........................................................50
Section 3.03. Money for Note Payments to be Held in Trust..............................................50
Section 3.04. Existence of Issuer......................................................................52
Section 3.05. Protection of Trust Estate...............................................................53
Section 3.06. Opinions as to Trust Estate..............................................................54
Section 3.07. Performance of Obligations; Servicing Agreement..........................................54
Section 3.08. Investment Company Act...................................................................55
Section 3.09. Negative Covenants.......................................................................55
Section 3.10. Annual Statement as to Compliance........................................................56
Section 3.11. Restricted Payments......................................................................56
Section 3.12. Treatment of Notes as Debt for Tax Purposes..............................................56
Section 3.13. Notice of Events of Default..............................................................56
Section 3.14. Further Instruments and Acts.............................................................57
ARTICLE IV SATISFACTION AND DISCHARGE............................................................................57
Section 4.01. Satisfaction and Discharge of Indenture..................................................57
Section 4.02. Application of Trust Money...............................................................58
ARTICLE V DEFAULTS AND REMEDIES..................................................................................58
Section 5.01. Event of Default.........................................................................58
Section 5.02. Acceleration of Maturity; Rescission and Annulment.......................................60
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee................60
Section 5.04. Remedies.................................................................................61
Section 5.05. Indenture Trustee May File Proofs of Claim...............................................61
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of Notes.........................62
Section 5.07. Application of Money Collected...........................................................62
Section 5.08. Limitation on Suits......................................................................64
Section 5.09. Unconditional Right of Noteholders to Receive Principal and Interest.....................64
Section 5.10. Restoration of Rights and Remedies.......................................................65
Section 5.11. Rights and Remedies Cumulative...........................................................65
Section 5.12. Delay or Omission Not Waiver.............................................................65
</TABLE>
vii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 5.13. Control by Noteholders...................................................................65
Section 5.14. Waiver of Past Defaults..................................................................66
Section 5.15. Undertaking for Costs....................................................................66
Section 5.16. Waiver of Stay or Extension Laws.........................................................67
Section 5.17. Sale of Trust Estate.....................................................................67
Section 5.18. Action on Notes..........................................................................68
Section 5.19. No Recourse to Other Trust Estates or Other Assets of the Issuer.........................68
Section 5.20. Application of the Trust Indenture Act...................................................68
ARTICLE VI THE INDENTURE TRUSTEE.................................................................................69
Section 6.01. Duties of Indenture Trustee..............................................................69
Section 6.02. Notice of Default........................................................................70
Section 6.03. Rights of Indenture Trustee..............................................................71
Section 6.04. Not Responsible for Recitals or Issuance of Notes........................................71
Section 6.05. May Hold Notes...........................................................................71
Section 6.06. Money Held in Trust......................................................................72
Section 6.07. Eligibility; Disqualification............................................................72
Section 6.08. Indenture Trustee's Capital and Surplus..................................................72
Section 6.09. Resignation and Removal; Appointment of Successor........................................72
Section 6.10. Acceptance of Appointment by Successor...................................................74
Section 6.11. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee.........74
Section 6.12. Preferential Collection of Claims against Issuer.........................................74
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees....................................75
Section 6.14. Authenticating Agents....................................................................76
Section 6.15. Review of Mortgage Files.................................................................77
Section 6.16. Indenture Trustee Fees and Expenses......................................................79
ARTICLE VII NOTEHOLDERS' LISTS...................................................................................80
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders...................80
Section 7.02. Preservation of Information; Communications to Noteholders...............................80
Section 7.03. Reports by Indenture Trustee.............................................................80
Section 7.04. Reports by Issuer........................................................................81
</TABLE>
viii
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES..........................................81
Section 8.01. Collection of Moneys.....................................................................81
Section 8.02. Establishment of Accounts;...............................................................82
Section 8.03. [Reserved]...............................................................................85
Section 8.04. [Reserved]...............................................................................85
Section 8.05. Claims Against the MBIA Insurance Policy.................................................85
Section 8.06. General Provisions Regarding the Note Account and Mortgage Loans.........................86
Section 8.07. Releases of Defective Mortgage Loans.....................................................87
Section 8.08. Reports by Indenture Trustee to Noteholders; Access to Certain Information...............88
Section 8.09. Trust Estate Mortgage Files..............................................................89
Section 8.10. Amendment to Servicing Agreement.........................................................89
Section 8.11. Delivery of the Mortgage Files Pursuant to Servicing Agreement...........................89
Section 8.12. Servicer as Agent........................................................................90
Section 8.13. Termination of Servicer..................................................................90
Section 8.14. Investment of Funds in the Note Accounts.................................................90
Section 8.15. Appointment of Custodians................................................................91
Section 8.16. Rights of the Note Insurer to Exercise Rights of Noteholders.............................92
Section 8.17. Trust Estate and Accounts Held for Benefit of the Note Insurer...........................92
Section 8.18. Reserve Account..........................................................................92
ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................94
Section 9.01. Supplemental Indentures without Consent of Noteholders...................................94
Section 9.02. Supplemental Indentures with Consent of Noteholders......................................95
Section 9.03. Execution of Supplemental Indentures.....................................................96
Section 9.04. Effect of Supplemental Indentures........................................................97
Section 9.05. [Reserved]...............................................................................97
Section 9.06. Reference in Notes to Supplemental Indentures............................................97
Section 9.07. Amendments to Governing Documents........................................................97
ARTICLE X REDEMPTION OF NOTES....................................................................................98
Section 10.01. Redemption..............................................................................98
Section 10.02. Form of Redemption Notice...............................................................98
</TABLE>
ix
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<TABLE>
<CAPTION>
<S> <C>
Section 10.03. Notes Payable on Optional Redemption....................................................99
ARTICLE XI MISCELLANEOUS........................................................................................ 99
Section 11.01. Compliance Certificates and Opinions....................................................99
Section 11.02. Form of Documents Delivered to Indenture Trustee.......................................100
Section 11.03. Acts of Noteholders....................................................................101
Section 11.04. Notices, etc. to Indenture Trustee, the Note Insurer and Issuer........................101
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices..................................103
Section 11.06. Rules by Indenture Trustee.............................................................103
Section 11.07. Conflict With Trust Indenture Act......................................................103
Section 11.08. Effect of Headings and Table of Contents...............................................103
Section 11.09. Successors and Assigns.................................................................104
Section 11.10. Separability...........................................................................104
Section 11.11. Benefits of Indenture..................................................................104
Section 11.12. Legal Holidays.........................................................................104
Section 11.13. Governing Law..........................................................................104
Section 11.14. Counterparts...........................................................................104
Section 11.15. Recording of Indenture.................................................................105
Section 11.16. Issuer Obligation......................................................................105
Section 11.17. No Petition............................................................................105
Section 11.18. Inspection.............................................................................106
Section 11.19. Usury..................................................................................106
Section 11.20. Third-Party Beneficiary................................................................106
Section 11.21. Limitation on Liability of Owner Trustee...............................................106
</TABLE>
SCHEDULES AND EXHIBITS
Schedule I.................Mortgage Loan Schedule
Exhibit A..................Form of Note
Exhibit B..................Form of Officer's Certificate
Exhibit C..................Form of Servicing Agreement
Exhibit D..................Form of Custodial Agreement
Exhibit E..................Form of Investment Letter
x
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xi
<PAGE>
CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of
the provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.1
<TABLE>
<CAPTION>
Trust Indenture Act of 1939 Indenture Section
--------------------------- -----------------
<S> <C>
Section 310
(a) (1)................................................................ 6.07
(a) (2)................................................................ 6.07, 6.08
(a) (3)................................................................ 6.13
(a) (4)................................................................ Not Applicable
(a) (5)................................................................ 6.07
(b).................................................................... 6.07, 6.09
(c).................................................................... Not Applicable
Section 311
(a).................................................................... 6.12
(b).................................................................... 6.12
(c).................................................................... Not Applicable
Section 312
(a).................................................................... 7.01(a), 7.02(a)
(b).................................................................... 7.02(b)
(c).................................................................... 7.02(c)
Section 313
(a).................................................................... 7.03(a)
(b).................................................................... 7.03(a)
(c).................................................................... 11.05
(d).................................................................... 7.03(b)
Section 314
(a)(1)................................................................. 7.04
(a)(2)................................................................. 7.04
(a)(3)................................................................. 7.04
(a)(4)................................................................. 7.04
(b)(1)................................................................. 2.11(c), 11.01
(b)(2)................................................................. 3.06
(c)(1)................................................................. 2.11(d), 4.01,
8.02(e), 11.01
(c)(2)................................................................. 2.11(c), 4.01,
8.02(e), 11.01
(c)(3)................................................................. 8.02(e)
(d)(1)................................................................. 11.01(a)
(d)(2)................................................................. 11.01(a)
(d)(3)................................................................. 11.01(a)
(e).................................................................... 11.0 1(b)
Section 315
</TABLE>
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1 This Cross-Reference Table is not part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(a).................................................................... 6.01(b), 6.01(c)(i)
(b).................................................................... 6.02, 11.05
(c).................................................................... 6.01(a)
(d)(1)................................................................. 6.01(b), 6.01(c)
(d)(2)................................................................. 6.01(c)(ii)
(d)(3)................................................................. 6.01(c)(iii)
(e).................................................................... 5.15
Section 316
(a).................................................................... 5.20
(b).................................................................... 5.09
(c).................................................................... 5.20
Section 317
(a)(1)................................................................. 5.03
(a)(2)................................................................. 5.05
(b).................................................................... 3.01
Section 318
(a).................................................................... 11.07
</TABLE>
<PAGE>
THIS INDENTURE, dated as of June 1, 1999 (as amended or
supplemented from time to time as permitted hereby, this "Indenture"), is
between RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1, a Delaware business trust
(together with its permitted successors and assigns, the "Issuer") and THE BANK
OF NEW YORK, a New York banking corporation, as trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of
this Indenture to provide for its Asset-Backed Notes, Series 1999-1 (the
"Notes"), issuable in two Classes as provided in this Indenture. All covenants
and agreements made by the Issuer herein are for the benefit and security of the
Holders of the Notes and the Note Insurer. The Issuer is entering into this
Indenture, and the Indenture Trustee is accepting the trusts created hereby, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
All things necessary to make this Indenture a valid agreement
of the Issuer in accordance with its terms have been done.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee, for the
exclusive benefit of the Holders of the Notes and the Note Insurer, without
recourse but subject to the terms and provisions of this Agreement, all of the
Issuer's right, title and interest in and to (a) the Mortgage Loans (as from
time to time may be Granted by the Issuer) and all Qualified Replacement
Mortgage Loans (as from time to time may be Granted by the Issuer) (including
property that secures a Mortgage Loan that becomes an REO Property), including
the related Mortgage Files delivered or to be delivered to the Indenture Trustee
pursuant to the Depositor Sale Agreement, all payments of principal and interest
due after the applicable Cut-off Date for each Mortgage Loan and all other
proceeds received in respect of such Mortgage Loans, (b) the MBIA Insurance
Policy, (c) the Servicing Agreement, (d) the Cap Agreement, (e) Sections 2, 3,
4, 7, 10 and 13 of the Company Sale Agreement, (f) Sections 2, 3, 4, 7, 10 and
13 of the Depositor Sale Agreement, (g) Sections 2, 3, 4, 7, 10 and 13 of the
Funding Co. Sale Agreement, (h) Sections 2, 3, 4, 5, 6, 7, 10, 11, 14 and 17 of
the Loan Contribution Agreement, (i) the Insurance Policies, (j) all cash,
instruments or other property held or required to be deposited in the Collection
Account, the Note Accounts and the Reserve 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 Accounts, which income shall
belong to and be for the account of the Issuer) and (k) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid assets, including, without limitation, all insurance proceeds and
condemnation awards. Such Grants are made, however, in trust, to secure the
Notes equally and ratably without prejudice, priority or distinction between any
Note and any other 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
<PAGE>
terms, (y) the payment of all other sums payable under this Indenture and (z)
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee acknowledges such Grant, accepts the
trusts hereunder in accordance with the provisions of this Indenture and agrees
to perform the duties herein required in order that, and for the purpose that,
the interests of the Holders of the Notes may be adequately and effectively
protected. The Indenture Trustee agrees that it will hold the MBIA Insurance
Policy in trust and that it will hold any proceeds of any claim upon the MBIA
Insurance Policy, solely for the use and benefit of the Noteholders in
accordance with the terms hereof and the MBIA Insurance Policy.
In connection with the Grant set forth above, the Issuer does
hereby deliver to, and deposit with the Custodian as the agent of the Indenture
Trustee, the Mortgage Files.
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions. Except as otherwise
specified or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture,
including the Preliminary Statement and the Granting Clause, and the definitions
of such terms are applicable to the singular as well as to the plural forms of
such terms and to the masculine as well as to the feminine genders of such
terms. Whenever reference is made herein to an Event of Default or a Default
known to the Indenture Trustee or of which the Indenture Trustee has notice or
knowledge, such reference shall be construed to refer only to an Event of
Default or Default of which the Indenture Trustee is deemed to have notice or
knowledge pursuant to Section 6.01(d).
"A Risk Mortgage Loans": Mortgage Loans graded in the "A"
risk category under the RBMG Guidelines, as more fully described in the
Prospectus Supplement.
"A- Risk Mortgage Loans": Mortgage Loans graded in the "A-"
risk category under the RBMG Guidelines, as more fully described in the
Prospectus Supplement.
"Accountant": A Person engaged in the practice of accounting
who (except when this Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Issuer or an Affiliate of the Issuer.
"Act": With respect to any Noteholder, as defined in Section
11.03.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan, with respect
to which the Coupon Rate adjusts from time-to-time as provided in the related
Mortgage Note and designated as an adjustable-rate Mortgage Loan on the Mortgage
Loan Schedule.
"Adjustment Date": With respect to each Adjustable-Rate
Mortgage Loan, each Adjustment Date, which is the first day of the month in
which the Coupon Rate of an Adjustable-Rate Mortgage Loan changes pursuant to
the related Mortgage Note. The first
2
<PAGE>
Adjustment Date following the Cut-off Date as to each Adjustable-Rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.
"Administrative Fee Amount": For each Group and any Payment
Date, the sum of the related Servicing Fee, the related Indenture Trustee's Fee,
the Note Insurer Premium, and allocable to such Group, each relating to such
Payment Date.
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract, relation to individuals or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent": Any Note Registrar, Paying Agent, Authenticating
Agent or Custodian.
"Aggregate Scheduled Principal Balance": On any date of
determination, the aggregate of the Scheduled Principal Balances of the Mortgage
Loans and REO Properties in Group I, Group II or the Trust Estate, as applicable
on such date.
"Aggregate Stated Principal Balance": On any date of
determination, the aggregate of the Stated Principal Balances of the Mortgage
Loans and REO Properties in Group I, Group II or the Trust Estate, as applicable
on such date.
"Assignment": An assignment of Mortgage, notice of
transfer or equivalent instrument, in recordable form, which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect of record the sale of the Mortgage.
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Issuer pursuant to Section 6.14, until any successor
Authenticating Agent for the Notes is named, and thereafter "Authenticating
Agent" shall mean such successor. The initial Authenticating Agent shall be the
Indenture Trustee. Any Authenticating Agent other than the Indenture Trustee
shall sign an instrument under which it agrees to be bound by all of the terms
of this Indenture applicable to the Authenticating Agent.
"Authorized Officer": With respect to the Indenture Trustee,
any Responsible Officer in the case of the Owner Trustee, the President, any
Vice President, Financial Services Officer or Trust Officer, or any other
officer or employee of the Owner Trustee who has been authorized by the Owner
Trustee's board of directors or by-laws to act for the Owner Trustee with
respect to the Issuer, and with respect to any other Person, the Chairman, Chief
Operating Officer, President or any Vice President of such Person.
"Available Funds": With respect to a Group and any Payment
Date, the sum of the amounts described in clauses (a) through (h) below,
together with amounts from the Reserve Account for the benefit of such Group on
such Payment Date, less (i) the Administrative Fee Amount for such Group in
respect of such Payment Date, (ii) P&I Advances and Servicing Advances for such
Group previously made that are reimbursable to the Servicer (other than those
included in liquidation expenses for any Liquidated Mortgage Loan in such Group
and
3
<PAGE>
reimbursed from the related Liquidation Proceeds) with respect to the related
Collection Period to the extent permitted by the Servicing Agreement, (iii) the
aggregate amounts (A) deposited into the Collection Account or Note Account and
allocable to the related Group that may not be withdrawn therefrom pursuant to a
final and nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the Bankruptcy Code and
that would otherwise have been included in Available Funds on such Payment Date
and (B) received by the Indenture Trustee that are recoverable and sought to be
recovered from the Issuer as a voidable preference by a trustee in bankruptcy
pursuant to the Bankruptcy Code in accordance with a final nonappealable order
of a court of competent jurisdiction, (iv) any Stayed Funds and , (v) any
amounts reimbursable to the Indenture Trustee to the extent appointed as
successor servicer for an advance made pursuant to Section 5.02(b) of the
Servicing Agreement, which advance the Indenture Trustee has determined to be
nonrecoverable from the Stayed Funds in respect of which it was made (without
duplication of any such amount not constituting a portion of Remittable Funds).
(a) all scheduled payments of interest received with respect to the
Mortgage Loans in such Group and due during the related Due Period and
all other interest payments on or in respect of the Mortgage Loans in
such Group received by or on behalf of the Servicer during the related
Collection Period (including Payments Ahead that are allocable to
interest for the related Due Period), net of amounts representing
interest accrued on such Mortgage Loans in respect of any period prior
to the applicable Cut-off Dates, plus any Compensating Interest
Payments made by the Servicer in respect of the related Mortgage Loans
and any net income from related REO Properties for such Collection
Period;
(b) all scheduled payments of principal received with respect to the
Mortgage Loans in such Group and due during the related Due Period and
all other principal payments (including Principal Prepayments, but
excluding amounts described elsewhere in this definition) received or
deemed to be received during the related Collection Period (including
Payments Ahead that are allocable as principal for the related Due
Period) in respect of the related Mortgage Loans;
(c) the aggregate of any related Insurance Proceeds collected by the
Servicer during the related Collection Period with respect to Mortgaged
Property securing a Mortgage Loan in such Group;
(d) the aggregate of any related Net Liquidation Proceeds collected
by the Servicer during the related Collection Period with respect to
Mortgaged Property securing a Mortgage Loan in such Group;
(e) the aggregate of the Purchase Prices received with respect to
Mortgaged Property securing a Mortgage Loan in such Group that are
required or permitted to be repurchased, released, removed or
substituted by any of RBMG, Funding Co., the Company, the Depositor or
the Issuer during or in respect of the related Collection Period, to
the extent such amounts are received by the Indenture Trustee on or
before the related Servicer Remittance Date;
4
<PAGE>
(f) the amount of any P&I Advances with respect to such Group made
by the Servicer for such Payment Date; and
(g) the amount of any Cap Payments available with respect to such
Group for such Payment Date under the Cap Agreement; and
(h) the aggregate of amounts deposited in the related Note Account
during such Collection Period in connection with redemption of the
Notes pursuant to Article X.
"Available Funds Cap Rate": For a Class of Notes and any
Payment Date is a rate per annum equal to a fraction, expressed as a percentage,
the numerator of which is (i) an amount equal to (A) 1/12 of the Aggregate
Scheduled Principal Balance of the then outstanding Mortgage Loans and REO
Properties in the related Group multiplied by the weighted average of the
Expense Adjusted Coupon Rates on the then outstanding Mortgage Loans and REO
Properties in the related Group minus (B) the amount of the Note Insurer Premium
allocable to the related Group for such Payment Date, and the denominator of
which is (ii) an amount equal to (x) the Note Balance of the related Class on
such Payment Date multiplied by (y) the actual number of days elapsed in the
related Interest Period divided by 360.
"Available Funds Cap Rate Carry Forward Amount": For a Class
of Notes and any Payment Date for which the related Note Interest Rate was equal
to the related Available Funds Cap Rate, the difference between the amount of
Note Interest that would have accrued had the related Note Interest Rate equaled
the related Note Formula Rate, minus the amount of Note Interest that did accrue
for such Class and Payment Date, plus interest accrued on such difference from
such Payment Date at the related Note Interest Rate for each successive Interest
Period to but excluding the Payment Date on which such amount, with interest, is
paid in full.
"B Risk Mortgage Loans": Mortgage Loans graded in the
"B" risk category under the RBMG Guidelines, as more fully described in the
Prospectus Supplement.
"B- Risk Mortgage Loans": Mortgage Loans graded in the "B-"
risk category under the RBMG Guidelines, as more fully described in the
Prospectus Supplement.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title
11 of the United States Code), as amended.
"Basic Documents": This Agreement, the Trust Agreement, the
Servicing Agreement, the Company Sale Agreement, the Funding Co. Sale Agreement,
the Depositor Sale Agreement, the Sub-Servicing Agreement, the Management
Agreement, the Cap 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).
5
<PAGE>
"Best Efforts": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, in its reasonable
discretion. Such efforts do not require such Person to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require such Person to advance or expend fees or sums of money in addition to
those specifically set forth in this Indenture and the Servicing Agreement.
"Book-Entry Notes": Any Notes registered in the name of the
Clearing Agency or its nominee, ownership of which is reflected on the books of
the Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (directly or as an indirect participant in accordance with the
rules of such Clearing Agency).
"Book-Entry Custodian": The custodian appointed pursuant to
Section 2.12 (c)
"Book-Entry Termination": The time at which the book-entry
registration of the Book-Entry Notes shall terminate, as specified in Section
2.13.
"Business Day": Any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the State of Nevada, the State of
New York, the State of New Jersey, the State of South Carolina, the State of
Delaware, or the city in which the Corporate Trust Office of the Indenture
Trustee or in which the Note Insurer's principal office is located are
authorized or obligated by law, regulation, executive order or governmental
decree to be closed.
"C Risk Mortgage Loans": Mortgage Loans graded in the "C"
risk category under the RBMG Guidelines, as more fully described in the
Prospectus Supplement.
"Cap Agreement": That certain interest rate cap agreement
held by the Indenture Trustee and made between the Issuer and the Cap Provider.
"Cap Payment": Any payments received by the Indenture
Trustee with respect to a Group and a Payment Date under the Cap Agreement.
"Cap Provider": Morgan Guaranty Trust Company of New York.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which were more than (i) 1% of the original principal balance of the
Mortgage Loan or (ii) $1000 in excess of the principal balance of any existing
first mortgage or subordinate mortgage on the related Mortgaged Property and
related closing costs, and any consumer debt of the borrower that was paid at
closing.
"Cedel": Cedel, Societe anonyme.
"Certificate": As defined in the Trust Agreement.
"Certificate Distribution Account": As defined in the Trust
Agreement.
"Certificateholders": As defined in the Trust Agreement.
"Class": The Class A-1 Notes or the Class A-2 Notes as
applicable.
6
<PAGE>
"Class A-1 Aggregate O/C Surplus Amount": As defined in
Section 8.18(c)(i) of this Indenture.
"Class A-1 Available Funds": Available Funds with respect to
the Class A-1 Notes.
"Class A-1 Available Funds Cap Rate Carry-Forward Amount":
The Available Funds Cap Rate Carry-Forward Amount with respect to the Class A-1
Notes.
"Class A-1 Cash O/C Amount": As defined in Section 8.18 (a)
of this Indenture.
"Class A-1 Monthly Principal Available": The Monthly Principal
Available with respect to the Class A-1 Notes.
"Class A-1 Noteholder": A Holder of a Class A-1 Note.
"Class A-1 Note Interest": The Note Interest payable with
respect to the Class A-1 Notes.
"Class A-1 Notes": The RBMG Funding Co. Mortgage Loan Trust
1999-1 Asset Backed Notes, Series 1999-1, Class A-1.
"Class A-1 Overcollateralization Amount": The
Overcollateralization Amount with respect to the Class A-1 Notes.
"Class A-1 Overcollateralization Deficit": The
Overcollateralization Deficit with respect to the Class A-1 Notes.
"Class A-1 Overcollateralization Surplus": As defined in
Section 8.18(d)(i) of this Indenture.
"Class A-1 Required Overcollateralization Amount": The
Required Overcollateralization Amount with respect to the Class A-1 Notes.
"Class A-2 Aggregate O/C Surplus Amount": As defined in
Section 8.18(c)(ii) of this Indenture.
"Class A-2 Available Funds": Available Funds with respect to
the Class A-2 Notes.
"Class A-2 Available Funds Cap Rate Carry-Forward Amount":
The Available Funds Cap Rate Carry-Forward Amount with respect to the Class
A-2 Notes.
"Class A-2 Cash O/C Amount": As defined in Section 8.18 (a) of
this Indenture.
"Class A-2 Monthly Principal Available": The Monthly Principal
Available with respect to the Class A-2 Notes.
"Class A-2 Noteholder": A Holder of a Class A-2 Note.
7
<PAGE>
"Class A-2 Note Interest": The Note Interest payable with
respect to the Class A-2 Notes.
"Class A-2 Notes": The RBMG Funding Co. Mortgage Loan Trust
1999-1 Asset Backed Notes, Series 1999-1, Class A-2.
"Class A-2 Overcollateralization Amount": The
Overcollateralization Amount with respect to the Class A-2 Notes.
"Class A-2 Overcollateralization Deficit": The
Overcollateralization Deficit with respect to the Class A-2 Notes.
"Class A-2 Overcollateralization Surplus": As defined in
Section 8.18(d)(ii) of this Indenture.
"Class A-2 Required Overcollateralization Amount": The
Required Overcollateralization Amount with respect to the Class A-2 Notes.
"Clearing Agency": An organization registered as a "clearing
agency" pursuant to Section 17A of the Securities and Exchange Act of 1934, as
amended, and the regulations of the Commission thereunder and shall initially be
The Depository Trust Company, the nominee of which is Cede & Co.
"Clearing Agency Participants": The entities for whom the
Clearing Agency will maintain book-entry records of ownership and transfer of
Book-Entry Notes, which may include securities brokers and dealers, banks and
trust companies and clearing corporations and certain other organizations.
"Closing Date": June 7, 1999, the date of initial issuance of
the Notes.
"Code": The Internal Revenue Code of 1986, as amended, and as
may be further amended from time to time, as successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form and proposed regulations thereunder to the extent that,
by reason of their proposed effective date, such proposed regulations would
apply.
"Collection Account": As defined in the Servicing Agreement.
"Collection Period": With respect to each Class of Notes and
any Payment Date and any Mortgage Loan, the calendar month immediately preceding
the month in which such Payment Date occurs (or, in the case of the first
Payment Date after a Mortgage Loan constitutes part of the Trust Estate, the
period beginning on the day following the applicable Cut-off Date for such
Mortgage Loan through and including the last day of the month prior to the month
in which such Payment Date occurs).
"Commission": The Securities and Exchange Commission, as from
time to time constituted, or if at any time such Commission is not existing and
performing the duties now assigned to it, then the body performing such duties
at such time.
8
<PAGE>
"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, 1999, between Funding Co. and the Company pursuant to which
the Mortgage Loans will be acquired from the Company by Funding Co.
"Compensating Interest Payments": As defined in the Servicing
Agreement.
"Corporate Trust Office": The principal office of the
Indenture Trustee at which at any particular time its corporate trust business
with respect to this Indenture shall be principally administered, which office
at the date of the execution of this Indenture is located at 101 Barclay Street,
12th Floor, New York, New York 10268 or such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders, the
Issuer, the Servicer and the Note Insurer.
"Coupon Rate": With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) in
the case of each Mortgage Loan other than an Adjustable-Rate Mortgage Loan shall
remain constant at the rate set forth in the Mortgage Loan Schedule as the
Coupon Rate in effect immediately following the Cut-off Date and (ii) in the
case of each Adjustable-Rate Mortgage Loan, (A) as of any date of determination
until the first Adjustment Date following the applicable Cut-off Date, shall be
the rate set forth in the Mortgage Loan Schedule as the Coupon Rate in effect
immediately following the applicable Cut-off Date and (B), as of any date of
determination thereafter, shall be the rate as adjusted on the most recent
Adjustment Date, to equal the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; PROVIDED that the Coupon Rate on such Mortgage Loan on any
Adjustment Date shall never be more than the lesser of (i) the sum of the Coupon
Rate in effect immediately prior to the Adjustment Date plus the related
Periodic Rate Cap, if any, and (ii) the related Maximum Rate, and shall never be
less than the greater of (x) the Coupon Rate in effect immediately prior to the
Adjustment Date less the Periodic Rate Cap, if any, and (y) the related Minimum
Rate. With respect to each Mortgage Loan that becomes an REO Property, as of any
date of determination, the annual rate determined in accordance with the
immediately preceding sentence as of the date such Mortgage Loan became an REO
Property.
"Crossover Amount": With respect to a Class of Notes and any
Payment Date, the amount withdrawn from the Note Account for the other Class and
deposited to the Note Account with respect to the first Class, pursuant to
clauses (i), (iii) and (iv) of Section 8.02(c) hereof on such Payment Date.
"Cumulative Insured Payments": As of any time of
determination, the aggregate amount of all Insured Payments previously made by
the Note Insurer under the MBIA Insurance Policy plus interest thereon from the
date such amount became due until paid in full, at a rate of interest calculated
as provided in the Insurance Agreement minus the sum of all payments
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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, 1999, 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 the Mortgage Loans Granted to
the Indenture Trustee on the Closing Date, June 1, 1999, and with respect to the
Qualified Replacement Mortgage Loans, their respective dates of substitution.
"D Risk Mortgage Loans": Mortgage Loans graded in the "D"
risk category under the RBMG Guidelines, as more fully described in the
Prospectus Supplement.
"Default": Any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Defective Mortgage Loan": Any Mortgage Loan that is
required to be repurchased or substituted by the Issuer, the Company, Funding
Co., the Depositor or RBMG.
"Deficiency Event": The inability of the Indenture Trustee to
remit the Insured Payment on any Payment Date due to a shortage of funds for
such purpose then held in the Note Account and the failure of the Note Insurer
to pay in full a claim made in accordance with the MBIA Insurance Policy with
respect to such Payment Date.
"Deficient Valuation": As defined in the Servicing Agreement.
"Definitive Notes": Notes other than Book-Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Replacement Mortgage Loan.
"Delinquency Amount": As of any Payment Date, the product
of the Delinquency Percentage and the Aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties in the related Group as of the Determination
Date relating to such Payment Date.
"Delinquency Loss Factor": With respect to each Group and as
of any Payment Date, the sum of (i) the Aggregate Stated Principal Balance of
all Mortgage Loans in such Group 30-59 days delinquent multiplied by 10.75%,
(ii) the Aggregate Stated Principal Balance of all Mortgage Loans in such Group
60-89 days delinquent multiplied by 21.50% and (iii) the
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Aggregate Stated Principal Balance of all Mortgage Loans in such Group 90 or
more days delinquent multiplied by 43%.
"Delinquency Percentage": With respect to each Group and any
Payment Date, the fraction expressed as a percentage, the numerator of which is
(x) the sum of the aggregate Stated Principal Balance of (i) all related
Mortgage Loans 90 or more days delinquent on a contractual basis (including
those in bankruptcy) plus (ii) related Mortgage Loans in foreclosure, plus all
Mortgage Loans purchased pursuant to Section 2.15(c) of the Servicing Agreement
for so long as such related Mortgage Loans are 90 days delinquent plus (iv)
related Mortgage Loans converted to REO Properties, and the denominator of which
is (y) the then Aggregate Stated Principal Balance of the related Mortgage
Loans.
"Depositor": Residential Asset Funding Corporation, a North
Carolina corporation, and its successors and permitted assigns.
"Depositor Sale Agreement": That certain Loan Sale Agreement,
dated as of June 1, 1999, between the Depositor and the Issuer, pursuant to
which the Mortgage Loans will be acquired from the Depositor by the Issuer for
inclusion in the Trust Estate.
"Determination Date": As to any Payment Date, the fifteenth
(15th) day of the month in which such Payment Date occurs, or if such fifteenth
day is not a Business Day, the immediately preceding Business Day.
"Due Date": With respect to each Payment Date, the first day
of the calendar month in which such Payment Date occurs, which is the day of the
month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any
days of grace.
"Due Period": With respect to any Payment Date, the period
commencing on the second day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs (or, with respect to the first
Payment Date after a Mortgage Loan constitutes part of the Trust Estate,
commencing the day following the applicable Cut-off Date for such Mortgage Loan)
and ending on the first day of the calendar month in which such Payment Date
occurs.
"Eligible Account": Either (A) a segregated account or
accounts maintained with an institution the deposits of which are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
long-term unsecured debt obligations of which shall be rated "AA" or better by
Standard & Poor's and "Aa2" or better by Moody's and in the highest short term
rating category by Standard & Poor's and Moody's, and that is either (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the Note
Insurer or (B) a segregated account maintained with the trust department of a
federal or state chartered depository institution or trust company acceptable to
each Rating Agency and the Note Insurer, having capital and surplus of not less
than $100,000,000, acting in its fiduciary capacity, the
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long-term unsecured debt obligations of which shall be rated "Baa3" or better by
Moody's or (C) a segregated account or accounts the deposits in which are fully
insured by the FDIC (to the limits established by such corporation), the
uninsured deposits in which account are otherwise secured such that the
Noteholders will have a claim with respect to the funds in such account or a
perfected first priority security interest against any collateral (which shall
be limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or general creditors of the depository
institution with which such account is maintained. Any Eligible Accounts
maintained with the Indenture Trustee shall conform to the preceding clause (B).
"Euroclear": Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Event of Default": As defined in Section 5.01.
"Excess Cash": With respect to a Group and any Payment Date,
the amount, if any, by which Available Funds for such Group and Payment Date
exceed the sum of (i) any amounts payable to the Note Insurer for Insured
Payments with respect to either Group paid on prior Payment Dates and not yet
reimbursed and for any unpaid Note Insurer Premiums for such Group on prior
Payment Dates (in each case with interest thereon at the "Late Payment Rate" (as
defined in the Insurance Agreement)) (and to the extent not covered by Available
Funds for the other Group, such amounts with respect to the other Group), (ii)
the Note Interest for the related Class and Payment Date (and to the extent not
covered by Available Funds for the other Group, such amounts with respect to the
other Group), (iii) an amount equal to the Overcollateralization Deficit for
either Class, (iv) the Monthly Principal for the related Class and Payment Date,
and (v) any amounts due and owing to the Note Insurer under the Insurance
Agreement that are not described in Section 8.02(c)(i) hereof.
"Excess Cash Payment": As defined in clause fourth of Section
8.02(c).
"Expense Adjusted Coupon Rate": With respect to any Mortgage
Loan, the then applicable Coupon Rate thereon minus the sum of (i) the Minimum
Spread, (ii) the Servicing Fee Rate and (iii) the Indenture Trustee Fee Rate.
"FDIC": The Federal Deposit Insurance Corporation and its
successors in interest.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Certification": A certification as to the completeness
of each Mortgage File provided by the Indenture Trustee, or a Custodian on its
behalf, on or before the 270th day after the Closing Date pursuant to Section
6.15(b) hereof and Section 6(b) of the Custodial Agreement substantially in the
form of Exhibit B-2 to the Custodial Agreement.
"Final Maturity Date": The Payment Date in June 2030.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Mortgaged Property.
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"FNMA": The Federal National Mortgage Association or any
successor thereto.
"Full Prepayment": With respect to any Mortgage Loan, when any
one of the following occurs: (i) payment is made by the Mortgagor to the
Servicer of 100% of the outstanding principal balance of such Mortgage Loan,
together with all accrued and unpaid interest thereon at the Coupon Rate on such
Mortgage Loan, (ii) payment is made to the Indenture Trustee of the Purchase
Price of such Mortgage Loan in connection with the purchase of such Mortgage
Loan by RBMG, the Company, the Depositor, Funding Co. or the Servicer or (iii)
payment is made to the Servicer of all Insurance Proceeds and Liquidation
Proceeds, and other payments, if any, that have been determined by the Servicer
in accordance with the provisions of the Servicing Agreement to be finally
recoverable, in the Servicer's reasonable judgment, in respect of such Mortgage
Loan.
"Funding Co. ": RBMG Funding Co., a Nevada corporation.
"Funding Co. Sale Agreement": That certain Loan Sale
Agreement, dated as of June 1, 1999, between the Depositor and Funding Co.,
pursuant to which the Mortgage Loans will be acquired from Funding Co. by the
Depositor.
"Grant": To assign, transfer, mortgage, pledge, create and
grant a security interest in, deposit, set-over and confirm. A Grant of a
Mortgage Loan and related Mortgage Files, a Permitted Investment, the Servicing
Agreement, the Company Sale Agreement, the Funding Co. Sale Agreement, the Loan
Contribution Agreement, an Insurance Policy or any other instrument shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder (except as otherwise specified in the Granting
Clause), including without limitation the immediate and continuing right to
claim for, collect, receive and give receipts for principal and interest
payments thereunder, insurance proceeds, purchase prices and all other moneys
payable thereunder and all proceeds thereof, to give and receive notices and
other communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Granting party or
otherwise, and generally to do and receive anything that the Granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Coupon Rate for such Mortgage Loan.
"Group": Group I or Group II, as the case may be.
"Group I": The group of Mortgage Loans pledged to the
Indenture Trustee and assigned to Group I, as reflected on the Mortgage Loan
Schedule.
"Group I Mortgage Loans": The Mortgage Loans assigned to
Group I.
"Group II": The group of Mortgage Loans pledged to the
Indenture Trustee and assigned to Group II, as reflected on the Mortgage Loan
Schedule.
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"Group II Mortgage Loans": The Mortgage Loans assigned to
Group II.
"Highest Lawful Rate": As defined in Section 11.19.
"Indenture": This Indenture, dated as of June 1, 1999, 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": The Bank of New York, a New York banking
corporation, and any Person resulting from or surviving any consolidation or
merger to which it may be a party until a successor Person shall have become the
Indenture Trustee pursuant to the applicable provisions of this Indenture, and
thereafter "Indenture Trustee" shall mean such successor Person.
"Indenture Trustee Fee Rate": As of any Payment Date, 0.0175%
per annum.
"Indenture Trustee's Fee": With respect to each Class of
Notes, the Indenture Trustee's monthly fee, equal to 1/12th of 0.0175% of the
Aggregate Stated Principal Balance of the Mortgage Loans in the related Group as
of the first day of the related Due Period.
"Independent": When used with respect to any specified Person
means such a Person who (i) is in fact independent of the Issuer, RBMG, Funding
Co., the Sub-Servicer, the Company, the Servicer and any other obligor upon the
Notes, (ii) does not have any direct financial interest or any material indirect
financial interest in the Issuer, RBMG, Funding Co., the Sub-Servicer, the
Company, the Servicer or in any such other obligor or in an Affiliate of the
Issuer, RBMG, Funding Co., the Sub-Servicer, the Company, the Servicer or such
other obligor, and (iii) is not connected with the Issuer, RBMG, Funding Co.,
the Sub-Servicer, the Company, the Servicer or any such other obligor as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions; PROVIDED, HOWEVER, that a Person shall not fail to
be Independent of the Issuer, RBMG, Funding Co., the Sub-Servicer, the Company
or the Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any class of securities issued by the Issuer,
RBMG, Funding Co., the Sub-Servicer, the Company or the Servicer or any
Affiliate thereof, as the case may be. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Indenture
Trustee, such Person shall be appointed by an Issuer Order and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning hereof.
"Index": With respect to each Adjustable-Rate Mortgage Loan
and each related Adjustment Date, the average of the interbank offered rates for
six-month United States dollar deposits in the London market as published in THE
WALL STREET JOURNAL and as most recently available either (i) as of the first
business day 45 days prior to such Adjustment Date or (ii) as of
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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.
"Indemnification Agreement": As defined in the Insurance
Agreement.
"Insurance Agreement": The Insurance Agreement, dated as of
June 1, 1999, among the Note Insurer, the Issuer, the Servicer, the
Sub-Servicer, the Company, the Depositor, First Union Corporation, Funding Co.,
RBMG and the Indenture Trustee, as may be amended from time to time.
"Insurance Policies": All insurance policies insuring any
Mortgage Loan or Mortgaged Property, to the extent the Issuer or the Indenture
Trustee has any interest therein.
"Insurance Proceeds": As defined in the Servicing Agreement.
"Insured Payments": As to any Payment Date, and with respect
to either Class of Notes, the amount required to be paid by the Note Insurer
under the MBIA Insurance Policy pursuant to a Notice of Claim presented by the
Indenture Trustee (in the manner described in Section 8.05). The Insured Payment
for a Class of Notes is (a) for any Payment Date, the sum of (i) the Note
Interest for the related Class for such Payment Date minus the Total Available
Funds for the related Class for such Payment Date; (ii) the then existing
Overcollateralization Deficit for the related Class, if any (after application
of the Total Available Funds for the related Class for such Payment Date to
reduce the Note Balance for the related Class on such Payment Date) and (b) any
shortfall in the amount required to pay a Preference Amount for the related
Class from any source other than the MBIA Insurance Policy.
"Interest 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 1999 and, as to any subsequent Payment Date, the period beginning
on the immediately preceding Payment Date and ending on the day prior to the
related Payment Date.
"Interim Certification": A certification as to the
completeness of each Mortgage File provided by the Indenture Trustee, or a
Custodian on its behalf, pursuant to Section 6.15(b)
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hereof and Section 6(b) of the Custodial Agreement substantially in the form of
Exhibit B-2 to the Custodial Agreement.
"Issuer": RBMG Funding Co. Mortgage Loan Trust 1999-1, 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.
"Letter Agreement": The Letter of Representations to The
Depository Trust Company from the Indenture Trustee and the Issuer dated June 7,
1999.
"Liquidated Mortgage Loan": As defined in the Servicing
Agreement.
"Liquidation Date": With respect to any Mortgage Loan,
the date of the final receipt of all Liquidation Proceeds, Insurance Proceeds
or other payments with respect to such Mortgage Loan.
"Liquidation Event": As defined in the Servicing Agreement.
"Liquidation Proceeds": As defined in the Servicing Agreement.
"Loan Contribution Agreement": That certain Loan Contribution
Agreement, dated as of June 1, 1999, between the Company and RBMG, pursuant to
which the Mortgage Loans will be acquired from RBMG by the Company.
"Loan-To-Value Ratio": With respect to any Mortgage Loan as of
any date of determination, the fraction, expressed as a percentage, the
numerator of which is the principal balance of the related Mortgage Loan as of
such date and the denominator of which is the Value of the related Mortgaged
Property.
"London Business Day": A Business Day on which banks are
open for dealing in foreign currency and exchange in London and New York City.
"Majority Certificateholder": The holder of the majority
interest in the Certificate, which as of the Closing Date is Funding Co.
"Management Agreement": That certain Management Agreement,
dated as of June 1, 1999, 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.
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"Maximum Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Coupon Rate
thereunder.
"MBIA Insurance Policy": The financial guaranty insurance
policy (No. 29390), dated June 7, 1999, issued by the Note Insurer to the
Indenture Trustee for the benefit of the Noteholders, pursuant to which the Note
Insurer guarantees payment of Insured Payments.
"MBIA Payment Default": Failure and continued failure by
the Note Insurer to make an Insured Payment required under the MBIA Insurance
Policy in accordance with its terms.
"Minimum Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Coupon Rate
thereunder.
"Minimum Spread": With respect to each Group and Payment Date
occurring from the Closing Date through and including the twelfth Payment Date
after the Closing Date, 0.00% per annum. With respect to each Payment Date
occurring after the twelfth Payment Date, 0.50% per annum.
"Monthly Payment": With respect to any Mortgage Note, the
amount of each scheduled monthly payment of principal and interest payable from
time to time under such Mortgage Note by the Mortgagor in accordance with its
terms, including one month's accrued interest on the related Scheduled Principal
Balance at the then applicable Coupon Rate, but net of any portion of such
monthly payment that represents late payment charges, prepayment or extension
fees or collections allocable to payments to be made by Mortgagors for payment
of insurance premiums or similar items.
"Monthly Principal": For each Class of Notes and any Payment
Date, the excess of (i) the Monthly Principal Available for such Class and
Payment Date over (ii) the Overcollateralization Surplus for such Class and
Payment Date.
"Monthly Principal Available": For each Class of Notes and any
Payment Date, an amount equal to the lesser of: (a) the excess of (i) the
Available Funds in the related Note Account, over (ii) the amounts payable
pursuant to Section 8.02(c)(i) 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 Mortgage Loans in the
related Group and due during the related Due Period and all other amounts
collected, received or otherwise recovered in respect of principal on such
Mortgage Loans (including Principal Prepayments, but not including Payments
Ahead that are not allocable to principal for the related Due Period) during or
in respect of the related Collection Period, and (ii) the aggregate of the
amounts allocable to principal deposited in the related Note Account on the
related Servicer Remittance Date by the Issuer, Funding Co., the Company, the
Depositor, the Servicer or the Note Insurer or RBMG in connection with a
repurchase, release, removal or substitution of any Mortgage Loans in the
related Group pursuant to this Indenture or the Servicing Agreement.
"Moody's": Moody's Investors Service, Inc. and its successors
in interest.
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"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple in real property securing a
Mortgage Loan.
"Mortgage File": The mortgage documents listed in Section 3(b)
of the Depositor Sale Agreement pertaining to a particular Mortgage Loan and any
additional documents pertaining to a Mortgage Loan required to be delivered to
the Issuer under the Depositor Sale Agreement.
"Mortgage Loan": Each of the mortgage loans Granted to the
Indenture Trustee under this Indenture as security for the Notes and that from
time to time comprise part of the Trust Estate, including those Mortgage Loans
Granted to the Indenture Trustee on the Closing Date, the Qualified Replacement
Mortgage Loans, and any property that secures a Mortgage Loan that becomes REO
Property.
"Mortgage Loan Schedule": As of any date, the schedule,
provided in computer readable format, of Mortgage Loans included in the Trust
Estate. Schedule I hereto identifies the Mortgage Loans being Granted to the
Indenture Trustee on the Closing Date. The Issuer shall deliver the Mortgage
Loan Schedule to the Indenture Trustee in both physical and computer-readable
form.
The Mortgage Loan Schedule shall set forth the following
information with respect to each Mortgage Loan (and shall set forth such
information according to Group):
(i) RBMG's Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the state and
zip code;
(iv) a code indicating whether the Mortgaged Property is owner-occupied;
(v) the type of Residential Dwelling constituting the Mortgaged Property;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the applicable
Cut-off Date based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Coupon Rate in effect immediately following the applicable Cut-off
Date;
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(x) (A) the date on which the first Monthly Payment was due on the Mortgage
Loan and, (B) if such date is not consistent with the Due Date currently in
effect, such Due Date;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xiv) the original principal amount of the Mortgage Loan;
(xv) the Scheduled Principal Balance of the Mortgage Loan as of the
close of business on the applicable Cut-off Date;
(xvi) in the case of each Adjustable-Rate Mortgage Loan, the Adjustment
Dates;
(xvii) in the case of each Adjustable-Rate Mortgage Loan, the Gross Margin;
(xviii) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase financing, Rate/Term Refinancing, Cash-Out Refinancing);
(xix) in the case of each Adjustable-Rate Mortgage Loan, the Maximum Rate;
(xx) in the case of each Adjustable-Rate Mortgage Loan, the Minimum Rate;
(xxi) the Coupon Rate at origination;
(xxii) in the case of each Adjustable-Rate Mortgage Loan, the Periodic
Rate Cap and the maximum first Adjustment Date Coupon Rate adjustment;
(xxiii) a code indicating the documentation style (i.e., Full Documentation,
Limited Documentation or Stated Income Documentation);
(xxiv) a code indicating the originator;
(xxv) in the case of each Adjustable-Rate Mortgage Loan, the first Adjustment
Date immediately following the applicable Cut-off Date;
(xxvi) the risk grade;
(xxvii) the Value of the Mortgaged Property;
(xxviii) the sale price of the Mortgaged Property, if applicable;
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(xxix) the actual unpaid principal balance of the Mortgage Loan as of the
applicable Cut-off Date;
(xxx) a code indicating whether there is a prepayment penalty;
(xxxi) a code indicating whether the Mortgage Loan is an Adjustable Rate
Mortgage Loan;
(xxxii) the first payment date of the Mortgage Loan; and
(xxxiii) the first payment date of the Mortgage Loan immediately succeeding
the Cut-off Date.
The Mortgage Loan Schedule shall set forth the following
information as of the Initial Cut-off Date with respect to the Mortgage Loans in
the aggregate in each Group: (1) the number of Mortgage Loans; (2) the current
principal balance of the Mortgage Loans; (3) the weighted average Coupon Rate of
the Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans.
The Mortgage Loan Schedule shall be amended from time to time by the Issuer upon
each Grant of a Qualified Replacement Mortgage Loan to set forth the
aforementioned information with respect to the Mortgage Loans as of the
applicable Cut-off Date and the deletion of Mortgage Loans.
"Mortgage Note": The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property.
"Mortgagor": The obligor under a Mortgage Note.
"Net Liquidation Proceeds": As defined in the Servicing
Agreement.
"Nonrecoverable P&I Advance": As defined in the Servicing
Agreement.
"Note Account": With respect to each Class of Notes, the
segregated trust account, which shall be an Eligible Account, established and
maintained pursuant to Section 8.02 and entitled "The Bank of New York, as
Indenture Trustee for RBMG Funding Co. Mortgage Loan Trust 1999-1 Asset-Backed
Notes, Series 1999-1, Class A-1 Note Account" or "The Bank of New York, as
Indenture Trustee for RBMG Funding Co. Mortgage Loan Trust 1999-1 Asset Backed
Notes, Series 1999-1, Class A-2 Note Account" on behalf of the Noteholders and
the Note Insurer.
"Note Balance": With respect to the Class A-1 or Class A-2
Notes will be equal, as of any Payment Date, to the Original Note Balance of
such Class less all Monthly Principal and Excess Cash paid to the related
Noteholders on previous Payment Dates to reduce the Note Balance of such Class
(exclusive, for the sole purpose of effecting the Note Insurer's subrogation
rights, of payments made by the Note Insurer in respect of any
Overcollateralization Deficit
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related to such Class of Notes and such Payment Date under the Insurance Policy,
except to the extent reimbursed to the Note Insurer pursuant to Section 8.02(c)
of this Indenture).
"Note Factor": With respect to each Class of Notes as of any
Payment Date, a fraction, expressed as a decimal carried to six places, the
numerator of which is the aggregate Outstanding Note Balance of the related
Notes on such Payment Date (after giving effect to any distributions of
principal in reduction of the aggregate Outstanding Note Balance of the related
Notes to be made on such Payment Date), and the denominator of which is the
related Original Note Balance.
"Noteholder" or "Holder": The Person in whose name a Note is
registered in the Note Register, except that, solely for the purpose of taking
any action under Section 5.02 or giving of any consent pursuant to this
Indenture, any Note registered in the name of the Issuer, the Company, the
Servicer, Funding Co., RBMG or the Depositor, or any Persons actually known by a
Responsible Officer of the Indenture Trustee to be an Affiliate of the Issuer,
the Company, the Servicer, Funding Co., RBMG or the Depositor shall be deemed
not to be Outstanding and the percentage interest evidenced thereby shall not be
taken into account in determining whether Holders of the requisite percentage
interests necessary to take any such action or effect any such consent have
acted or consented unless the Issuer, the Company, the Servicer, Funding Co.,
the Depositor, RBMG, or any such Person is an owner of record of all of the
Notes.
"Note Formula Rate": With respect to the Class A-1 Notes and
for any Interest Period ending prior to the Redemption Date, a per annum rate
equal to One-Month LIBOR plus 0.26% and, for any Interest Period ending
thereafter, a per annum rate equal to One-Month LIBOR plus 0.52%. With respect
to the Class A-2 Notes and for any Interest Period ending prior to the
Redemption Date, a per annum rate equal to One-Month LIBOR plus 0.29% and, for
any Interest Period ending thereafter, a per annum rate equal to One-Month LIBOR
plus 0.58%.
"Note Insurer": MBIA Insurance Corporation, a New York stock
insurance company, and any successors thereto.
"Note Insurer Commitment Letter": The commitment letter
dated June, 7 1999, from the Note Insurer to RBMG and the Issuer regarding the
issuance of a financial guaranty insurance policy.
"Note Insurer Default": The existence and continuance of any
of the following:
(a) a MBIA Payment Default;
(b) the entry by a court having jurisdiction of (i) a final
and nonappealable decree or order for relief in respect of the Note
Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law of (ii) a final and nonappealable
decree or order adjudging the Note Insurer bankrupt or insolvent, or
approving as properly filed 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,
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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 25, 1999 and on each Payment Date thereafter, the Premium
Percentage specified in paragraph 1(b) thereof.
"Note Interest": As to a Class of Notes and any Payment Date,
the amount of interest payable to Holders of such Notes on such Payment Date,
which amount shall be equal to (a) with respect to the initial Interest Period,
interest for the number of days in the period commencing on the Closing Date and
ending on the day prior to such Payment Date at the related Note Interest Rate
on the related Original Note Balance, and (b) with respect to any subsequent
Interest Period, interest for the number of days in such Interest Period at the
related Note Interest Rate on the related Note Balance as of the preceding
Payment Date (after giving effect to the payment, if any, in reduction of
principal made on such Notes on such preceding Payment Date) reduced by (i) the
related aggregate Prepayment Interest Shortfall, if any, for such Payment Date,
to the extent not covered by related Compensating Interest Payments, and (ii)
the aggregate amount of Relief Act Interest Shortfall with respect to Mortgage
Loans in the related Group, if any, for such Payment Date. All calculations of
interest on each Class of Notes will be
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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 1999 Payment Date and the Class A-1 Notes, 0.26% per annum.
With respect to each Interest Period thereafter and the Class A-1 Notes, a per
annum rate equal to the lesser of (a) the related Note Formula Rate and (b) the
related Available Funds Cap Rate. With respect to the Interest Period relating
to the July 1999 Payment Date and the Class A-2 Notes, 0.29% per annum. With
respect to each Interest Period thereafter and the Class A-2 Notes, a per annum
rate equal to the lesser of (a) the related Note Formula Rate and (b) the
related Available Funds Cap Rate.
"Note Register": As defined in Section 2.06.
"Notes": The Class A-1 Notes and the Class A-2 Notes of the
RBMG Funding Co. Mortgage Loan Trust 1999-1 Asset-Backed Notes, Series 1999-1,
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,
4.9525% 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 for one-month U.S. dollar deposits as such rate
appears 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). If such
rate does not appear on page 3750 of Telerate, One-Month LIBOR will be
established by the Indenture Trustee as follows:
(i) if on such Interest Determination Date two or
more Reference Banks provide such offered quotations, One-Month LIBOR
shall be the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 0.0625%) of such offered quotations; or
(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.
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"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 $75,030,000 for the Class A-1
Notes and $50,000,000 for the Class A-2 Notes.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Definitive Notes theretofore canceled by the
Note Registrar or delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any Paying Agent (other than the Issuer)
in trust for the Holders of such Notes; PROVIDED, HOWEVER, that if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor, satisfactory to the
Indenture Trustee, has been made;
(iii) Notes in exchange for or in lieu of which other
Notes have been authenticated and delivered pursuant to this Indenture
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser (as defined by the
Uniform Commercial Code of the applicable jurisdiction); and
(iv) Notes alleged to have been destroyed, lost or
stolen that have been paid as provided for in Section 2.07;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite percentage of the Note Balance of the Outstanding Notes have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Issuer, any other obligor upon the
Notes, RBMG, the Depositor, the Company, the Servicer, the
Sub-Servicer, or Funding Co., the Issuer or any Affiliate of any of
them, shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Indenture Trustee shall be protected
in relying upon any such request, demand, 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
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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.
"Overcollateralization Amount": For each Class of Notes and
any Payment Date, the amount, if any, by which (x) the Aggregate Stated
Principal Balance of the Mortgage Loans in the related Group as of the end of
the related Due Period, exceeds (y) the Note Balance of the related Class of
Notes for such Payment Date, after taking into account the Monthly Principal
(disregarding any permitted reduction in Monthly Principal due to an
Overcollateralization Surplus) to be applied in reduction of the related Note
Balance on such Payment Date. If the Aggregate Stated Principal Balance of the
Mortgage Loans in such Group as of the end of the related Due Period as of such
date, is less than the related Note Balance for such Payment Date, determined as
provided above, the Overcollateralization Amount for such Class and Payment Date
shall be zero.
"Overcollateralization Deficit": With respect to each Class of
Notes and any Payment Date, the amount, if any, by which the related Note
Balance on such Payment Date (after taking into account any payments to be paid
on such Payment Date in reduction of such Note Balance) exceeds the Aggregate
Stated Principal Balance of the related Mortgage Loans in such Group as of the
end of the related Due Period, as of such date. If the Aggregate Stated
Principal Balance of the Mortgage Loans in such Group is greater than the
related Note Balance for such Payment Date determined as provided above, the
related Overcollateralization Deficit for such Payment Date shall be zero.
"Overcollaterization Surplus": Either the Class A-1
Overcollaterization Surplus or the Class A-2 Overcollaterization Surplus, as
applicable.
"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 26, 1999.
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"Payment Date Statement": The statement prepared pursuant to
Section 2.08(d) with respect to collections on or in respect of the Mortgage
Loans in each Group and other assets of the Trust Estate and payments on or in
respect of the Notes, based solely upon the information contained in the
Servicer Remittance Report prepared pursuant to the Servicing Agreement and
setting forth the following information with respect to each Payment Date and
each Group (to the extent the Servicer has made such information (other than the
information described in clause (ii), (iii), (iv), (v), (xii), (xix) and (xxii)
below) available to the Indenture Trustee):
(i) the amount of such payment to Noteholders of each Class
allocable to (x) Monthly Principal (separately setting forth Principal
Prepayments) and (y) any Excess Cash Payment;
(ii) the amount of such payment to Noteholders of each Class
allocable to (x) Note Interest and (y) the Available Funds Cap Rate
Carry Forward Amount;
(iii) the Note Balance for each Class, after giving effect to the
payment of Monthly Principal and any Excess Cash Payment applied to
reduce the Note Balance on such Payment Date;
(iv) the amount of any Insured Payments with respect to the
properties securing the Mortgage Loans in each Group for such Payment
Date and the respective portions thereof allocable to principal and
interest;
(v) the related Overcollateralization Amount, the then applicable
Required Overcollateralization Amount, the Overcollateralization
Surplus, if any, and the Overcollateralization Deficit, if any, with
respect to such Payment Date;
(vi) the Aggregate Stated Principal Balance of the Mortgage Loans
and REO Properties in each Group as of the end of the related Due
Period;
(vii) the amount of P&I Advances made with respect to each Group and
such Payment Date and the aggregate amount of unreimbursed P&I Advances
and Servicing Advances, if any;
(viii) the number and aggregate of the Stated Principal Balances of
Mortgage Loans (including the Stated Principal Balances of all Mortgage
Loans in foreclosure) in each Group contractually delinquent (i) one
month, (ii) two months and (iii) three or more months, as of the end of
the related Collection Period;
(ix) the number and aggregate of the Stated Principal Balances of the
Mortgage Loans in each Group in foreclosure or subject to other similar
proceedings, and the number and aggregate of the Stated Principal
Balances of Mortgage Loans in each Group the Mortgagors of which are
known by the Servicer to be in bankruptcy as of the end of the related
Collection Period and the book value of any real estate acquired
through foreclosure, grant of a deed in lieu of foreclosure or other
similar proceedings during the related Collection Period;
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(x) the aggregate of the Stated Principal Balances of the Mortgage
Loans in each Group repurchased by RBMG, the Company, the Depositor or
Funding Co. or purchased by the Servicer, the Majority
Certificateholders or the Note Insurer, separately setting forth the
aggregate of the Stated Principal Balances of Mortgage Loans in each
Group delinquent for three consecutive monthly installments purchased
by the Majority Certificateholder, the Servicer or the Note Insurer at
their option pursuant to the Servicing Agreement;
(xi) the aggregate amount of the related Servicing Fee paid to or
retained by the Servicer for the related Collection Period;
(xii) the amount of any reimbursement payment made to the Note
Insurer on the related Payment Date pursuant to Section 8.02(c)(i) and
(iv) and the amount of Cumulative Insured Payments after giving effect
to any Insured Payment made or such Payment Date to the Noteholders or
any such reimbursement payment to the Note Insurer;
(xiii) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Coupon Rate of the
Mortgage Loans in each Group as of the related Due Date;
(xiv) with respect to any Mortgage Loan that in each Group became an
REO Property during the preceding calendar month, the loan number of
such Mortgage Loan, the unpaid principal balance and the Stated
Principal Balance of such Mortgage Loan as of the date it became an REO
Property;
(xv) the book value of any REO Property in each Group as of the close
of business on the last Business Day of the calendar month preceding
the Payment Date;
(xvi) the aggregate amount of Principal Prepayments in each Group
made during the related Collection Period;
(xvii) the aggregate amount of Realized Losses in each Group incurred
during the related Collection Period;
(xviii) the Class A-1 Cash O/C Amount, the Class A-2 Cash O/C Amount
the Class A-1 Aggregate O/C Surplus Amount and the Class A-2 Aggregate
O/C Surplus Amount;
(xix) the Note Factor for the related Notes applicable to such
Payment Date;
(xx) the aggregate amount of any Prepayment Interest Shortfalls for
such Group and Payment Date, to the extent not covered by Compensating
Interest Payments by the Servicer pursuant to Section 2.23 of the
Servicing Agreement;
(xxi) the aggregate amount of Relief Act Interest Shortfalls for such
Group and Payment Date; and
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(xxii) the aggregate amount of any Cap Payments received with respect
to each Group with respect to 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 related Original Note Balance
and multiplying the result by 100.
"Periodic Rate Cap": With respect to each Adjustable Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Coupon
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Rate or the Minimum Rate) on such Adjustment Date from the Coupon Rate
in effect immediately prior to such Adjustment Date.
"Permitted Investments": One or more of the following
obligations, instruments and securities:
(a) direct general obligations of, or obligations fully guaranteed
by, the United States of America, the Federal Home Loan Mortgage
Corporation, Fannie Mae, the Federal Home Loan Banks or any agency or
instrumentality of the United States of America, the obligations of
which are backed by the full faith and credit of the United States of
America;
(b) (i) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or its
agent acting in their respective commercial capacities) incorporated
under the laws of the United States of America or any state thereof and
subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, such depository institution
or trust company or its ultimate parent has a short-term uninsured debt
rating in one of the two highest available rating categories of
Standard & Poor's and the highest available rating category of Moody's
and 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
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manner as to accomplish perfection of a security interest in the
collateral by possession of certificated securities;
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America
or any state thereof which has a long-term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
(e) commercial paper having an original maturity of less than 365
days and issued by an institution having a short-term unsecured debt
rating in the highest available rating category of each of the Rating
Agencies at the time of such investment;
(f) a guaranteed investment contract approved by each of the Rating
Agencies and the Note Insurer and issued by an insurance company or
other corporation having a long-term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
(g) money market funds having ratings in one of the two highest
available rating categories of Standard & Poor's and the highest
available rating category Moody's at the time of such investment which
invest only in other Permitted Investments (any such money market funds
which provide for demand withdrawals being conclusively deemed to
satisfy any maturity requirements for Permitted Investments set forth
herein) including money market funds of the Indenture Trustee and any
such funds that are managed by the Indenture Trustee or its affiliates
or for which the Indenture Trustee or any affiliate acts as advisor as
long as such money market funds satisfy the criteria of this
subparagraph (g); and
(h) any investment approved in writing by the Note Insurer and
written evidence that any such investment will not result in a
downgrading or withdrawal of the rating by each Rating Agency on the
Notes.
The Indenture Trustee may purchase from or sell to itself or
an affiliate, as principal or agent, the Permitted Investments listed above. All
Permitted Investments in a trust account under the Indenture shall be made in
the name of the Indenture Trustee for the benefit of the Noteholders and the
Note Insurer.
"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.
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"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.
"Prepayment Interest Shortfall": As defined in the Servicing
Agreement.
"Principal Prepayment": As to any Mortgage Loan and Collection
Period, any payment by a Mortgagor or other recovery in respect of principal on
a Mortgage Loan (including Net Liquidation Proceeds and Insurance Proceeds)
that, in the case of a payment by a Mortgagor, is received in advance of its
scheduled due date and is not a Payment Ahead, or (b) is accompanied by
instructions from the related Mortgagor directing the Servicer to apply such
payment to the principal balance of such Mortgage Loan currently.
"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Prospectus Supplement": The Issuer's Prospectus Supplement,
dated June 2, 1999, relating to the Notes.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 8.07 or
10.01, and as confirmed by an Officers' Certificate from the Servicer to the
Indenture Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 8.07), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance (plus, in the case of a Defective
Mortgage Loan, the amount of any Related Loss resulting From a Deficient
Valuation) at a rate equal to the applicable Coupon Rate minus the related
Servicing Fee Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Mortgagor or an advance by the
Servicer, which payment or advance had as of the date of purchase been paid
pursuant to Section 8.02, through the end of the calendar month in which the
purchase is to be effected, and (y) an REO Property, the sum of (1) accrued
interest on such Stated Principal Balance (plus, in the case of a Defective
Mortgage Loan, the amount of any Related Loss resulting from a Deficient
Valuation) at a rate equal to the applicable Coupon Rate minus the related
Servicing Fee Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Mortgagor or an advance by the
Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and P&I Advances
that had as of the date of purchase been distributed as or to cover REO Imputed
Interest pursuant to Section 8.02, (iii) any unreimbursed Servicing Advances and
P&I Advances and any unpaid Servicing Fees allocable to such Mortgage Loan or
REO Property, (iv) any amounts previously withdrawn from the Collection Account
in respect of such Mortgage Loan or REO Property pursuant to the Servicing
Agreement, and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 8.07, expenses reasonably incurred or to be incurred
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by the Servicer or the Indenture Trustee in respect of the breach or defect
giving rise to the purchase obligation.
"Qualified Replacement Mortgage Loan": A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 8.07 that must, at
the end of the Due Period preceding the date of such substitution, (i) have an
outstanding principal balance (when taken together with any other Qualified
Replacement Mortgage Loan being substituted for such Deleted Mortgage Loan), not
in excess of and not ten percent less than the unpaid principal balance of the
Deleted Mortgage Loan(s) at the end of the Due Period preceding the date of
substitution, (ii) have the Coupon Rate computed on substantially the same basis
as the Coupon Rate on the related Mortgage Loan, utilizing the same Index and
having a Gross Margin or Minimum Rate not less than (and not more than one
percentage point in excess of) the Gross Margin and Minimum Rate applicable to
the Deleted Mortgage Loan, (iii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(iv) have a Loan-to-Value Ratio equal to or lower than the Loan-to- Value Ratio
of the Deleted Mortgage Loan, (v) have a first lien priority, (vi) comply as of
the date of substitution with each representation and warranty set forth in
Section 3(b) of the Funding Co. Sale Agreement, Section 3(b) of the Company Sale
Agreement, Section 3(b) of the Depositor Sale Agreement or Section (6) of the
Loan Contribution Agreement (vii) have the same or better property type as the
Deleted Mortgage Loan and (viii) have the same or better occupancy status. In
the event that one or more mortgage loans are proposed to be substituted for one
or more Deleted Mortgage Loans, the foregoing tests may be met on a weighted
average basis or other aggregate basis acceptable to the Note Insurer, except
that the requirements of clauses (v), (vi), (vii) and (viii) hereof must be
satisfied as to each Qualified Replacement Mortgage Loan.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than (i) 1% of the original principal balance of
the Mortgage Loan, or (ii) $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.
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"Recordation Event" means (i) the occurrence of any Event of
Default (as defined in the Indenture), Servicer Event of Default or Event of
Default (as defined in the Sub-Servicing Agreement), (ii) the Note Insurer gives
written notice to RBMG that the Note Insurer has determined, in its sole
discretion, that recording an Assignment of Mortgage is required to protect the
right, title and interest of the Indenture Trustee on behalf of the Noteholders
and the Note Insurer in and to the related Mortgage Loan, (iii) with respect to
a particular Mortgage Loan, a bankruptcy or insolvency proceeding involving the
Mortgagor is initiated, or foreclosure proceedings are initiated against the
related Mortgaged Property, (iv) a court recharacterizes the conveyance of the
Mortgage Loans as a financing, or (v) as a result of any change in or amendment
to the laws of the State or jurisdiction or any political subdivision thereof in
which a Mortgaged Property is located, or of any change in official position
regarding application or interpretation of such laws, including, without
limitation, a holding by a court of competent jurisdiction, recording of the
related Assignment is required to protect the right, title and interest of the
Indenture Trustee on behalf of the Noteholders and the Note Insurer in and to
the related Mortgage Loan.
"Recordation Opinion" means a written opinion of counsel
[(excluding inside or salaried counsel of RBMG)] acceptable to the Note Insurer
to the effect that recording an Assignment of Mortgage is not required (i) to
protect the Indenture Trustee's right, title and interest in and to the related
Mortgage Loan on behalf of the Noteholders and the Note Insurer, or (ii) in the
event that a court should recharacterize the conveyance of the Mortgage Loans as
a financing, to perfect a first priority security interest in favor of the
Indenture Trustee in the related Mortgage Loan.
"Record Date": With respect to any Payment Date, the date on
which the Persons entitled to receive any payment of principal of or interest on
any Notes (or notice of a payment in full of principal) due and payable on such
Payment Date are determined; such date shall be the last Business Day preceding
such Payment Date or, with respect to Definitive Notes, the last Business Day of
the month preceding the month of such Payment Date. With respect to a vote of
Noteholders required or allowed hereunder, the Record Date shall be the later of
(i) 30 days prior to the first solicitation of consents or (ii) the date of the
most recent list of Noteholders furnished to the Indenture Trustee pursuant to
Section 7.01(a) prior to such solicitation.
"Redemption Date": The Payment Date, if any, on which a Class
of Notes is redeemed pursuant to Article X hereof, which date may occur on or
after the Payment Date on which the combined aggregate Outstanding Note Balance
of the Class A-1 Notes and Class A-2 Notes as of the related Determination Date
is less than 10% of the combined aggregate Outstanding Note Balance of the Class
A-1 Notes and the Class A-2 Notes as of the Closing Date.
"Redemption Price": With respect to any Note to be redeemed in
whole or in part, an amount equal to 100% of the combined aggregate Outstanding
Note Balance of the Class A-1 Notes and the Class A-2 Notes 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.
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"Reference Banks": The Bank of New York, Barclay's Bank PLC,
the Bank of Tokyo and National Westminster Bank PLC; PROVIDED that, if any of
the foregoing banks are deemed by the Indenture Trustee as not suitable to serve
as a Reference Bank, then any leading banks selected by the Indenture Trustee
that are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
whose quotations appear on page 3750 of Telerate on the relevant Interest
Determination Date, (iii) that have been designated as such by the Indenture
Trustee and (iv) not controlling, controlled by, or under common control with
the Issuer, the Company, the Depositor, Funding Co., RBMG, or any Affiliates
thereof.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds
of which were not used to purchase the related Mortgaged Property.
"Release Date": The date forty (40) calendar days after the
later of (i) the commencement of the offering of the Notes and (ii) the Closing
Date.
"Relief Act Interest Shortfall": With respect to any Payment
Date and any Mortgage Loan, any reduction in the amount of interest collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"Remittable Funds": As defined in the Servicing Agreement.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of the Trust
Estate, one month's interest at a rate equal to the then applicable Coupon Rate
minus the related Servicing Fee Rate on the Stated Principal Balance of such REO
Property (or, in the case of the first such calendar month, of the related
Mortgage Loan if appropriate) as of the close of business on the Payment Date in
such calendar month.
"REO Principal Amortization": As defined in the Servicing
Agreement.
"REO Property": As defined in the Servicing Agreement.
"Required Overcollateralization Amount" means with respect to
each Class of Notes:
(a) for any Payment Date occurring during the period commencing on
the Closing Date and ending on the later of the thirtieth Payment Date
following the Closing Date and the date upon which principal payments
on the Notes in an amount equal to one-half of the Aggregate Stated
Principal Balance of the related Mortgage Loans as of the Cut-off Date
has been received by the Noteholders, the greater of: (i) 5.25% of the
Aggregate Stated Principal Balance of the related Mortgage Loans as of
the Cut-off Date and (ii) 105% of the related Delinquency Amount.
(b) for any Payment Date occurring after the end of the period
described in clause (a) above, the greatest of (i) 10.50% of the
Aggregate Stated Principal Balance of the related Mortgage Loans as of
the Determination Date relating to such Payment Date,
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(ii) 105 % of the related Delinquency Amount, and (iii) the greater of
(A) .75% of the Aggregate Stated Principal Balance of the Mortgage
Loans as of the Cut-off Date and (B) the aggregate Stated Principal
Balance of the three Mortgage Loans in such Group with the largest
Stated Principal Balance.
(c) PROVIDED, HOWEVER, that for any Payment Date occurring after
the end of the period described in clause (a) above, if the Delinquency
Percentage for the related Group exceeds 8%, the Required
Overcollateralization Amount shall be no less than the related Required
Overcollateralization Amount as of the previous Payment Date. The Note
Insurer may, in its sole discretion, at the request of the Majority
Certificateholder, modify clause (a)(ii) or (b)(ii) above for the
purpose of reducing or eliminating, in whole or in 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).
"Required Payment Amount": With respect to each Class of
Notes and any Payment Date, the Note Interest for such Payment Date
plus the amount of any related Overcollateralization Deficit for such
Payment Date.
"Reserve Account": That certain account, which shall be an
Eligible Account, established pursuant to Section 8.18 of this
Indenture.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Indenture Trustee determines to
be either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 0.0625%) of the one-month U.S. dollar lending rates that New
York City banks selected by the Indenture Trustee are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market, (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate
that New York City banks selected by the Indenture Trustee are quoting on such
Interest Determination Dates to leading European banks or (iii) in the event New
York City banks are not offering quotes, One-Month LIBOR for the Interest Period
in which such Interest Determination Date occurs.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a detached one-family dwelling in a planned unit development, or (iv)
condominium units.
"Responsible Officer": With respect to the Indenture Trustee,
the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller, any assistant
controller or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
in each case having direct responsibility for the administration of this
Indenture also, with respect to a particular corporate trust matter, any other
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officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Sale": As defined in Section 5.17.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the applicable Cut-off Date, the outstanding principal balance
of such Mortgage Loan as of such date, net of the principal portion of all
unpaid Monthly Payments, if any, due on or before such date; (b) as of any Due
Date subsequent to the applicable Cut-off Date up to and including the Due Date
in the calendar month in which a Liquidation Event occurs with respect to such
Mortgage Loan, the Scheduled Principal Balance of such Mortgage Loan as of the
applicable Cut-off Date, minus the sum of (i) the principal portion of each
Monthly Payment due on or before such Due Date but subsequent to the applicable
Cut-off Date, whether or not received, (ii) all Principal Prepayments received
before such Due Date but after the applicable Cut-off Date, (iii) the principal
portion of all Liquidation Proceeds and Insurance Proceeds received before such
Due Date but after the applicable Cut-off Date, net of any portion thereof that
represents principal due (without regard to any acceleration of payments under
the related Mortgage and Mortgage Note) on a Due Date occurring on or before the
date on which such proceeds were received and (iv) any Realized Loss incurred
with respect thereto as a result of a Deficient Valuation occurring before such
Due Date, but only to the extent such Realized Loss represents a reduction in
the portion of principal of such Mortgage Loan not yet due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) as of
the date of such Deficient Valuation; and (c) as of any Due Date subsequent to
the occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.
With respect to any REO Property: (a) as of any Due Date subsequent to the date
of its acquisition on behalf of the Trust Estate up to and including the Due
Date in the calendar month in which a Liquidation Event occurs with respect to
such REO Property, an amount (not less than zero) equal to the Scheduled
Principal Balance of the related Mortgage Loan as of the Due Date in the
calendar month in which such REO Property was acquired, minus the aggregate
amount of REO Principal Amortization, if any, in respect of such REO Property
for all previously ended calendar months; and (b) as of any Due Date subsequent
to the occurrence of a Liquidation Event with respect to such REO Property,
zero.
"Securities Act": The Securities Act of 1933, as amended.
"Servicer": Resource Bancshares Mortgage Group, Inc., a
Delaware corporation, in its capacity as servicer under the Servicing Agreement,
and its permitted successors and assigns thereunder, including any successor
servicer appointed pursuant to the Servicing Agreement.
"Servicer Remittance Date": With respect to any Payment Date,
3:00 p.m. New York Time on the 18th day of the calendar month in which such
Payment Date occurs or, if such 18th day is not a Business Day, the Business Day
immediately following such 18th day.
"Servicer Remittance Report": As defined in the Servicing
Agreement.
"Servicing Advance": As defined in the Servicing Agreement.
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"Servicing Agreement": The Servicing Agreement, dated as of
June 1, 1999, among the Issuer, the Servicer and the Indenture Trustee, as
indenture trustee and backup servicer, providing, among other things, for the
servicing of the Mortgage Loans, as such agreement may be amended or
supplemented from time to time as permitted hereby and thereby. Such term shall
also include any servicing agreement entered into with a successor servicer. A
copy of the Servicing Agreement as in effect as of the date hereof is attached
hereto as Exhibit C.
"Servicing Fee": As defined in the Servicing Agreement.
"Servicing Fee Rate": With respect to each Group, 0.44% per
annum; PROVIDED, HOWEVER, that such rate may be increased to a maximum of 0.50%
per annum if the Indenture Trustee and the Note Insurer mutually determine in
good faith that such increase is required in order to obtain a successor
servicer or a successor sub-servicer pursuant to Section 5.02 of the Servicing
Agreement.
"Standard & Poor's": Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies Inc., and its successors in interest.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Payment Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the Scheduled Principal Balance of such Mortgage Loan
as of the applicable Cut-off Date, as shown in the Mortgage Loan Schedule, minus
the sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the applicable Cut-off Date, to the extent received from the
Mortgagor or advanced by the Servicer and distributed pursuant to Section 8.02
on or before such date of determination, (ii) all Principal Prepayments received
after the applicable Cut-off applicable Date, to the extent distributed pursuant
to Section 8.02 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the Servicer as recoveries of
principal in accordance with the Servicing Agreement, to the extent distributed
pursuant to Section 8.02 on or before such date of determination, and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Collection Period for the most recent Payment Date
coinciding with or preceding such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (a) as of any date
of determination up to but not including the Payment Date on which the proceeds,
if any, of a Liquidation Event with respect to such REO Property would be
distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Estate, minus the sum (i) if such REO
Property was acquired before the Payment Date in any calendar month, the
principal portion of the Monthly Payment due on the Due Date in the calendar
month of acquisition, to the extent advanced by the Servicer and distributed
pursuant to Section 8.02 on or before such date of determination, and (ii) the
aggregate amount of REO Principal Amortization in respect of such REO Property
for all previously ended calendar months, to the extent distributed pursuant to
Section 8.02 on or before such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Payment Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, zero.
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"Stayed Funds": As defined in the Servicing Agreement.
"Sub-Servicer": Ocwen Federal Bank FSB, a federally-chartered
savings bank, as Sub-Servicer under the Sub-Servicing Agreement, and its
permitted successors and assigns thereunder, including any successor
sub-servicer appointed pursuant to the Sub-Servicing Agreement.
"Sub-Servicing Agreement": The Sub-Servicing Agreement, dated
as of June 1, 1999, between the Servicer and the Sub-Servicer, providing among
other things for the sub-servicing of the Mortgage Loans which the Servicer is
obliged to service under the Servicing Agreement, as such agreement may be
amended or supplemented from time to time as permitted hereby and thereby. Such
term shall also include any servicing agreement entered into with a successor
sub-servicer.
"TIA": The Trust Indenture Act of 1939, as it may be amended
from time to time.
"Three Month Rolling Average Delinquency Percentage": With
respect to each Group and any Payment Date, the average of the Delinquency
Percentages of such Group as of the last day of each of the three (or one or
two, in case of the first and second Payment Dates) preceding calendar months.
"Total Available Funds": As to any Payment Date and with
respect to either Class of Notes, the sum of (i) the Available Funds for such
Payment Date and Class, (ii) any Crossover Amount available from the other Class
on such Payment Date and (iii) any amount withdrawn from the Reserve Account and
deposited to the Note Account for the related Class.
"Total Expected Losses": With respect to any Payment Date,
cumulative Realized Losses of such Group occurring from the Closing Date through
and including such Payment Date plus the Delinquency Loss Factor as of such
Payment Date.
"Transferor": As defined in Section 8.07(a).
"Trust Agreement": That certain Deposit Trust Agreement,
dated as of June 1, 1999, among the Depositor, as depositor, The Bank of New
York, as Trust Paying Agent, and Wilmington Trust Company, as Owner Trustee.
"Trust Estate": All money, instruments and other property
subject or intended to be subject to the lien of this Indenture for the benefit
of the Noteholders and the Note Insurer as of any particular time (including,
without limitation, all property and interests Granted to the Indenture Trustee,
including all proceeds thereof).
"Trust Paying Agent": The entity appointed to act as
paying agent pursuant to the Trust Agreement with respect to amounts on deposit
from time to time in the Certificate Distribution Account and distributions
thereof to Certificateholders. The initial Trust Paying Agent is The Bank of New
York.
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"Twelve Month Loss Amount": With respect to each Group and
any Payment Date, an amount equal to the aggregate of all related Realized
Losses during the previous twelve Due Periods.
"Underwriter": First Union Capital Markets Corp., a North
Carolina corporation. as underwriter of the Notes pursuant to the Underwriting
Agreement, dated June 2, 1999, 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 Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of FNMA and FHLMC, and (b)
the value thereof as determined by a review appraisal conducted by RBMG in the
event any such review appraisal determines an appraised value ten percent or
more lower than the value thereof as determined by the appraisal referred to in
clause (i)(a) above and (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan; PROVIDED,
HOWEVER, (A) in the case of a Refinanced Mortgage Loan, such value of the
Mortgaged Property is based solely upon the lesser of (1) the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of FNMA and FHLMC and (2) the value thereof as determined
by a review appraisal conducted by RBMG in the event any such review appraisal
determines an appraised value ten percent or more lower than the value thereof
as determined by the appraisal referred to in clause (ii)(A)(1) above and (B) in
the case of a Mortgage Loan originated in connection with a "lease-option
purchase," such value of the Mortgaged Property is based on the lower of the
value determined by an appraisal made for the originator of such Mortgage Loan
at the time of origination or the sale price of such Mortgaged Property if the
"lease option purchase price" was set less than 12 months prior to origination,
and is based on the value determined by an appraisal made for the originator of
such Mortgage Loan at the time of origination if the "lease option purchase
price" was set 12 months or more prior to origination.
"Vice President": Any vice president, whether or not
designated by a number or a word or words added before or after the title "vice
president".
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ARTICLE II
THE NOTES
Section 2.01. Forms Generally.
The Notes shall be in substantially the form set forth on
Exhibit A-1 with respect to the Class A-1 Notes and Exhibit A-2 with respect to
the Class A-2 Notes, each attached hereto. Each Note may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the Authorized Officers
of the Owner Trustee executing such Notes on behalf of the Issuer, as evidenced
by their execution thereof. Any portion of the text of any Note may be set forth
on the reverse thereof with an appropriate reference on the face of the Note.
The Definitive Notes may be produced in any manner determined
by the Authorized Officers of the Owner Trustee executing such Notes, as
evidenced by their execution thereof.
Section 2.02. Forms of Certificate of Authentication.
The form of the Authenticating Agent's certificate of
authentication is as follows:
This is one of the Notes referred to in the within mentioned
Indenture.
THE BANK OF NEW YORK, as Authenticating Agent
By:__________________________________________
Authorized Signatory
Section 2.03. General Provisions With Respect to Principal
and Interest Payments.
The Notes shall be designated generally as the "Asset-Backed
Notes, Series 1999-1" of the Issuer.
The aggregate principal amount of Notes that may be
authenticated and delivered under the Indenture is limited to $75,030,000 Class
A-1 Notes and $50,000,000 Class A-2 Notes, except for the Notes authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Notes pursuant to Sections 2.06, 2.07, or 9.06 of this Indenture. The
Notes shall consist of two classes, each having an Original Note Balance, Note
Interest Rate for the initial Interest Period and Final Maturity Date as
follows:
<TABLE>
<CAPTION>
Note Interest
Original Note Rate for the Initial Final
Designation Balance Interest Period Maturity Date
- ------------------------- ----------------- ---------------------- ---------------
<S> <C> <C> <C>
Class A-1 $75,030,000 LIBOR + 0.26% June 25,2030
Class A-2 $50,000,000 LIBOR + 0.29% June 25,2030
</TABLE>
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<PAGE>
The Notes shall be issued in the form specified in Section
2.01.
Subject to the provisions of Section 3.01, Section 5.07,
Section 5.09 and Section 8.02, the principal of the Notes shall be payable in
installments ending no later than the Final Maturity Date unless the unpaid
principal of such Notes become due and payable at an earlier date by declaration
of acceleration or call for redemption or otherwise.
All payments made with respect to any related Note shall be
applied first to the interest then due and payable on such Note and then to the
principal thereof. All computations of interest accrued on any Note shall be
made on the basis of the actual number of days elapsed in the related Interest
Period in a year of 360 days.
Interest on the Notes shall accrue at the related Note
Interest Rate during each Interest Period on the Outstanding Note Balance of
each Outstanding Note at the end of such Interest Period. Interest accrued
during an Interest Period shall be payable on the next following Payment Date.
All payments of principal of and interest on any Note shall be
made in the manner specified in Section 2.08.
Notwithstanding any of the foregoing provisions with respect
to payments of principal of and interest on the Notes, if the Notes have become
or been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be made
in accordance with Section 5.07.
Section 2.04. Denominations.
The Notes shall be issuable only as registered Notes in the
minimum denomination of $1,000 and integral multiples in excess thereof, with
the exception of one Note which may be issued in a lesser amount.
Section 2.05. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Issuer by an
Authorized Officer of the Owner Trustee. The signature of such Authorized
Officer of the Owner Trustee on the Notes may be manual or by facsimile.
Notes bearing the manual or facsimile signature of an
individual who was at any time an Authorized Officer of the Owner Trustee shall
bind the Issuer, notwithstanding that such individual has ceased to be an
Authorized Officer of the Owner Trustee prior to the authentication and delivery
of such Notes or was not an Authorized Officer of the Owner Trustee at the date
of issuance of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Notes executed on behalf of
the Issuer to the Authenticating Agent for authentication; and the
Authenticating Agent shall authenticate and deliver such Notes as in this
Indenture provided and not otherwise.
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Each Note authenticated on the Closing Date shall be dated the
Closing Date. All other Notes that are authenticated after the Closing Date for
any other purpose hereunder shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Authenticating Agent by the manual signature of one of its
Authorized Officers, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
Section 2.06. Registration, Registration of Transfer and
Exchange.
(a) The Issuer shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Issuer shall provide for the registration of Notes and
(b) the registration of transfers of Notes. The Indenture
Trustee is hereby initially appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. The Indenture
Trustee shall remain the Note Registrar throughout the term hereof. Upon any
resignation of the Indenture Trustee, the Issuer shall promptly appoint a
successor, with the approval of the Note Insurer, or, in the absence of such
appointment, shall assume the duties of Note Registrar.
(c) Upon surrender for registration of transfer of any Note at
the office or agency of the Issuer to be maintained as provided in Section 3.02,
the Owner Trustee on behalf of the Issuer, shall execute, and the Authenticating
Agent shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount.
(d) At the option of the Holder, Notes may be exchanged for
other Notes of any authorized denominations, and of a like aggregate initial
principal amount, upon surrender of the Notes to be exchanged at the office or
agency of the Issuer to be maintained as provided in Section 3.02. Whenever any
Notes are so surrendered for exchange, the Owner Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver, the Notes that the
Noteholder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Note Registrar duly executed
by the Holder thereof or his attorney duly authorized in writing.
(g) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Issuer and the Note Registrar may require
payment of a sum sufficient to cover
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any tax or other governmental charge as may be imposed in connection with any
registration of transfer or exchange of Notes, other than exchanges pursuant to
Section 2.07.
(h) The Note Registrar shall not register the transfer of any
Note (other than the transfer of a Note to the nominee of a Clearing Agency)
unless the transferee has executed and delivered a certification in the form and
substance attached hereto as Exhibit E to the effect that either (i) the
transferee is not (A) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to the provisions of Title I of ERISA or (B) a plan (as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code")) that is subject to Section 4975 of the Code (each of the foregoing, a
"Benefit Plan"), and is not acting on behalf of or investing the assets of a
Benefit Plan, or (ii) that the transferee's acquisition and continued holding of
the Note will be covered by a U.S. Department of Labor Prohibited Transaction
Class Exemption. Each transferee of a Book-Entry Note shall be deemed to make
one of the foregoing representations.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes.
If (1) any mutilated Note is surrendered to the Note Registrar
or the Note Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (2) there is delivered to the Note Registrar such
security or indemnity as may be required by the Note Registrar to hold each of
the Issuer, the Note Insurer and the Note Registrar harmless, then, in the
absence of notice to the Issuer or the Note Registrar that such Note has been
acquired by a bona fide purchaser, an Authorized Officer of the Owner Trustee
shall execute and upon its request the Authenticating Agent shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Note, a new Note or Notes of the same tenor and aggregate initial
principal amount bearing a number not contemporaneously outstanding. If, after
the delivery of such new Note, a bona fide purchaser of the original Note in
lieu of which such new Note was issued presents for payment such original Note,
the Issuer and the Note Registrar shall be entitled to recover such new Note
from the person to whom it was delivered or any person taking therefrom, except
a bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Issuer, the Note Insurer or the Note Registrar in connection
therewith. If any such mutilated, destroyed, lost or stolen Note shall have
become or shall be about to become due and payable, or shall have become subject
to redemption in full, instead of issuing a new Note, the Issuer may pay such
Note without surrender thereof, except that any mutilated Note shall be
surrendered.
Upon the issuance of any new Note under this Section, the
Issuer or the Note Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee, the Note Registrar and the Authenticating Agent)
connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be
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entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Payments of Principal and Interest.
(a) Payments on Notes issued as Book-Entry Notes will be made
by or on behalf of the Indenture Trustee to the Clearing Agency or its nominee.
Any installment of interest or principal payable on any Definitive Notes that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered at the close of business on the Record Date for
such Payment Date by either (i) check mailed to such Person's address as it
appears in the Note Register on such Record Date, or (ii) by wire transfer of
immediately available funds to the account of a Noteholder, if such Noteholder
(A) is the registered holder of Definitive Notes having an initial principal
amount of at least $1,000,000 and (B) has provided the Indenture Trustee with
wiring instructions in writing by five Business Days prior to the related Record
Date or has provided the Indenture Trustee with such instructions for any
previous Payment Date, except for the final installment of principal payable
with respect to such Note (or the Redemption Price for any Note called for
redemption, if such redemption will result in payment of the then entire unpaid
principal amount of such Note), which shall be payable as provided in subsection
(b) below of this Section 2.08. A fee may be charged by the Indenture Trustee to
a Noteholder of Definitive Notes for any payment made by wire transfer. Any
installment of interest or principal not punctually paid or duly provided for
shall be payable as soon as funds are available to the Indenture Trustee for
payment thereof, or if Section 5.07 applies, pursuant to Section 5.07.
(b) All reductions in the principal amount of a Note (or one
or more Predecessor Notes) effected by payments of installments of principal
made on any Payment Date shall be binding upon all Holders of such Note and of
any Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, whether or not such payment is noted on such Note.
The final installment of principal of each Note (including the Redemption Price
of any Note called for optional redemption, if such optional redemption will
result in payment of the entire unpaid principal amount of such Note) shall be
payable only upon presentation and surrender thereof on or after the Payment
Date therefor at the Indenture Trustee's presenting office located within the
United States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire
remaining unpaid principal amount of any Note will become due and payable on the
next Payment Date other than pursuant to a redemption pursuant to Article X, it
shall, no later than two days prior to such Payment Date, telecopy or hand
deliver to each Person in whose name a Note to be so retired is registered at
the close of business on such otherwise applicable Record Date a notice to the
effect that:
(i) the Indenture Trustee expects that funds sufficient
to pay such final installment will be available in the Note Account on such
Payment Date; and
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(ii) if such funds are available, (A) such final
installment will be payable on such Payment Date, but only upon
presentation and surrender of such Note at the office or agency of the Note
Registrar maintained for such purpose pursuant to Section 3.02 (the address
of which shall be set forth in such notice) and (B) no interest shall
accrue on such Note after such Payment Date. A copy of such form of notice
shall be sent to the Note Insurer by the Indenture Trustee. Notices in
connection with redemptions of Notes shall be mailed to Noteholders in
accordance with Section 10.02.
(c) Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to unpaid
principal and interest that were carried by such other Note. Any checks mailed
pursuant to subsection (a) of this Section 2.08 and returned undelivered shall
be held in accordance with Section 3.03.
(d) Each Payment Date Statement, prepared by the Indenture
Trustee based solely on the Servicer Remittance Report delivered to the
Indenture Trustee pursuant to the Servicing Agreement, shall be delivered by the
Indenture Trustee to the Issuer or the designee of the Issuer on each Payment
Date for the Issuer's or such designees review of the information contained
therein and to the Issuer, any designee of the Issuer, the Note Insurer, the
Rating Agencies, the Underwriter and each Noteholder on each Payment Date. Such
report shall constitute the report required pursuant to Section 8.08. In
addition, on each Payment Date the Indenture Trustee shall forward to the
Underwriter and Bloomberg the electromagnetic tape or disk containing certain
Mortgage Loan information required to be delivered to the Indenture Trustee by
the Servicer pursuant to Section 3.01 of the Servicing Agreement; PROVIDED,
HOWEVER, that the Indenture Trustee shall not forward any such tape or disk that
separately sets forth the Note Insurer Premium or the Note Insurer Premium Rate.
None of the Indenture Trustee, the Paying Agent or the Owner Trustee shall have
any responsibility to recalculate, verify or recompute information contained in
any such tape or disk or any such Servicer Remittance Report, except to the
extent necessary to attempt to reconciliate any errors between such tape or disk
and the Indenture Trustee's calculations as described in Section 2.08(d).
(e) If the Issuer or the Issuer's designee, believes the
Payment Date Statement contains an inaccuracy, the Issuer or the Issuer's
designee shall promptly notify the Indenture Trustee and the Indenture Trustee
and the Issuer agree to cooperate to promptly produce a revised Payment Date
Statement that they both agree is accurate.
(f) Within 90 days after the end of each calendar year, the
Indenture Trustee will be required to furnish to each person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (i) and
(ii) in the definition of "Payment Date Statement," aggregated for such calendar
year or the applicable portion thereof during which such person was a
Noteholder. Such obligation will be deemed to have been satisfied to the extent
that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force.
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(g) The Issuer agrees to designate the Manager to review the
Payment Date Statement. The Issuer may change such designation from time to time
by written notice to the Indenture Trustee.
Section 2.09. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any
Note, the Issuer, the Indenture Trustee, the Authenticating Agent, any Paying
Agent and any other agent of the Issuer, the Note Insurer or the Indenture
Trustee may treat the Person in whose name any Note is registered as the owner
of such Note (a) on the applicable Record Date for the purpose of receiving
payments of the principal of and interest on such Note and (b) on any other date
for all other purposes whatsoever, and neither the Issuer, the Indenture
Trustee, any Paying Agent nor any other agent of the Issuer, the Note Insurer or
the Indenture Trustee shall be affected by notice to the contrary.
Section 2.10. Cancellation.
All Notes surrendered for payment, registration of transfer,
exchange or redemption shall, if surrendered to any Person other than the Note
Registrar, be delivered to the Note Registrar and shall be promptly canceled by
it. The Issuer may at any time deliver to the Note Registrar for cancellation
any Note previously authenticated and delivered hereunder which the Issuer may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Note Registrar. No Notes shall be authenticated in lieu
of or in exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Notes held by the Note
Registrar shall be held by the Note Registrar in accordance with its standard
retention policy, unless the Issuer shall direct by an Issuer Order that they be
destroyed or returned to it.
Section 2.11. Authentication and Delivery of Notes.
On the Closing Date, the Notes may be executed by an
Authorized Officer of the Owner Trustee and delivered to the Authenticating
Agent for authentication, and thereupon the same shall be authenticated and
delivered by the Authenticating Agent, upon Issuer Request. On or prior to the
Closing Date, the Issuer shall deliver the following:
(a) An Issuer Order authorizing the execution, authentication
and delivery of the Notes and specifying the Final Maturity Date, the principal
amount and the Note Interest Rate (or the manner in which such Note Interest
Rate is to be determined) of such Notes to be authenticated and delivered.
(b) An Issuer Order authorizing the execution and delivery of
this Indenture.
(c) One or more Opinions of Counsel addressed to the Indenture
Trustee, Authenticating Agent and the Note Insurer or upon which the
Authenticating Agent and the Note Insurer is expressly permitted to rely,
complying with the requirements of Section 11.01, reasonably satisfactory in
form and substance to the Authenticating Agent and the Note Insurer.
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In rendering the opinions described above, such counsel may
rely upon officer's certificates of the Issuer, the Owner Trustee, the Servicer
and the Indenture Trustee, without independent confirmation or verification with
respect to factual matters relevant to such opinions. In rendering the opinions
described above, such counsel need express no opinion as to (A) the existence
of, or the priority of the security interest created by the Indenture against,
any liens or other interests that arise by operation of law and that do not
require any filing or similar action in order to take priority over a perfected
security interest or (B) the priority of the security interest created by this
Indenture with respect to any claim or lien in favor of the United States or any
agency or instrumentality thereof (including federal tax liens and liens arising
under Title IV of the Employee Retirement Income Security Act of 1974).
The acceptability to the Note Insurer of the Opinion of
Counsel delivered to the Indenture Trustee, the Authenticating Agent and the
Note Insurer at the Closing Date shall be conclusively evidenced by the delivery
on the Closing Date of the MBIA Insurance Policy.
(d) An Officers' Certificate of the Issuer complying with the
requirements of Section 11.01 and stating that:
(i) the Issuer is not in Default under this Indenture
and the issuance of the Notes will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, the
Trust Agreement or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may be bound or to
which it may be subject, and that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Notes have
been complied with;
(ii) the Issuer is the owner of each Mortgage Loan, free
and clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Mortgage Loan (or, if any such
interest or participation has been assigned, it has been released) and has
the right to Grant each such Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan
Schedule attached as Schedule I to this Indenture is correct;
(iv) the Issuer has Granted to the Indenture Trustee all
of its right, title and interest in each Mortgage Loan;
(v) as of the Closing Date, no lien in favor of the
United States described in Section 6321 of the Code, or lien in favor of
the Pension Benefit Guaranty Corporation described in Section 4068(a) of
the Employee Retirement Income Security Act of 1974, as amended, has been
filed as described in subsections 6323(f) and 6323(g) of the Code upon any
property belonging to the Issuer; and
(vi) attached thereto is a true and correct copy of
letters signed by each Rating Agency confirming that the Notes have been
rated in the highest rating category of such Rating Agency.
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(e) An executed counterpart of the Servicing Agreement.
(f) An executed counterpart of each of the Company Sale
Agreement, the Depositor Sale Agreement and the Funding Co. Sale Agreement.
(g) An executed counterpart of the Loan Contribution
Agreement.
Section 2.12. Book-Entry Notes.
(a) The notes, upon original issuance, will be issued in the
form of typewritten Notes representing the Book-Entry Notes, to be delivered to
the initial Clearing Agency, or its custodian by, or on behalf of, the Issuer.
The Book-Entry Notes shall be registered initially on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no
Beneficial Owner thereof will receive a Definitive Note representing such
Beneficial Owner's interest in such Note, except as provided in Section 2.13.
Unless and until Definitive Notes have been issued to such Beneficial Owners
pursuant to Section 2.13:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Note Registrar, the Note Insurer and the
Indenture Trustee shall be entitled to deal with the Clearing Agency for
all purposes of this Indenture (including the payment of principal of and
interest on the Notes and the giving of instructions or directions
hereunder) as the sole holder of the Notes (subject to Section 8.16
hereof), and shall have no obligation to the Beneficial Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those established
by law and agreements between such Beneficial Owners and the Clearing
Agency and/or the Clearing Agency Participants pursuant to the Note
Depository Agreement. Unless and until Definitive Notes are issued pursuant
to Section 2.13, the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Note Balance, the Clearing Agency
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Beneficial Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
(b) Except as provided in Section 2.06, registration of
Book-Entry Notes may not be transferred by the Note Registrar except to another
Clearing Agency that agrees to hold such Book-Entry Notes for the respective
Beneficial Owners. Beneficial Owners shall hold their
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respective ownership interests in and to such Book-entry Notes through the
book-entry facilities of the Clearing Agency. Except as provided below,
Beneficial Owners shall not be entitled to Definitive Notes.
(c) All transfers by Beneficial Owners of their respective
ownership interests in the Book-Entry Notes shall be made in accordance with the
procedures established by the Clearing Agency Participant or brokerage firm
representing such Beneficial Owner. Each Clearing Agency Participant shall only
transfer the ownership interests in the Book-Entry Notes of the Beneficial
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Clearing Agency's normal procedures.
(d) The Indenture Trustee is hereby initially appointed as the
Book-Entry Custodian and hereby agrees to act as such in accordance herewith and
in accordance with the agreement that it has with the Clearing Agency
authorizing it to act as such. The Book-Entry Custodian may, and, if it is no
longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a
written instrument delivered to the Issuer, the Servicer, the Note Insurer and,
if the Indenture Trustee is not the Book-Entry Custodian, the Indenture Trustee,
any other transfer agent (including the Clearing Agency or any successor
Clearing Agency) to act as Book-Entry Custodian under such conditions as the
predecessor Book-Entry Custodian and the Clearing Agency or any successor
Clearing Agency may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Clearing Agency. If the
Indenture Trustee resigns or is removed in accordance with the terms hereof, the
successor trustee or, if it so elects, the Clearing Agency shall immediately
succeed to its predecessor's duties as Book-Entry Custodian. The Issuer shall
have the right to inspect, and to obtain copies of, any Book-Entry Notes held by
the Book-Entry Custodian.
(e) Whenever a notice or other communication to the
Noteholders is required under this Indenture, unless and until Definitive Notes
shall have been issued to the Beneficial Owners pursuant to Section 2.13, the
Indenture Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Beneficial Owners.
(f) Registration of the Notes may not be transferred by the
Note Registrar except upon Book-Entry Termination. In such case, the Note
Registrar shall deal with the Clearing Agency as representatives of the
Beneficial Owners of such Notes for purposes of exercising the rights of
Noteholders hereunder. Each payment of principal of and interest on a Book-Entry
Note shall be paid to the Clearing Agency, which shall credit the amount of such
payments to the accounts of its Clearing Agency Participants in accordance with
its normal procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Beneficial Owners of the Book-Entry Notes that
it represents and to each indirect participating brokerage firm (a "brokerage
firm" or "indirect participating firm") for which it acts as agent. Each
brokerage firm shall be responsible for disbursing funds to the Beneficial
Owners of the Book-Entry Notes that it represents. All such credits and
disbursements are to be made by the Clearing Agency and the Clearing Agency
Participants in accordance with the provisions of the Notes. None of the
Indenture Trustee, the Note Registrar, if any, the Issuer, or any Paying Agent
or the Note Insurer shall have any responsibility therefor except as otherwise
provided by
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applicable law. Requests and directions from, and votes of, such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Beneficial Owners.
Section 2.13. Termination of Book Entry System.
(a) The book-entry system through the Clearing Agency with
respect to the Book-Entry Notes will be terminated upon the occurrence of any of
the following:
(i) The Clearing Agency or the Issuer advises the
Indenture Trustee that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities as nominee and depositary with
respect to the Notes and the Issuer or the Indenture Trustee is unable to
locate a qualified successor clearing agency satisfactory to the Issuer;
(ii) The Issuer, in its sole discretion, elects to
terminate the book-entry system by notice to the Clearing Agency and the
Indenture Trustee; or
(iii) After the occurrence of an Event of Default the
Beneficial Owners of no less than 51% of the Note Balance of both Classes
of the Book-Entry Notes advise the Indenture Trustee and the Clearing
Agency in writing, through the related Clearing Agency Participants, that
the continuation of a book-entry system through the Clearing Agency to the
exclusion of any Definitive Notes being issued to any person other than the
Clearing Agency or its nominee is no longer in the best interests of such
Beneficial Owners.
Upon the occurrence of any event described in subsection (a)
above, the Indenture Trustee shall use its Best Efforts to notify all Beneficial
Owners, through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same, in an
aggregate Outstanding Note Balance representing the interest of each, making
such adjustments and allowances as it may find necessary or appropriate as to
accrued interest and previous calls for redemption. Definitive Notes shall be
issued only upon surrender to the Indenture Trustee of the global Certificate(s)
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions for the Definitive Notes. Neither the Issuer nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon issuance of the Definitive Notes, (i) all references herein
to obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Indenture Trustee to the extent
applicable to such Definitive Notes, (ii) the provisions herein relating to
Definitive Notes shall be applicable and (iii) the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders hereunder.
Section 2.14. [Reserved]
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
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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.
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes.
The Issuer will pay or cause to be duly and punctually paid
the principal of, and interest on, the Notes in accordance with the terms of the
Notes and this Indenture. The Notes shall be non-recourse obligations of the
Issuer and shall be limited in right of payment to amounts available from the
Trust Estate as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Notes. No person shall be personally liable for any
amounts payable under the Notes. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this Section 3.01, the
provisions of this Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency.
The Issuer will cause the Note Registrar to, and the Indenture
Trustee, as initial Note Registrar agrees, to maintain its corporate trust
office at a location where Notes may be surrendered for registration of transfer
or exchange, and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served.
The Issuer may also from time to time at its own expense
designate one or more other offices or agencies within the United States of
America where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
any designation of an office or agency for payment of Notes shall be subject to
Section 3.03. The Issuer will give prompt written notice to the Indenture
Trustee and the Note Insurer of any such designation or rescission and of any
change in the location of any such other office or agency.
Section 3.03. Money for Note Payments to be Held in Trust.
All payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the related Note Account
pursuant to Section 8.02(c) or Section 5.07 shall be made on behalf of the
Issuer by the Paying Agent, and no amounts so withdrawn from the related Note
Account for payments of Notes shall be paid over to the Issuer
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under any circumstances except as provided in this Section 3.03 or in Section
5.07 or Section 8.02.
With respect to Definitive Notes, if the Issuer shall have a
Paying Agent that is not also the Note Registrar, such Note Registrar shall
furnish to the Paying Agent, no later than the fifth calendar day after each
Record Date, a list, in such form as such Paying Agent may reasonably require,
of the names and addresses of the Holders of Notes and of the number of
Individual Notes held by each such Holder.
Whenever the Issuer shall have a Paying Agent other than the
Indenture Trustee, it will, on or before the Business Day next preceding each
Payment Date direct the Indenture Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the related Note 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
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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
any of the Notes, the Issuer has provided the calculations pertaining
thereto to the Indenture Trustee and the Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Issuer; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Indenture Trustee or such Paying Agent
with respect to such trust money shall thereupon cease. The Indenture Trustee
may adopt and employ, at the expense of the Issuer, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or any Agent, at the last address of record for each such Holder).
Section 3.04. Existence of Issuer.
(a) Subject to Sections 3.04(b) and (c), the Issuer will keep
in full effect its existence, rights and franchises as a business trust under
the laws of the State of Delaware or under the laws of any other state or the
United States of America, and will obtain and preserve its qualification to do
business in each jurisdiction in which it is or shall be necessary to protect
the validity and enforceability of this Indenture, the Notes, the Servicing
Agreement, the Sub-
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Servicing Agreement, the Insurance Agreement, the Management Agreement, the
Depositor Sale Agreement and the Funding Co. Sale Agreement.
(b) Subject to Section 3.09(vii), the prior consent of the
Note Insurer, and receipt from the Rating Agencies of a written statement that
their ratings and shadow ratings of the Notes in effect immediately prior to
such merger or consolidation will not be qualified, reduced or withdrawn as a
result thereof, any entity into which the Issuer may be merged or with which it
may be consolidated, or any entity resulting from any merger or consolidation to
which the Issuer shall be a party, shall be the successor Issuer under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto, anything in any agreement
relating to such merger or consolidation, by which any such Issuer may seek to
retain certain powers, rights and privileges therefore obtaining for any period
of time following such merger or consolidation to the contrary notwithstanding
(other than Section 3.09(vii)).
(c) Upon any consolidation or merger of or other succession to
the Issuer in accordance with this Section 3.04, the Person formed by or
surviving such consolidation or merger (if other than the Issuer) may exercise
every right and power of, and shall have all of the obligations of, the Issuer
under this Indenture with the same effect as if such Person had been named as
the Issuer herein.
Section 3.05. Protection of Trust Estate.
(a) The Issuer or a designee on its behalf, which the Issuer
agrees that as of the Closing Date shall be the Manager, will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action as it shall have been
notified by the Indenture Trustee in writing that may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the lien of this Indenture or
carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans, the Cap
Agreement, the Servicing Agreement, the Sub-Servicing Agreement, the
Company Sale Agreement, the Management Agreement, the Funding Co. Sale
Agreement, the Depositor Sale Agreement or the Loan Contribution Agreement;
or
(v) preserve and defend title to the Trust Estate and
the rights of the Indenture Trustee, and of the Noteholders, in the
Mortgage Loans and the other property held as part of the Trust Estate
against the claims of all Persons and parties.
(b) The Indenture Trustee shall not remove any portion of the
Trust Estate that consists of money or is evidenced by an instrument,
certificate or other writing from the
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jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.06 (or from the jurisdiction in which it
was held, or to which it is intended to be removed, as described in the Opinion
of Counsel delivered at the Closing Date pursuant to Section 2.11(c), if no
Opinion of Counsel has yet been delivered pursuant to Section 3.06) or cause or
permit ownership or the pledge of any portion of the Trust Estate that consists
of book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Indenture Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
Section 3.06. Opinions as to Trust Estate.
On or before April 30, 2000 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.
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Section 3.08. Investment Company Act.
The Issuer shall at all times conduct its operations so as not
to be subject to, or shall comply with, the requirements of the Investment
Company Act of 1940, as amended (or any successor statute), and the rules and
regulations thereunder.
Section 3.09. Negative Covenants.
The Issuer shall not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this Indenture
or the Servicing Agreement;
(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.
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Section 3.10. Annual Statement as to Compliance.
Not later than 90 days following the end of the fiscal year of
the Issuer beginning in 1999, the Issuer shall deliver to the Indenture Trustee,
the Note Insurer and the Underwriter a written statement, signed by an
Authorized Officer of the Owner Trustee, stating as to the signer thereof, that:
(i) a certificate, opinion or letter of a
Certificateholder, the Depositor and the Servicer as contemplated by
Section 11.01(c) regarding the fulfillment by the Issuer during such year
of its obligations under this Indenture has been received by the Issuer;
and
(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.
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Section 3.14. Further Instruments and Acts.
Upon request of the Indenture Trustee or the Note Insurer, the
Issuer will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied:
(1) either
(a) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section
2.07, and (ii) Notes for whose payment money has theretofore
been deposited in trust and thereafter repaid to the Issuer,
as provided in Section 3.03) have been delivered to the Note
Registrar for cancellation; or
(b) all Notes not theretofore delivered to the Note
Registrar for cancellation (i) have become due and payable, or
(ii) will become due and payable at the Final Maturity Date
within one year, or (iii) are to be called for redemption
within one year under irrevocable arrangements satisfactory to
the Indenture Trustee for the giving of notice of redemption
by the Indenture Trustee in the name, and at the expense, of
the Servicer, the Majority Certificateholder, or the Note
Insurer and the Servicer, the Majority Certificateholder, or
the Note Insurer in the case of clauses (b)(i), (b)(ii) or
(b)(iii) above, has irrevocably deposited or caused to be
deposited with the Indenture Trustee, in trust for such
purpose, an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation, for principal and interest
to the Final Maturity Date or to the applicable Redemption
Date, as the case may be, and in the case of Notes that were
not paid at the Final Maturity Date of their entire unpaid
principal amount, for all overdue principal and all interest
payable on such Notes to the next succeeding Payment Date
therefor;
(2) the later of (a) eighteen months after payment in full of
all outstanding obligations under the Notes, and (b) the date
on which the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer (including, without
limitation, any amounts due the Note Insurer hereunder); and
(3) the Issuer has delivered to the Indenture Trustee and the
Note Insurer an Officers' Certificate and an Opinion of
Counsel satisfactory in form and substance to the Indenture
Trustee and the Note Insurer each stating that all conditions
precedent herein providing for the satisfaction and discharge
of this Indenture
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have been complied with; then, upon Issuer Request, this
Indenture and the lien, rights and interests created hereby
and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if
any, then acting as such hereunder shall, at the expense of
the party redeeming the Notes, execute and deliver all such
instruments as may be necessary to acknowledge the
satisfaction and discharge of this Indenture and shall pay, or
assign or transfer and 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
DEFAULTS AND REMEDIES
Section 5.01. Event of Default.
"Event of Default", wherever used herein, means, with respect
to each Class of Notes issued hereunder, any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if the Issuer shall default in the payment on any Payment
Date of any payment of interest on such Class of Notes at the respective
Note Formula Rate or Monthly Principal on any Note in such Class or fail to
pay the Notes in such Class in full on or before the Final Maturity Date
(and in the case of any such default, such default or failure shall
continue for a period of 5 days unremedied);
(b) if, with respect to the related Class of Notes, the Issuer
shall breach or default in the due observance of any one or more of the
covenants set forth in clauses (i) through (viii) of Section 3.09;
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(c) if, with respect to the related Class of Notes, the Issuer
shall breach, or default in the due observance or performance of, any other
of its covenants in this Indenture, the Servicing Agreement, the Depositor.
Sale Agreement or the Insurance Agreement, and such Default shall continue
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer and the Note Insurer by the Indenture Trustee
at the direction of the Note Insurer, or to the Issuer and the Indenture
Trustee by the Holders of Notes representing at least 25% of the Note
Balance of the Outstanding Notes of the related Class, with the prior
written consent of the Note Insurer, a written notice specifying such
Default and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder;
(d) if any representation or warranty of the Issuer made in
this Indenture or any certificate or other writing delivered by the Issuer
pursuant hereto or in connection herewith, the Servicing Agreement, the
Depositor Sale Agreement or the Insurance Agreement, shall prove to be
incorrect in any material respect as of the time when the same shall have
been made and, within 30 days after there shall have been given, by
registered or certified mail, written notice thereof to the Issuer by the
Indenture Trustee at the direction of the Note Insurer, or to the Issuer
and the Indenture Trustee by the Holders of Notes representing at least 25%
of the Note Balance of the related Class of the Outstanding Notes, with the
prior written consent of the Note Insurer, the circumstance or condition in
respect of which such representation or warranty was incorrect shall not
have been eliminated or otherwise cured; PROVIDED, HOWEVER, that in the
event that there exists a remedy with respect to any such breach that
consists of a purchase obligation, repurchase obligation or right to
substitute under the Basic Documents, then such purchase obligation,
repurchase obligation or right to substitute shall be the sole remedy with
respect to such breach and shall not constitute an Event of Default
hereunder;
(e) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Issuer in an involuntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any substantial
part of its property, or ordering the winding up or liquidation of the
affairs of the Issuer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(f) the commencement by the Issuer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or the consent by the Issuer to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or of any substantial part of its property
or the making by the Issuer of an assignment for the benefit of creditors
or the failure by the Issuer generally to pay its debts as such debts
become due or the taking of corporate action by the Issuer in furtherance
of any of the foregoing.
(g) the occurrence of any event described in (a) - (f) above
with respect to the other Class.
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Section 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default occurs and is continuing, then and in every
such case, but with the consent of the Note Insurer in the absence of a Note
Insurer Default, the Indenture Trustee may, and on request of the Holders of
Notes representing not less than 50% of the Note Balance of the Outstanding
Notes of the related Class, shall, declare such Notes to be immediately due and
payable by a notice in writing to the Issuer (and to the Indenture Trustee if
given by Noteholders of the related Class of Notes), and upon any such
declaration such Notes, in an amount equal to the Note Balance of such Notes,
together with accrued and unpaid interest thereon to the date of such
acceleration, shall become immediately due and payable, all subject to the prior
written consent of the Note Insurer in the absence of a Note Insurer Default.
At any time after such a declaration of acceleration of
maturity of the related Class of Notes has been made and before a judgment or
decree for payment of the money due has been obtained by the Indenture Trustee
as hereinafter in this Article provided, the Note Insurer or the Holders of
Notes representing more than 50% of the Note Balance of the Outstanding Notes of
the related Class, with the prior written consent of the Note Insurer, by
written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(i) all payments of principal of, and interest on, all the
related Notes and all other amounts that would then be due hereunder or
upon such Notes if the Event of Default giving rise to such acceleration
had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of the related Notes that have become due solely by such
acceleration, have been cured or waived as provided in Section 5.14.
No such rescission shall affect any subsequent Default or
impair any right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. Subject to the provisions of Section 3.01 and
the following sentence, if an Event of Default occurs and is continuing, the
Indenture Trustee may, with the prior written consent of the Note Insurer in the
absence of a Note Insurer Default, proceed to protect and enforce its rights and
the rights of the Noteholders of the related Class of Notes and the Note Insurer
by any Proceedings the Indenture Trustee deems appropriate to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or enforce any other proper remedy. Any proceedings brought by the
Indenture Trustee on behalf of the Noteholders of the related Class of Notes and
the Note Insurer or any Noteholder against the Issuer shall be limited to the
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preservation, enforcement and foreclosure of the liens, assignments, rights and
security interests under the Indenture and no attachment, execution or other
unit or process shall be sought, issued or levied upon any assets, properties or
funds of the Issuer, other than the Mortgage Loans in the Group related to the
Class of Notes in respect of which such Event of Default has occurred. If there
is a foreclosure of any such liens, assignments, rights and security interests
under this Indenture, by private power of sale or otherwise, no judgment for any
deficiency upon the indebtedness represented by such Class of Notes may be
sought or obtained by the Indenture Trustee or any Noteholder of the related
Class of Notes against the Issuer. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to this Article V,
including reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
Section 5.04. Remedies. If an Event of Default shall have
occurred and be continuing and the Notes of the related Class have been declared
due and payable and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee, at the direction of the Note
Insurer in the absence of a Note Insurer Default or the Holders of the related
Class of Notes representing not less than 50% of the Note Balance of the
Outstanding Notes of the related Class with the prior written consent of the
Note Insurer (subject to Section 5.17, to the extent applicable) may, for the
benefit of the Noteholders of the related Class of Notes and the Note Insurer,
do one or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on such Notes, or under this Indenture, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Issuer
moneys adjudged due, subject in all cases to the provisions of Sections
3.01 and 5.03;
(b) in accordance with Section 5.17, sell the Trust Estate or
any portion thereof or rights or interest therein, at one or more public or
private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of
the Notes of the related Class of Notes and the Note Insurer hereunder; and
(e) refrain from selling the Mortgage Loans in the Group
related to such Class of Notes and apply all Remittable Funds pursuant to
Section 5.07.
Section 5.05. Indenture Trustee May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Issuer or any other obligor upon any of the Notes or the property of the
Issuer or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether such Class of Notes shall then be due and payable as
provided in this Indenture or in the related Class of Notes or by declaration
or otherwise and irrespective of
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whether the Indenture Trustee shall have made any demand on the Issuer for
the payment of any overdue principal or interest) shall, with the prior
written consent of, or at the direction of, the Note Insurer in the absence
of a Note Insurer Default, be entitled and empowered, by intervention in
such Proceeding or otherwise to:
(a) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of such Notes and file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel) and of the Noteholders of the related
Class of Notes and the Note Insurer allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, or sequestrator (or other similar
official) in any such Proceeding is hereby authorized by each Noteholder of
the related Class of Notes and the Note Insurer to make such payments to
the Indenture Trustee and, in the event that the Indenture Trustee shall
consent to the making of such payments directly to the Noteholders of the
related Class of Notes and the Note Insurer, to pay to the Indenture
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the related Class of Notes or the
rights of any Holder thereof, or the Note Insurer, or to authorize the Indenture
Trustee to vote in respect of the claim of any Noteholder of the related Class
of Notes or the Note Insurer in any such Proceeding.
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or any
of the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee at
the direction of the Note Insurer shall be brought in its own name as trustee of
an express trust, and any recovery of judgment shall be for the ratable benefit
of the Holders of the related Class of Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (a) of Section 5.07.
Section 5.07. Application of Money Collected. If the Class of
Notes has been declared due and payable following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, any money
collected by the Indenture Trustee with respect to each Class of Notes pursuant
to this Article or otherwise and any other monies that may then be held or
thereafter received by the Indenture Trustee as security for such Class of Notes
shall be applied in the following order, at the date or dates fixed by the
Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, such Class of Notes, upon presentation
and surrender thereof:
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(a) first, to the Indenture Trustee, any unpaid Indenture
Trustee's Fees then due with respect to the related Group and any other
amounts payable and due to the Indenture Trustee with respect to such Class
under this Indenture, including any costs or expenses incurred by it in
connection with the enforcement of the remedies provided for in this
Article V;
(b) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees with respect to the related Group
then due and to reimburse the Servicer for P&I Advances previously made by,
and not previously reimbursed or retained by, the Servicer and, upon the
final liquidation of the related Mortgage Loans or the final liquidation of
the Trust Estate, Servicing Advances with respect to the related Group
previously made by, and not previously reimbursed or retained by, the
Servicer;
(c) third, to the payment of Note Interest then due and unpaid
upon the Outstanding Notes of such Class through the day preceding the date
on which such payment is made;
(d) fourth, to the payment of the Note Balance of the
Outstanding Notes of such Class, up to the amount of their respective
Outstanding Note Balances, ratably, without preference or priority of any
kind;
(e) fifth, such amounts set forth in (c) and (d) above with
respect to the other Class.
(f) sixth, to the payment to the Note Insurer, as subrogee to
the rights of the Noteholders, (A) the aggregate amount necessary to
reimburse the Note Insurer for any unreimbursed Insured Payments for such
Class paid by the Note Insurer on prior Payment Dates, together with
interest thereon at the "Late Payment Rate" specified in the Insurance
Agreement from the date such Insured Payments were paid by the Note Insurer
to such Payment Date, (B) the amount of any unpaid Note Insurer Premium for
such Class then due, together with interest thereon at the "Late Payment
Rate" specified in the Insurance Agreement from the date such amounts were
due, (C) any other amounts due and owing to the Note Insurer under the
Insurance Agreement and (D) such amounts set forth in (A), (B) and (C)
above with respect to the other Class;
(g) seventh, to the Class A-1 or Class A-2 Noteholders, any
amounts due them as a result of Prepayment Interest Shortfalls and
shortfalls in interest resulting from application of the Relief Act with
respect to Mortgage Loans in the related Group;
(h) eighth, to the payment of the entire outstanding Available
Funds Cap Rate Carry Forward Amount then due and unpaid upon the
Outstanding Notes of the related Class through the day preceding the date
on which such payment is made; and
(i) ninth, to the Owner Trustee and the Issuer, certain
amounts reimbursable to them with respect to the related Class pursuant to
the Indenture or the Trust Agreement;
(j) tenth, to the payment of the remainder, if any, to the
Issuer or any other Person legally entitled thereto.
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Section 5.08. Limitation on Suits.
No Holder of a Class of Note shall have any right to institute
any Proceedings, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the
Indenture Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the
Note Balance of the Outstanding Notes of the related Class shall have made
written request to the Indenture Trustee to institute Proceedings in
respect of such Event of Default in its own name as Indenture Trustee
hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any
such Proceeding;
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of Notes representing more than 50% of the Note Balance of the
Outstanding Notes of the related Class; and
(f) the consent of the Note Insurer shall have been obtained;
it being understood and intended that no one or more Holders of a Class of
Notes shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of such Class of Notes or to
obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders of the
related Class of Notes.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Holders of a
Class of Notes, each representing less than 50% of the Note Balances of the
Outstanding Notes of the related Class, the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken notwithstanding any
other provision herein to the contrary.
Section 5.09. Unconditional Right of Noteholders to Receive
Principal and Interest.
Subject to the provisions in this Indenture (including
Sections 3.01 and 5.03) limiting the right to recover amounts due on a Note to
recovery from amounts in the Trust Estate, the Holder of any Note shall have the
right, to the extent permitted by applicable law, which right is absolute and
unconditional, to receive payment of each
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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.
Subject to Section 8.16 hereof, the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes of a
Class of Notes on the applicable Record Date shall, with the consent of the Note
Insurer in the absence of a Note Insurer Default, have the right to direct the
time, method and place of conducting any Proceeding for any remedy available to
the Indenture Trustee or exercising any trust or power conferred on the
Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale
of the Trust Estate shall be by the Holders of Notes representing the
percentage of the Note Balance of the
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Outstanding Notes specified in Section 5.17(b) (i), unless Section 5.17(b)
(ii) is applicable; and
(c) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; PROVIDED, HOWEVER, that, subject to Section 6.01, the Indenture
Trustee need not take any action that it determines might involve it in
liability or be unjustly prejudicial to the Noteholders not consenting.
Section 5.14. Waiver of Past Defaults.
Subject to Section 8.16 hereof, the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes of a
Class of Notes on the applicable Record Date may on behalf of the Holders of all
the Notes, and with the consent of the Note Insurer in the absence of a Note
Insurer Default, waive any past Default hereunder and its consequences, except a
Default:
(a) in the payment of principal or any installment of interest
on any Note; or
(b) in respect of a covenant or provision hereof that under
Section 9.02 cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 5.15. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Note by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered or omitted by it as Indenture Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Indenture Trustee, to any suit instituted by any Noteholder,
or group of Noteholders, holding in the aggregate Notes representing more than
10% of the Note Balance of the Outstanding Notes of the related Class of Notes,
or to any suit instituted by any Noteholder of such Class of for the enforcement
of the payment of any Required Payment Amount on any Note on or after the
related Payment Date or for the enforcement of the payment of principal of any
Note on or after the Final Maturity Date (or, in the case of any Note called for
redemption, on or after the applicable Redemption Date).
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Section 5.16. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension of
law wherever enacted, now or at any time hereafter in force, that may affect the
covenants in, or the performance of, this Indenture; and the Issuer (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Indenture Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.17. Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion of
the Trust Estate pursuant to Section 5.04 shall not be exhausted by any one or
more Sales as to any portion of the Trust Estate remaining unsold, but shall
continue unimpaired until the entire Trust Estate shall have been sold or all
amounts payable on the Notes and under this Indenture with respect thereto shall
have been paid. The Indenture Trustee may from time to time postpone any public
Sale by public announcement made at the time and place of such Sale.
(b) To the extent permitted by law, the Indenture Trustee
shall not in any private Sale sell or otherwise dispose of the Trust Estate, or
any portion thereof, unless: (i) the Holders of Notes representing not less than
50% of the Note Balance of the Notes then Outstanding of the related Class of
Notes consent to or direct the Indenture Trustee to make such Sale; or (ii) the
proceeds of such Sale would be not less than the entire amount that would be
payable to the Holders of the Notes, in full payment thereof in accordance with
Section 5.07, on the Payment Date next succeeding the date of such Sale.
In the absence of a Note Insurer Default, no sale hereunder
shall be effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes of the related
Class of Notes have otherwise consented or directed the Indenture Trustee, at
any public Sale of all or any portion of the Trust Estate at which a minimum bid
equal to or greater than the amount described in clause (ii) of subsection (b)
of this Section 5.17 has not been established and no Person bids an amount equal
to or greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee on behalf of the Noteholders, shall prevent such sale and
reject all bids.
(d) In connection with a Sale of all or any portion of the
Trust Estate:
(i) any Holder or Holders of Notes may bid for and
purchase the property offered for Sale, and upon compliance with the terms
of sale may hold, retain and possess and dispose of such property, without
further accountability, and may, in paying the purchase money therefor,
deliver any Outstanding Notes or claims for interest thereon in lieu of
cash up to the amount that shall, upon distribution of the net proceeds of
such Sale, be payable thereon, and such Notes, in case the amounts so
payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to show
such partial payment;
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(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale thereof, and,
in lieu of paying cash therefor, may make settlement for the purchase price
by crediting the gross Sale price against the sum of (A) the amount that
would be payable to the Holders of the Notes as a result of such Sale in
accordance with Section 5.07 on the Payment Date next succeeding the date
of such Sale and (B) the expenses of the Sale and of any Proceedings in
connection therewith which are reimbursable to it, without being required
to produce the Notes in order to complete any such Sale or in order for the
net Sale price to be credited against such Notes, and any property so
acquired by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate related to the Class of Notes in connection
with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to transfer and
convey its interest in any portion of the Trust Estate related to the Class
of Notes in connection with a Sale thereof, and to take all action
necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be
bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
Section 5.18. Action on Notes.
The Indenture Trustee's right to seek and recover judgment
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee,
the Note Insurer or the Holders of Notes shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate.
Section 5.19. No Recourse to Other Trust Estates or Other
Assets of the Issuer.
The Trust Estate Granted to the Indenture Trustee as security
for the Notes serves as security only for the Notes. Holders of the Notes shall
have no recourse against the trust estate granted as security for any other
securities issued by the Issuer, and no judgment against the Issuer for any
amount due with respect to the Notes may be enforced against either the trust
estate securing any other securities or any other assets of the Issuer, nor may
any prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Issuer.
Section 5.20. Application of the Trust Indenture Act.
Pursuant to Section 316(a) of the TIA, all provisions
automatically provided for in Section 316(a) are hereby expressly excluded.
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ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Indenture Trustee need perform only those duties
that are specifically set forth in this Indenture and no others and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) In the absence of bad faith on its part, the
Indenture Trustee may request and conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and conforming
to the requirements of this Indenture. The Indenture Trustee shall,
however, examine such certificates and opinions to determine whether they
conform on their face to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) This paragraph does not limit the effect of
subsection (b) of this Section 6.01;
(ii) The Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) The Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.13 or 5.17 or
exercising any trust or power conferred upon the Indenture Trustee under
this Indenture.
(d) For all purposes under this Indenture, the Indenture
Trustee shall not be deemed to have notice or knowledge of any Event of Default
described in Section 5.01(b), 5.01(e) or 5.01(f) or any Default described in
Section 5.01(c) or 5.01(d) or of any event described in Section 3.05 unless a
Responsible Officer assigned to and working in the Indenture Trustee's corporate
trust department has actual knowledge thereof or unless written notice of any
event that is in fact such an Event of Default or Default is received by the
Indenture Trustee at the Corporate Trust Office, and such notice references the
Notes generally, the Issuer, the Trust Estate or this Indenture.
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(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of
any of the Noteholders pursuant to the provisions of this Indenture, or to make
any investigation into the facts or matters stated in any resolution, note,
statement, instrument, opinion, report, notice, request, order, approval, bond
or other paper if it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it under the Servicing Agreement or otherwise.
(f) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the Maturity of the Notes,
whether such extinguishment occurs through a Sale of the Trust Estate to another
Person, the acquisition of the Trust Estate by the Indenture Trustee or
otherwise, the rights, powers and duties of the Indenture Trustee with respect
to the Trust Estate (or the proceeds thereof) and the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(h) The Indenture Trustee or any Custodian appointed pursuant
to Section 8.15 shall at all times retain possession of the Mortgage Files in
the State of New York or the State of Illinois, except for those Mortgage Files
or portions thereof released to the Servicer pursuant to this Indenture or the
Servicing Agreement.
(i) The Indenture Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Indenture or any agreement referred to
herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Note Accounts, (D) to confirm or verify
the contents of any reports or certificates of the Servicer delivered to the
Indenture Trustee pursuant to this Indenture believed by the Indenture Trustee
to be genuine and to have been signed or presented by the proper party or
parties.
Section 6.02. Notice of Default.
Immediately after the occurrence of any Default known to the
Indenture Trustee, the Indenture Trustee shall transmit by mail to the Note
Insurer and the Underwriter notice of each such Default and, within 90 days
after the occurrence of any Default known to the Indenture Trustee, the
Indenture Trustee shall transmit by mail to all Holders of Notes notice of each
such Default, unless such Default shall have been cured or waived. Concurrently
with the mailing of any such notice to the Holders of the Notes, the Indenture
Trustee shall transmit by mail a copy of such notice to the Rating Agencies.
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Section 6.03. Rights of Indenture Trustee.
(a) Except as otherwise provided in Section 6.01, the
Indenture Trustee may rely on any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Indenture Trustee need
not investigate any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) With the consent of the Note Insurer, which consent shall
not be unreasonably withheld, the Indenture Trustee may act through agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be authorized or
within its rights or powers.
(e) The right of the Indenture Trustee to perform any
discretionary act enumerated in this Indenture shall not be construed as a duty,
and the Indenture Trustee shall not be answerable for other than its negligence
or willful misconduct in the performance of such act.
(f) The Indenture Trustee shall not be required to give any
bond or surety in respect of the execution of the Trust Fund created hereby or
the powers granted hereunder.
(g) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, attorneys or custodians, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney or custodian appointed by the Indenture Trustee with due care.
Section 6.04. Not Responsible for Recitals or Issuance of
Notes.
The recitals contained herein and in the Notes, except the
certificates of authentication on the Notes, shall be taken as the statements of
the Issuer, and the Indenture Trustee and the Authenticating Agent assume no
responsibility for their correctness. The Indenture Trustee makes no
representations with respect to the Trust Estate or as to the validity or
sufficiency of this Indenture or of the Notes. The Indenture Trustee shall not
be accountable for the use or application by the Issuer of the Notes or the
proceeds thereof or any money paid to the Issuer or upon Issuer Order pursuant
to the provisions hereof.
Section 6.05. May Hold Notes.
The Indenture Trustee, any Agent, or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or pledgee
of Notes and, subject to Sections 6.07 and 6.13, may otherwise deal with the
Issuer or any Affiliate of the Issuer with the same rights it would have if it
were not Indenture Trustee, Agent or such other agent.
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Section 6.06. Money Held in Trust.
Money held by the Indenture Trustee in trust hereunder need
not be segregated from other funds except to the extent required by this
Indenture or by law. The Indenture Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Issuer and except to the extent of income or other gain on investments that
are obligations of the Indenture Trustee, in its commercial capacity, and income
or other gain actually received by the Indenture Trustee on investments, which
are obligations of others.
Section 6.07. Eligibility; Disqualification.
Irrespective of whether this Indenture is qualified under the
TIA, this Indenture shall always have an Indenture Trustee who satisfies the
requirements of TIA Sections 310(a)(1) and 310(a)(5). The Indenture Trustee
shall always have a combined capital and surplus as stated in Section 6.08. The
Indenture Trustee shall be subject to TIA Section 310(b).
Section 6.08. Indenture Trustee's Capital and Surplus.
The Indenture Trustee shall at all times be a corporation or
banking association organized and doing business under the laws of the United
States or any state thereof, be authorized under such laws to exercise corporate
trust powers, be subject to supervision or examination by federal or state
authorities, and have a combined capital and surplus of at least $50,000,000 or
shall be a member of a bank holding company system, the aggregate combined
capital and surplus of which is at least $50,000,000. If the Indenture Trustee
publishes annual reports of condition of the type described in TIA Section
310(a)(1), its combined capital and surplus for purposes of this Section 6.08
shall be as set forth in the latest such report. If at any time the Indenture
Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.08, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.09. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.10.
(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Issuer, the Note Insurer, each Rating Agency, and
the Servicer. If an instrument of acceptance by a successor Indenture Trustee
shall not have been delivered to the Indenture Trustee within 30 days after the
giving of such notice of resignation, the resigning Indenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee. Any successor Indenture Trustee must be approved by the Note
Insurer and the Rating Agencies.
(c) The Indenture Trustee may be removed at any time by the
Note Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Balance of the Outstanding Notes of both
Classes, delivered to the Indenture Trustee and to the Issuer.
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(d) If at any time:
(i) the Indenture Trustee shall have a conflicting
interest prohibited by Section 6.07 and shall fail to resign or eliminate
such conflicting interest in accordance with Section 6.07 after written
request therefor by the Issuer or by any Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible
under Section 6.08 or shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Indenture Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation; then, in any such
case, (i) the Issuer by an Issuer Order, with the consent of the Note
Insurer, may remove the Indenture Trustee, and the Issuer shall join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such
successor Indenture Trustee any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Indenture;
PROVIDED, HOWEVER, if the Issuer and the Note Insurer do not join in such
appointment within fifteen (15) days after the receipt by it of a request
to do so, or in case an Event of Default has occurred and is continuing,
the Indenture Trustee may petition a court of competent jurisdiction to
make such appointment, or (ii) subject to Section 5.15, and, in the case of
a conflicting interest as described in clause (1) above, unless the
Indenture Trustee's duty to resign has been stayed as provided in TIA
Section 310(b), the Note Insurer or any Noteholder who has been a bona fide
Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, with the consent of the Note Insurer, petition
any court of competent jurisdiction for the removal of the Indenture
Trustee and the appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Indenture Trustee for any cause, the Issuer, by an Issuer Order, shall promptly
appoint a successor Indenture Trustee acceptable to the Note Insurer and the
Rating Agencies. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy a successor Indenture Trustee
shall be appointed by the Note Insurer or, with the consent of the Note Insurer,
by Act of the Holders of Notes representing more than 50% of the Note Balance of
the Outstanding Notes of both Classes delivered to the Issuer and the retiring
Indenture Trustee, the successor Indenture Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Indenture Trustee
(subject to approval by the Rating Agencies) and supersede the successor
Indenture Trustee appointed by the Issuer. If no successor Indenture Trustee
shall have been so appointed by the Issuer, the Note Insurer or Noteholders and
shall have accepted appointment in the manner hereinafter provided, any
Noteholder who has been a bona fide Holder of a Note for at least six months
may, on behalf of himself and all others similarly situated, with the consent of
the Note Insurer and the Rating Agencies, petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee to the Holders of Notes
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and the Note Insurer. Each notice shall include the name of the successor
Indenture Trustee and the address of its Corporate Trust Office.
Section 6.10. Acceptance of Appointment by Successor.
Every successor Indenture Trustee appointed hereunder shall
execute, acknowledge and deliver to the Issuer, the Note Insurer and the
retiring Indenture Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective and such successor Indenture Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Indenture Trustee. Notwithstanding the foregoing, on
request of the Issuer or the successor Indenture Trustee, such retiring
Indenture Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Indenture Trustee all the rights,
powers and trusts of the retiring Indenture Trustee, and shall duly assign,
transfer and deliver to such successor Indenture Trustee all property and money
held by such retiring Indenture Trustee hereunder. Upon request of any such
successor Indenture Trustee, the Issuer shall execute and deliver any and all
instruments for more fully and certainly vesting in and confirming to such
successor Indenture Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment
unless (i) at the time of such acceptance such successor Indenture Trustee shall
be qualified and eligible under this Article and (ii) the Note Insurer and the
Rating Agencies have approved such appointment.
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee.
Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor of
the Indenture Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Notes have been authenticated, but not delivered, by the Indenture Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Indenture Trustee may adopt such authentication and deliver the
Notes so authenticated with the same effect as if such successor Indenture
Trustee had authenticated such Notes.
Section 6.12. Preferential Collection of Claims against
Issuer.
The Indenture Trustee (and any co-trustee or separate trustee)
shall be subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b), and an Indenture Trustee (and any co-trustee or
separate trustee) who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated.
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Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees.
At any time or times, for the purpose of meeting the
requirements of this Indenture or of any jurisdiction in which any of the Trust
Estate may at the time be located, the Indenture Trustee shall have power to
appoint, and, upon the written request of the Indenture Trustee, of the Note
Insurer or of the Holders of Notes representing more than 50% of the Note
Balance of the Outstanding Notes of both Classes with respect to which a
co-trustee or separate trustee is being appointed with the consent of the Note
Insurer, the Issuer shall for such purpose join with the Indenture Trustee in
the execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Indenture
Trustee either to act as co-trustee, jointly with the Indenture Trustee, of all
or any part of the Trust Estate, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Issuer does not join in such
appointment within 15 days after the receipt by it of a request to do so, or in
case an Event of Default has occurred and is continuing, the Indenture Trustee
alone shall have power to make such appointment. All fees and expenses of any
co-trustee or separate trustee shall be payable by the Issuer.
Should any written instrument from the Issuer be required by
any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(a) The Notes shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be exercised,
solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee or by the Indenture Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that under
any law of any jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or unqualified to perform such act, in
which event such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer evidenced by an
Issuer Order, may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case an Event of Default has
occurred and is continuing, the Indenture Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee without the
concurrence of the Issuer upon the written request of the Indenture Trustee, the
Issuer shall join with the Indenture
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Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture Trustee, or
any other such trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee.
(f) Any separate trustee or co-trustee may, at any time,
constitute the Indenture Trustee, its agent or attorney-in-fact, with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
Section 6.14. Authenticating Agents.
Issuer shall appoint an Authenticating Agent with power to act
on its behalf and subject to its direction in the authentication and delivery of
the Notes designated for such authentication by the Issuer and containing
provisions therein for such authentication (or with respect to which the Issuer
has made other arrangements, satisfactory to the Indenture Trustee and such
Authenticating Agent, for notation on the Notes of the authority of an
Authenticating Agent appointed after the initial authentication and delivery of
such Notes) in connection with transfers and exchanges under Section 2.06, as
fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by that Section to authenticate and deliver Notes. For all
purposes of this Indenture (other than in connection with the authentication and
delivery of Notes pursuant to Sections 2.05 and 2.11 in connection with their
initial issuance), the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Notes "by the Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.07 for the Indenture Trustee hereunder and has an
office for presentation of Notes in the United States of America. The Indenture
Trustee shall initially be the Authenticating Agent and shall be the Note
Registrar as provided in Section 2.06. The office from which the Indenture
Trustee shall perform its duties as Note Registrar and Authenticating Agent
shall be the Corporate Trust Office. Any Authenticating Agent appointed pursuant
to the terms of this Section 6.14 or pursuant to the terms of any supplemental
indenture shall deliver to the Indenture Trustee as a condition precedent to the
effectiveness of such appointment an instrument accepting the trusts, duties and
responsibilities of Authenticating Agent and of Note Registrar or co-Note
Registrar and indemnifying the Indenture Trustee for and holding the Indenture
Trustee harmless against, any loss, liability or expense (including reasonable
attorneys' fees) incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance, administration of the trust or
exercise of authority by such Authenticating Agent, Note Registrar or co-Note
Registrar.
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Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section, without the execution or filing of any further act
on the part of the parties hereto or the Authenticating Agent or such successor
corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Issuer. The Issuer may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Issuer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Issuer
shall promptly appoint a successor Authenticating Agent, shall give written
notice of such appointment to the Indenture Trustee, and shall mail notice of
such appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e), to
pay to any Authenticating Agent from time to time reasonable compensation for
its services and the Indenture Trustee shall be entitled to be reimbursed for
such payments pursuant to Section 8.02. The provisions of Sections 2.09, 6.04
and 6.05 shall be applicable to any Authenticating Agent.
Section 6.15. Review of Mortgage Files.
(a) The Indenture Trustee shall cause a Custodian on its
behalf to review, for the benefit of the Noteholders and the Note Insurer, each
Mortgage File prior to the Closing Date 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, an Initial
Certification with respect to each Mortgage Loan covered thereby to the effect
that, except as specifically noted on a schedule of exceptions thereto, (A) all
documents required to be contained in the related Mortgage File are in its
possession, (B) such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan, and (C) based on its examination
and only as to the foregoing documents, the information set forth on the related
Mortgage Loan Schedule accurately reflects information set forth in the related
Mortgage File.
(b) On each of (i) the 45th day after the Closing Date and
(ii) the 270th day after the Closing Date, the Indenture Trustee shall deliver,
or cause a Custodian on its behalf to deliver, to the Issuer, RBMG, the
Depositor, the Company, Funding Co., the Note Insurer and the Servicer, on the
date referred to in clause (i) of this subsection an Interim Certification, and
on the date referred to in clause (ii) of this subsection (b), a Final
Certification, with respect to each Mortgage Loan to the effect that, except as
specifically noted on a schedule of exceptions thereto, (A) all documents
required to be contained in the related Mortgage File are in its possession, (B)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan, and (C) based on its examination and only as to
the foregoing documents, the information set forth on the related Mortgage Loan
Schedule accurately reflects information set forth in the related Mortgage File.
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(c) It is understood that before making the Initial
Certification, the Interim Certifications and the Final Certification, the
Indenture Trustee, or a Custodian on its behalf, shall examine the related
Mortgage File to confirm that:
(i) each Mortgage Note and Mortgage bears an original
signature or signatures purporting to be that of the Person or Persons
named as the maker and mortgagor/trustor or, if photocopies are permitted,
that such copies bear a reproduction of such signature or signatures;
(ii) except for the endorsement to the Indenture
Trustee, neither the Mortgage nor any Assignment, on the face or the
reverse side(s) thereof, contains evidence of any unsatisfied claims,
liens, security interests, encumbrances or restrictions on transfer;
(iii) the principal amount of the indebtedness secured
by the related Mortgage is identical to the original principal amount of
the related Mortgage Note;
(iv) the Assignment of the related Mortgage from RBMG to
the Indenture Trustee is in the form required pursuant to Section 4(b)(iv)
of the Loan Contribution Agreement, and bears an original signature of RBMG
and any other necessary party (or signatures purporting to be that of RBMG
and any such other party) or, if photocopies are permitted, that such
copies bear a reproduction of such signature or signatures;
(v) if intervening Assignments are included in the
Mortgage File, each such intervening Assignment bears an original signature
of the related mortgagee and/or the assignee (and any other necessary
party) (or signatures purporting to be that of each such party) or, if
photocopies are permitted, that such copies bear a reproduction of such
signature or signatures;
(vi) if either a title insurance policy, a preliminary
title report or a written commitment to issue a title insurance policy is
delivered, the address of the real property set forth in such policy,
report or written commitment is identical to the real property address
contained in the related Mortgage; and
(vii) if any of a title insurance policy, certificate of
title insurance or a written commitment to issue a title insurance policy
is delivered, such policy, certificate or written commitment is for an
amount not less than the original principal amount of the related Mortgage
Note and such title insurance policy insures that the related Mortgage
creates a first lien, senior in priority to all other deeds of trust,
mortgages, deeds to secure debt, financing statements and security
agreements and to any mechanics' liens, judgment liens or writs of
attachment (or if the title insurance policy or certificate of title
insurance has not been issued, the written commitment for such insurance
obligates the insurer to issue such policy for an amount not less than the
original principal amount of the related Mortgage Note);
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PROVIDED THAT, with respect to the Initial Certification, the scope of such
review shall only include those items described in clauses (i) (solely with
respect to each Mortgage Note), (iv) and (v) above.
(d) In giving the Initial Certification, the Interim
Certifications and the Final Certification, the Indenture Trustee shall be under
no duty or obligation (i) to inspect, review or examine any such documents,
instruments, securities or other papers to determine that they or the signatures
thereto are genuine, enforceable, or appropriate for the represented purpose or
that they have actually been recorded or that they are other than what they
purport to be on their face or (ii) to determine whether any Mortgage File
should include a flood insurance policy, any rider, addenda, surety or guaranty
agreement, power of attorney, buy down agreement, assumption agreement,
modification agreement, written assurance or substitution agreement.
(e) No later than the fifth Business Day of each third month,
commencing in September, 1999, the Indenture Trustee shall deliver, or cause a
Custodian on its behalf to deliver, to the Company, Funding Co., RBMG, the
Servicer and the Note Insurer a recordation report dated as of the first day of
such month, identifying those Mortgage Loans for which it has not yet received
(i) an original recorded Mortgage or a copy thereof certified to be true and
correct by the public recording office in possession of such Mortgage or (ii) an
original recorded Assignment of the Mortgage to the Indenture Trustee, if
required to be recorded pursuant to the Loan Contribution Agreement and the
Servicing Agreement, and any required intervening Assignments or a copy thereof
certified to be a true and correct copy by the public recording office in
possession of such Assignment.
Section 6.16. Indenture Trustee Fees and Expenses.
(a) On each Payment Date, the Indenture Trustee shall be
entitled to receive its Indenture Trustee Fee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of any express
trust) from amounts deposited into the Note Accounts on the related Servicer
Remittance Date. The Indenture Trustee Fee constitutes compensation for all
services rendered by the Indenture Trustee in the exercise and performance of
any of the powers and duties hereunder. The Indenture Trustee does not and will
not have any lien on the Trust Estate for payment of any such fees or expenses.
(b) This Section 6.16 shall survive the termination of this
Indenture or the resignation or removal of the Indenture Trustee as regards
rights accrued prior to such resignation or removal.
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ARTICLE VII
NOTEHOLDERS' LISTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders.
(a) The Issuer shall furnish or cause to be furnished to the
Indenture Trustee (i) semi-annually, not less than 45 days nor more than 60 days
after the Payment Date occurring closest to six months after the Closing Date
and each Payment Date occurring at six-month intervals thereafter, all
information in the possession or control of the Issuer, in such form as the
Indenture Trustee may reasonably require, as to names and addresses of the
Holders of Notes, and (ii) at such other times, as the Indenture Trustee may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; PROVIDED, HOWEVER, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished.
(b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under subsection (a), the Issuer shall also
furnish all Noteholder lists, if any, required under Section 3.03 at the times
required by Section 3.03.
Section 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of the Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
Section 7.03. Reports by Indenture Trustee.
(a) Within 60 days after December 31 of each year (the
"reporting date"), commencing with the year after the issuance of the Notes, (i)
the Indenture Trustee shall, if required by TIA Section 313(a), mail to all
Holders a brief report dated as of such reporting date that complies with TIA
Section 313(a); (ii) the Indenture Trustee shall, to the extent not set forth in
the Payment Date Statement pursuant to Section 2.08(d), also mail to Holders of
Notes and the Note Insurer with respect to which it has made advances, any
reports with respect to such advances that are required by TIA Section
313(b)(2); and, the Indenture Trustee shall also mail to Holders of Notes and
the Note Insurer any reports required by TIA Section 313(b)(1). For purposes of
the information required to be included in any such reports pursuant to TIA
Sections 313(a)(2), 313(b)(1) (if applicable), or 313(b)(2), the principal
amount of indenture securities
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outstanding on the date as of which such information is provided shall be the
Note Balance of the then Outstanding Notes covered by the report.
(b) A copy of each report required under this Section 7.03
shall, at the time of such transmission to Holders of Notes and the Note Insurer
be filed by the Indenture Trustee with the Commission and with each securities
exchange upon which the Notes are listed. The Issuer will notify the Indenture
Trustee when the Notes are listed on any securities exchange.
Section 7.04. Reports by Issuer.
The Issuer (a) shall deliver to the Indenture Trustee within
15 days after the Issuer is required to file the same with the Commission copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may by rules
and regulations prescribe) that the Issuer is required to file with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, and (b) shall also comply with the other provisions of TIA
Section 314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Collection of Moneys.
Except as otherwise expressly provided herein, the Indenture
Trustee may demand payment or delivery of, and shall receive and collect,
directly and without intervention or assistance of any fiscal agent or other
intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall hold
all such money and property received by it as part of the Trust Estate and shall
apply it as provided in this Indenture.
If the Indenture Trustee shall not have received the
Remittable Funds by close of business on any related Servicer Remittance Date,
the Indenture Trustee shall, unless the Issuer or the Servicer shall have made
provisions satisfactory to the Indenture Trustee for delivery to the Indenture
Trustee of an amount equal to such Remittable Funds, deliver a notice, with a
copy to the Note Insurer, to the Issuer and to the Servicer of the Servicer's
failure to remit such Remittable Funds and that such failure, if not remedied by
the close of business on the Business Day after the date upon which such notice
is delivered to the Servicer, shall constitute an event of default under the
Servicing Agreement. If the Indenture Trustee shall subsequently receive any
such Remittable Funds by 2:00 p.m. Eastern Time on such Business Day, such event
of default shall not be deemed to have occurred. Notwithstanding any other
provision hereof, the Indenture Trustee shall
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deliver to the Issuer or the Servicer, or their respective designee or assignee,
any Remittable Funds received with respect to a Mortgage Loan after the related
Servicer Remittance Date to the extent that the Issuer or the Servicer,
respectively, previously made payment or provision for payment with respect to
such Remittable Funds in accordance with this Section 8.01, and any such
Remittable Funds shall not be deemed part of the Trust Estate. Except as
otherwise expressly provided in this Indenture and the Servicing Agreement, if,
following delivery by the Indenture Trustee of the notice described above, the
Servicer shall fail to remit the Remittable Funds on any Servicer Remittance
Date, the Indenture Trustee shall deliver a second notice to the Servicer, the
Issuer and the Note Insurer by 2:00 p.m. Eastern Time on the third Business Day
prior to the related Payment Date indicating that an event of default occurred
and is continuing under the Servicing Agreement. Thereupon, the Indenture
Trustee shall take such actions as are required of the Indenture Trustee under
Article V of the Servicing Agreement. In addition, if a default occurs in any
other performance required under the Servicing Agreement, the Indenture Trustee
may, with the consent of the Note Insurer, and upon the request of the Note
Insurer or, with the consent of the Note Insurer, the Holders of Notes
representing more than 50% of the Note Balance of the Outstanding Notes of both
Classes shall, take such action as may be appropriate to enforce such payment or
performance including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and to proceed thereafter as
provided in Article V.
Section 8.02. Establishment of Accounts;
(a) The Issuer hereby directs the Indenture Trustee to
establish for each Class of Notes, one or more separate trust accounts that
shall collectively be the "Note Account" for such Class on or before the Closing
Date. The Indenture Trustee shall promptly deposit in the related Note Account
(i) all Remittable Funds for the related Group received by it from the Servicer
pursuant to the Servicing Agreement, (ii) any other funds from any deposits for
such Group to be made by the Servicer pursuant to the Servicing Agreement, (iii)
any amount for such Group required to be deposited in the related Note Account
pursuant to Section 8.04, (iv) all amounts received pursuant to Section 8.05,
(v) amounts withdrawn from the Reserve Account and deposited into such Note
Account in accordance with Section 8.18 hereof and (vi) all other amounts
received for deposit in the related Note Account, including the payment of any
Purchase Price or Cap Payment received by the Indenture Trustee. The Indenture
Trustee shall allocate any Cap Payment between the two Note Accounts based on
the related outstanding Note Balance of the Class A-1 Notes and Class A-2 Notes
as of the immediately preceding Payment Date. All amounts that are deposited
from time to time in the related Note Account are subject to withdrawal by the
Indenture Trustee for the purposes set forth in subsections (c) and (e) of this
Section 8.02. All funds withdrawn from the related Note Account pursuant to
subsection (c) of this Section 8.02 for the purpose of making payments to the
Holders of Notes shall be applied in accordance with Section 3.03.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, amounts held in the Note Account (other than amounts
received pursuant to Section 8.05) shall be invested in Permitted Investments,
which Permitted Investments shall mature no later than the Business Day
preceding the immediately following Payment Date.
All income or other gains, if any, from investment of moneys
deposited in the Note Account shall be for the benefit of the Issuer and on each
Payment Date, any such amounts may be released from the Note Account and paid to
the Issuer for deposit in the Certificate Distribution Account established and
maintained pursuant to the Trust Agreement. Any loss resulting from such
investment of moneys deposited in a Note Account shall be reimbursed immediately
as incurred to such Note Account by the Issuer. Subject to Section 6.01 and the
preceding sentence, the Issuer shall not in any way be held liable by reason of
any insufficiency in such Note Account.
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(c) On each Payment Date, the Indenture Trustee shall withdraw
amounts on deposit in each Note Account and pay on a PARI PASSU basis the Note
Insurer Premium, the Indenture Trustee Fee for the related Group, and, provided
notice is given to the Indenture Trustee no later than the 4th Business Day
prior to the Payment Date, amounts required to pay the Servicer any unpaid
related Servicing Fees then due and to reimburse the Servicer for related P&I
Advances and Servicing Advances previously made by and not previously reimbursed
to or retained by, the Servicer, which are so reimbursable to the Servicer
pursuant to the Servicing Agreement (as reported in writing by the Servicer to
the Indenture Trustee). After payment of such amounts, unless the Notes have
been declared due and payable pursuant to Section 5.02 and moneys collected by
the Indenture Trustee are being applied in accordance with Section 5.07,
Available Funds on deposit in the related Note Account on any Payment Date or
Redemption Date shall be withdrawn from the related Note Account (unless
otherwise specified herein), in the amounts required, for application on such
Payment Date as follows:
(i) first, to the payment to the Note Insurer, as
subrogee to the rights of the Noteholders, out of Total Available Funds for
such Class, the aggregate amount necessary to reimburse the Note Insurer
for any unreimbursed payments of Insured Payments and unpaid Note Insurer
Premiums (together with interest thereon at the Late Payment Rate specified
in the Insurance Agreement); PROVIDED, HOWEVER, that the Note Insurer shall
be paid unreimbursed Insured Payments and unpaid related Note Insurer
Premiums (and any interest thereon) only after each Class of Noteholders
has received Note Interest and any Overcollateralization Deficit with
respect to such Payment Date;
(ii) second, to the Class A-1 or Class A-2 Noteholders,
the Note Interest for such Class out of amounts then on deposit in the
related Note Account, with respect to such Payment Date;
(iii) third, to the Class A-1 or Class A-2 Noteholders,
out of amounts then on deposit in the Note Account for such Class, the
amount of applicable Monthly Principal for the Notes of such Class with
respect to such Payment Date, to reduce the related Note Balance until such
Note Balance is reduced to zero;
(iv) fourth, to the Noteholders of the other Class, out
of amounts then on deposit in the Note Account not related to the Class to
be paid, any Note Interest for such other Class remaining unpaid after
application of clause (ii) above;
(v) fifth, to the Class A-1 or Class A-2 Noteholders,
out of amounts then on deposit in the other Note Account, an amount equal
to any Overcollateralization Deficit for such Class (computed as if the
Monthly Principal for such Class and Excess Cash for such Group on such
Payment Date had been paid) to reduce the related Note Balance of such
Class until such Note Balance is reduced to zero;
(vi) sixth, to the Note Insurer, any amounts due and
owing under the Insurance Agreement that are not described in clause (i)
above;
(vii) seventh, to the Class A-1 or Class A-2
Noteholders, out of amounts then on deposit in the Note Account for such
Class, to reduce the Note Balance for such
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Class, the amount, if any, equal to the lesser of (A) Excess Cash with
respect to the related Group for such Payment Date, and (B) the lesser of
(1) the amount necessary for the Overcollateralization Amount for such
Class to equal the Required Overcollateralization Amount for such Class on
such Payment Date (after paying the Monthly Principal to the related Class
for such Payment Date) and (2) the amount necessary to reduce the related
Note Balance to zero:
(viii) eighth, to the Reserve Account, in the event that
the Overcollateralization Amount with respect to Class A-1 or Class A-2 is
less than the Required Overcollateralization Amount for such Class, out of
amounts on deposit in the Note Account related to the other Class, to the
extent of any such shortfall;
(ix) ninth, to the Class A-1 or Class A-2 Noteholders,
the Available Funds Cap Carry Forward Amount related to such Class for such
Payment Date; and
(x) tenth, to the Class A-1 or Class A-2 Noteholders,
any amounts due them as a result of Prepayment Interest Shortfalls and
shortfalls in interest resulting from application of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended (the "Relief Act") with
respect to Mortgage Loans in the related Group;
(xi) eleventh, to the Class A-1 or Class A-2
Noteholders, out of amounts then on deposit on the other Note Account, an
amount equal to any remaining shortfall in the amounts described in clauses
(ix) and (x) preceding, in that order, with respect to such Class;
(xii) twelfth, to the Owner Trustee, the Servicer and
the Issuer, certain amounts reimbursable to them with respect to the
related Group pursuant to the Indenture, the Owner Trust Agreement, or the
Servicing Agreement.
(d) [Reserved]
(e) On or after each Payment Date, so long as the Indenture
Trustee shall have prepared a Payment Date Statement in respect of such Payment
Date and shall have made, or, in accordance with Section 3.03, set aside from
amounts in the Note Account an amount sufficient to make, the payments required
to be made as set forth in Section 8.02(c) as indicated in such Payment Date
Statement, the Available Funds with respect to the current Payment Date, if any,
remaining in the related Note Account, after application thereof in accordance
Section 8.02(c)(i) - (xii), shall be withdrawn from the related Note Account by
the Indenture Trustee and, so long as no Default or Event of Default shall have
occurred and be continuing, shall be released from the lien of this Indenture
and paid by the Indenture Trustee to the related Certificate holders.
(f) Any payments made by the Indenture Trustee to the Issuer
pursuant to this Section 8.02 shall be remitted to the Certificate Distribution
Account established and maintained pursuant to the Trust Agreement.
(g) In the event the Indenture Trustee is required to
establish a Collection Account pursuant to the Servicing Agreement, the
Indenture Trustee shall establish and maintain such account in the manner
required under the Servicing Agreement. The Indenture Trustee shall
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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. [Reserved]
Section 8.04. [Reserved]
Section 1.05. Claims Against the MBIA Insurance Policy.
(a) The Indenture Trustee shall (A) receive as
attorney-in-fact of each Noteholder any Insured Payment from the Note Insurer or
on behalf of the Note Insurer and (B) disburse such Insured Payment to such
Noteholders in accordance with Section 8.02(c) hereof for the benefit of the
related Noteholders. Any Insured Payment received by the Indenture Trustee shall
be held by the Indenture Trustee uninvested. Insured Payments disbursed by the
Indenture Trustee from proceeds of the MBIA Insurance Policy shall not be
considered payment by the Issuer with respect to the Notes, nor shall such
payments discharge the obligation of the Issuer with respect to such Notes, and
the Note Insurer shall become the owner of such unpaid amounts due from the
Issuer in respect of such Insured Payments as the deemed assignee and subrogee
of such Noteholders and shall be entitled to receive the reimbursement in
respect thereof. The Indenture Trustee hereby agrees on behalf of each
Noteholder (and each Noteholder and Beneficial Owner, by acceptance of a Note or
a beneficial interest in a Note agrees) for the benefit of the Note Insurer that
it recognizes that to the extent the Note Insurer makes Insured Payments for the
benefit of the Noteholders, the Note Insurer will be entitled to receive the
related reimbursement in accordance with the priority of distributions
referenced in Section 8.02(c) hereof.
(i) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, relating to a
Preference Amount in respect of any payment made on the Notes. Each Noteholder
that pays any amount in respect of a Preference Amount theretofore received by
such Noteholder on account of a Note will be entitled to receive reimbursement
for such amounts from the Note Insurer in accordance with the terms of the MBIA
Insurance Policy. Each Noteholder, by its purchase of Notes, and the Indenture
Trustee hereby agree that, the Note Insurer (so long as no Note Insurer Default
exists) may at any time during the continuation of any proceeding relating to a
Preference Amount direct all matters relating to such Preference Amount,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Amount and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Note Insurer shall be subrogated to the rights
of the Indenture Trustee and each Noteholder with respect to any such Preference
Amount, including, without limitation, all rights of any party to any adversary
proceeding action with respect to any court order issued in connection with any
such Preference Amount.
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(ii) Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that, unless an Note Insurer Default exists and
is continuing, the Note Insurer shall have the right to direct all matters
relating to the Notes in any proceeding in a bankruptcy of the Issuer, including
without limitation any proceeding relating to a Preference Amount and the
posting of any surety or bond pending any such appeal.
(iii) With respect to a Preference Amount, the Indenture
Trustee shall be responsible for procuring and delivering the items set forth in
the MBIA Insurance Policy to the Note Insurer.
(b) Unless a Note Insurer Default exists and is continuing,
the Indenture Trustee shall cooperate at the Note Insurer's expense in all
respects with any reasonable request by the Note Insurer for action to preserve
or enforce the Note Insurer's rights or interests hereunder without limiting the
rights or affecting the interests of the Noteholders as otherwise set forth
herein and the Note Insurer shall reimburse the Indenture Trustee for all costs
incurred by its cooperation with such request.
(c) The Indenture Trustee shall surrender the MBIA Insurance
Policy to the Note Insurer for cancellation upon the expiration of the term of
the MBIA Insurance Policy as provided in the MBIA Insurance Policy.
(d) With respect to any Payment Date on which an Insured
Payment is required to be made, the Indenture Trustee shall deliver to the Note
Insurer a Notice of Claim by no later than noon on the third Business Day prior
to such Payment Date in the manner set forth in the MBIA Insurance Policy.
(e) The Issuer hereby directs the Indenture Trustee to
establish one or more accounts that shall collectively be the "Policy Payments
Account", on or before the Closing Date. Upon receipt of an Insured Payment from
the Note Insurer, the Indenture Trustee shall promptly deposit such Insured
Payment in the Policy Payments Account. All amounts on deposit in the Policy
Payments Account shall remain uninvested. On each Payment Date, the Indenture
Trustee shall (i) transfer an amount equal to the Insured Payment with respect
to such Payment Date to the Note Account and (ii) return any money in the Policy
Payments Account which does not constitute on Insured Payment to the Note
Insurer. The Indenture Trustee shall distribute on each Payment Date, to the
Noteholders, the Insured Payment for such Payment Date from the Note Account in
accordance with the priorities set forth in Section 8.02.
Section 8.06. General Provisions Regarding the Note Account
and Mortgage Loans.
(a) Each Note Account shall relate solely to the related Class
of Notes and to the related Group of Mortgage Loans, Permitted Investments and
other property securing such Notes. Funds and other property in each Note
Account shall not be commingled with any other moneys or property of the Issuer
or any Affiliate thereof. Notwithstanding the foregoing, the Indenture Trustee
may hold any funds or other property received or held by it as part of a Note
Account in collective accounts maintained by it in the normal course of its
business and containing funds or property held by it for other Persons (which
may include the Issuer or an
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Affiliate), provided that such accounts are under the sole control of the
Indenture Trustee and the Indenture Trustee maintains adequate records
indicating the ownership of all such funds or property and the portions thereof
held for credit to the Note Account.
(b) If any amounts are needed for payment from the Note
Account and sufficient uninvested funds are not available therein to make such
payment, the Indenture Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in the Note Account.
(c) The Indenture Trustee shall, at all times while any Notes
are Outstanding, maintain in its possession, or in the possession of an agent
whose actions with respect to such items are under the sole control of the
Indenture Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Note Account. The Indenture Trustee shall relinquish
possession of such items, or direct its agent to do so, only for purposes of
collecting the final payment receivable on such investment or certificate or, in
connection with the sale of any investment held in the Note Account, against
delivery of the amount receivable in connection with any sale.
(d) The Indenture Trustee shall not invest any part of the
Trust Estate in Permitted Investments that constitute uncertificated securities
(as defined in Section 8-102 of the Uniform Commercial Code, as enacted in the
relevant jurisdiction) or in any other book-entry securities unless it has
received an Opinion of Counsel reasonably satisfactory in form and substance to
the Indenture Trustee setting forth, with respect to each type of security for
which authority to invest is being sought, the procedures that must be followed
to maintain the lien and security interest created by this Indenture with
respect to the Trust Estate. The cost of obtaining such Opinion of Counsel shall
not be borne by the Indenture Trustee.
Section 8.07. Releases of Defective Mortgage Loans.
(a) In the event a Responsible Officer of the Indenture
Trustee has actual knowledge, or written notice is received by the Indenture
Trustee at the Corporate Trust Office (and such notice references the Notes
generally, the Issuer, the Trust Estate or this Indenture), of any materially
defective document in, or that a document is missing from (and never constituted
part of) a Mortgage File, or of the breach by Funding Co. of any representation,
warranty or covenant under the Funding Co. Sale Agreement, the breach by the
Depositor of any representation, warranty or covenant under the Depositor Sale
Agreement, the breach by the Company of any representation, warranty or covenant
under the Company Sale Agreement, or of the breach by RBMG of any
representation, warranty or covenant under the Loan Contribution Agreement in
respect of any Mortgage Loan which materially adversely affects the value of
such Mortgage Loan or the interest therein of the Noteholders of the related
Class of Notes or the Note Insurer, the Indenture Trustee shall promptly notify
RBMG, the Company, Funding Co., the Depositor, the Servicer and the Note Insurer
and direct the party breaching such representation, warranty or covenant to
either (i) within 30 days after Funding Co., the Company, the Depositor, or RBMG
(each a "Transferor") receives actual knowledge of such incorrectness, eliminate
or otherwise cure the circumstance or condition in respect of which such
representation or warranty was incorrect as of the time made, (ii) withdraw such
Defective Mortgage Loan from the lien of this Indenture following the expiration
of such 30-day period by depositing to the
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related Note Account an amount equal to the Purchase Price, plus the amount of
any related Realized Loss resulting from a Deficiency Valuation, for such
Mortgage Loan or (iii) substitute a Qualified Replacement Mortgage Loan for such
Defective Mortgage Loan and deposit any Purchase Price, plus the amount of any
Realized Loss resulting from a Deficiency Valuation, required to be paid in
connection with such substitution pursuant to Section 7 of the Funding Co. Sale
Agreement, Section 7 of the Depositor Sale Agreement, Section 7 of the Company
Sale Agreement or Section 7 of the Loan Contribution Agreement. Upon any
purchase of or substitution for a Defective Mortgage Loan by either Funding Co.,
the Depositor, the Company, or RBMG as set forth above, the Indenture Trustee
shall deliver or cause the Custodian to deliver, the Mortgage File relating to
such Defective Mortgage Loan to Funding Co., the Depositor, the Company or RBMG,
as the case may be, and the Issuer and the Indenture Trustee shall execute such
instruments of transfer as are necessary to convey title to such Defective
Mortgage Loan to Funding Co., the Depositor, the Company, or RBMG, as the case
may be, from the lien of this Indenture.
(b) Upon substitution of a Qualified Replacement Mortgage
Loan, the Indenture Trustee or a Custodian on its behalf, shall acknowledge
receipt of such Qualified Replacement Mortgage Loan or Loans and, (i) within ten
Business Days thereafter, review such documents as specified in Section 6.15(c)
and deliver to the Issuer, RBMG, the Company, Funding Co., the Depositor, the
Note Insurer and the Servicer a certification substantially in the form of the
Initial Certification described in Section 6.15(a) with respect to such
Qualified Replacement Mortgage Loan or Loans and, (ii) within 270 days after
such substitution, review such documents as specified in Section 6.15(c) and
deliver to the parties set forth in clause (i) a certification substantially in
the form of the Final Certification described in Section 6.15(b) with respect to
such Qualified Replacement Mortgage Loan or Loans.
(c) Monthly Payments due with respect to Qualified Replacement
Mortgage Loans in the month of substitution shall be retained by the Transferor.
For the month of substitution, the Indenture Trustee on behalf of the
Noteholders and the Note Insurer shall be entitled to receive the Monthly
Payment due on such Deleted Mortgage Loan, and the Transferor shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. Upon such substitution, such Qualified Replacement
Mortgage Loan or Loans shall be subject in all respects to the terms of this
Indenture, including, all applicable representations and warranties included
herein in each case as of the date of substitution.
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
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Date as described in the Indenture, (d) any statements of compliance delivered
to the Indenture Trustee since the Closing Date as required under the Servicing
Agreement, (e) any Collection Account report statements delivered to the
Indenture Trustee as required under the Servicing Agreement and (f) any
Accountants' servicing reports delivered to the Indenture Trustee since the
Closing Date as required under the Servicing Agreement. Copies of any and all of
the foregoing items will be available from the Indenture Trustee upon request;
however, the Indenture Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such copies
and shall not be required to provide such copies without reasonable assurances
that such sum will be paid.
Section 8.09. Trust Estate Mortgage Files.
(a) The Indenture Trustee shall release, or cause the
Custodian to release Mortgage Files or portions thereof to the Servicer on the
terms specified in the Servicing Agreement.
(b) The Indenture Trustee shall, at such time as there are no
Notes outstanding, release all of the Trust Estate to the Issuer when all of the
conditions of Section 4.01 have been satisfied.
Section 8.10. Amendment to Servicing Agreement.
The Indenture Trustee may, without the consent of any Holder,
enter into or consent to any amendment or supplement to the Servicing Agreement
for the purpose of increasing the obligations or duties of any party other than
the Indenture Trustee or the Holders of the Notes. The Indenture Trustee may, in
its discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation from the Rating Agencies that the then-current implied
ratings on the Notes (without taking into account the MBIA Insurance Policy)
would not be adversely affected by such supplement or amendment or (ii) if its
own rights, duties or immunities would be adversely affected.
Section 8.11. Delivery of the Mortgage Files Pursuant to
Servicing Agreement.
As is appropriate for the servicing or foreclosure of any
Mortgage Loan, the Indenture Trustee shall deliver, or cause the Custodian to
deliver, to the Servicer the Mortgage Files for such Mortgage Loan upon receipt
by the Indenture Trustee on or prior to the date such release is to be made of:
(a) such Officers' Certificates, if any, as are required by
the Servicing Agreement; and
(b) a "Request for Release" in the form prescribed by the
Servicing Agreement, executed by the Servicer, providing that the Servicer
will hold or retain the Mortgage Files in trust for the benefit of the
Indenture Trustee, the Note Insurer and the Noteholders.
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Section 8.12. Servicer as Agent.
In order to facilitate the servicing of the Mortgage Loans by
the Servicer, the Servicer has been appointed by the Issuer to retain, in
accordance with the provisions of the Servicing Agreement and this Indenture,
all Remittable Funds on such Mortgage Loans prior to their deposit into the Note
Account on or prior to the related Servicer Remittance Date.
Section 8.13. Termination of Servicer.
In accordance with the Servicing Agreement, in the event of an
event of default specified in Section 5.01 of the Servicing Agreement, the
Indenture Trustee may, with the consent of the Note Insurer, and shall, upon the
direction of the Note Insurer, (or as otherwise provided in the Servicing
Agreement) terminate the Servicer as provided in Section 5.01 and Section 5.02
of the Servicing Agreement. If the Indenture Trustee terminates the Servicer,
the Indenture Trustee or the initial Sub-Servicer as applicable shall, pursuant
to Section 5.02 of the Servicing Agreement, assume the duties of the Servicer or
appoint a successor servicer acceptable to the Issuer, the Note Insurer and the
Rating Agencies and meeting the requirements set forth in the Servicing
Agreement.
Section 8.14. Investment of Funds in the Note Accounts.
(a) So long as no Default or Event of Default shall have
occurred and be continuing, the Issuer may direct any depository institution
maintaining the Note Accounts (each, for purposes of this Section 8.14, an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments. All such Permitted Investments shall be held to
maturity, unless payable on demand. Any investment of funds in an Investment
Account shall be made in the name of the Indenture Trustee (in its capacity as
such) or in the name of a nominee of the Indenture Trustee. The Indenture shall
be entitled to sole possession (except with respect to investment direction of
funds held in such Investment Account) over each such investment and the income
thereon, and any certificate or other instrument evidencing any such investment
shall be delivered directly to the Indenture Trustee or its agent, together with
any document of transfer necessary to transfer title to such investment to the
Indenture Trustee or its nominee. If no investment direction is made as to any
Investment Account, the Indenture Trustee shall invest all funds on deposit in
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
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Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit
in the Investment Account.
(b) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, upon the request of the Note Insurer
or the Holders of Notes evidencing more than 50% of the Outstanding Note
Balance, shall take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings.
Section 8.15. Appointment of Custodians.
(a) Notwithstanding anything to the contrary in this
Indenture, the parties hereto and each Noteholder by its acceptance of its Note
acknowledge that the functions of the Indenture Trustee with respect to the
custody, acceptance, inspection, review and release of the Mortgage Files
pursuant to this Indenture and the related Initial Certification and Final
Certification shall be performed by LaSalle National Bank, as Custodian,
pursuant to the Custodial Agreement and that the Indenture Trustee shall in no
way be liable for any acts or omissions of the Custodian. The fees and expenses
of the Custodian shall be paid by the Servicers.
(b) The Servicer may, at the expense of the Servicer or the
successor Servicer, with the consent of the Issuer, the Indenture Trustee and
the Note Insurer (which consent shall not be unreasonably withheld), appoint a
successor Custodian to hold all or a portion of the Mortgage Files as agent for
the Indenture Trustee. Each successor Custodian shall (i) be a financial
institution supervised and regulated by the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, the Office of Thrift
Supervision, or the FDIC; (ii) have combined capital and surplus of at least
$10,000,000; (iii) be equipped with secure, fireproof storage facilities, and
have adequate controls on access to assure the safety and security of the
Mortgage Files; (iv) utilize in its custodial function employees who are
knowledgeable in the handling of mortgage documents and of the functions of a
mortgage document custodian; and (v) satisfy any other reasonable requirements
that the Issuer may from time to time deem necessary to protect the interests of
Noteholders and the Note Insurer in the Mortgage Files. Each successor Custodian
shall be subject to the same obligations and standard of care as would be
imposed on the Indenture Trustee hereunder assuming the Indenture Trustee
retained the Mortgage Files directly. The appointment of one or more additional
Custodians shall not relieve the Indenture Trustee from any of its obligations
hereunder, and the Indenture Trustee shall remain responsible for all acts and
omissions of any such Custodian. If the Servicer is appointed as Custodian in
accordance with this Section 8.15, it shall fulfill its servicing and custodial
duties and obligations through separate departments and, if it maintains a trust
department, shall fulfill its custodial duties and obligations through such
trust department. The appointment of a successor Custodian shall be evidenced by
a Custodial Agreement, substantially in the form of Exhibit E hereto.
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Section 8.16. Rights of the Note Insurer to Exercise Rights of
Noteholders.
By accepting its Notes, each Noteholder agrees that unless a
Note Insurer Default exists, the Note Insurer shall have the right to exercise
all rights of the Noteholders under this Indenture without any further consent
of the Noteholders, including, without limitation:
(a) the right to require the Servicer to effect foreclosures
upon Mortgage Loans upon failure of the Servicer to do so;
(b) the right to require RBMG to repurchase or substitute for
Defective Mortgage Loans pursuant to Section 8.07;
(c) the right to direct the actions of the Indenture Trustee
during the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this
Indenture.
In addition, each Noteholder agrees that, unless a Note
Insurer Default exists, the rights specifically set forth above may be exercised
by the Noteholders only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.05 and
notwithstanding any provision in this Indenture to the contrary, so long as a
Note Insurer Default has occurred and is continuing, the Note Insurer shall have
no rights to exercise any voting rights of the Noteholders (other than as the
deemed assignee and subrogee of the Noteholders to the extent the Note Insurer
has made Insured Payments for the benefit of the Noteholders) hereunder, nor
shall the Indenture Trustee be required to obtain the consent of, or act at the
direction of, the Note Insurer.
Section 8.17. Trust Estate and Accounts Held for Benefit of
the Note Insurer.
The Indenture Trustee shall hold the Trust Estate and the
Mortgage Files for the benefit of the Noteholders and the Note Insurer and all
references in this Indenture and in the Notes to the benefit of Holders of the
Notes shall be deemed to include the Note Insurer (provided there does not exist
a Note Insurer Default).
All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to the
Noteholders shall also be sent to the Note Insurer.
Section 8.18. Reserve Account
(a) The Issuer hereby directs the Indenture Trustee to
establish at the Corporate Trust Office one or more accounts with respect to
both Classes of Notes that shall collectively be the "Reserve Account". On each
Payment Date the Indenture Trustee shall deposit to the Reserve Account the
amounts, if any, described in Section 8.02(c)(viii) hereof. The amount so
deposited from Available Funds with respect to Class A-1 shall be the "Class A-2
Cash O/C Amount," and the amount so deposited from the Available Funds with
respect to Class A-2 shall be the "Class A-1 Cash O/C Amount."
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(b)(i) If, on any Payment Date, and after taking into account
the application of the Class A-1 Available Funds plus any Crossover Amount
available from Group II (but not the proceeds of any Insured Payment), the full
amount of the Class A-1 Note Interest has not been paid, and/or a Class A-1
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the Class A-1 Cash O/C Amount then on deposit in the Reserve Account and
deposit in the Note Account for the Class A-1 Notes an amount equal to the
lesser of (x) the Class A-1 Cash O/C Amount then on deposit in the Reserve
Account and (y) the amount of such shortfall in the amount of the Class A-1 Note
Interest and the amount of such Class A-1 Overcollateralization Deficit.
(ii) If, on any Payment Date, and after taking into account,
the application of the Class A-2 Available Funds plus any Crossover Amount
available from the Group I (but not the proceeds of any Insured Payment), the
full amount of the Class A-2 Note Interest has not been paid, and/or a Class A-2
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the Class A-2 Cash O/C Amount then on deposit in the Reserve Account and
deposit in the Note Account for the Class A-2 Notes an amount equal to the
lesser of (x) the Class A-2 O/C Cash Amount then on deposit in the Reserve
Account and (y) the amount of such shortfall in the amount of the Class A-2 Note
Interest and the amount of such Class A-2 Overcollateralization Deficit.
(iii) If, on any Payment Date, and after taking into account
the application of the Class A-1 Available Funds plus any Crossover Amount
available from Group II (but not the proceeds of any Insured Payment), the full
amount of the Class A-1 Note Interest has not been paid, and/or a Class A-1
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the remaining Class A-2 Cash O/C Amount then on deposit in the Reserve
Account and deposit in the Note Account for the Class A-1 Notes an amount equal
to the lesser of (x) the remaining Class A-2 Cash O/C Amount then on deposit in
the Reserve Account and (y) the amount of such shortfall in the amount of the
Class A-1 Note Interest and the amount of such Class A-1 Overcollateralization
Deficit.
(iv) If, on any Payment Date, and after taking into account,
the application of the Class A-2 Available Funds plus any Crossover Amount
available from the Group I (but not the proceeds of any Insured Payment), the
full amount of the Class A-2 Note Interest has not been paid, and/or a Class A-2
Overcollateralization Deficit would result, the Indenture Trustee shall withdraw
from the remaining Class A-1 Cash O/C Amount then on deposit in the Reserve
Account and deposit in the Note Account for the Class A-2 Notes an amount equal
to the lesser of (x) the remaining Class A-1 O/C Cash Amount then on deposit in
the Reserve Account and (y) the amount of such shortfall in the amount of the
Class A-2 Note Interest and the amount of such Class A-2 Overcollateralization
Deficit.
(c)(i) If, on any Payment Date, (A) the sum of (x) the Class
A-1 Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Class A-1
Overcollateralization Surplus, plus (y) the Class A-1 Cash O/C Amount on deposit
in the Reserve Account, after taking into account any withdrawals therefrom
pursuant to clause (b)(i) above, exceeds (B) the Class A-1 Required
Overcollateralization Amount for such Payment Date (such excess being a "Class
A-1 Aggregate O/C Surplus Amount"), the lesser of (I) such Class A-1 Aggregate
O/C Surplus Amount and (II)
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the Class A-1 Cash O/C Amount shall be released from the Reserve Account and
distributed to the related Certificateholders as a distribution with respect to
Group I.
(ii) If, on any Payment Date, (A) the sum of (x) the Class A-2
Overcollateralization Amount, after taking into account all distributions on
such Payment Date other than any distribution of any Class A-2
Overcollateralization Surplus plus (y) the Class A-2 Cash O/C Amount on deposit
in the Reserve Account after taking into account any withdrawals therefrom
pursuant to clause (b)(ii) above exceeds (B) the Class A-2 Required
Overcollateralization Amount for such Payment Date (such excess being a "Class
A-2 Aggregate O/C Surplus Amount"), the lesser of (I) such Class A-2 Aggregate
O/C Surplus Amount and (II) the Class A-2 Cash O/C Amount shall be released from
the Reserve Account and distributed to the related Certificateholders as a
distribution with respect to Group II.
(d)(i) As of any Payment Date, the lesser of (A) the excess of
(I) the Class A-1 Aggregate O/C Surplus Amount over (II) the amount of the Class
A-1 Cash O/C Amount released from the Reserve Account pursuant to clause (c)(i)
above and (B) the Class A-1 Monthly Principal Available for such Payment Date is
the "Class A-1 Overcollateralization Surplus" for such Payment Date.
(ii) As of any Payment Date, the lesser of (A) the excess of
(I) the Class A-2 Aggregate O/C Surplus Amount over (II) the amount of the Class
A-2 Cash O/C Amount released from the Reserve Account pursuant to clause (c)(ii)
above and (B) the Class A-2 Monthly Principal Available for such Payment Date is
the "Class A-2 Overcollateralization Surplus" for such Payment Date.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures without Consent of
Noteholders.
With the consent of the Note Insurer and without the consent
of the Holders of any Notes, the Issuer and the Indenture Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Indenture Trustee, for any of the following
purposes:
(a) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(b) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance, authentication
and delivery of any Notes;
(c) to evidence the succession of another Person to the Issuer
to the extent permitted herein, and the assumption by any such successor of
the covenants of the Issuer herein and in the Notes contained;
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(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 1.02. Supplemental Indentures with Consent of
Noteholders.
With the consent of the Note Insurer and with the consent of
Holders of Notes representing not less than a majority of the Note Balance of
all Outstanding Notes of both Classes by Act of said Holders delivered to the
Issuer and the Indenture Trustee, the Issuer and the Indenture Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(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;
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(d) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(e) permit the creation of any lien other than the lien of
this Indenture with respect to any part of the Trust Estate (except for
encumbrances permitted under the Depositor Sale Agreement) or terminate the
lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security afforded by the lien of this
Indenture;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the Required Payment Amount for any
Payment Date (including the calculation of any of the individual components
of such Required Payment Amount) or to affect rights of the Holders of the
Notes to the benefits of any provisions for the mandatory redemption of
Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would
cause the Issuer or the Trust Estate to be treated as a "taxable mortgage
pool" within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether
or not any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
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.
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Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Notes to which such supplemental indenture relates that have
theretofore been or thereafter are authenticated and delivered hereunder shall
be bound thereby.
Section 9.05. [Reserved].
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. Amendments to Governing Documents.
The Indenture Trustee shall, upon Issuer Request, consent to
any proposed amendment to the Issuer's governing documents, or an amendment to
or waiver of any provision of any other document relating to the Issuer's
governing documents, such consent to be given without the necessity of obtaining
the consent of the Holders of any Notes upon receipt by the Indenture Trustee
of:
(a) an Officers' Certificate, to which such proposed amendment
or waiver shall be attached, stating that such attached copy is a true copy
of the proposed amendment or waiver and that all conditions precedent to
such consent specified in this Section 9.07 have been satisfied; and
(b) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect their implied ratings of the Notes (without taking into account the
MBIA Insurance Policy).
Notwithstanding the foregoing, the Indenture Trustee may
decline to consent to a proposed waiver or amendment that adversely affects its
own rights, duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require
that any Person obtain the consent of the Indenture Trustee to any amendment or
waiver of any provision of any document where the making of such amendment or
the giving of such waiver without obtaining the consent of the Indenture Trustee
is not prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) 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 Accounts of the Class A-1 Notes and the Class A-2 Notes and paid to the
Servicer as reimbursement for Nonrecoverable Advances and such other information
as may be required to accomplish such redemption.
(c) Upon payment of the Redemption Price to the Noteholders of
the related Class of Notes and all amounts owed under Section 10.01(a), the
Indenture Trustee shall promptly release to the party redeeming such Notes the
Mortgage Files for the remaining Mortgage Loans in the related Group, and the
Indenture Trustee shall execute without recourse all assignments, endorsements
and other instruments necessary to effectuate such transfer and as are necessary
to convey title to the related Mortgage Loans and to evidence the release of the
related Mortgage Loans from the lien of this Indenture. Any funds remaining in
the related Note Account after all payments due hereunder have been made shall
be remitted to the related Certificate Distribution Account established pursuant
to the Trust Agreement for the benefit of the Issuer.
Section 1.02. 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
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redeemed, such Holders being determined as of the Record Date for such Payment
Date, and to the Note Insurer.
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
related Note Balance shall, until paid, bear interest from the Redemption Date
at the related Note Interest Rate.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions.
(a) Upon any application or request by the Issuer to the
Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee an Officers' Certificate stating
that all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel, if
requested by the Indenture Trustee, stating that in the opinion of such counsel
all such conditions precedent, if any, have been complied with, except that in
the case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or request, no additional certificate or opinion
need be furnished.
(b) Every certificate, opinion or letter with respect to
compliance with a condition or covenant provided for in this Indenture,
including one furnished pursuant to specific requirements of this Indenture
relating to a particular application or request shall include the following:
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(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
(c) In furnishing any such certificate on behalf of the
Issuer, opinion or letter, an Authorized Officer of the Owner Trustee may,
without conducting any independent investigation, rely solely on a corresponding
certificate, opinion or letter of the Servicer, the Depositor, Funding Co., or
any Certificateholder.
Section 11.02. Form of Documents Delivered to Indenture
Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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
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foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion contained
in any such document as provided in Section 6.01(b)(2).
Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d).
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(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:
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(a) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with and received by the Indenture Trustee at its
Corporate Trust Office; or
(b) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder (except as provided in
Section 5.01(3) and (4)) if in writing and mailed, first-class postage
prepaid, to the Issuer addressed to it at RBMG Funding Co. Mortgage Loan
Trust 1999-1, 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. Mortgage Loan Trust 1999-1), or at
any other address previously furnished in writing to the Indenture Trustee
by the Note Insurer; or
(d) Funding Co. by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage paid, to RBMG Funding Co., 2820 West Charleston
Boulevard, Las Vegas, Nevada 89102, Attention: Fredrick R. Broker 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: Fredrick R.
Broker, 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 Residential Asset Funding 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
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Division of The McGraw-Hill Companies, Inc., 26 Broadway (15th Floor), New York,
New York, 10004, Attention: Asset-Backed Surveillance Department; or as to each
of the foregoing, at such other address as shall be designed by written notice
to the other parties.
Section 11.05. Notices and Reports to Noteholders; Waiver of
Notices.
Where this Indenture provides for notice to Noteholders of any
event or the mailing of any report to Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Section 11.06. Rules by Indenture Trustee.
The Indenture Trustee may make reasonable rules for any
meeting of Noteholders.
Section 11.07. Conflict With Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Indenture by
any of the provisions of the TIA, such required provision shall control.
Section 11.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
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Section 11.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer
shall bind its successors and assigns, whether so expressed or not.
Section 11.10. Separability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.11. Benefits of Indenture.
Other than as provided in Section 11.20 herein, nothing in
this Indenture or in the Notes, expressed or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, any separate
trustee or Co-trustee appointed under Section 6.14 and the Noteholders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 11.12. Legal Holidays.
In any case where the date of any Payment Date, Redemption
Date or any other date on which principal of or interest on any Note is proposed
to be paid shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the nominal date of any such Payment Date, Redemption Date
or other date for the payment of principal of or interest on any Note and no
interest shall accrue for 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.
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Section 11.15. Recording of Indenture.
This Indenture is subject to recording in any appropriate
public recording offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.11(c) or 3.06.
Section 11.16. Issuer Obligation.
No recourse may be taken, directly or indirectly, with respect
to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under this Indenture or any certificate or other writing delivered
in connection herewith or therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.
Section 11.17. No Petition.
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.
105
<PAGE>
Section 11.18. Inspection.
The Issuer agrees that, on reasonable prior notice, it will
permit any representative of the Indenture Trustee and the Note Insurer, during
the Issuer's normal business hours, to examine all of books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent Accountants selected by the
Indenture Trustee or the Note Insurer, as the case may be, and to discuss its
affairs, finances and accounts with its officers, employees and Independent
Accountants (and by this provision the Issuer hereby authorizes its Accountants
to discuss with such representatives such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested. Any
expense incident to the exercise by the Indenture Trustee of any right under
this Section 11.18 shall be borne by the Issuer.
Section 11.19. Usury.
The amount of interest payable or paid on any Note under the
terms of this Indenture shall be limited to an amount that shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the
United States or the State of New York (whichever shall permit the higher rate),
that could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Note exceeds the Highest
Lawful Rate, the Issuer stipulates that such excess amount will be deemed to
have been paid as a result of an error on the part of both the Indenture
Trustee, acting on behalf of the Holder of such Note, and the Issuer, and the
Holder receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Issuer or the Indenture Trustee, refund
the amount of such excess or, at the option of the Indenture Trustee, apply the
excess to the payment of principal of such Note, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of Holders of Notes for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Notes.
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
and any other documents executed by the Issuer 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
106
<PAGE>
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.
107
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
By: Wilmington Trust Company,
not in its individual capacity,
but solely as Owner Trustee
By: /s/DONALD G. MACKELCAN
-----------------------------
Authorized Signatory
Name: Donald G. Mackelcan
Title:Vice President
THE BANK OF NEW YORK
as Indenture Trustee
By: /s/ ANNA H. FELT
---------------------------
Name: Anna H. Felt
Title: Assistant Treasurer
108
<PAGE>
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
On the 3rd day of June , 1999 before me, a notary public in and for
said State, personally appeared Donald G. Mackelcan, known to me to be Vice
President of Wilmington Trust Company, a corporation, not in its individual
capacity, but solely as Owner Trustee, that executed the within instrument
acting not in its individual capacity, but solely as trustee of RBMG Funding Co.
Mortgage Loan Trust 1999-1, 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.
/s/ JANEL R. HARRILLA
----------------------------------
Notary Public
[Notarial Seal]
109
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 7th day of June, 1999 before me, a notary public in
and for said State, personally appeared Anna H. Felt, known to me to be an
Assistant Treasurer of The Bank of New York, a New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said banking corporation and acknowledged to me that
such banking corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ SCOTT PERRUCCI
----------------------------------
Notary Public
[Notarial Seal]
110
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[ON FILE WITH RBMG]
<PAGE>
EXHIBIT A-1
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN OCWEN FEDERAL BANK
FSB, THE BANK OF NEW YORK, MBIA INSURANCE CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS NOTE NOR ANY OF THE UNDERLYING MORTGAGE LOANS, WITH
LIMITED EXCEPTIONS, IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
Date of Indenture: As of June 1, 1999
First Payment Date: July 26, 1999
Denomination: $75,030,000
Original Note Balance: $75,030,000
CUSIP No.: 74925XAC8
Note No.: A-1-1
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
ASSET-BACKED NOTES, SERIES 1999-1
RBMG Funding Co. Mortgage Loan Trust 1999-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of SEVENTY FIVE MILLION THIRTY THOUSAND
DOLLARS ($75,030,000) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is
$75,030,000 and the denominator of which is $75,030,000 (this Note's "Percentage
Interest") by (ii) the aggregate amount, if any, payable from the related Note
Account in respect of principal
A-1-1
<PAGE>
on the Class A-1 Notes pursuant to the Indenture dated as of June 1, 1999 (the
"Indenture"), between the Issuer and The Bank of New York, a New York banking
corporation, as Indenture Trustee (the "Indenture Trustee"); provided, however,
that the entire unpaid principal amount of this Note shall be due and payable on
the earlier of (i) the Payment Date occurring in June 25, 2030 (the "Final
Maturity Date"), (ii) the Redemption Date, if any, pursuant to Article X of the
Indenture or (iii) the date on which an Event of Default shall have occurred and
be continuing, if the related Class of Notes have been declared to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined in Article
I of the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the
25th day of each month or, if such day is not a Business Day, on the Business
Day immediately following such 25th day (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the amounts to be paid on the Class A-1 Notes with respect to
such Payment Date, all as more specifically set forth in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-1-2
<PAGE>
[STATEMENT OF INSURANCE]
A-1-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be
signed manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: June 7, 1999
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee under the Trust Agreement
By:_____________________________________
Authorized Signatory
A-1-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
Date: June 7, 1999
THE BANK OF NEW YORK,
as Authenticating Agent
By:____________________________
Authorized Signatory
A-1-5
<PAGE>
[Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Asset-Backed Notes, Series 1999-1, Class A-1 (herein called
the "Class A-1 Notes"), issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. Also issued under the Indenture are the
Asset-Backed Notes, Series 1999-1, Class A-2 (herein called the "Class A-2
Notes" and collectively with the Class A-1 Notes, the "Notes"). To the extent
that any provision of this Note contradicts or is inconsistent with the
provisions of the Indenture, the provisions of the Indenture shall control and
supersede such contradictory or inconsistent provision herein. The Notes are
subject to all terms of the Indenture.
The Class A-1 Notes are and will be equally and ratably secured by the
Mortgage Loans in Group I of the Trust Estate and the other collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Payment Date
in an amount described on the face hereof.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Maturity Date and the
Redemption Date, if any, pursuant to Article X of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the Class A-1 Notes shall
be due and payable on the date on which an Event of Default shall have occurred
and be continuing and the indenture Trustee, at the direction or upon the prior
written consent of MBIA Insurance Corporation (the "Note Insurer") in the
absence of a Note Insurer Default, or the Holders of the Class A-1 Notes
representing not less than 50% of the Note Balance of the Outstanding Notes of
the related Class of Notes with the prior written consent of the Note Insurer in
the absence of a Note Insurer Default have declared the related Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the Class A-1 Noteholders entitled thereto.
The Note Insurer has issued a MBIA Insurance Policy in the name of the
Indenture Trustee for the benefit of the Noteholders, which policy guarantees
payments on each Payment Date to the Indenture Trustee for the benefit of the
Noteholders of the related Noteholders' Percentage Interest in the Required
Payment Amount for such Payment Date. Unless a Note Insurer Default shall be
continuing, subject to Section 8.16 of the Indenture, the Note Insurer shall be
deemed to be the Holder of 100% of the Note Balance of the Outstanding Notes of
the related Class of Notes for the purpose of exercising the rights, including
voting rights, of the Noteholders of the related Class of Notes under the
Indenture. In addition, on each Payment Date, after the Noteholders of the
related Class of Notes have been paid all amounts to which they are entitled,
the Note Insurer will be entitled to be reimbursed for any unreimbursed Insured
Amounts and any other amounts owed under the MBIA Insurance Policy.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made
A-1-6
<PAGE>
by check mailed to the Person whose name appears as the Holder of this Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Holder hereof as of the Record Date preceding such
Payment Date by notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New York.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Servicer or the Note Insurer on any Payment
Date on and after the date on which the aggregate Outstanding Note Balance of
the Class A-1 Notes and the Class A-2 Notes is less than 10% of the aggregate
Outstanding Note Balance of the Class A-1 Notes and the Class A-2 Notes as of
the Closing Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Beneficial Owner, by acceptance of a beneficial interest in a
Note, shall be deemed to represent either (i) that it is not (A) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975
of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii) that its
acquisition and continued holding of such beneficial interest will be covered by
a U.S. Department of Labor Prohibited Transaction Class Exemption.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be
A-1-7
<PAGE>
taken, directly or indirectly, with respect to the obligations of the Issuer,
the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture
or any certificate or other writing delivered in connection therewith against
(i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Indenture Trustee or
the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that by accepting the benefits of the Indenture that such Noteholder or
Beneficial Owner will not at any time institute against the Depositor, the
Company, Funding Co., RBMG or the Issuer, or join in any institution against the
Depositor, the Company, Funding Co., RBMG or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture, the Depositor Sale Agreement,
the Company Sale Agreement, the Funding Co. Sale Agreement, the Loan
Contribution Agreement, the Cap Agreement or the Servicing Agreement (the "Basic
Documents").
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer, the Note Insurer
or the Indenture Trustee may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Issuer, the Note Insurer, the Indenture
Trustee or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the related Class of Notes under the
Indenture at any time by the Issuer with the consent of the Note Insurer and the
Holders of the Notes of the related Class representing a majority of the Note
Balance of all Outstanding Notes of such Class. The Indenture also contains
provisions permitting the Holders of Notes representing specified percentages of
the Note Balance of Outstanding Notes of the related Class of Notes, on behalf
of the Holders of all the Notes of such Class, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and
A-1-8
<PAGE>
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer, the Company, Funding Co. or
RBMG, the Owner Trustee in its individual capacity, any owner of a beneficial
interest in the Issuer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-1-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
-------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated:
A-1-10
<PAGE>
EXHIBIT A-2
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN OCWEN FEDERAL BANK
FSB, THE BANK OF NEW YORK, MBIA INSURANCE CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS NOTE NOR ANY OF THE UNDERLYING MORTGAGE LOANS, WITH
LIMITED EXCEPTIONS, IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
Date of Indenture: As of June 1, 1999
First Payment Date: July 26, 1999
Denomination: $50,000,000
Original Note Balance: $50,000,000
CUSIP No.: 74925XAD6
Note No.: A-2- 1
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
ASSET-BACKED NOTES, SERIES 1999-1
RBMG Funding Co. Mortgage Loan Trust 1999-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of FIFTY MILLION DOLLARS ($50,000,000)
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $50,000,000 and the
denominator of which is $50,000,000 (this Note's "Percentage Interest") by (ii)
the aggregate amount, if any, payable from the related Note Account in respect
of principal on the Class A-2
A-2-1
<PAGE>
Notes pursuant to the Indenture dated as of June 1, 1999 (the "Indenture"),
between the Issuer and The Bank of New York, a New York banking corporation, as
Indenture Trustee (the "Indenture Trustee"); provided, however, that the entire
unpaid principal amount of this Note shall be due and payable on the earlier of
(i) the Payment Date occurring in June 25, 2030 (the "Final Maturity Date"),
(ii) the Redemption Date, if any, pursuant to Article X of the Indenture or
(iii) the date on which an Event of Default shall have occurred and be
continuing, if the Notes have been declared to be immediately due and payable in
the manner provided in Section 5.02 of the Indenture. Capitalized terms used but
not defined herein are defined in Article I of the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the
25th day of each month or, if such day is not a Business Day, on the Business
Day immediately following such 25th day (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the amounts to be paid on the Class A-2 Notes with respect to
such Payment Date, all as more specifically set forth in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
A-2-2
<PAGE>
[STATEMENT OF INSURANCE]
A-2-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be
signed manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: June 7, 1999
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee under the Trust
Agreement
By:_____________________________________
Authorized Signatory
A-2-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
Date: June 7, 1999
THE BANK OF NEW YORK,
as Authenticating Agent
By:________________________________
Authorized Signatory
A-2-5
<PAGE>
[Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Asset-Backed Notes, Series 1999-1, Class A-2 (herein called
the "Class A-2 Notes"), issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. Also issued under the Indenture are the
Asset-Backed Notes, Series 1999-1, Class A-1 (herein called the "Class A-1
Notes" and collectively with the Class A-2 Notes, the "Notes"). To the extent
that any provision of this Note contradicts or is inconsistent with the
provisions of the Indenture, the provisions of the Indenture shall control and
supersede such contradictory or inconsistent provision herein. The Notes are
subject to all terms of the Indenture.
The Class A-2 Notes are and will be equally and ratably secured by the
Mortgage Loans in Group II of the Trust Estate and the other collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Payment Date
in an amount described on the face hereof.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Maturity Date and the
Redemption Date, if any, pursuant to Article X of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the Class A-2 Notes shall
be due and payable on the date on which an Event of Default shall have occurred
and be continuing and the indenture Trustee, at the direction or upon the prior
written consent of MBIA Insurance Corporation (the "Note Insurer") in the
absence of a Note Insurer Default, or the Holders of the Notes representing not
less than 50% of the Note Balance of the Outstanding Notes of the related Class
of Notes with the prior written consent of the Note Insurer in the absence of a
Note Insurer Default have declared the related Notes to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture. All principal
payments on the Class A-2 Notes shall be made pro rata to the Class A-2
Noteholders entitled thereto.
The Note Insurer has issued a MBIA Insurance Policy in the name of the
Indenture Trustee for the benefit of the Noteholders, which policy guarantees
payments on each Payment Date to the Indenture Trustee for the benefit of the
Noteholders of the related Noteholders' Percentage Interest in the Required
Payment Amount for such Payment Date. Unless a Note Insurer Default shall be
continuing, subject to Section 8.16 of the Indenture, the Note Insurer shall be
deemed to be the Holder of 100% of the Note Balance of the Outstanding Notes of
the related Class of Notes for the purpose of exercising the rights, including
voting rights, of the Noteholders of the related Class of Notes under the
Indenture. In addition, on each Payment Date, after the Noteholders of the
related Class of Notes have been paid all amounts to which they are entitled,
the Note Insurer will be entitled to be reimbursed for any unreimbursed Insured
Amounts and any other amounts owed under the MBIA Insurance Policy.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made
A-2-6
<PAGE>
by check mailed to the Person whose name appears as the Holder of this Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Holder hereof as of the Record Date preceding such
Payment Date by notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New York.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, at the option of the Servicer or the Note Insurer on any Payment
Date on and after the date on which the aggregate Outstanding Note Balance of
the Class A-1 Notes and the Class A-2 Notes is less than 10% of the aggregate
Outstanding Note Balance of the Class A-1 Notes and the Class A-2 Notes as of
the Closing Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Beneficial Owner, by acceptance of a beneficial interest in a
Note, shall be deemed to represent either (i) that it is not (A) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title I of ERISA or (B) a plan (as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (the "Code")) that is subject to Section 4975
of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii) that its
acquisition and continued holding of such beneficial interest will be covered by
a U.S. Department of Labor Prohibited Transaction Class Exemption.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be
A-2-7
<PAGE>
taken, directly or indirectly, with respect to the obligations of the Issuer,
the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture
or any certificate or other writing delivered in connection therewith against
(i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Indenture Trustee or
the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that by accepting the benefits of the Indenture that such Noteholder or
Beneficial Owner will not at any time institute against the Depositor, the
Company, Funding Co., RBMG or the Issuer, or join in any institution against the
Depositor, the Company, Funding Co., RBMG or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture, the Depositor Sale Agreement,
the Company Sale Agreement, the Funding Co. Sale Agreement, the Loan
Contribution Agreement, the Cap Agreement or the Servicing Agreement (the "Basic
Documents").
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer, the Note Insurer
or the Indenture Trustee may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Issuer, the Note Insurer, the Indenture
Trustee or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes of the related Class of Notes
under the Indenture at any time by the Issuer with the consent of the Note
Insurer and the Holders of the related Class of Notes representing a majority of
the Note Balance of all Outstanding Notes of such Class. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Note Balance of Outstanding Notes of the related Class of
Notes, on behalf of the Holders of all the Notes of such Class, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes) shall
be conclusive and
A-2-8
<PAGE>
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer, the Company, Funding Co. or
RBMG, the Owner Trustee in its individual capacity, any owner of a beneficial
interest in the Issuer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-2-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
----------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated:
A-2-10
<PAGE>
EXHIBIT B
OFFICER'S CERTIFICATE
RBMG Funding Co. Mortgage Loan Trust 1999-1 (the "Issuer"), hereby
certifies, as follows:
Each condition precedent specified in Section 2.14 of the
Indenture, dated as of June __, 1999(the "Indenture") between
RBMG Funding Co. Mortgage Loan Trust 1999-1 and The Bank of
New York, as Indenture Trustee and each condition precedent
specified in the Additional Transfer Instrument has been
satisfied by the Issuer.
Capitalized terms not otherwise defined herein have the meanings set
forth in the Indenture.
IN WITNESS WHEREOF, I have hereunto signed my name.
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
By: Wilmington Trust Company, not its
individual capacity, but solely as Owner
Trustee
By: _______________________________________
Name:
Title:
Dated: June __, 1999
B-1
<PAGE>
EXHIBIT C
FORM OF SERVICING AGREEMENT
[ON FILE WITH DEWEY BALLANTINE LLP]
C-1
<PAGE>
EXHIBIT D
FORM OF CUSTODIAL AGREEMENT
[ON FILE WITH DEWEY BALLANTINE LLP]
D-1
<PAGE>
EXHIBIT E
FORM OF INVESTMENT LETTER (ERISA)
[Date]
The Bank of New York
101 Barclay Street, 12th floor
New York, New York 10068
Attention:
Re: Indenture, dated as of June __, 1999, between RBMG
Funding Co. Mortgage Loan Trust 1999-1 and The Bank of New
York, as Indenture Trustee, relating to RBMG Funding Co.
Mortgage Loan Trust 1999-1, Asset-Backed Notes, Series
1999-1.
Ladies and Gentlemen:
____________(the "Transferee") has today purchased in a private sale
from _______________ $________________ of Asset Backed Notes, issued by RBMG
Funding Co. Mortgage Loan Trust 1999-1 pursuant to an Indenture, dated as of
June __, 1999, between RBMG Funding Co. Mortgage Loan Trust 1999-1 and The Bank
of New York, as Indenture Trustee, relating to RBMG Funding Co. Mortgage Loan
Trust 1999-1, Asset-Backed Notes, Series 1999-1, (the "Indenture"). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Indenture. The undersigned hereby certifies and agrees on behalf of the
Purchaser either:
1. The transferee is not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA or (B) a plan
(as defined in Section 4975(e)(i) of the Internal Revenue Code of 1986, as
amended (the "Code")) that is subject to Section 4975 of the Code (each of the
foregoing, a "Benefit Plan"), and is not acting on behalf of or investing the
assets of a Benefit Plan; or
2. The transferee's acquisition and continued holding of the Note will
be covered by a U.S. Department of Labor Prohibited Transaction Class Exemption.
Very truly yours,
NAME OF PURCHASER
By:_____________________
Name:
Title:
E-1
Exhibit 8.1
June 7, 1999
To the Parties Listed on
the Attached Annex A:
Re: RBMG Funding Co. Mortgage Loan Trust 1999-1
Asset Backed Notes, Series 1999-1
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. Mortgage
Loan Trust 1999-1 Asset Backed Notes, Series 1999-1 Notes, Class A-1 and Class
A-2 (the "Notes") pursuant to the terms of the Indenture (the "Indenture"),
dated as of June 1, 1999, between the RBMG Funding Co. Mortgage Loan Trust
1999-1 (the "Issuer") and The Bank of New York, as indenture trustee (the
"Indenture Trustee"). Capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Indenture.
As special tax counsel, we have examined such documents as we
have deemed appropriate for the purposes of rendering the opinions set forth
below, including the following: (a) an executed copy of the Indenture and the
exhibits attached thereto and (b) certain representations and warranties made to
us by RBMG and certain information provided by the Underwriter.
In our examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
We have examined the question of whether the Notes will be
treated as indebtedness for federal income tax purposes. Our analysis is based
on the provisions of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to
<PAGE>
differing interpretations, which could apply retroactively. The opinion of
special tax counsel is not binding on the courts or the Internal Revenue Service
(the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not a transaction constitutes the issuance of
indebtedness for federal income tax purposes, which we have reviewed as they
apply to this transaction.
Based on the foregoing, and such legal and factual
investigations as we have deemed appropriate, while no transaction closely
comparable to that contemplated in the Operative Documents has been the subject
of any Treasury regulation, revenue ruling or judicial decision, and therefore
the matter is subject to interpretation, we are of the opinion that for federal
income tax purposes:
(1) The Notes will properly be treated as indebtedness for
federal income tax purposes;
(2) The Trust will not constitute an association (or a
publicly traded partnership) taxable as a corporation or a taxable
mortgage pool.
We express no opinion on any matter not discussed in this
letter. This opinion is rendered as of the Closing Date, for the sole benefit of
the addressees hereof and it may not be relied on by any other party or quoted
without our express consent in writing.
Very truly yours,
/s/ DEWEY BALLANTINE LLP
2
<PAGE>
ANNEX A
<TABLE>
<CAPTION>
<S> <C>
First Union Capital Markets Corp. Standard & Poor's Ratings Services
301 South College Street, TW-06 25 Broadway
Charlotte, North Carolina 28288-0610 New York, New York 10004
Moody's Investors Service, Inc. Resource Bancshares Mortgage Group, Inc.
99 Church Street 7909 Parklane Road
New York, New York 10007 Columbia, South Carolina 29223
RBMG Asset Management Company, Inc. RBMG Funding Co.
2820 West Charleston Boulevard, Suite 17 2820 West Charleston Boulevard, Suite 17
Las Vegas, Nevada 89102 Las Vegas, Nevada 89102
MBIA Insurance Corporation The Bank of New York
113 King Street 101 Barclay Street, 12E
Armonk, New York 10504 New York, New York 10286
</TABLE>
3
Exhibit 10.1
EXECUTION COPY
================================================================================
MBIA INSURANCE CORPORATION,
as Insurer
RESOURCE BANCSHARES MORTGAGE GROUP, INC.,
OCWEN FEDERAL BANK FSB,
as Sub-Servicer
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor
FIRST UNION CORPORATION
and
FIRST UNION CAPITAL MARKETS CORP.,
as Underwriter
INDEMNIFICATION AGREEMENT
$125,030,000
RBMG Funding Co. Mortgage Loan Trust 1999-1
Asset-Backed Notes
Series 1999-1, Class A-1 and Class A-2
Dated as of June 1, 1999
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
Section 1. Definitions..........................................................................................1
Section 2. Representations and Warranties of the Insurer........................................................3
Section 3. Agreements, Representations and Warranties of the Underwriter........................................4
Section 4. Agreements, Representations and Warranties of RBMG...................................................4
Section 5. Agreements, Representations and Warranties of the Sub-Servicer.......................................5
Section 6. Agreements, Representations and Warranties of the Depositor..........................................5
Section 7. Indemnification......................................................................................5
Section 8. Notice To Be Given...................................................................................6
Section 9. Contribution.........................................................................................8
Section 10. Notices............................................................................................10
Section 11. Governing Law, Etc.................................................................................11
Section 12. Insurance Agreement; Underwriting Agreement; Servicing Agreement...................................11
Section 13. Limitations........................................................................................11
Section 14. Counterparts.......................................................................................11
Section 15. Non-petition.......................................................................................11
TESTIMONIUM..........................................................................................SIGNATURE PAGE
SIGNATURES AND SEALS.................................................................................SIGNATURE PAGE
</TABLE>
i
<PAGE>
INDEMNIFICATION AGREEMENT
This Agreement, dated as of June 1, 1999, is by and among MBIA
Insurance Corporation, as Insurer, (the "Insurer"), as the Insurer under the
Financial Guaranty Insurance Policy (the "Policy") issued in connection with the
Offered Obligations described below, Resource Bancshares Mortgage Group, Inc.
("RBMG"), Ocwen Federal Bank FSB, as Sub-Servicer, (the "Sub-Servicer"),
Residential Asset Funding Corporation, as Depositor (the "Depositor"), First
Union Corporation ("First Union") and First Union Capital Markets Corp., as
Underwriter (the "Underwriter").
Section 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings stated herein, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate.
Capitalized terms used in this Agreement but not otherwise defined herein will
have the meanings ascribed to such terms in the Indenture (as described below).
"ACT" means the Securities Act of 1933, as amended, together with all
related rules and regulations.
"AGREEMENT" means this Indemnification Agreement by and among the
Insurer, RBMG, the Sub-Servicer, the Depositor, First Union and the Underwriter.
"COMPANY" means RBMG Asset Management Company, Inc., a Nevada
corporation, or its successors in interest.
"CONTRIBUTION AGREEMENT" means the Loan Contribution Agreement dated as
of June 1,1999 between RBMG and the Company.
"DEPOSITOR PARTY" means the Depositor and its respective parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
"INDEMNIFIED PARTY" means any party entitled to any indemnification
pursuant to Section 7 below, as the context requires.
"INDEMNIFYING PARTY" means any party required to provide
indemnification pursuant to Section 7 below, as the context requires.
"INDENTURE" means the Indenture dated as of June 1, 1999 between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means The Bank of New York and its permitted
successors and assigns.
1
<PAGE>
"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of June
1, 1999, by and among the Insurer, RBMG, in its individual capacity and as
Servicer, the Sub-Servicer, RBMG Funding Co., as Funding Co. and as residual
holder, the Company, the Issuer, the Depositor, First Union and the Indenture
Trustee, as indenture trustee.
"INSURER PARTY" means the Insurer and its respective parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
"ISSUER" means RBMG Funding Co. Mortgage Loan Trust 1999-1.
"LOSSES" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"OFFERED OBLIGATIONS" means the RBMG Funding Co. Mortgage Loan Trust
1999-1, Asset-Backed Notes, Series 1999-1, Class A-1 and Class A-2, issued
pursuant to the Indenture.
"PERSON" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization or any government or agency or political
subdivision thereof.
"PROSPECTUS" means the form of final Prospectus included in the
Registration Statement on each date that the Registration Statement and any
post-effective amendment or amendments thereto became effective.
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement dated
June 2, 1999 with respect to the Offered Obligations and filed with the
Securities and Exchange Commission on June 7, 1999, and any amendment or
supplement thereto.
"RBMG PARTY" means RBMG, each of its parents, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or any
"controlling person" (as such term is used in the Act) of any of the foregoing.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-3
of the Depositor (No. 333-64775) relating to the Offered Obligations, and any
pre- and post-effective amendment thereto, including the Prospectus, the
Prospectus Supplement and all exhibits thereto.
"SUB-SERVICER" means Ocwen Federal Bank FSB, as Sub-Servicer.
"SUB-SERVICER PARTY" means the Sub-Servicer, each of its parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
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"UNDERWRITER PARTY" means the Underwriter and its parent, subsidiaries
and affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Act) of any of the foregoing.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement by and
between the Depositor and the Underwriter, dated June 2, 1999.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE INSURER. The Insurer
represents and warrants to the Underwriter, First Union, the Depositor and RBMG
as follows:
(a) ORGANIZATION AND LICENSING. The Insurer is a duly
incorporated and existing New York stock insurance company licensed to
do business in the State of New York and is in good standing under the
laws of such state.
(b) CORPORATE POWER. The Insurer has the corporate power and
authority to issue the Policy and execute and deliver this Agreement
and the Insurance Agreement and to perform all of its obligations
hereunder and thereunder.
(c) AUTHORIZATION; APPROVALS. The issuance of the Policy and
the execution, delivery and performance of this Agreement and the
Insurance Agreement have been duly authorized by all necessary
corporate proceedings. No further approvals or filings of any kind,
including, without limitation, any further approvals of or further
filings with any governmental agency or other governmental authority,
or any approval of the Insurer's board of directors or stockholders,
are necessary for the Policy, this Agreement and the Insurance
Agreement to constitute the legal, valid and binding obligations of the
Insurer.
(d) ENFORCEABILITY. The Policy, when issued, and this
Agreement and the Insurance Agreement will each constitute a legal,
valid and binding obligation of the Insurer, enforceable in accordance
with its terms, subject to applicable laws affecting the enforceability
of creditors' rights generally.
(e) FINANCIAL INFORMATION. The consolidated financial
statements of the Insurer as of December 31, 1998 and December 31, 1997
and for each of the three years in the period ended December 31, 1998
incorporated by reference in the Prospectus Supplement (the "Insurer
Audited Financial Statements"), fairly present in all material respects
the financial condition of the Insurer as of such date and for the
period covered by such statements in accordance with generally accepted
accounting principles consistently applied. The consolidated financial
statements of the Insurer and its subsidiaries as of March 31, 1999 and
for the three-month periods ending March 31, 1999 and March 31, 1998
incorporated by reference in the Prospectus Supplement (the "Insurer
Unaudited Financial Statements" and, collectively with the Insurer
Audited Financial Statements, the "Insurer Financial Statements")
present fairly in all material respects the financial condition of the
Insurer as of such date and for the period covered by such statements
in accordance with generally accepted accounting principles applied in
a manner consistent with the accounting principles used in preparing
the Insurer Audited Financial Statements, and, since March 31, 1999
there has been no material change in
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<PAGE>
such financial condition of the Insurer which would materially and
adversely affect its ability to perform its obligations under the
Policy.
(f) INSURER INFORMATION. The information in the Prospectus
Supplement as of the date hereof under the caption "THE INSURANCE
POLICY AND THE NOTE INSURER" (other than the information under the
sub-caption "--CREDIT ENHANCEMENT DOES NOT APPLY TO PREPAYMENT RISK" as
to which the Insurer makes no representation or warranty) (the "Insurer
Information") is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus for a registrant
under the Act, in connection with the public offer and sale of
securities of such registrant. Within such limited scope of disclosure,
the Insurer Information does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(g) NO LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its condition
(financial or otherwise) or operations of it or would materially and
adversely affect its ability to perform its obligations under this
Agreement, the Policy or the Insurance Agreement.
Section 3. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE
UNDERWRITER. The Underwriter represents and warrants to and agrees with RBMG and
the Insurer that the statements in the Prospectus Supplement made in reliance
upon and in conformity with written information relating to the Underwriter
furnished specifically for use in the preparation of the Prospectus Supplement,
it being acknowledged that the only such information is that set forth under the
heading "UNDERWRITING" and any information relating to market making (referred
to herein as the "Underwriter Information"), are true and correct in all
material respects.
Section 4. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF RBMG. RBMG
represents and warrants to and agrees with the Insurer, the Sub-Servicer, First
Union, the Depositor and the Underwriter as follows:
(a) REGISTRATION STATEMENT. The information in the Prospectus
Supplement, under the headings "SUMMARY--PARTIES--RBMG or Resource
Bancshares Mortgage Group, Inc.," "SUMMARY--MORTGAGE LOAN POOL,"
"DESCRIPTION OF THE MORTGAGE POOL," "RBMG," "RBMG FUNDING CO" and
"SERVICING OF THE MORTGAGE LOANS" (other than information under the
sub-heading "--THE SUB-SERVICER") (collectively, the "RBMG
Information") is true and correct in all material respects and does not
contain any untrue statement of a fact that is material or omit to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) ORGANIZATION. RBMG is duly incorporated and existing under
the laws of the State of Delaware and is in good standing as a foreign
corporation in each jurisdiction
4
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in which the nature of its business, or the properties owned or leased
by it, makes such qualification necessary.
(c) CORPORATE POWER. RBMG has the corporate power and
authority to execute and deliver this Agreement, the Contribution
Agreement and the Insurance Agreement and to perform all of its
obligations hereunder and thereunder in all material respects.
(d) AUTHORIZATION; APPROVALS. The execution, delivery and
performance of this Agreement, the Contribution Agreement and the
Insurance Agreement by RBMG have been duly authorized by all necessary
corporate proceedings. No further approvals or filings of any kind,
including, without limitation, any further approvals of or further
filing with any governmental agency or other governmental authority, or
any approval of RBMG's board of directors or stockholders, are
necessary for this Agreement, the Contribution Agreement and the
Insurance Agreement to constitute the legal, valid and binding
obligations of RBMG.
(e) ENFORCEABILITY. This Agreement, the Contribution Agreement
and the Insurance Agreement will each constitute a legal, valid and
binding obligation of RBMG, each enforceable in accordance with its
terms, subject, as to the enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
the enforceability of creditors' rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of RBMG and to
general principles of equity.
(f) NO LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of RBMG's knowledge, threatened
against it at law or in equity or before any court, governmental
agency, board or commission or any arbitrator which, if decided
adversely, would materially and adversely affect its condition
(financial or otherwise) or its operations or would materially and
adversely affect its ability to perform its obligations under this
Agreement, the Contribution Agreement or the Insurance Agreement.
Section 5. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE
SUB-SERVICER. The Sub-Servicer represents and warrants to and agrees with RBMG,
First Union, the Depositor and the Underwriter that the information in the
Prospectus Supplement set forth under the heading "SERVICING OF THE MORTGAGE
LOANS--THE SUB-SERVICER" (the "Sub-Servicer Information") does not contain any
untrue statement of a material fact and does not omit to state a material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
Section 6. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor represents and warrants to and agrees with the Insurer that the
information in the Registration Statement, other than the Insurer Information,
the Sub-Servicer Information, the Underwriter Information and the RBMG
Information (the "Depositor Information"), is true and correct in all material
respects and does not contain any untrue statement of a fact that is material
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<PAGE>
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Section 7. INDEMNIFICATION. (a) The Insurer hereby agrees, upon the
terms and subject to the conditions of this Agreement, to indemnify, defend and
hold harmless each RBMG Party, each Depositor Party, First Union and each
Underwriter Party against any and all Losses incurred by them with respect to
the offer and sale of any of the Offered Obligations which result from the
Insurer's breach of any of its representations and warranties (including,
without limitation, with respect to the Insurer Information) set forth in
Section 2 of this Agreement.
(b) The Underwriter hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by it with respect to the
offer and sale of any of the Offered Obligations which result from the
Underwriter's breach of its representation and warranty with respect to the
Underwriter Information set forth in Section 3 of this Agreement.
(c) RBMG hereby agrees, upon the terms and subject to the conditions of
this Agreement, to indemnify, defend and hold harmless each Insurer Party and
each Sub-Servicer Party against any and all Losses incurred by them with respect
to the offer and sale of any of the Offered Obligations which result from RBMG's
breach of any of its representations and warranties (including, without
limitation, with respect to the RBMG Information) set forth in Section 4 of this
Agreement or resulting from the Depositor's breach of any of its representations
and warranties set forth in Section 6 of this Agreement with respect to
information in the Prospectus Supplement under the headings
"SUMMARY--DESCRIPTION OF THE NOTES," "RISK FACTORS" (other than information
under the sub-headings "--Book-Entry Registration May Reduce the Liquidity of
the Notes," "--An Investment in the Notes May Be an Illiquid Investment," and
"--Year 2000 Issue May Adversely Affect The Distribution to Noteholders"),
"DESCRIPTION OF THE NOTES" (other than information under the sub-heading
"--BOOK-ENTRY REGISTRATION AND DEFINITIVE NOTES") and "CERTAIN PREPAYMENT AND
YIELD CONSIDERATIONS" (other than information under the sub-heading "--WEIGHTED
AVERAGE LIFE OF THE NOTES").
(d) The Sub-Servicer hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each RBMG
Party, First Union, each Depositor Party and each Underwriter Party against any
and all Losses incurred by it with respect to the offer and sale of any of the
Offered Obligations which result from the Sub-Servicer's breach of any of its
representations and warranties (including, without limitation, with respect to
the Sub-Servicer Information) set forth in Section 5 of this Agreement.
(e) First Union hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by it with respect to the
offer and sale of any of the Offered Obligations which result from the
Depositor's breach of any of its representations and warranties set forth in
Section 6 of this Agreement other than Losses for which RBMG has agreed to
indemnify the Insurer Parties pursuant to Section 7(c) of this Agreement. First
Union, the Underwriter and the Depositor shall
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not be liable hereunder with respect to the Insurer Information, the RBMG
Information and the Sub-Servicer Information.
(f) Upon the incurrence of any Losses entitled to indemnification
hereunder, the Indemnifying Party shall reimburse the Indemnified Party promptly
upon establishment by the Indemnified Party to the Indemnifying Party of the
Losses incurred.
Section 8. NOTICE TO BE GIVEN. (a) Except as provided in Section 9
below with respect to contribution, the indemnification provided herein by the
Indemnifying Party shall be the exclusive remedy of each Indemnified Party for
the Losses resulting from the Indemnifying Party's breach of a representation,
warranty or agreement hereunder; provided, however, that each Indemnified Party
shall be entitled to pursue any other remedy at law or in equity for any such
breach so long as the damages sought to be recovered shall not exceed the Losses
incurred thereby resulting from such breach.
(b) In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Indemnified Party to be
indemnified under this Agreement, such party shall give the Indemnifying Party
written or facsimile notice of such action or claim reasonably promptly after
receipt of written notice thereof.
(c) Upon request of the Indemnified Party, the Indemnifying Party shall
retain counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. The Indemnifying Party may, at its option, at any time upon
written notice to the Indemnified Party, assume the defense of any proceeding
and may designate counsel reasonably satisfactory to the Indemnified Party in
connection therewith provided that the counsel so designated would have no
actual or potential conflict of interest in connection with such representation.
Unless it shall assume the defense of any proceeding, the Indemnifying Party
shall not be liable for any settlement of any proceeding, effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. The Indemnifying Party shall be entitled to participate
in the defense of any such action or claim in reasonable cooperation with, and
with the reasonable cooperation of, each Indemnified Party.
(d) The Indemnified Party will have the right to employ its own counsel
in any such action, but the fees and expenses of such counsel will be at the
expense of such Indemnified Party unless (1) the employment of counsel by the
Indemnified Party at the Indemnifying Party's expense has been authorized in
writing by the Indemnifying Party, (2) the Indemnifying Party has not in fact
employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action or (3) the named
parties to any such action include the Indemnifying Party on the one hand and,
on the other hand, the Indemnified Party, and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense
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of the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action or proceeding on such Indemnified Party's
behalf), in each of which cases the reasonable fees and expenses of counsel
(including local counsel) will be at the expense of the Indemnifying Party, and
all such fees and expenses will be reimbursed promptly as they are incurred. In
the event that any expenses so paid by the Indemnifying Party are subsequently
determined to not be required to be borne by the Indemnifying Party hereunder,
the party which received such payment shall promptly refund to the Indemnifying
Party the amount so paid by such Indemnifying Party. Notwithstanding the
foregoing, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, the Indemnifying Party shall not be liable
for the fees and expenses of more than one counsel for all RBMG Parties, more
than one counsel for all Underwriter Parties and more than one counsel for all
Insurer Parties, as applicable.
(e) The Indemnified Parties shall cooperate with the Indemnifying
Parties in resolving any event which would give rise to an indemnity obligation
pursuant to Section 6 hereof in the most efficient manner.
(f) No settlement of any such claim or action shall be entered into
without the consent of each Indemnified Party who is subject to such claim or
action, on the one hand, and each Indemnifying Party who is subject to such
claim or action, on the other hand; provided, however, that the consent of such
Indemnified Party shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such
Indemnified Party.
(g) Any failure by an Indemnified Party to comply with the provisions
of this Section shall relieve the Indemnifying Party of liability only if such
failure is materially prejudicial to any legal pleadings, grounds, defenses or
remedies in respect thereof or the Indemnifying Party's financial liability
hereunder, and then only to the extent of such prejudice.
Section 9. CONTRIBUTION. (a) To provide for just and equitable
contribution if the indemnification provided by the Insurer is determined to be
unavailable for any Underwriter Party (other than pursuant to Section 7 or 8 of
this Agreement), or if the indemnification provided by the Underwriter is
determined to be unavailable for any Insurer Party (other than pursuant to
Section 7 or 8 of this Agreement), the Insurer and the Underwriter shall
contribute to the aggregate costs of liabilities arising from any breach of
their respective representations and warranties set forth in this Agreement on
the basis of the relative fault of all Insurer Parties and all Underwriter
Parties.
(b) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be unavailable for any
RBMG Party (other than pursuant to Section 7 or 8 of this Agreement), or if the
indemnification provided by RBMG is determined to be unavailable for any Insurer
Party (other than pursuant to Section 7 or 8 of this Agreement), the Insurer and
RBMG shall contribute to the aggregate cost of liabilities arising from any
breach of their respective representations and warranties set forth in this
Agreement on the basis of the relative fault of all Insurer Parties and all RBMG
Parties.
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(c) To provide for just and equitable contribution if the
indemnification provided by RBMG is determined to be unavailable for any
Sub-Servicer Party (other than pursuant to Section 7 or 8 of this Agreement), or
if the indemnification provided by the Sub-Servicer is determined to be
unavailable for any RBMG Party (other than pursuant to Section 7 or 8 of this
Agreement), RBMG and the Sub-Servicer shall contribute to the aggregate cost of
liabilities arising from any breach of their respective representation and
warranties set forth in this Agreement on the basis of the related fault of all
RBMG Parties and all Sub-Servicer Parties.
(d) To provide for just and equitable contribution if the
indemnification provided by Insurer is determined to be unavailable for any
Depostor Party or for First Union (other than pursuant to Section 7 or 8 of this
Agreement), or if the indemnification provided by First Union is determined to
be unavailable for any Insurer Party (other than pursuant to Section 7 or 8 of
this Agreement), the Insurer and First Union shall contribute to the aggregate
cost of liabilities arising from any breach of their respective representation
and warranties set forth in this Agreement on the basis of the related fault of
all Insurer Parties on the one hand, and First Union and all Depositor Parties
on the other hand.
(e) To provide for just and equitable contribution if the
indemnification provided by the Sub-Servicer is determined to be unavailable for
First Union (other than pursuant to Section 7 or 8 of this Agreement), First
Union and the Sub-Servicer shall contribute to the aggregate cost of liabilities
arising from any breach of their respective representation and warranties set
forth in this Agreement on the basis of the related fault of First Union and all
Depositor Parties on the one hand, and all Sub-Servicer Parties on the other
hand.
(f) The relative fault of each Indemnifying Party, on the one hand, and
of each Indemnified Party, on the other hand, shall be determined by reference
to, among other things, whether the breach of, or alleged breach of, any of its
representations and warranties set forth in Section 2, 3, 4, 5 or 6 of this
Agreement relates to information supplied by, or action within the control of,
the Indemnifying Party or the Indemnified Party and the Parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such breach.
(g) The Parties agree that the Insurer shall be solely responsible for
the Insurer Information and for the Insurer Financial Statements, that RBMG
shall be solely responsible for the RBMG Information and the Depositor
Information for which RBMG has agreed to indemnify the Insurer Parties and the
Sub-Servicer Parties pursuant to Section 7(c) of this Agreement, that the
Sub-Servicer shall be solely responsible for the Sub-Servicer Information, that
the Underwriter shall be solely responsible for the Underwriter Information and
that the Depositor shall be responsible for all other information in the
Prospectus Supplement.
(h) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(i) The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of the Depositor, any Underwriter Party,
any RBMG Party, any Sub-Servicer Party or any
9
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Insurer Party, (ii) the issuance of any Offered Obligations or the Policy or
(iii) any termination of this Agreement.
(j) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
Section 10. NOTICES. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
10
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If to the Insurer: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio
Management--Structured
Finance (IPM-SF)
If to RBMG: Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, SC 29223
Attention: Larry Reed
If to the Underwriter: First Union Capital Markets Corp.
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Evan Peverley
If to the Sub-Servicer: Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd.
West Palm Beach, FL 33401
Attention: Secretary
If to First Union: First Union Corporation
301 South College Street
Charlotte, NC 28288
Attention: Shanker Merchant
If to the Depositor: Residential Asset Funding Corporation
c/o First Union Capital Markets Corp.
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Evan Peverley
Section 11. GOVERNING LAW, ETC. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Insurer, RBMG, the Sub-Servicer,
the Depositor, First Union and the Underwriter.
Section 12. INSURANCE AGREEMENT; UNDERWRITING AGREEMENT; SERVICING
AGREEMENT. This Agreement in no way limits or otherwise affects the
indemnification obligations of RBMG, the Underwriter, the Depositor, First Union
or the Sub-Servicer, as applicable, under (a) the
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Insurance Agreement, (b) the Underwriting Agreement (c) the Servicing Agreement,
or (d) the Sub-Servicing Agreement. To the extent that this Agreement conflicts
with or does not address the relative rights of the Underwriter and the
Depositor as between themselves as set forth in the Underwriting Agreement, the
Underwriting Agreement shall govern.
Section 13. LIMITATIONS. Nothing in this Agreement shall be construed
as a representation or undertaking by the Insurer concerning maintenance of the
rating currently assigned to its claims-paying ability by Moody's Investors
Service, Inc. ("Moody's") and/or Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc. ("S&P") or any other rating agency.
Section 14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall together constitute but one and the same
instrument.
Section 15. NON-PETITION. So long as the Insurance Agreement is in
effect, and for one year and one day following its termination, none of the
parties hereto will file any involuntary petition or otherwise institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceeding under any federal or state bankruptcy or similar law against
RBMG Funding Co., RBMG Funding Co. Mortgage Loan Trust 1999-1 or RBMG Asset
Management Company, Inc.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Parties hereto have caused this Indemnification
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the date first above written.
MBIA INSURANCE CORPORATION
By /s/ ANN D. MCKENNA
------------------------------------
Title: Authorized Officer
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
By /s/ JORDAN D. DORCHUCK
------------------------------------
Name: Jordan D. Dorchuck
Title: Senior Vice President
OCWEN FEDERAL BANK FSB
By /s/ RONALD M. FARIS
------------------------------------
Name: Ronald M. Faris
Title: Executive Vice President
FIRST UNION CAPITAL MARKETS CORP.
By /s/ SHANKER L. MERCHANT
------------------------------------
Name: Shanker L. Merchant
Title: Senior Vice President
RESIDENTIAL ASSET FUNDING CORPORATION
By /s/ SHANKER L. MERCHANT
------------------------------------
Name: Shanker L. Merchant
Title: Senior Vice President
FIRST UNION CORPORATION
By /s/ CAROLYN ESKRIDGE
------------------------------------
Name: Carolyn Eskridge
Title: Senior Vice President
Exhibit 10.2
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Insurer
OCWEN FEDERAL BANK FSB,
as Sub-Servicer
RESOURCE BANCSHARES MORTGAGE GROUP, INC.,
as RBMG and Servicer
RBMG FUNDING CO.,
as Funding Co. and Residual Holder
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-1
as Issuer
RBMG ASSET MANAGEMENT COMPANY, INC.,
as Company
RESIDENTIAL ASSET FUNDING CORPORATION,
as Depositor
FIRST UNION CORPORATION
and
THE BANK OF NEW YORK
as Indenture Trustee
INSURANCE AGREEMENT
$125,030,000
RBMG Funding Co. Mortgage Loan Trust 1999-1
Asset-Backed Notes
Series 1999-1, Class A-1 and Class A-2
Dated as of June 1, 1999
<PAGE>
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be a part of this Insurance Agreement. All capitalized terms
used in this Insurance Agreement and not otherwise defined shall have the
meanings set forth in Article I of this Insurance Agreement.)
<TABLE>
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ARTICLE I........................................................................................................1
DEFINITIONS......................................................................................................1
ARTICLE II.......................................................................................................6
REPRESENTATIONS, WARRANTIES AND COVENANTS........................................................................6
Section 2.01. Representation and Warranties of RBMG, the Servicer, the Company and Funding Co...................6
Section 2.02. Affirmative Covenants of RBMG, the Servicer, the Company and Funding Co..........................10
Section 2.03. Negative Covenants of RBMG, the Servicer, the Company and Funding Co.............................16
Section 2.04. Representation and Warranties of the Sub-Servicer................................................17
Section 2.05. Affirmative Covenants of the Sub-Servicer........................................................20
Section 2.06. Negative Covenants of the Sub-Servicer...........................................................24
Section 2.07. Representations, Warranties and Covenants of Indenture Trustee...................................25
Section 2.08 Representations, Warranties and Covenants of the Issuer..........................................27
Section 2.09. Affirmative Covenants of the Issuer..............................................................29
Section 2.10. Negative Covenants of the Issuer.................................................................30
Section 2.11. Representation and Warranties of the Depositor...................................................31
Section 2.12. Affirmative Covenants of the Depositor...........................................................33
Section 2.13. Negative Covenants of the Depositor..............................................................34
ARTICLE III.....................................................................................................35
THE POLICY; REIMBURSEMENT.......................................................................................35
Section 3.01. Issuance of the Policy...........................................................................35
Section 3.02. Payment of Fees and Bond Insurer Premium.........................................................37
Section 3.03. Reimbursement and Additional Payment Obligation..................................................38
Section 3.04. Indemnification by RBMG, the Servicer, the Company and Funding Co.; Limitation of
Liability..............................................................................................40
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<CAPTION>
<S> <C>
Section 3.05. Indemnification by Sub-Servicer; Limitation of Liability.........................................42
Section 3.06. Indemnification by Indenture Trustee; Limitation of Liability....................................43
Section 3.07. Indemnification by First Union; Limitation of Liability..........................................43
Section 3.08. Payment Procedure................................................................................45
ARTICLE IV......................................................................................................45
FURTHER AGREEMENTS..............................................................................................45
Section 4.01. Effective Date; Term of the Insurance Agreement..................................................45
Section 4.02. Further Assurances and Corrective Instruments....................................................45
Section 4.03. Obligations Absolute.............................................................................46
Section 4.04. Assignments; Reinsurance; Third-Party Rights.....................................................47
Section 4.05. Liability of the Insurer.........................................................................48
Section 4.06. Parties Will Not Institute Insolvency Proceedings................................................48
Section 4.07. Parties to Join in Enforcement Action............................................................48
ARTICLE V.......................................................................................................49
DEFAULTS; REMEDIES..............................................................................................49
Section 5.01. Defaults.........................................................................................49
Section 5.02. Remedies; No Remedy Exclusive....................................................................50
Section 5.03. Waivers..........................................................................................51
ARTICLE VI......................................................................................................51
MISCELLANEOUS...................................................................................................51
Section 6.01. Amendments, Etc..................................................................................51
Section 6.02. Notices..........................................................................................51
Section 6.03. Severability.....................................................................................54
Section 6.04. Governing Law....................................................................................54
Section 6.05. Consent to Jurisdiction..........................................................................54
Section 6.06. Consent of the Insurer...........................................................................55
Section 6.07. Counterparts.....................................................................................55
Section 6.08. Headings.........................................................................................55
Section 6.09. Trial by Jury Waived.............................................................................55
Section 6.10. Limited Liability................................................................................56
Section 6.11. Entire Agreement.................................................................................56
Section 6.12 Covenant of the Residual Holder...................................................................56
</TABLE>
ii
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INSURANCE AGREEMENT
INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of June 1,
1999 by and among RESOURCE BANCSHARES MORTGAGE GROUP, INC., in its individual
capacity (together with its permitted successors and assigns, "RBMG") and as
Servicer under the Servicing Agreement described below (together with its
permitted successors and assigns, the "Servicer"), OCWEN FEDERAL BANK FSB, in
its capacity as Sub-Servicer under the Sub-Servicing Agreement described below
(together with its permitted successors and assigns, the "Sub-Servicer"), RBMG
FUNDING CO., in its individual capacity ("Funding Co.") and as the Residual
Holder (the "Residual Holder"), MBIA INSURANCE CORPORATION (the "Insurer"), RBMG
FUNDING CO. MORTGAGE LOAN TRUST 1999-1, as the Issuer (the "Issuer"), RBMG ASSET
MANAGEMENT COMPANY, INC., as the Company (the "Company"), RESIDENTIAL ASSET
FUNDING CORPORATION, as the Depositor (the "Depositor"), FIRST UNION CORPORATION
("First Union"), THE BANK OF NEW YORK, as Indenture Trustee (together with its
permitted successors and assigns, the "Indenture Trustee").
WHEREAS, the Indenture dated as of June 1, 1999 by and between the
Issuer and the Indenture Trustee (the "Indenture") relating to the RBMG Funding
Co. Mortgage Loan Trust 1999-1 Asset-Backed Notes, Series 1999-1, Class A-1 and
Class A-2 (the "Obligations") provides for, among other things, the issuance of
asset-backed notes, representing non-recourse debt obligations of the Issuer
which are secured by the trust estate established thereby and the Insurer has
issued its financial guaranty insurance policy (the "Policy") that guarantees
certain payments due from the Trust Estate on the Obligations;
WHEREAS, the Insurer shall be paid an insurance premium pursuant to the
Indenture, and the details of such premium are set forth herein; and
WHEREAS, the Servicer, RBMG, Funding Co., the Company, the
Sub-Servicer, the Depositor and the Issuer have undertaken certain obligations
in consideration for the Insurer's issuance of the Policy;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I, in the first paragraph of this
Insurance Agreement and in the Whereas clauses shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate. Unless the
context clearly requires otherwise, all capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture. All words used herein shall be construed to be of such gender or
number as the circumstances
<PAGE>
require. This "Insurance Agreement" shall mean this Insurance Agreement as a
whole and as the same may, from time to time hereafter, be amended, supplemented
or modified. The words "herein," "hereby," "hereof," "hereto," "hereinabove" and
"hereinbelow," and words of similar import, refer to this Insurance Agreement as
a whole and not to any particular paragraph, clause or other subdivision hereof,
unless otherwise specifically noted.
"BOND INSURER PREMIUM" means the Bond Insurer Premium payable in
accordance with Section 3.02 hereof.
"BOND INSURER PREMIUM RATE" shall have the meaning ascribed to such
term in Section 3.02 hereof.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which the Insurer is closed or (iii) banking institutions in New
York City or Nevada or in the city in which the corporate trust officer of the
Indenture Trustee under the Indenture is located are authorized or obligated by
law or executive order to close.
"CAP AGREEMENT" means the ISDA Master Agreement and Rate Cap Agreement
dated as of June 7, 1999 between the Cap Provider and the Trust.
"CAP PROVIDER" means Morgan Guaranty Trust Company of New York.
"CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"COMMISSION" means the Securities and Exchange Commission.
"COMMITMENT" means the letter of commitment from the Insurer to RBMG
dated June 4, 1999.
"COMPANY SALE AGREEMENT" means the Loan Sale Agreement dated as of June
1, 1999 between Funding Co. and the Company as the same may be amended and
supplemented in accordance with the terms thereof.
"CONTRIBUTION AGREEMENT" means the Loan Contribution Agreement dated as
of June 1, 1999, between RBMG and the Company as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"DATE OF ISSUANCE" means the date on which the Policy is issued as
specified therein.
"DEFAULT" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"DEPOSITOR INFORMATION" shall have the meaning assigned to such term in
Section 6 of the Indemnification Agreement.
2
<PAGE>
"DEPOSITOR SALE AGREEMENT" means the Loan Sale Agreement dated as of
June 1, 1999 between the Depositor and the Issuer as the same may be amended and
supplemented from time to time in accordance with the terms thereof.
"EVENT OF DEFAULT" means any event of default specified in Section 5.01
hereof.
"FINANCIAL STATEMENTS" means, with respect to RBMG, the Servicer, the
Company and the Sub-Servicer, the balance sheets and the statements of income,
retained earnings and cash flows and the notes thereto which have been provided
to the Insurer.
"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policy.
"FUNDING CO. SALE AGREEMENT" means the Loan Sale Agreement dated as of
June 1, 1999 between Funding Co. and the Depositor as the same may be amended
and supplemented from time to time in accordance with the terms thereof.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated
as of June 1, 1999, between the Insurer, RBMG, the Sub-Servicer, the Depositor,
First Union and the Underwriter as the same may be amended or supplemented from
time to time in accordance with the terms thereof.
"INDENTURE TRUSTEE" means The Bank of New York, a New York banking
corporation, as Indenture Trustee under the Indenture, and any successor to the
Indenture Trustee under the Indenture.
"INSURED PAYMENT" means a payment by the Insurer under the Policy.
"INSURER INFORMATION" means the information set forth in the Offering
Document under the caption "THE INSURANCE POLICY AND THE NOTE INSURER"
(excluding the information under the sub-caption "--CREDIT ENHANCEMENT DOES NOT
APPLY TO PREPAYMENT RISK"), or in the financial statements of the Insurer,
including any information in any amendment or supplement to the Offering
Document furnished by the Insurer in writing expressly for use therein that
amends or supplements such information.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"LATE PAYMENT RATE" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
3
<PAGE>
"LIABILITIES" shall have the meaning ascribed to such term in Section
3.04(a) hereof.
"LOSSES" means (i) any actual out-of-pocket loss paid by the Insurer or
its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term is
used in the Securities Act) of any of the foregoing, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"MANAGEMENT AGREEMENT" means the Management Agreement dated as of June
1, 1999 by and among the Issuer, RBMG, as Manager, and the Company, as Back-up
Manager, as the same may be amended and supplemented from time to time in
accordance with the terms thereof.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"MOODY'S" means Moody's Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized rating agency
designated by the Insurer.
"OBLIGOR" means the original obligor under each Mortgage Loan,
including any guarantor of such obligor and their respective successors.
"OFFERING DOCUMENT" means the Prospectus dated November 10, 1998 and
the Prospectus Supplement of the Issuer in respect of the Obligations (and any
amendment or supplement thereto) and any other offering document in respect of
the Obligations prepared by the Servicer, RBMG, the Company, the Issuer, the
Sub-Servicer or the Depositor that makes reference to the Policy.
"OPINION FACTS AND ASSUMPTIONS" means the facts and assumptions
contained in the insolvency opinions dated June 7, 1999 by Graham & James LLP
under the heading "Assumptions of Fact" insofar as they relate to RBMG, the
Company and Funding Co. and the facts and assumptions contained in the
insolvency opinion dated June 7, 1999 by Dewey Ballantine LLP insofar as they
relate to the Depositor.
"OWNER TRUSTEE" means Wilmington Trust Company, as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"OWNERS" means registered holders of Obligations.
4
<PAGE>
"PERSON" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
limited liability company, partnership or other organization or entity (whether
governmental or private).
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement dated
June 2, 1999 with respect to the Obligations.
"RBMG INFORMATION" shall have the meaning assigned to such term in
Section 2.01(k) hereof.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-3
of the Depositor (No. 333-64775) relating to the Offered Obligations, and any
pre- and post-effective amendment thereto, including the Prospectus, the
Prospectus Supplement and all exhibits thereto.
"RESIDUAL HOLDER" shall have the meaning ascribed to the term
"Certificateholder" in the Trust Agreement.
"SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"SERVICING AGREEMENT" means the Servicing Agreement dated as of June 1,
1999 by and among the Servicer, the Issuer and the Indenture Trustee as the same
may be amended or supplemented from time to time in accordance with the terms
thereof.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"SUB-SERVICER INFORMATION" shall have the meaning assigned to such term
in Section 2.04(k) hereof.
"SUB-SERVICING AGREEMENT" means the Sub-Servicing Agreement dated as of
June 1, 1999 between the Servicer and the Sub-Servicer as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"TERM OF THE INSURANCE AGREEMENT" shall be determined as provided in
Section 4.01 hereof.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
5
<PAGE>
"TRANSACTION DOCUMENTS" means this Insurance Agreement, the Commitment,
the Offering Document, the Obligations, the Indemnification Agreement, the
Indenture, the Management Agreement, the Custodial Agreement, the Servicing
Agreement, the Sub-Servicing Agreement, the Contribution Agreement, the Company
Sale Agreement, the Funding Co. Sale Agreement, the Depositor Sale Agreement,
the Trust Agreement, the Cap Agreement and the Underwriting Agreement.
"TRUST AGREEMENT" means the Deposit Trust Agreement dated as of June 1,
1999 between the Depositor, the Owner Trustee and the Indenture Trustee, as
trust paying agent as the same may be amended and supplemented in accordance
with the terms thereof.
"TRUST ESTATE" means the trust estate created pursuant to the
Indenture.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"UNDERWRITER" means First Union Capital Markets Corp.
"UNDERWRITER INFORMATION" shall have the meaning ascribed to such term
in Section 3 of the Indemnification Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement between the
Underwriter and the Depositor with respect to the offer and sale of the
Obligations, as the same may be amended from time to time.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATION AND WARRANTIES OF RBMG, THE SERVICER, THE
COMPANY AND FUNDING CO. RBMG, the Servicer, the Company and Funding Co.
represent, warrant and covenant as of the Date of Issuance, each as to those
matters relating to itself, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. RBMG, the Servicer,
the Company and Funding Co. are each a corporation, duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of RBMG, the Servicer, the Company
and Funding Co. is duly qualified to do business, is in good standing
and has obtained all licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its
business as currently conducted and as described in the Offering
Document and the performance of its obligations under the Transaction
Documents, in each jurisdiction in which the failure to be so qualified
or to obtain such approvals would render any Transaction Document
unenforceable in any respect or would have a material adverse effect
upon the Transaction, the Owners or the Insurer.
6
<PAGE>
(b) POWER AND AUTHORITY. Each of RBMG, the Servicer, the
Company and Funding Co. has all necessary corporate power and authority
to conduct its business as currently conducted and, as described in the
Offering Document, to execute, deliver and perform its obligations
under the Transaction Documents and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by RBMG, the Servicer, the Company and
Funding Co. have been duly authorized by all necessary corporate action
and do not require any additional approvals or consents, or other
action by or any notice to or filing with any Person, including,
without limitation, any governmental entity or RBMG's, the Servicer's,
the Company's or Funding Co.'s stockholders, which have not previously
been obtained or given by RBMG, the Servicer, the Company or Funding
Co.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents by RBMG, the Servicer, the Company or Funding
Co., the consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of incorporation
or bylaws of RBMG, the Servicer, the Company or Funding Co. or
any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to RBMG, the Servicer, the Company or Funding
Co. or any of their material properties, including regulations
issued by an administrative agency or other governmental
authority having supervisory powers over RBMG, the Servicer,
the Company or Funding Co.;
(ii) constitutes a default by RBMG, the Servicer, the
Company or Funding Co. under or a breach of any material
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which RBMG, the Servicer, the
Company or Funding Co. is a party or by which any of its or
their respective properties, which are individually or in the
aggregate material to RBMG, the Servicer, the Company or
Funding Co., is or may be bound or affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of RBMG, the Servicer, the
Company or Funding Co., except as contemplated by the
Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting RBMG, the Servicer, the
Company, Funding Co. or any of its or their subsidiaries, or any
properties or rights of RBMG, the Servicer, the Company, Funding Co. or
any of its or their subsidiaries, pending or, to RBMG's, the
Servicer's, the Company's or Funding
7
<PAGE>
Co.'s knowledge after reasonable inquiry, threatened, which, in any
case, could reasonably be expected to result in a Material Adverse
Change with respect to RBMG, the Servicer, the Company or Depositor.
(f) VALID AND BINDING OBLIGATIONS. The Obligations, when
executed, authenticated and issued in accordance with the Indenture,
and the Transaction Documents (other than the Obligations), when
executed and delivered by RBMG, the Servicer, the Company and Funding
Co., will constitute the legal, valid and binding obligations of RBMG,
the Servicer, Funding Co. and the Issuer, as applicable, enforceable in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. None of
RBMG, the Servicer, the Company or Funding Co. will at any time in the
future deny that the Transaction Documents constitute the legal, valid
and binding obligations of RBMG, the Servicer, Funding Co., the Company
or the Issuer, as applicable.
(g) FINANCIAL STATEMENTS. The Financial Statements of RBMG,
the Servicer and Funding Co., copies of which have been furnished to
the Insurer, (i) are, as of the dates and for the periods referred to
therein, complete and correct in all material respects, (ii) present
fairly the financial condition and results of operations of RBMG, the
Servicer and Funding Co. as of the dates and for the periods indicated
and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein
(subject as to interim statements to normal year-end adjustments).
Since the date of the most recent Financial Statements, there has been
no Material Adverse Change in respect of RBMG, the Servicer or Funding
Co. Except as disclosed in the Financial Statements, none of RBMG, the
Servicer or Funding Co. are subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material
possibility of causing a Material Adverse Change in respect of RBMG,
the Servicer or Funding Co.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by RBMG, the Servicer, the
Company or Funding Co. in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to any of
them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to RBMG, the Servicer, the Company
or Funding Co. None of RBMG, the Servicer, the Company or Funding Co.
are in breach of or in default under any applicable law or
administrative regulation of its respective jurisdiction of
incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which RBMG, the Servicer, the Company or Funding Co. is a
party or is otherwise subject which, if enforced, would have a material
adverse effect on the ability of RBMG, the Servicer, the Company or
8
<PAGE>
Funding Co., as the case maybe, to perform its respective obligations
under the Transaction Documents.
(i) TAXES. RBMG, the Servicer, the Company, Funding Co. and
RBMG's, the Servicer's, the Company's and Funding Co.'s parent company
or companies have filed prior to the date hereof all federal and state
tax returns that are required to be filed and paid all taxes, including
any assessments received by them that are not being contested in good
faith, to the extent that such taxes have become due, except for any
failures to file or pay that, individually or in the aggregate, would
not result in a Material Adverse Change with respect to RBMG, the
Servicer, the Company or Depositor.
(j) ACCURACY OF INFORMATION. Neither the Transaction
Documents, nor other information relating to the Mortgage Loans, the
operations of RBMG, the Servicer, the Company or Funding Co. (including
servicing or origination of loans) or the financial condition of RBMG,
the Servicer, the Company or Funding Co. (collectively, the
"Documents"), as amended, supplemented or superseded, furnished to the
Insurer by RBMG, the Servicer, the Company or Funding Co. contain any
statement of a material fact by RBMG, the Servicer, the Company or
Depositor which was untrue or misleading in any material adverse
respect when made. None of RBMG, the Servicer, the Company or Funding
Co. has any knowledge of circumstances that could reasonably be
expected to cause a Material Adverse Change with respect to RBMG, the
Servicer, the Company or Funding Co. Since the furnishing of the
Documents, there has been no change nor any development or event
involving a prospective change known to RBMG, the Servicer, the Company
or Funding Co. that would render any of the Documents untrue or
misleading in a material respect.
(k) COMPLIANCE WITH SECURITIES LAWS. The information in the
Offering Document, under the headings "SUMMARY--PARTIES--RBMG or
Resource Bancshares Mortgage Group, Inc.," "SUMMARY--MORTGAGE LOAN
POOL," "DESCRIPTION OF THE MORTGAGE POOL," "RBMG," "RBMG FUNDING CO."
and "SERVICING OF THE MORTGAGE LOANS" (other than information under the
sub-heading "--THE SUB-SERVICER") (collectively, the "RBMG
Information") is true and correct in all material respects and does not
contain any untrue statement of a fact that is material or omit to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(l) TRANSACTION DOCUMENTS. Each of the representations and
warranties of RBMG, the Servicer, the Company and Funding Co. contained
in the Transaction Documents is true and correct in all material
respects, and RBMG, the Servicer, the Company and Funding Co. hereby
make each such representation and warranty to, and for the benefit of,
the Insurer as if the same were set forth in full herein.
(m) SOLVENCY. RBMG, the Servicer, the Company and Funding Co.
are solvent and will not be rendered insolvent by the Transaction and,
after giving effect to the
9
<PAGE>
Transaction, none of RBMG, the Servicer, the Company or Funding Co.
will be left with an unreasonably small amount of capital with which to
engage in its business, nor does RBMG, the Servicer, the Company or
Funding Co. intend to incur, or believe that it has incurred, debts
beyond its ability to pay as they mature. None of RBMG, the Servicer,
the Company or Funding Co. contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment
of a receiver, liquidator, conservator, trustee or similar official in
respect of RBMG, the Servicer, the Company or Funding Co. or any of
their assets.
(n) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of RBMG is located in Columbia, South Carolina, the principal
place of business of the Servicer is located in Columbia, South
Carolina, the principal place of business of Funding Co. is located in
Las Vegas, Nevada and the principal place of business of the Company is
located in Las Vegas, Nevada.
(o) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and
Assumptions insofar as they relate to RBMG, the Company and Funding Co.
are true and correct as of the Date of Issuance.
Section 2.02. AFFIRMATIVE COVENANTS OF RBMG, THE SERVICER, THE COMPANY
AND FUNDING CO. RBMG, the Servicer, the Company and Funding Co. hereby agree
that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. RBMG, the
Servicer, the Company and Funding Co. shall not be in default under the
Transaction Documents and shall comply with all material requirements
of any law, rule or regulation applicable to it. None of RBMG, the
Servicer, the Company or Funding Co. shall agree to any amendment to or
modification of the terms of any Transaction Documents unless the
Insurer shall have given its prior written consent, which consent will
not be unreasonably withheld.
(b) CORPORATE EXISTENCE. RBMG, its successors and assigns, the
Servicer, its successors and assigns, the Company, its successors and
assigns and Funding Co., its successors and assigns, shall maintain
their corporate existence and shall at all times continue to be duly
organized under the laws of its respective jurisdiction of
incorporation and duly qualified and duly authorized (as described in
subsections 2.01(a), (b) and (c) hereof) and shall conduct its business
in accordance with the terms of its certificate or articles of
incorporation and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER
INFORMATION. RBMG, the Servicer, the Company and Funding Co. shall keep
or cause to be kept in reasonable detail books and records of account
of their assets and business, including, but not limited to, books and
records relating to the Transaction. The Servicer, RBMG and the Company
shall furnish or cause to be furnished to the Insurer:
10
<PAGE>
(i) ANNUAL FINANCIAL STATEMENTS. As soon as
available, and in any event within 120 days after the close of
each fiscal year of the Servicer and RBMG (and the Company in
the event that the Company prepares financial statements which
are not consolidated with RBMG), the audited consolidated
balance sheets of the Servicer and RBMG (and the Company in
the event that the Company prepares financial statements which
are not consolidated with RBMG) and their subsidiaries as of
the end of such fiscal year and the related audited
consolidated statements of income, changes in shareholders'
equity and cash flows for such fiscal year, all in reasonable
detail and stating in comparative form the respective figures
for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied
by the audit opinion of the Servicer's and RBMG's (and the
Company's, in the event that the Company prepares financial
statements which are not consolidated with RBMG) independent
accountants (which shall be a nationally recognized
independent public accounting firm) and by the certificate
specified in Section 2.02(e) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within 90 days after each of the
first three fiscal quarters of each fiscal year of the
Servicer and RBMG (and the Company in the event that the
Company prepares financial statements which are not
consolidated with RBMG), the unaudited consolidated balance
sheets of the Servicer and RBMG (and the Company in the event
that the Company prepares financial statements which are not
consolidated with RBMG) and their subsidiaries as of the end
of such fiscal quarter and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash
flows for such fiscal quarter, all in reasonable detail and
stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.02(e) hereof.
(iii) INITIAL AND CONTINUING REPORTS. On or before
the Closing Date, the Servicer will deliver or cause to be
delivered to the Insurer a copy of the magnetic tape to be
delivered to the Indenture Trustee on the Closing Date setting
forth as to each Mortgage Loan, the information required under
the definition of "Mortgage Loan Schedule" in Section 1.01 of
the Indenture. After the Closing Date, the Servicer shall
deliver, or shall cause the Sub-Servicer to deliver, to the
Insurer not later than 12:00 noon, New York City time, on the
Business Day following each Determination Date the report
required by Section 3.01 of the Servicing Agreement.
(iv) COMPUTER DISKETTE. Beginning in September 1999,
the Servicer shall deliver, or cause the Sub-Servicer to
deliver, to the Insurer on a quarterly basis, a computer
diskette containing a quarterly summary of the information
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provided to the Insurer pursuant to clause (iii) of this
subsection 2.02(c) and also containing information similar to
the information provided in the Mortgage Loan Schedule
delivered to the Indenture Trustee pursuant to the Indenture
and described in Schedule I of the Indenture.
(v) CERTAIN INFORMATION. Upon the reasonable request
of the Insurer, RBMG, the Servicer, the Company and Funding
Co. shall promptly provide copies of any requested proxy
statements, financial statements, reports and registration
statements which RBMG, the Servicer, the Company or Funding
Co. files with, or delivers to, the Commission or any national
securities exchange.
(vi) OTHER INFORMATION. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by RBMG, the Servicer,
the Company or Funding Co. pursuant to the terms of the
Indenture or the Servicing Agreement and, promptly upon
request, such other data as the Insurer may reasonably
request.
All financial statements specified in clause (i) of this
subsection 2.02(c) shall be furnished in consolidated form for RBMG and its
subsidiaries in the event RBMG shall consolidate its financial statements with
its subsidiaries, and for the Servicer and its subsidiaries in the event the
Servicer shall consolidate its financial statements with its subsidiaries unless
the Servicer's financial statements are consolidated with those of RBMG.
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports and other
information delivered by RBMG, the Servicer, the Company or Funding Co. pursuant
to this subsection 2.02(c) to the extent provided in subsection 2.02(f) hereof.
(d) RBMG shall deliver to the Insurer, concurrently with the
delivery of the financial statements required pursuant to subsection 2.02(c)(i)
and (ii) hereof and on any other date of calculation, a certificate setting
forth RBMG's net worth as determined in accordance with Section 5.01(xi) of the
Servicing Agreement. RBMG shall provide to the Insurer notice of, and conformed
copies of (i) any amendment to RBMG's net worth covenant in the Third Amended
and Restated Secured Revolving/Term Credit Agreement (the Secured Facility),
dated as of July 28, 1998, among RBMG, The Bank of New York, as agent and
collateral agent, and certain other banks, and (ii) any credit warehouse
facility or facilities entered into by RBMG that replaces the Secured Facility
or any replacement facility, and any amendments thereto. RBMG shall provide
immediate notice to the Insurer at any time RBMG's net worth is less than the
minimum net worth required under the Secured Facility or any replacement
facility.
(e) COMPLIANCE CERTIFICATE. The Servicer, RBMG and the Company
shall deliver to the Insurer, concurrently with the delivery of the financial
statements required pursuant to subsection 2.02(c)(i) and (ii) hereof, one or
more certificates signed by an
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officer of the Servicer, an officer of RBMG and an officer of the Company
authorized to execute such certificates on behalf of the Servicer, RBMG and the
Company stating that:
(i) in the event that the Sub-Servicing Agreement has
been terminated, a review of the Servicer's performance under
the Transaction Documents during such period has been made
under such officer's supervision;
(ii) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or Event of Default has
occurred, specifying the nature thereof and the steps, if any,
being taken to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such
Default or Event of Default relates;
(iii) the attached financial statements submitted in
accordance with subsection 2.02(c)(i) or (ii) hereof, as the
case may be, are complete and correct in all material respects
and present fairly the financial condition and results of
operations of the Servicer, RBMG and the Company as of the
dates and for the periods indicated, in accordance with
generally accepted accounting principles consistently applied;
and
(iv) in the event that the Sub-Servicing Agreement
has been terminated, the Servicer has in full force and effect
a blanket fidelity bond (or direct surety bond) and an errors
and omissions insurance policy in accordance with the terms
and requirements of Section 2.13 of the Servicing Agreement.
(f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND
ACCOUNTANTS. On an annual basis, or upon the occurrence of a
Material Adverse Change, the Servicer, RBMG and the Company
shall, upon the reasonable request of the Insurer, permit the
Insurer or its authorized agents:
(i) to inspect the books and records of the Servicer,
RBMG and the Company as they may relate to the Obligations,
the obligations of the Servicer, RBMG and the Company under
the Transaction Documents, and the Transaction;
(ii) to discuss the affairs, finances and accounts of
the Servicer, RBMG or of the Company with the chief operating
officer and the chief financial officer of the Servicer, RBMG
or of the Company; and
(iii) with the Servicer's, RBMG's or the Company's
consent, as applicable, which consent shall not be
unreasonably withheld, to discuss the affairs, finances and
accounts of the Servicer, RBMG or of the Company with the
Servicer's, RBMG's or the Company's independent accountants,
provided that an officer of the Servicer, RBMG or the Company
shall have the right to be present during such discussions.
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Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of RBMG or the Servicer. The books and records of RBMG and the Servicer
shall be maintained at the address of RBMG or the Servicer, as
applicable, designated herein for receipt of notices, unless RBMG or
the Servicer shall otherwise advise the parties hereto in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter of
which it becomes aware through such inspections or discussions (unless
readily available from public sources), except as may be otherwise
required by regulation, law or court order or requested by appropriate
governmental authorities or as necessary to preserve its rights or
security under or to enforce the Transaction Documents, provided that
the foregoing shall not limit the right of the Insurer to make such
information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
(g) NOTICE OF MATERIAL EVENTS. RBMG, the Servicer, the Company
and Funding Co. shall be obligated (which obligation shall be satisfied
as to each if performed by RBMG, the Servicer, the Company or Funding
Co.) promptly to inform the Insurer in writing of the occurrence of any
of the following to the extent any of the following relate to it:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against RBMG, the Servicer, the Company or
Funding Co. that (A) could be required to be disclosed to the
Commission or to RBMG's, the Servicer's, the Company's or
Funding Co.'s shareholders or (B) could result in a Material
Adverse Change with respect to RBMG, the Servicer, the Company
or Funding Co., or the promulgation of any proceeding or any
proposed or final rule which would result in a Material
Adverse Change with respect to RBMG, the Servicer, the Company
or Funding Co.;
(ii) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation in any federal, state or local court or
before any arbitration board, or any such proceeding
threatened by any government agency, which, if adversely
determined, would have a material adverse effect on the
Issuer, the Owners or the Insurer;
(iii) any change in the location of RBMG's, the
Servicer's, the Company's or Funding Co.'s principal offices
or any change in the location of RBMG's, the Company's or
Funding Co.'s books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
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(v) the commencement of any proceedings by or against
RBMG, the Servicer, the Company or Funding Co. under any
applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall
have been, or may be, appointed or requested for RBMG, the
Servicer, the Company or Funding Co. or any of its or their
assets; or
(vi) the receipt of notice that (A) RBMG, the
Servicer, the Company or Funding Co. is being placed under
regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of RBMG's,
the Servicer's, the Company's or Funding Co.'s business is to
be, or may be suspended or revoked, or (C) RBMG, the Servicer,
the Company or Funding Co. is to cease and desist any
practice, procedure or policy employed by RBMG, the Servicer,
the Company or Funding Co. in the conduct of its business, and
such cessation may result in a Material Adverse Change with
respect to RBMG, the Servicer, the Company or Funding Co.
(h) FINANCING STATEMENTS AND FURTHER ASSURANCES. RBMG will
cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Indenture Trustee in the Trust Estate. RBMG, the
Servicer, the Company and Funding Co. shall, upon the request of the
Insurer, from time to time, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, within ten days of such
request, such amendments hereto and such further instruments and take
such further action as may be reasonably necessary to effectuate the
intention, performance and provisions of the Transaction Documents. In
addition, each of RBMG, the Servicer, the Company and Funding Co. agree
to cooperate with S&P and Moody's in connection with any review of the
Transaction that may be undertaken by S&P and Moody's after the date
hereof and to provide all information reasonably requested by S&P or
Moody's.
(i) MAINTENANCE OF LICENSES. RBMG, the Servicer, the Company
and Funding Co., respectively, or any successors thereof shall maintain
or cause to be maintained all licenses, permits, charters and
registrations which are material to the conduct of its business.
(j) REDEMPTION OF OBLIGATIONS. RBMG, the Servicer, the Company
and Funding Co. shall instruct the Indenture Trustee, upon redemption
or payment of all of the Obligations pursuant to the Indenture or
otherwise, to furnish to the Insurer a notice of such redemption and,
upon a redemption or payment of all of the Obligations, to surrender
the Policy to the Insurer for cancellation.
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(k) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Obligations shall clearly disclose that the Policy is
not covered by the property/casualty insurance security fund specified
in Article 76 of the New York Insurance Law.
(l) SERVICING OF MORTGAGE LOANS; ADMINISTRATION. The Servicer,
the Company and RBMG shall perform such actions with respect to the
Mortgage Loans and note administration as are required by or provided
in the Indenture, the Contribution Agreement or the Management
Agreement. The Servicer and RBMG will provide the Insurer with written
notice of any change or amendment to any Transaction Document as
currently in effect.
(m) MAINTENANCE OF TRUST. On or before each June 1 beginning
in 2000, so long as any of the Obligations are outstanding, RBMG shall
furnish to the Insurer and the Indenture Trustee an officers'
certificate either stating that such action has been taken with respect
to the recording, filing, rerecording and refiling of any financing
statements and continuation statements as is necessary to maintain the
interest of the Indenture Trustee created by the Indenture with respect
to the Trust Estate and reciting the details of such action or stating
that no such action is necessary to maintain such interests. Such
officers' certificate shall also describe the recording, filing,
rerecording and refiling of any financing statements and continuation
statements that will be required to maintain the interest of the
Indenture Trustee in the Trust Estate until the date such next
officers' certificate is due.
(n) CLOSING DOCUMENTS. RBMG and Funding Co. shall use
reasonable efforts to provide or cause to be provided to the Insurer a
bound volume or volumes of the Transaction Documents and an executed
original copy of each document executed in connection with the
Transaction within 60 days after the date of closing. Upon the request
of the Insurer, RBMG and Funding Co. shall use reasonable efforts to
provide or cause to be provided to the Insurer a copy of each of the
Transaction Documents on computer diskette in a format acceptable to
the Insurer.
(o) PREFERENCE PAYMENTS. With respect to any Preference Amount
(as defined in the Policy), the Servicer shall provide to the Insurer
upon the request of the Insurer:
(i) a certified copy of the final nonappealable order
of a court having competent jurisdiction ordering the recovery
by a trustee in bankruptcy as voidable preference amounts
included in previous distributions under Section 8.02(c) or
Section 5.07 of the Indenture to any Owner pursuant to the
United States Bankruptcy Code, 11 U.S.C. ss.ss. 101 et seq.,
as amended (the "Bankruptcy Code");
(ii) an opinion of counsel reasonably satisfactory to
the Insurer, and upon which the Insurer shall be entitled to
rely, stating that such order is final and is not subject to
appeal; and
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(iii) an assignment in such form as reasonably
required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Servicer, the Sub-Servicer, the
Indenture Trustee and any Owner relating to or arising under
the Mortgage Loan against the debtor which made such
preference payment or otherwise with respect to such
preference amount; and
(iv) appropriate instruments to effect (when executed
by the affected party) the appointment of the Insurer as agent
for the Indenture Trustee and any owner in any legal
proceeding relating to such preference payment being in a form
satisfactory to the Insurer.
(p) YEAR 2000 PROGRAM. In the event that the Sub-Servicing
Agreement has been terminated, the Servicer will have taken, by July 1,
1999, substantially all steps necessary and appropriate to prevent any
problems in its computer and information systems arising from or in
connection with the information processing challenges associated with
the Year 2000, and will provide to the Insurer such information and
reports as the Insurer may reasonably request from time to time with
respect to such steps as have or will be taken with respect thereto.
Section 2.03. NEGATIVE COVENANTS OF RBMG, THE SERVICER, THE
COMPANY AND FUNDING CO. RBMG, the Servicer, the Company and Funding Co.
hereby agree that during the Term of the Insurance Agreement, unless
the Insurer shall otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. None of RBMG, the Servicer, the
Company or Funding Co. shall take any action, or fail to take any
action, if such action or failure to take action may result in a
material adverse change as described in clause (ii) of the definition
of Material Adverse Change with respect to RBMG, the Servicer, the
Company or Funding Co., or may interfere with the enforcement of any
rights of the Insurer under or with respect to the Transaction
Documents. RBMG, the Servicer, the Company or Funding Co. shall give
the Insurer written notice of any such action or failure to act on the
earlier of: (i) the date upon which any publicly available filing or
release is made with respect to such action or failure to act or (ii)
promptly prior to the date of consummation of such action or failure to
act. RBMG, the Servicer, the Company and Funding Co. shall furnish to
the Insurer all information requested by it that is reasonably
necessary to determine compliance with this subsection (a).
(b) ADVERSE SELECTION PROCEDURE. RBMG, the Servicer, the
Company and Funding Co. have not and shall not use any adverse
selection procedure in selecting Mortgage Loans to be transferred to
the Indenture Trustee from the outstanding mortgage loans that qualify
under the Indenture for inclusion in the Trust.
(c) WAIVER, AMENDMENTS, ETC. None of RBMG, the Servicer, the
Company or Funding Co. shall waive, modify or amend, or consent to any
waiver, modification or
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amendment of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the Insurer.
(d) MORTGAGE LOAN AGREEMENTS; CHARGE-OFF POLICY. Except as
otherwise permitted in the Indenture and the Servicing Agreement, RBMG,
the Servicer, the Company and Funding Co. shall not alter or amend any
Mortgage Loan, their respective collection policies or their respective
charge-off policies in a manner that materially adversely affects the
Insurer unless the Insurer shall have previously given its consent,
which consent shall not be withheld unreasonably.
Section 2.04. REPRESENTATION AND WARRANTIES OF THE
SUB-SERVICER. The Sub-Servicer represents, warrants and covenants as of
the Date of Issuance as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Sub-Servicer is
duly organized, validly existing and in good standing as a federal
savings bank under the laws of the United States. The Sub-Servicer is
duly qualified to do business, is in good standing and has obtained all
licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and as described in the Offering Document and the performance
of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction,
the Owners or the Insurer.
(b) POWER AND AUTHORITY. The Sub-Servicer has all necessary
corporate power and authority to conduct its business as currently
conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents and
to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by the Sub-Servicer have been duly
authorized by all necessary corporate action and does not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Sub-Servicer's stockholders, which have not
previously been obtained or given by the Sub-Servicer.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents by the Sub-Servicer, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the charter or bylaws of the
Sub-Servicer or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently
in effect having applicability to the Sub-Servicer or any of
its material properties,
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including regulations issued by an administrative agency or
other governmental authority having supervisory powers over
the Sub-Servicer;
(ii) constitutes a default by the Sub-Servicer under
or a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Sub-Servicer is a party or by which any of its properties,
which are individually or in the aggregate material to the
Sub-Servicer, is or may be bound or affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of the Sub-Servicer, except
as contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Sub-Servicer or any of
its subsidiaries, or any properties or rights of the Sub-Servicer or
any of its subsidiaries, pending or, to the Sub-Servicer's knowledge
after reasonable inquiry, threatened, which, in any case, could
reasonably be expected to result in a Material Adverse Change with
respect to the Sub-Servicer.
(f) VALID AND BINDING OBLIGATIONS. The Transaction Documents
(other than the Obligations), when executed and delivered by the
Sub-Servicer, will constitute the legal, valid and binding obligations
of the Sub-Servicer, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and public
policy considerations as to rights of indemnification for violations of
federal securities laws. The Sub-Servicer will not at any time in the
future deny that the Transaction Documents constitute the legal, valid
and binding obligations of the Sub-Servicer.
(g) FINANCIAL STATEMENTS. The Financial Statements of the
Sub-Servicer, copies of which have been furnished to the Insurer, (i)
are, as of the dates and for the periods referred to therein, complete
and correct in all material respects, (ii) present fairly the financial
condition and results of operations of the Sub-Servicer as of the dates
and for the periods indicated and (iii) have been prepared in
accordance with generally accepted accounting principles consistently
applied, except as noted therein (subject as to interim statements to
normal year-end adjustments). Since the date of the most recent
Financial Statements, there has been no Material Adverse Change in
respect of the Sub-Servicer. Except as disclosed in the Financial
Statements, the Sub-Servicer is not subject to any contingent
liabilities or commitments that, individually or in the aggregate, have
a material possibility of causing a Material Adverse Change in respect
of the Sub-Servicer.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Sub-Servicer in the
conduct of its business violates any
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law, regulation, judgment, agreement, order or decree applicable to it
that, if enforced, could reasonably be expected to result in a Material
Adverse Change with respect to the Sub-Servicer. The Sub-Servicer is
not in breach of or in default under any applicable law or
administrative regulation of any department, division, agency or
instrumentality of the United States or of any state, or any applicable
judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Sub-Servicer is
a party or is otherwise subject which, if enforced, would have a
material adverse effect on the ability of the Sub-Servicer to perform
its respective obligations under the Transaction Documents.
(i) TAXES. The Sub-Servicer and the Sub-Servicer's parent
company or companies have filed prior to the date hereof all federal
and state tax returns that are required to be filed and paid all taxes,
including any assessments received by them that are not being contested
in good faith, to the extent that such taxes have become due, except
for any failures to file or pay that, individually or in the aggregate,
would not result in a Material Adverse Change with respect to the
Sub-Servicer.
(j) ACCURACY OF INFORMATION. Neither the Transaction
Documents, nor other information relating to the Mortgage Loans, the
operations of the Sub-Servicer (including servicing or origination of
loans) or the financial condition of the Sub-Servicer (collectively,
the "Documents"), as amended, supplemented or superseded, furnished to
the Insurer by the Sub-Servicer contain any statement of a material
fact by the Sub-Servicer which was untrue or misleading in any material
adverse respect when made. The Sub-Servicer has no knowledge of
circumstances that could reasonably be expected to cause a Material
Adverse Change with respect to the Sub-Servicer. Since the furnishing
of the Documents, there has been no change nor any development or event
involving a prospective change known to the Sub-Servicer that would
render any of the Documents untrue or misleading in a material respect.
(k) COMPLIANCE WITH SECURITIES LAWS. The information in the
Offering Document set forth under the heading "SERVICING OF THE
MORTGAGE LOANS--THE SUB-SERVICER" (the "Sub-Servicer Information") does
not contain any untrue statement of a material fact and does not omit
to state a material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading.
(l) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Sub-Servicer contained in the Transaction Documents
is true and correct in all material respects, and the Sub-Servicer
hereby makes each such representation and warranty to, and for the
benefit of, the Insurer as if the same were set forth in full herein.
(m) SOLVENCY. The Sub-Servicer is solvent and will not be
rendered insolvent by the Transaction and, after giving effect to the
Transaction, the Sub-Servicer will not be left with an unreasonably
small amount of capital with which to engage in its business,
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nor does the Sub-Servicer intend to incur, or believe that it has
incurred, debts beyond its ability to pay as they mature. The
Sub-Servicer does not contemplate the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment
of a receiver, liquidator, conservator, trustee or similar official in
respect of the Sub-Servicer or any of its assets.
(n) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Sub-Servicer is located in West Palm Beach, Florida.
Section 2.05. AFFIRMATIVE COVENANTS OF THE SUB-SERVICER. The
Sub-Servicer hereby agrees that during the Term of the Insurance Agreement,
unless the Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The
Sub-Servicer shall not be in default under the Transaction Documents
and shall comply with all material requirements of any law, rule or
regulation applicable to it. The Sub-Servicer shall not agree to any
amendment to or modification of the terms of any Transaction Documents
unless the Insurer shall have given its prior written consent.
(b) MAINTENANCE OF EXISTENCE. The Sub-Servicer and its
successors and assigns shall maintain its existence and shall at all
times continue to be duly organized under the laws of the United States
and duly qualified and duly authorized (as described in subsections
2.04(a), (b) and (c) hereof) and shall conduct its business in
accordance with the terms of its charter or bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER
INFORMATION. The Sub-Servicer shall keep or cause to be kept in
reasonable detail books and records of account of their assets and
business, including, but not limited to, books and records relating to
the Transaction. The Sub-Servicer shall furnish to the Insurer, within
30 days of receipt of written request of the Insurer:
(i) ANNUAL FINANCIAL STATEMENTS. The audited
consolidated balance sheets of the Sub-Servicer and its
subsidiaries as of the end of a fiscal year and the related
audited consolidated statements of income, changes in
shareholders' equity and cash flows for such fiscal year, all
in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by the audit opinion of the
Sub-Servicer's independent accountants (which shall be a
nationally recognized independent public accounting firm) and
by a certificate signed by an officer of the Sub-Servicer
authorized to execute such certificate on behalf of the
Sub-Servicer stating that the attached financial statements
are complete and correct in all material respects and present
fairly the financial condition and results of operations of
the Sub-Servicer as of the dates and for the periods
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indicated, in accordance with generally accepted accounting
principles consistently applied..
(ii) QUARTERLY FINANCIAL STATEMENTS. The unaudited
consolidated balance sheets of the Sub-Servicer and its
subsidiaries as of the end of a fiscal quarter and the related
unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for such fiscal quarter,
all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by a certificate signed by an officer
of the Sub-Servicer authorized to execute such certificate on
behalf of the Sub-Servicer stating that the attached financial
statements are complete and correct in all material respects
and present fairly the financial condition and results of
operations of the Sub-Servicer as of the dates and for the
periods indicated, in accordance with generally accepted
accounting principles consistently applied.
(iii) INITIAL AND CONTINUING REPORTS. The
Sub-Servicer shall deliver to the Insurer not later than 12:00
noon, New York City time, on the Business Day following each
Determination Date the report required by Section 3.01 of the
Servicing Agreement.
(iv) COMPUTER DISKETTE. Beginning in September 1999,
the Sub-Servicer will deliver to the Insurer on a quarterly
basis, a computer diskette containing a quarterly summary of
the information provided to the Insurer pursuant to clause
(iii) of this subsection 2.05(c) and also containing
information similar to the information provided in the
Mortgage Loan Schedule delivered to the Indenture Trustee
pursuant to the Indenture and described in Schedule I of the
Indenture.
(v) CERTAIN INFORMATION. Upon the reasonable request
of the Insurer, the Sub-Servicer shall promptly provide copies
of any requested proxy statements, financial statements,
reports and registration statements which the Sub-Servicer
files with, or delivers to, the Commission or any national
securities exchange.
(vi) OTHER INFORMATION. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Sub-Servicer
pursuant to the terms of the Sub-Servicing Agreement and,
promptly upon request, such other data as the Insurer may
reasonably request.
All financial statements specified in clause (i) of this subsection
2.05(c) shall be furnished in consolidated form for the Sub-Servicer and all its
subsidiaries in the event the Sub-Servicer shall consolidate its financial
statements with its subsidiaries.
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The Insurer agrees that it and its agents, accountants and attorneys
shall keep confidential all financial statements, reports and other information
delivered by the Sub-Servicer pursuant to this subsection 2.05(c) to the extent
provided in subsection 2.05(e) hereof.
(d) COMPLIANCE CERTIFICATE. The Sub-Servicer shall deliver to
the Insurer the officer's certificate of compliance pursuant to the
terms of Section 3.9 of the Sub-Servicing Agreement and Section 2.19 of
the Servicing Agreement; provided, however, in the event that S&P
changes or withdraws the Sub-Servicer's designation as a special
servicer for residential mortgages, the Sub-Servicer shall deliver to
the Insurer such officer's certificates within 30 days after the end of
each calendar quarter.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND
ACCOUNTANTS. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Sub-Servicer shall, upon the reasonable request of
the Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the
Sub-Servicer as they may relate to the Obligations, the
obligations of the Sub-Servicer under the Transaction
Documents, and the Transaction;
(ii) to discuss the affairs, finances and accounts of
the Sub-Servicer with the chief operating officer and the
chief financial officer of the Sub-Servicer; and
(iii) with the Sub-Servicer's consent, which consent
shall not be unreasonably withheld, to discuss the affairs,
finances and accounts of the Sub-Servicer with the
Sub-Servicer's independent accountants, provided that an
officer of the Sub-Servicer shall have the right to be present
during such discussions.
Such inspections and discussions shall be conducted upon reasonable
notice and during normal business hours and shall not unreasonably disrupt the
business of the Sub-Servicer. The books and records of the Sub-Servicer shall be
maintained at the address of the Sub-Servicer designated herein for receipt of
notices, unless the Sub-Servicer shall otherwise advise the parties hereto in
writing.
The Insurer agrees that it and its shareholders, directors, agents,
accountants and attorneys shall keep confidential any matter of which it becomes
aware through such inspections or discussions (unless readily available from
public sources), except as may be otherwise required by regulation, law or court
order or requested by appropriate governmental authorities or as necessary to
preserve its rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer to make
such information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
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(f) NOTICE OF MATERIAL EVENTS. The Sub-Servicer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of the
following to the extent any of the following relate to it:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against the Sub-Servicer that (A) is required
to be disclosed to the Commission or to the Sub-Servicer's
shareholders or (B) is likely to result in a Material Adverse
Change with respect to the Sub-Servicer, or the promulgation
of any proceeding or any proposed or final rule which would
result in a Material Adverse Change with respect to the
Sub-Servicer;
(ii) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation in any federal, state or local court or
before any arbitration board, or any such proceeding
threatened by any government agency, which, if adversely
determined, would have a material adverse effect on the
Issuer, the Owners or the Insurer;
(iii) any change in the location of the
Sub-Servicer's principal offices or any change in the location
of the Sub-Servicer's books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or against
the Sub-Servicer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Sub-Servicer or any of its
assets; or
(vi) the receipt of notice that (A) the Sub-Servicer
is being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Sub-Servicer's business is to be, or may be,
suspended or revoked, or (C) the Sub-Servicer is to cease and
desist any practice, procedure or policy employed by the
Sub-Servicer in the conduct of its business, and such
cessation may result in a Material Adverse Change with respect
to the Sub-Servicer.
(h) [RESERVED]
(i) MAINTENANCE OF LICENSES. The Sub-Servicer or any
successors thereof shall maintain or cause to be maintained all
licenses, permits, charters and registrations which are material to the
conduct of its business.
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(j) [RESERVED]
(k) SERVICING OF MORTGAGE LOANS. The Sub-Servicer shall
perform such actions with respect to the Mortgage Loans as are required
by or provided in the Sub-Servicing Agreement. The Sub-Servicer will
provide the Insurer with written notice of any change or amendment to
any Transaction Document to which it is a party as currently in effect.
(l) [RESERVED]
(m) [RESERVED]
(n) YEAR 2000 PROGRAM. On the basis of a comprehensive review
and assessment of the Sub-Servicer's systems and equipment and inquiry
made of Sub-Servicer's material suppliers, vendors and customers, the
Sub-Servicer reasonably believes that the "Year 2000 Problem" (that is,
the inability of computers, as well as embedded microchips in
non-computing devices, to perform properly, including performance of
date-sensitive functions with respect to certain dates prior to and
after December 31, 1999), including costs of remediation, could not
reasonably be expected to result in an Event of Default. The
Sub-Servicer has developed feasible contingency plans adequately to
ensure uninterrupted and unimpaired business operation in the event of
failure of its own or a third party's systems or equipment due to the
Year 2000 problem, including those of vendors, customers and suppliers,
as well as a general failure of or interruption in its communications
and delivery infrastructure. Except for any reprogramming referred to
above, the computer systems of the Sub-Servicer are and, with ordinary
course upgrading and maintenance, will continue for the term of this
Agreement to be, sufficient for the conduct of their business as
currently conducted. The Sub-Servicer will provide to the Insurer such
information and reports as the Insurer may reasonably request from time
to time with respect to such steps as have or will be taken with
respect thereto.
Section 2.06. NEGATIVE COVENANTS OF THE SUB-SERVICER. The Sub-Servicer
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Sub-Servicer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Sub-Servicer or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Sub-Servicer shall give the Insurer written notice of any such action
or failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Sub-Servicer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this subsection (a).
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(b) WAIVER, AMENDMENTS, ETC. The Sub-Servicer shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the Insurer.
(d) MORTGAGE LOAN AGREEMENTS; CHARGE-OFF POLICY. Except as
otherwise permitted in the Sub-Servicing Agreement, the Sub-Servicer
shall not alter or amend any Mortgage Loan, its collection policies or
its charge-off policies in a manner that materially adversely affects
the Insurer unless the Insurer shall have previously given its consent,
which consent shall not be withheld unreasonably.
Section 2.07. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INDENTURE
TRUSTEE. The Indenture Trustee represents and warrants to, as of the Date of
Issuance, and covenants with the other parties hereto as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Indenture Trustee
is a corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Indenture
Trustee is duly qualified to do business, is in good standing and has
obtained all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction,
the Owners or the Insurer.
(b) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by the Indenture Trustee have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Indenture Trustee's stockholders, which have
not previously been obtained or given by the Indenture Trustee.
(c) VALID AND BINDING OBLIGATIONS. The Indenture, the
Servicing Agreement, the Custodial Agreement, the Trust Agreement and
this Insurance Agreement, when executed and delivered by the Indenture
Trustee, will constitute the legal, valid and binding obligations of
the Indenture Trustee, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles. The
Indenture Trustee will not at any time in the future deny that the
Transaction Documents to which it is a party constitute the legal,
valid and binding obligations of the Indenture Trustee.
Section 2.08 REPRESENTATIONS AND WARRANTIES OF THE ISSUER. As of the
date hereof or such other date specified below, the Issuer represents, warrants
and covenants as follows:
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(a) DUE ORGANIZATION AND QUALIFICATION. The Issuer is a
Delaware business trust, duly organized, validly existing and in good
standing under the laws of its jurisdiction. The Issuer is duly
qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents to which
it is a party, in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Transaction
Document to which it is a party unenforceable in any respect or would
have a material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Issuer has all necessary power
and authority to conduct its business as currently conducted and, as
described in the Offering Document, to execute, deliver and perform its
obligations under the Transaction Documents to which it is a party and
to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents to which it is a party by the Issuer has
been duly authorized by all necessary action and does not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity, which have not previously been obtained or given
by the Issuer.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents to which it is a party by the Issuer, the
consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents
to which it is a party:
(i) conflicts with or results in any breach or
violation of any provision of the Trust Agreement or its
Certificate of Trust or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Issuer or any
of its material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Issuer;
(ii) constitutes a default by the Issuer under or a
breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the Issuer
is a party or by which any of its properties, which are
individually or in the aggregate material to the Issuer, is or
may be bound or affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of the Issuer except as
contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting
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the Issuer or any properties or rights of the Issuer pending or, to the
Issuer's knowledge after reasonable inquiry, threatened, which, in any
case, could reasonably be expected to result in a Material Adverse
Change with respect to the Issuer.
(f) VALID AND BINDING OBLIGATIONS. The Obligations, when
executed, authenticated and issued in accordance with the Indenture and
the Trust Agreement, and the Transaction Documents (other than the
Obligations), when executed and delivered by the Issuer, will
constitute the legal, valid and binding obligations of the Issuer
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles and public policy
considerations as to rights of indemnification for violations of
federal securities laws. The Issuer will not at any time in the future
deny that the Transaction Documents or the Obligations constitute the
legal, valid and binding obligations of the Issuer.
(g) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Issuer in the conduct of
its business violates any law, regulation, judgment, agreement, order
or decree applicable to any of them that, if enforced, could reasonably
be expected to result in a Material Adverse Change with respect to the
Issuer.
(h) TAXES. The Issuer has filed prior to the date hereof all
federal and state tax returns that are required to be filed and paid
all taxes, including any assessments received by it that are not being
contested in good faith, to the extent that such taxes have become due,
except for any failures to file or pay that, individually or in the
aggregate, would not result in a Material Adverse Change with respect
to the Issuer.
(i) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Issuer contained in the Transaction Documents is true
and correct in all material respects, and the Issuer hereby makes each
such representation and warranty to, and for the benefit of, the
Insurer as if the same were set forth in full herein; provided that the
remedy for any breach of this paragraph shall be limited to the
remedies specified in the related Transaction Document.
(j) SOLVENCY. The Issuer is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the
Transaction, the Issuer will not be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Issuer intend to incur, or believe that it has incurred, debts beyond
its ability to pay as they mature. The Issuer does not contemplate the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of the Issuer or any of its
assets.
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(k) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Issuer is located in Wilmington, Delaware, and the
principal place of business of the Owner Trustee is located in
Wilmington, Delaware.
Section 2.09. AFFIRMATIVE COVENANTS OF THE ISSUER. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Issuer
shall not be in default under the Transaction Documents and shall
comply with all material requirements of any law, rule or regulation
applicable to it. The Issuer shall not agree to any material amendment
to or modification of the terms of any Transaction Documents unless the
Insurer shall have otherwise consented.
(b) MAINTAIN EXISTENCE. The Issuer, its successors and
assigns, shall maintain its existence and shall at all times continue
to be duly organized under the laws of its respective jurisdiction and
duly qualified and duly authorized and shall conduct its business in
accordance with the terms of its organizational documents.
(c) NOTICE OF MATERIAL EVENTS. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of
the following to the extent any of the following relate to it and to
the extent that it receives actual notice of the occurrence of any of
the following events:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against the Issuer that (A) could be required
to be disclosed to the Commission or to the Owners or (B)
could result in a Material Adverse Change with respect to the
Issuer, or the promulgation of any proceeding or any proposed
or final rule which would result in a Material Adverse Change
with respect to the Issuer;
(ii) any change in the location of the Issuer's or
the Owner Trustee's principal offices or any change in the
location of the Issuer's books and records;
(iii) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(iv) the commencement of any proceedings by or
against the Issuer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Issuer or any of its assets; or
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(v) the receipt of notice that (A) the Issuer is
being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Issuer's business is to be, or may be suspended
or revoked, or (C) the Issuer is to cease and desist any
practice, procedure or policy employed by the Issuer in the
conduct of its business, and such cessation may result in a
Material Adverse Change with respect to the Issuer.
(d) FINANCING STATEMENTS AND FURTHER ASSURANCES. To the extent
provided in the Indenture and the Servicing Agreement, the Issuer will
cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Indenture Trustee in the Trust Estate. The Issuer
shall, upon the request of the Insurer, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, within 15 days of such request, such amendments hereto and
such further instruments and take such further action as may be
reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents to which it is a party. In
addition, the Issuer agrees to cooperate with S&P and Moody's in
connection with any review of the Transaction that may be undertaken by
S&P and Moody's after the date hereof.
(e) MAINTENANCE OF LICENSES. The Issuer, or any successors
thereof, shall maintain all licenses, permits, charters and
registrations which are material to the conduct of its business.
Section 2.10. NEGATIVE COVENANTS OF THE ISSUER. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Issuer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Issuer, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The Issuer
shall give the Insurer written notice of any such action or failure to
act on the earlier of: (i) the date upon which any publicly available
filing or release is made with respect to such action or failure to act
or (ii) promptly prior to the date of consummation of such action or
failure to act. The Issuer shall furnish to the Insurer all information
requested by it that is reasonably necessary to determine compliance
with this paragraph.
(b) WAIVER, AMENDMENTS, ETC. The Issuer shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the material terms, provisions or conditions of the
Transaction Documents without the consent of the Insurer which consent
shall not unreasonably be withheld. Except upon the prior written
consent
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of the Insurer which consent shall not unreasonably be withheld, the
Issuer shall not allow the transfer, modification or amendment, nor
consent to any transfer, modification or amendment of the Certificate
of Trust issued pursuant to the Trust Agreement.
Section 2.11. REPRESENTATION AND WARRANTIES OF THE DEPOSITOR. The
Depositor represents, warrants and covenants as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Depositor is a
corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Depositor is
duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Depositor has all necessary
corporate power and authority to conduct its business as currently
conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents to
which it is a party and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance
of the Transaction Documents by the Depositor have been duly authorized
by all necessary corporate action and do not require any additional
approvals or consents, or other action by or any notice to or filing
with any Person, including, without limitation, any governmental entity
or the Depositor's stockholders, which have not previously been
obtained or given by the Depositor.
(d) NONCONTRAVENTION. Neither the execution and delivery of
the Transaction Documents to which it is a party by the Depositor the
consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of incorporation
or bylaws of the Depositor or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to the
Depositor or any of their material properties, including
regulations issued by an administrative agency or other
governmental authority having supervisory powers over the
Depositor;
(ii) constitutes a default by the Depositor or a
breach of any provision of any material loan agreement,
mortgage, indenture or other material agreement or instrument
to which the Depositor is a party or by which any of its or
their
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respective properties, which are individually or in the
aggregate material to the Depositor, is or may be bound or
affected; or
(iii) results in or requires the creation of any lien
upon or in respect of any assets of the Depositor, except as
contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Depositor, or any of its
subsidiaries, or any properties or rights of the Depositor, or any of
its subsidiaries, pending or, to the Depositor's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably be
expected to result in a Material Adverse Change with respect to the
Depositor.
(f) VALID AND BINDING OBLIGATIONS. The Transaction Documents
to which the Depositor is a party, when executed and delivered by the
Depositor, will constitute the legal, valid and binding obligations of
the Depositor, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles and public policy
considerations as to rights of indemnification for violations of
federal securities laws. The Depositor will not at any time in the
future deny that the Transaction Documents constitute the legal, valid
and binding obligations of the Depositor.
(g) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Depositor in the conduct
of its business violates any law, regulation, judgment, agreement,
order or decree applicable to it that, if enforced, could reasonably be
expected to result in a Material Adverse Change with respect to the
Depositor. The Depositor is not in breach of or in default under any
applicable law or administrative regulation of its jurisdiction of
incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which the Depositor is a party or is otherwise subject
which, if enforced, would have a material adverse effect on the ability
of the Depositor to perform its respective obligations under the
Transaction Documents.
(h) TAXES. The Depositor and the Depositor's parent company
have filed prior to the date hereof all federal and state tax returns
that are required to be filed and paid all taxes, including any
assessments received by it that are not being contested in good faith,
to the extent that such taxes have become due, except for any failures
to file or pay that, individually or in the aggregate, would not result
in a Material Adverse Change with respect to the Depositor.
(i) [RESERVED]
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(j) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
Obligations comply in all material respects with all requirements of
law, including all registration requirements of applicable securities
laws. Without limitation of the foregoing, the Offering Document does
not contain any untrue statement of a material fact and does not omit
to state a material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading; provided, however, that no representation is made with
respect to the Insurer Information, to the Underwriter Information, to
the RBMG Information or to the Sub-Servicer Information. Neither the
offer nor the sale of the Obligations has been or will be in violation
of the Securities Act or any other federal or state securities laws.
The Issuer is not required to be registered as an "investment company"
under the Investment Company Act.
(k) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Depositor contained in the Transaction Documents is
true and correct in all material respects, and the Depositor hereby
makes each such representation and warranty to, and for the benefit of,
the Insurer as if the same were set forth in full herein.
(l) SOLVENCY. The Depositor is solvent and will not be
rendered insolvent by the Transaction and, after giving effect to the
Transaction, the Depositor will not be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Depositor intend to incur, or believe that it has incurred, debts
beyond its ability to pay as they mature. The Depositor does not
contemplate the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of the Depositor or
any of its assets.
(m) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Depositor is located in Charlotte, North Carolina.
(n) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and
Assumptions insofar as they relate to the Depositor are true and
correct as of the Date of Issuance.
Section 2.12. AFFIRMATIVE COVENANTS OF THE DEPOSITOR. The Depositor
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The
Depositor shall not be in default under the Transaction Documents and
shall comply with all material requirements of any law, rule or
regulation applicable to it. The Depositor shall not agree to any
amendment to or modification of the terms of any Transaction Documents
unless the Insurer shall have given its prior written consent, which
consent will not be unreasonably withheld.
(b) CORPORATE EXISTENCE. The Depositor, and its successors and
assigns, shall maintain its corporate existence and shall at all times
continue to be duly organized under
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the laws of its jurisdiction of incorporation and duly qualified and
duly authorized (as described in subsections 2.11(a), (b) and (c)
hereof) and shall conduct its business in accordance with the terms of
its certificate or articles of incorporation and bylaws.
(c) FINANCIAL STATEMENTS. The Depositor shall keep or cause to
be kept in reasonable detail books and records of account of its assets
and business, including, but not limited to, books and records relating
to the Transaction.
(d) THE DEPOSITOR SHAREHOLDER MEETINGS. The Depositor shall
have annual shareholder meetings and at least annual board of director
meetings and shall prepare income and franchise tax returns as
appropriate. The Depositor shall deliver to the Insurer copies of the
minutes of such meetings no later than April 30 of each year and such
tax returns promptly upon filing but in no event later than August 31
of each year, beginning in 1999.
(e) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Obligations shall clearly disclose that the Policy is
not covered by the property/casualty insurance security fund specified
in Article 76 of the New York Insurance Law.
(f) MAINTENANCE OF LICENSES. The Depositor, or any of its
successors shall maintain or cause to be maintained all licenses,
permits, charters and registrations which are material to the conduct
of its business.
Section 2.13. NEGATIVE COVENANTS OF THE DEPOSITOR. The Depositor hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Depositor shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Depositor, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Depositor shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any publicly
available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of
such action or failure to act. The Depositor shall furnish to the
Insurer all information requested by it that is reasonably necessary to
determine compliance with this subsection (a).
(b) ADVERSE SELECTION PROCEDURE. The Depositor has not and
shall not use any adverse selection procedure in selecting Mortgage
Loans to be transferred to the Indenture Trustee from the outstanding
mortgage loans that qualify under the Indenture for inclusion in the
Trust.
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(c) WAIVER, AMENDMENTS, ETC. The Depositor shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the Insurer.
(d) AMENDMENT OF DEPOSITOR'S CERTIFICATE OF INCORPORATION. The
Depositor shall not amend its certificate of incorporation if such
amendment would have an adverse impact on the Transaction without the
Insurer's prior written consent.
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. ISSUANCE OF THE POLICY. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) PAYMENT OF INITIAL BOND INSURER PREMIUM AND EXPENSES. The
Insurer shall have been paid, by RBMG and the Depositor, that portion
of a nonrefundable Bond Insurer Premium payable on the Date of Issuance
and RBMG shall agree to reimburse or pay directly other fees and
expenses identified in Section 3.02 hereof as payable.
(b) TRANSACTION DOCUMENTS. The Insurer shall have received a
fully executed copy of the Commitment and a copy of each of the
Transaction Documents, in form and substance satisfactory to the
Insurer, duly authorized, executed and delivered by each party thereto.
(c) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Insurer shall
have received a copy of (i) the certificate or articles of
incorporation and bylaws of the Servicer, RBMG, the Sub-Servicer, the
Company, Funding Co. and the Depositor and (ii) the resolutions of
RBMG's, the Company's, Funding Co.'s and the Depositor's Board of
Directors authorizing the sale of the Mortgage Loans and (iii) the
execution, delivery and performance by the Servicer, the Issuer, RBMG,
the Sub-Servicer, the Company, Funding Co. and the Depositor of the
Transaction Documents and the transactions contemplated thereby,
certified by the Secretary or an Assistant Secretary of the Servicer,
RBMG, the Sub-Servicer, the Company, Funding Co. and the Depositor
(which certificate shall state that such certificate or articles of
incorporation, bylaws and resolutions are in full force and effect
without modification on the Date of Issuance).
(d) THE CERTIFICATE OF TRUST OF THE ISSUER. The Insurer shall
have received a copy of the Certificate of Trust of the Issuer.
(e) INCUMBENCY CERTIFICATE. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of the Servicer,
RBMG, the Sub-Servicer, the Company, Funding Co., the Indenture Trustee
and the Depositor certifying the names and signatures of the officers
of the Servicer, RBMG, the Sub-Servicer, the Company,
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Funding Co., the Indenture Trustee and the Depositor authorized to
execute and deliver the Transaction Documents and that shareholder
consent to the execution and delivery of such documents is not
necessary.
(f) REPRESENTATIONS AND WARRANTIES; CERTIFICATE. The
representations and warranties of the Servicer, RBMG, the Sub-Servicer,
the Company, Funding Co., the Indenture Trustee and the Depositor set
forth or incorporated by reference in this Insurance Agreement shall be
true and correct as of the Date of Issuance as if made on the Date of
Issuance and the Insurer shall have received a certificate of
appropriate officers of the Servicer, RBMG, the Sub-Servicer, the
Company, Funding Co., the Indenture Trustee and the Depositor to that
effect.
(g) OPINIONS OF COUNSEL.
(i) The general counsel of RBMG and the Servicer
shall have issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of RBMG and the Servicer and
the validity and enforceability of the Transaction Documents
against RBMG and the Servicer. The general counsel of RBMG
shall have issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of Funding Co. and the
Company and the validity and enforceability of the Transaction
Documents against Funding Co. and the Company. The law firm of
Dewey Ballantine LLP shall have issued its favorable opinion,
in form and substance acceptable to the Insurer and its
counsel, regarding the corporate existence and authority of
the Depositor, First Union and the validity and enforceability
of the Transaction Documents against the Depositor.
(ii) The law firm of Graham & James LLP shall have
furnished its opinions, in form and substance acceptable to
the Insurer and its counsel, regarding the sale of the
Mortgage Loans
(iii) The law firm of Dewey Ballantine LLP shall have
furnished its opinions in form and substance acceptable to the
Insurer and its counsel regarding the sale of Mortgage Loans
and the tax treatment of payments on the Obligations under
federal and New York tax laws.
(iv) The Insurer shall have received such other
opinions of counsel, in form and substance reasonably
acceptable to the Insurer and its counsel, addressing such
other matters as the Insurer may reasonably request. Each
opinion of counsel delivered in connection with the
Transaction shall be addressed to and delivered to the
Insurer.
(h) APPROVALS, ETC. The Insurer shall have received true and correct
copies of all approvals, licenses and consents, if any, including, without
limitation, any required
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approval of the shareholders of the Servicer, RBMG, the Sub-Servicer the
Company, Funding Co. and the Depositor, required in connection with the
Transaction.
(i) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall
be pending or threatened before any court or governmental agency in
which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the Transaction Documents or the
consummation of the Transaction.
(j) LEGALITY. No statute, rule, regulation or order shall have
been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
transactions contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.
(k) ISSUANCE OF RATINGS. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes an
investment grade risk by S&P and Moody's, and that the Obligations,
when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(l) NO DEFAULT. No Default or Event of Default shall have
occurred.
(m) ADDITIONAL ITEMS. The Insurer shall have received such
other documents, instruments, approvals or opinions requested by the
Insurer or its counsel as may be reasonably necessary to effect the
Transaction, including, but not limited to, evidence satisfactory to
the Insurer and its counsel that the conditions precedent, if any, in
the Transaction Documents have been satisfied.
(n) CONFORM TO DOCUMENTS. The Insurer and its counsel shall
have determined that all documents, certificates and opinions to be
delivered in connection with the Obligations conform to the terms of
the Transaction Documents.
(o) COMPLIANCE WITH COMMITMENT. All other terms, conditions
and requirements of the Commitment shall have been satisfied.
(p) SATISFACTION OF CONDITIONS OF THE UNDERWRITER AGREEMENT.
All conditions in the Underwriter Agreement relating to the
Underwriter's obligation to purchase the Obligations shall have been
satisfied.
(q) UNDERWRITER AGREEMENT. The Insurer shall have received
copies of each of the documents, and shall be entitled to rely on each
of the documents, required to be delivered to the Underwriter pursuant
to the Underwriter Agreement.
Section 3.02. PAYMENT OF FEES AND BOND INSURER PREMIUM.
(a) LEGAL AND ACCOUNTING FEES. RBMG, the Servicer, the
Company, Funding Co. and the Depositor shall pay or cause to be paid,
on the Date of Issuance, legal fees
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and disbursements incurred by the Insurer in connection with the
issuance of the Policy and any fees of the Insurer's auditors in
accordance with the terms of the Commitment. Any fees of the Insurer's
auditors payable in respect of any amendment or supplement to the
Offering Document or any other Offering Document incurred after the
Date of Issuance shall be paid by RBMG, the Company, Funding Co. and
the Depositor on demand.
(b) BOND INSURER PREMIUM. In consideration of the issuance by
the Insurer of the Policy, the Insurer shall be entitled to receive the
Bond Insurer Premium as and when due in accordance with the terms of
the Commitment (i) in the case of Bond Insurer Premium due on or before
the Date of Issuance, directly from RBMG, the Servicer, the Company,
Funding Co. and the Depositor and (ii) in the case of Bond Insurer
Premium due after the Date of Issuance, FIRST, pursuant to the
Indenture, and SECOND, to the extent the amounts in subclause FIRST are
not sufficient, directly from RBMG. For purposes of the Indenture, the
term "Bond Insurer Premium Rate" shall be based upon the "Premium
Percentage" set forth in paragraph 1(a) of the Commitment. The Bond
Insurer Premium shall be calculated according to paragraph 1(a) of the
Commitment for the amount due on or before the Date of Issuance and
paragraph 1(b) of the Commitment for the amount due on each Payment
Date. The Bond Insurer Premium paid hereunder or under the Indenture
shall be nonrefundable without regard to whether the Insurer makes any
payment under the Policy or any other circumstances relating to the
Obligations or provision being made for payment of the Obligations
prior to maturity. RBMG, the Servicer, the Company, Funding Co., the
Depositor and the Indenture Trustee shall make all payments of Bond
Insurer Premium to be made by them by wire transfer to an account
designated from time to time by the Insurer by written notice to RBMG,
the Servicer, the Company, Funding Co., the Depositor and the Indenture
Trustee.
Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. (a) In
accordance with the priorities established in Section 8.02(c) or Section 5.07,
as applicable, of the Indenture, the Insurer shall be entitled to reimbursement
for any payment made by the Insurer under the Policy, which reimbursement shall
be due and payable on the date that any amount is to be paid pursuant to a
Notice (as defined in the Policy), in an amount equal to the amount to be so
paid and all amounts previously paid that remain unreimbursed, together with
interest on any and all amounts remaining unreimbursed (to the extent permitted
by law, if in respect of any unreimbursed amounts representing interest) from
the date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(b) Notwithstanding anything in subsection 3.03(a) to the
contrary, (i) RBMG and the Company agree to reimburse the Insurer for payments
made under the Policy arising as a result of RBMG's or the Company's failure to
repurchase any Mortgage Loan required to be repurchased pursuant to Section 7 of
the Contribution Agreement, together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect of any
unreimbursed amounts representing interest) from the date such amounts became
due until paid in full (after as well as before judgment), at a rate of interest
equal to the Late Payment Rate,
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(ii) in the event that the Sub-Servicing Agreement is terminated, the Servicer
agrees to reimburse the Bond Insurer for payments made under the Policy, arising
as a result of the Servicer's failure to deposit into the Collection Account or
the Note Account any amount required to be so deposited pursuant to the
Servicing Agreement together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect to any unreimbursed
amounts representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal to the
Late Payment Rate and (iii) the Sub-Servicer agrees to reimburse the Bond
Insurer for payments made under the Policy, arising as a result of the
Sub-Servicer's failure to deposit into the Collection Account (or any similar
account established pursuant to the Sub-Servicing Agreement) or the Note Account
any amount required to be so deposited pursuant to the Sub-Servicing Agreement
together with interest on any and all amounts remaining unreimbursed (to the
extent permitted by law, if in respect to any unreimbursed amounts representing
interest) from the date such amounts became due until paid in full (after as
well as before judgment), at a rate of interest equal to the Late Payment Rate.
(c) RBMG, the Servicer and the Company agree to pay to the Insurer as
follows: any and all charges, fees, costs and expenses that the Insurer may
reasonably pay or incur, including, but not limited to, attorneys' and
accountants' fees and expenses, in connection with (i) any accounts established
to facilitate payments under the Policy to the extent the Insurer has not been
immediately reimbursed on the date that any amount is paid by the Insurer under
the Policy, (ii) the enforcement, defense or preservation of any rights in
respect of any of the Transaction Documents, including defending, monitoring or
participating in any litigation or proceeding (including any insolvency or
bankruptcy proceeding in respect of any Transaction participant or any affiliate
thereof) relating to any of the Transaction Documents, any party to any of the
Transaction Documents, in its capacity as such a party, or the Transaction,
(iii) any amendment, waiver or other action with respect to, or related to, any
Transaction Document, whether or not executed or completed, or (iv) preparation
of bound volumes of the Transaction documents; costs and expenses shall include
a reasonable allocation of compensation and overhead attributable to the time of
employees of the Insurer spent in connection with the actions described in
clause (ii) above, and the Insurer reserves the right to charge a reasonable fee
as a condition to executing any waiver or consent proposed in respect of any of
the Transaction Documents.
(d) The Sub-Servicer agrees to pay to the Insurer as follows: any and
all charges, fees, costs and expenses that the Insurer may reasonably pay or
incur, including, but not limited to, attorneys' and accountants' fees and
expenses in connection with an Event of Default by the Sub-Servicer.
(e) RBMG, the Servicer, the Company, Funding Co. and the Depositor
severally but not jointly, to the extent liable, agree to pay to the Insurer as
follows: interest on any and all amounts described in subsections (b), (c), (f)
and (g) of this Section 3.03 from the date payable or paid by such party until
payment thereof in full, and interest on any and all amounts described in
Section 3.02 hereof from the date due until payment thereof in full, in each
case, payable to the Insurer at the Late Payment Rate per annum. The
Sub-Servicer agrees to pay to the Insurer as follows: interest on any and all
amounts described in subsections (b)(iii), (d), (f)(ii) and (g)(ii) of
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this Section 3.03 from the date payable or paid by such party until payment
thereof in full, payable to the Insurer at the Late Payment Rate per annum.
(f) (i) RBMG, the Servicer, the Company, Funding Co. and the Depositor
severally but not jointly, to the extent liable, agree to pay to the Insurer as
follows: any payments made by the Insurer on behalf of, or advanced to, RBMG,
the Servicer, the Company, Funding Co. or the Depositor, respectively,
including, without limitation, any amounts payable by RBMG, the Servicer, the
Company, Funding Co. or the Depositor pursuant to the Obligations or any other
Transaction Documents.
(ii) The Sub-Servicer agrees to pay to the Insurer as follows:
any payments made by the Insurer on behalf of, or advanced to, the Sub-Servicer,
including, without limitation, any amounts payable by the Sub-Servicer pursuant
to the Transaction Documents to the extent such amounts were required to be paid
or advanced by the Sub-Servicer pursuant to the Transaction Documents.
(g) (i) Following termination of the Indenture pursuant to Section
10.01 or Section 4.01 thereof, RBMG agrees to reimburse the Insurer for any
Insured Payments required to be made pursuant to the Policy subsequent to the
date of such termination.
(ii) Following termination of the Indenture pursuant to
Section 10.01 or Section 5.02 thereof, the Sub-Servicer agrees to reimburse the
Insurer for any Insured Payments required to be made pursuant to the Policy
subsequent to the date of such termination attributable to an Event of Default
by the Sub-Servicer.
All such amounts are to be immediately due and payable without demand.
Section 3.04. INDEMNIFICATION BY RBMG, THE SERVICER, THE COMPANY AND
FUNDING CO.; LIMITATION OF LIABILITY. (a) In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, RBMG, the Servicer, the Company, Funding Co. and any successors
thereto agree to pay, and to protect, indemnify and save harmless, the Insurer
and its officers, directors, shareholders, employees, agents, and each person,
if any, who controls the Insurer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act from and against any
and all claims, Losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or reasonable expenses (including, without
limitation, reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) or obligations whatsoever paid by the
Insurer (herein collectively referred to as "Liabilities") of any nature arising
out of or relating to the transactions contemplated by the Transaction Documents
by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the RBMG Information and the Depositor
Information with respect to information in the Prospectus Supplement
under the headings "SUMMARY--DESCRIPTION OF THE NOTES," "RISK FACTORS"
(other than information under the sub-headings "--Book-Entry
Registration May Reduce the Liquidity of the Notes,"
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"--An Investment in the Notes May Be an Illiquid Investment," and
"--Year 2000 Issue May Adversely Affect The Distribution to
Noteholders"), "DESCRIPTION OF THE NOTES" (other than information under
the sub-heading "--BOOK-ENTRY REGISTRATION AND DEFINITIVE NOTES") and
"CERTAIN PREPAYMENT AND YIELD CONSIDERATIONS" (other than information
under the sub-heading "--WEIGHTED AVERAGE LIFE OF THE NOTES") or in any
amendment or supplement thereto or in any preliminary offering
document, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(ii) to the extent not covered by clause (i) above, any act or
omission of RBMG, the Servicer, the Company or Funding Co., or the
allegation thereof, in connection with the offering, issuance, sale or
delivery of the Obligations other than by reason of false or misleading
information provided by the Insurer in writing for inclusion in the
Offering Document as specified in clause (i) above;
(iii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of RBMG,
the Servicer, the Company or Funding Co.;
(iv) the violation by the Company, Funding Co., the Servicer
or RBMG of any federal or state securities, banking or antitrust laws,
rules or regulations in connection with the issuance, offer and sale of
the Obligations or the transactions contemplated by the Transaction
Documents;
(v) the violation by the Company, Funding Co., the Servicer or
RBMG of any federal or state laws, rules or regulations relating to the
Transaction, including without limitation the maximum amount of
interest permitted to be received on account of any loan of money or
with respect to the Mortgage Loans;
(vi) the breach by the Company, Funding Co., the Servicer or
RBMG of any of its obligations under this Insurance Agreement or any of
the other Transaction Documents; and
(vii) the breach by RBMG, the Servicer, the Company or Funding
Co. of any representation or warranty on the part of RBMG, the
Servicer, the Company or Funding Co. contained in the Transaction
Documents or in any certificate or report furnished or delivered to the
Insurer thereunder.
This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.
(b) RBMG agrees to indemnify the Trust and the Insurer for any and
all Liabilities incurred by the Issuer and the Insurer due to any claim,
counterclaim, rescission, setoff or
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defense asserted by an Obligor under any Mortgage Loan subject to the Federal
Trade Commission regulations provided in 16 C.F.R. Part 433 and under any
Mortgage Loan which is a "mortgage" as such term is defined in 15 U.S.C.
ss.1602(aa).
(c) Any party which proposes to assert the right to be indemnified
under this Section 3.04 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against RBMG, the Servicer, the Company or Funding Co. under this
Section 3.04, notify RBMG, the Servicer, the Company or Funding Co. of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served. In case any action, suit or proceeding shall be brought against any
indemnified party and it shall notify RBMG, the Servicer, the Company or Funding
Co. of the commencement thereof, RBMG, the Servicer, the Company or Funding Co.
shall be entitled to participate in, and, to the extent that it shall wish, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from RBMG, the Servicer, the Company or Funding Co. to such
indemnified party of its election so to assume the defense thereof, RBMG, the
Servicer, the Company or Funding Co. shall not be liable to such indemnified
party for any legal or other expenses other than reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action the defense of which is assumed by RBMG, the
Servicer, the Company or Funding Co. in accordance with the terms of this
subsection (c), but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of counsel by such
indemnified party has been authorized by RBMG, the Servicer, the Company or
Funding Co. RBMG, the Servicer, the Company or Funding Co. shall not be liable
for any settlement of any action or claim effected without its consent.
Section 3.05. INDEMNIFICATION BY SUB-SERVICER; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification or any other rights of
the Insurer pursuant hereto or under law or equity, the Sub-Servicer and any
successors thereto agree to pay, and to protect, indemnify and save harmless,
the Insurer and its officers, directors, shareholders, employees, agents, and
each person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act
from and against any and all claims, Losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or obligations
whatsoever paid by the Insurer (herein collectively referred to as
"Liabilities") of any nature arising out of or relating to the transactions
contemplated by the Transaction Documents by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Sub-Servicer Information or in any
amendment or supplement thereto or in any preliminary offering
document, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading;
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(ii) the misfeasance or malfeasance of, or negligence or theft
committed by, any director, officer, employee or agent of the
Sub-Servicer;
(iii) the violation by the Sub-Servicer of any federal or
state securities, banking or antitrust laws, rules or regulations in
connection with the transactions contemplated by the Transaction
Documents;
(iv) the violation by the Sub-Servicer of any federal or state
laws, rules or regulations relating to the Transaction;
(v) the breach by the Sub-Servicer of any of its obligations
under this Insurance Agreement or any of the other Transaction
Documents; and
(vi) the breach by the Sub-Servicer of any representation or
warranty on the part of the Sub-Servicer contained in the Transaction
Documents or in any certificate or report furnished or delivered to the
Insurer thereunder.
This indemnity provision shall survive the termination of this Insurance
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.
(b) Any party which proposes to assert the right to be indemnified
under this Section 3.05 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against the Sub-Servicer under this Section 3.05, notify the
Sub-Servicer of the commencement of such action, suit or proceeding, enclosing a
copy of all papers served. In case any action, suit or proceeding shall be
brought against any indemnified party and it shall notify the Sub-Servicer of
the commencement thereof, the Sub-Servicer shall be entitled to participate in,
and, to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the Sub-Servicer to such indemnified party of its election so to assume the
defense thereof, the Sub-Servicer shall not be liable to such indemnified party
for any legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action the defense of which is assumed by the Sub-Servicer in accordance
with the terms of this subsection (b), but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless the employment of
counsel by such indemnified party has been authorized by the Sub-Servicer. The
Sub-Servicer shall not be liable for any settlement of any action or claim
effected without its consent.
Section 3.06. [RESERVED]
Section 3.07. INDEMNIFICATION BY FIRST UNION; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification or any other rights of
the Insurer pursuant hereto or under law or equity, First Union and any
successors thereto agree to pay, and to protect, indemnify and save harmless,
the Insurer and its officers, directors, shareholders, employees, agents, and
each
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person, if any, who controls the Insurer within the meaning of either Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities and
Exchange Act of 1934, as amended, from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses (including, without limitation, reasonable fees and
expenses of attorneys, consultants and auditors and reasonable costs of
investigations) or obligations whatsoever paid by the Insurer (herein
collectively referred to as "Liabilities") of any nature arising out of or
relating to the transactions contemplated by the Transaction Documents by reason
of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or Offering
Document, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon the
Insurer Information, RBMG Information, the Underwriter Information or
the Sub-Servicer Information, or as such Liabilities arise out of or
are based upon any such untrue statement or omission or allegation
thereof based upon the Depositor Information for which RBMG, the
Servicer, the Company and Funding Co. have agreed to indemnify the
Insurer pursuant to Section 3.04 hereof;
(ii) to the extent not covered by clause (i) above, any act or
omission of the Depositor in connection with the offering, issuance,
sale or delivery of the Obligations other than by reason of false or
misleading information provided by the Insurer, the Underwriter, the
Servicer, RBMG, Funding Co., the Company or the Sub-Servicer in writing
for inclusion in the Offering Document or as specified in clause (i)
above or the allegation thereof;
(iii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of the
Depositor;
(iv) the violation by the Depositor of any federal or state
securities, banking or antitrust laws, rules or regulations in
connection with the issuance, offer and sale of the Obligations or the
transactions contemplated by the Transaction Documents;
(v) the breach by the Depositor of any of its obligations
under this Insurance Agreement or any of the Transaction Documents to
which the Depositor is a party; and
(vi) the breach by the Depositor of any representation or
warranty on the part of the Depositor contained in the Transaction
Documents to which the Depositor is a party or in any certificate or
report furnished or delivered to the Insurer thereunder.
This indemnity provision shall survive the termination of this Agreement and
shall survive until the statute of limitations has run on any causes of action
which arise from one of these reasons and until all suits filed as a result
thereof have been finally concluded.
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(b) Any party which proposes to assert the right to be indemnified
under this Section 3.07 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against First Union under this Section 3.07, notify First Union of
the commencement of such action, suit or proceeding, enclosing a copy of all
papers served. In case any action, suit or proceeding shall be brought against
any indemnified party and it shall notify First Union of the commencement
thereof, First Union shall be entitled to participate in, and, to the extent
that it shall wish, to assume the defense thereof, with counsel satisfactory to
such indemnified party, and after notice from First Union to such indemnified
party of its election so to assume the defense thereof, First Union shall not be
liable to such indemnified party for any legal or other expenses other than
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action the defense of which is
assumed by First Union in accordance with the terms of this subsection (b), but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless the employment of counsel by such indemnified party has
been authorized by First Union. First Union shall not be liable for any
settlement of any action or claim effected without its consent.
Section 3.08. PAYMENT PROCEDURE. In the event of any payment by the
Insurer, the Indenture Trustee, RBMG, the Servicer, the Company, Funding Co.,
First Union, the Sub-Servicer and the Depositor agree to accept objective
evidence of payment as prima facie evidence of the propriety thereof and the
liability therefor to the Insurer. All payments to be made to the Insurer under
this Insurance Agreement shall be made to the Insurer in lawful currency of the
United States of America in immediately available funds at the notice address
for the Insurer as specified in Section 6.02 hereof on the date when due or as
the Insurer shall otherwise direct by written notice to the other parties
hereto. In the event that the date of any payment to the Insurer or the
expiration of any time period hereunder occurs on a day which is not a Business
Day, then such payment or expiration of time period shall be made or occur on
the next succeeding Business Day with the same force and effect as if such
payment was made or time period expired on the scheduled date of payment or
expiration date. Payments to be made to the Insurer under this Insurance
Agreement shall bear interest at the Late Payment Rate from the date when due to
the date paid.
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ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co. First Union or the Depositor or from any other source under
the Transaction Documents and all amounts payable under the Obligations have
been paid in full; provided, however, that the provisions of Sections 3.02,
3.03, 3.04, 3.05, 3.06, 3.07 and 4.06 hereof shall survive any termination of
this Insurance Agreement.
Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. (a)
Excepting at such times as a default in payment under the Policy shall exist or
shall have occurred, none of the Servicer, the Indenture Trustee, RBMG, the
Sub-Servicer, the Issuer, the Company, Funding Co. or the Depositor shall grant
any waiver of rights under any of the Transaction Documents to which any of them
is a party without the prior written consent of the Insurer, and any such waiver
without the prior written consent of the Insurer shall be null and void and of
no force or effect.
(b) To the extent permitted by law, the Servicer, the Indenture
Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union and the Depositor agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as the Insurer may request
and as may be required in the Insurer's judgment to effectuate the intention of
or facilitate the performance of this Insurance Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE. (a) The obligations of the
Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union and the Depositor hereunder shall be absolute
and unconditional and shall be paid or performed strictly in accordance with
this Insurance Agreement under all circumstances irrespective of:
(i) any lack of validity or enforceability of, or any
amendment or other modifications of, or waiver, with respect to any of
the Transaction Documents, the Obligations or the Policy;
(ii) any exchange or release of any other obligations
hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that the Servicer, the Indenture Trustee,
RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union or the Depositor may have at any time against the Insurer or any
other Person;
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(iv) any document presented in connection with the Policy
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) any payment by the Insurer under the Policy against
presentation of a certificate or other document that does not strictly
comply with terms of the Policy;
(vi) any failure of the Servicer, the Indenture Trustee, RBMG,
the Sub-Servicer, the Issuer, the Company, Funding Co., First Union or
the Depositor to receive the proceeds from the sale of the Obligations;
or
(vii) any breach by the Servicer, the Indenture Trustee, RBMG,
the Sub-Servicer, the Issuer, the Company, Funding Co. or the Depositor
of any representation, warranty or covenant contained in any of the
Transaction Documents.
(b) The Servicer, the Indenture Trustee, RBMG, the Sub-Servicer,
the Depositor, First Union, the Issuer, the Company, Funding Co. and any and all
others who are now or may become liable for all or part of the obligations of
the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor under this Insurance
Agreement agree to be bound by this Insurance Agreement and (i) to the extent
permitted by law, waive and renounce any and all redemption (other than as
expressly provided for in the Transaction Documents) and exemption rights and
the benefit of all valuation and appraisement privileges against the
indebtedness and obligations evidenced by any Transaction Document or by any
extension or renewal thereof; (ii) waive presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor and notice of
protest; (iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of any payment hereunder, except as required by the Transaction
Documents; (iv) waive all rights of abatement, diminution, postponement or
deduction, or any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction Documents, by
any party thereto or any beneficiary thereof, or out of any obligation at any
time owing to the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the
Issuer, the Company, Funding Co., First Union or the Depositor; (v) agree that
its liabilities hereunder shall, except as otherwise expressly provided in this
Section 4.03, be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall operate
only for such event and not for any subsequent event; (vii) consent to any and
all extensions of time that may be granted by the Insurer with respect to any
payment hereunder or other provisions hereof and to the release of any security
at any time given for any payment hereunder, or any part thereof, with or
without substitution, and to the release of any Person or entity liable for any
such payment; and (viii) consent to the addition of any and all other makers,
endorsers, guarantors and other obligors for any payment hereunder, and to the
acceptance of any and all other security for any payment hereunder, and agree
that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
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(c) Nothing herein shall be construed as prohibiting the Servicer,
the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding
Co., First Union or the Depositor from pursuing any rights or remedies it may
have against any other Person in a separate legal proceeding.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS. (a) This
Insurance Agreement shall be a continuing obligation of the parties hereto and
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. None of the Servicer, the Indenture
Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union or the Depositor may assign its rights under this Insurance Agreement, or
delegate any of its duties hereunder, without the prior written consent of the
Insurer. Any assignment made in violation of this Insurance Agreement shall be
null and void.
(b) The Insurer shall have the right to give participations in its
rights under this Insurance Agreement and to enter into contracts of reinsurance
with respect to the Policy upon such terms and conditions as the Insurer may in
its discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve the Insurer of any of its
obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or pledge
to any bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any rights
of the Insurer under the Transaction Documents or with respect to any real or
personal property or other interests pledged to the Insurer, or in which the
Insurer has a security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right, remedy
or claim, express or implied, upon any Person, including, particularly, any
Owner, other than the Insurer against the Servicer, the Indenture Trustee, RBMG,
the Sub-Servicer, the Issuer, the Company, Funding Co., First Union or the
Depositor, and all the terms, covenants, conditions, promises and agreements
contained herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and permitted assigns. Neither the Indenture Trustee
nor any Owner shall have any right to payment from any Bond Insurer Premiums
paid or payable hereunder or under the Indenture or from any other amounts paid
by the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor pursuant to Section 3.02,
3.03, 3.04, 3.05, 3.06 or 3.07 hereof.
(e) The Servicer, the Company, Funding Co., RBMG, the
Sub-Servicer, the Depositor, the Issuer and the Indenture Trustee agree that the
Insurer shall have all rights of a third-party beneficiary in respect of the
Indenture, the Servicing Agreement, the Sub-Servicing Agreement, the Trust
Agreement and each other Transaction Document to which it is not a signing party
and hereby incorporate and restate their representations, warranties and
covenants as set forth therein for the benefit of the Insurer.
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Section 4.05. LIABILITY OF THE INSURER. Neither the Insurer nor any of
its officers, directors or employees shall be liable or responsible for: (a) the
use that may be made of the Policy by the Indenture Trustee or for any acts or
omissions of the Indenture Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer (or
its Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
the Insurer shall have actual knowledge thereof). In furtherance and not in
limitation of the foregoing, the Insurer (or its Fiscal Agent) may accept
documents that appear on their face to be in order, without responsibility for
further investigation.
Section 4.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS. So
long as this Agreement is in effect, and for one year following its termination,
none of the parties hereto will file any involuntary petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or similar
law against the Company, Funding Co., the Depositor, the Issuer or the Residual
Holder.
Section 4.07. PARTIES TO JOIN IN ENFORCEMENT ACTION. To the extent
necessary to enforce any right of the Insurer in or remedy of the Insurer under
any Mortgage Loan, the Indenture Trustee, the Depositor, RBMG, the Sub-Servicer,
the Issuer, the Company, Funding Co., First Union and the Servicer agree to join
in any action initiated by the Trust or the Insurer for the protection of such
right or exercise of such remedy.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Any representation or warranty made by the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co. or the Depositor hereunder or under the Transaction
Documents, or in any certificate furnished hereunder or under the
Transaction Documents, shall prove to be untrue or incomplete in any
material respect;
(b)(i) The Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor shall fail to pay
when due any amount payable by the Servicer, RBMG, the Sub-Servicer,
the Issuer, the Company, Funding Co., First Union or the Depositor
hereunder or (ii) a legislative body has enacted any law that declares
or a court of competent jurisdiction shall find or rule that any
Transaction Document is not valid and binding on the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co., First Union or the Depositor;
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(c) The occurrence and continuance of a "Servicer Event of
Default" under the Servicing Agreement (as defined therein);
(d) Any failure on the part of the Servicer, the Indenture
Trustee, RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co.
or the Depositor duly to observe or perform in any material respect any
other of the covenants or agreements on the part of the Servicer, the
Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co. or the Depositor contained in this Insurance Agreement or
in any other Transaction Document which continues unremedied for a
period of 30 days with respect to this Insurance Agreement, or, with
respect to any other Transaction Document, beyond any cure period
provided for therein, after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Indenture Trustee, the Servicer, RBMG, the Sub-Servicer, the
Issuer, the Company, Funding Co. or the Depositor, as applicable, by
the Insurer (with a copy to the Indenture Trustee) or by the Indenture
Trustee (with a copy to the Insurer);
(e) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor and such decree or
order shall have remained in force undischarged or unstayed for a
period of 90 consecutive days;
(f) The Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor shall consent to the
appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer,
RBMG, the Sub-Servicer, the Issuer, the Company, Funding Co., First
Union or the Depositor or of or relating to all or substantially all of
the property of either;
(g) The Servicer, RBMG, the Sub-Servicer, the Issuer, the
Company, Funding Co., First Union or the Depositor shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of or otherwise voluntarily commence
a case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations; or
(h) The occurrence and continuance of an "Event of Default"
under the Indenture (as defined therein);
(i) The occurrence and continuance of a "Event of Default"
under the Sub-Servicing Agreement (as defined therein);
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(j) the failure of RBMG, the Company, Funding Co. or the
Depositor to comply with, or maintain the accuracy of, the Opinion
Facts and Assumptions.
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE. (a) Upon the occurrence of
an Event of Default, the Insurer may exercise any one or more of the rights and
remedies set forth below:
(i) declare all indebtedness of every type or description then
owed by the Servicer, the Indenture Trustee, RBMG, the Sub-Servicer,
the Issuer, the Company, Funding Co., First Union or the Depositor to
the Insurer to be immediately due and payable, and the same shall
thereupon be immediately due and payable;
(ii) exercise any rights and remedies under the Transaction
Documents in accordance with the terms of the Transaction Documents or
direct the Indenture Trustee or the Issuer to exercise such remedies in
accordance with the terms of the Transaction Documents; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due
under the Transaction Documents or to enforce performance and
observance of any obligation, agreement or covenant of the Servicer,
the Indenture Trustee, RBMG, the Sub-Servicer, the Issuer, the Company,
Funding Co., First Union or the Depositor under the Transaction
Documents.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under the Transaction Documents or existing at law or in equity.
No delay or omission to exercise any right or power accruing under the
Transaction Documents upon the happening of any event set forth in Section 5.01
hereof shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Insurer to exercise
any remedy reserved to the Insurer in this Article, it shall not be necessary to
give any notice, other than such notice as may be required in this Article V.
Section 5.03. WAIVERS. (a) No failure by the Insurer to exercise, and
no delay by the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein to
the Insurer are declared in every case to be cumulative and not exclusive of any
remedies provided by law or equity.
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(b) The Insurer shall have the right, to be exercised in its
complete discretion, to waive any Event of Default hereunder, by a writing
setting forth the terms, conditions and extent of such waiver signed by the
Insurer and delivered to the Servicer, the Indenture Trustee, RBMG, the
Sub-Servicer, the Issuer, the Company, Funding Co., First Union and the
Depositor. Unless such writing expressly provides to the contrary, any waiver so
granted shall extend only to the specific event or occurrence which gave rise to
the Event of Default so waived and not to any other similar event or occurrence
which occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, ETC. This Insurance Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. The Servicer agrees to promptly provide a copy of any
amendment to this Insurance Agreement to the Indenture Trustee, S&P and Moody's.
No act or course of dealing shall be deemed to constitute an amendment,
modification or termination hereof.
Section 6.02. NOTICES. All demands, notices and other communications to
be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured Finance
(IPM-SF)(RBMG Funding Co. Mortgage Loan Trust 1999-1
Asset-Backed Notes, Series 1999-1)
Telecopy No.: (914) 765-3810
Confirmation: (914) 273-4545
(in each case in which notice or other communication
to the Insurer refers to an Event of Default, a claim
on the Policy or with respect to which failure on the
part of the Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to
the attention of each of the general counsel and the
Insurer and shall be marked to indicate "URGENT
MATERIAL ENCLOSED.")
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(b) To RBMG:
Resource Bancshares Mortgage Group, Inc.
7909 Parklane Road
Columbia, SC 29223
Attention: Larry Reed
Telecopy No.: (803) 741-3733
Confirmation: (803) 741-3333
(c) To the Sub-Servicer:
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 1002
West Palm Beach, FL 33401
Attention: Secretary
Telecopy No.: 561-681-8177
Confirmation: 561-681-8157
with copy to:
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd., Suite 532
West Palm Beach, FL 33401
Attention: Senior V.P., Law Dept.
Telecopy No.: 561-681-8163
Confirmation: 561-682-8820
(d) To the Indenture Trustee:
The Bank of New York
101 Barclay Street-- 12E
New York, NY 10286
Attention: Corporate Trust
Telecopy No.: (212) 815-5309
Confirmation No. (212) 815-2297
(e) To Funding Co.:
RBMG Funding Co.
2820 West Charleston Blvd.
Suite 17
Las Vegas, NV 89102
Attention: Sheldon Stern
Telecopy No.: (702) 259-9591
Confirmation: (702) 658-2810
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(f) To the Residual Holder:
RBMG Funding Co.
2820 West Charleston Blvd.
Suite 17
Las Vegas, NV 89102
Attention: Sheldon Stern
Telecopy No.: (702) 259-9591
Confirmation: (702) 658-2810
(g) To the Issuer:
RBMG Funding Co. Mortgage Loan Trust 1999-1
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Corporate Trust Administration
Telecopy No.: (302) 651-8882
(h) To the Company:
RBMG Asset Management Company, Inc.:
2820 West Charleston Blvd.
Suite 17
Las Vegas, NV 89102
Attention: Sheldon Stern
Telecopy No.: (702) 259-9591
Confirmation: (702) 658-2810
(i) To the Depositor:
Residential Asset Funding Corporation
c/o First Union Capital Markets Corp.
301 South College Street
Charlotte, NC 28288
Attention: Evan Peverley
Telecopy No.: (704) 383-8121
(j) To First Union:
First Union Corporation
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301 South College Street
Charlotte, NC 28288
Attention: Shanker Merchant
Telecopy No.: (704) 383-8121
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 6.04. GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CHOICE OF LAW PROVISIONS.
Section 6.05. CONSENT TO JURISDICTION. (a) The parties hereto hereby
irrevocably submit to the jurisdiction of the United States District Court for
the Southern District of New York and any court in the State of New York located
in the City and County of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and to or in connection with
any of the Transaction Documents or the transactions contemplated thereunder or
for recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York state court or,
to the extent permitted by law, in such federal court. The parties hereto agree
that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. To the extent permitted by applicable law, the
parties hereto hereby waive and agree not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the related documents or the
subject matter thereof may not be litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
(c) Except as provided in Section 4.06 herein, nothing contained
in this Insurance Agreement shall limit or affect the Insurer's right to serve
process in any other manner permitted
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by law or to start legal proceedings relating to any of the Transaction
Documents against any party hereto or its or their property in the courts of any
jurisdiction.
Section 6.06. CONSENT OF THE INSURER. In the event that the consent of
the Insurer is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by the
Insurer in its sole discretion without any implied duty towards any other
Person.
Section 6.07. COUNTERPARTS. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
Section 6.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives, to
the fullest extent permitted by law, any right to a trial by jury in respect of
any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(B) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.
Section 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
trustee, officer, employee, director, affiliate or shareholder of any party
hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Transaction Documents, the Obligations or the Policy, it being expressly
agreed and understood that each Transaction Document is solely a corporate
obligation of each party hereto, or, in the case of the Issuer, as a separate
legal entity, and not of the Owner Trustee and that any and all personal
liability, either at common law or in equity, or by statute or constitution, of
every such officer, employee, director, affiliate or shareholder for breaches by
any party hereto of any obligations under any Transaction Document is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Insurance Agreement.
Section 6.11. ENTIRE AGREEMENT. The Transaction Documents and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Insurance Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.
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Section 6.12 COVENANT OF THE RESIDUAL HOLDER. During the Term of this
Insurance Agreement, the Residual Holder hereby covenants and agrees that it
shall not amend its Articles of Incorporation without the prior consent of the
Insurer.
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SIGNATURE PAGE FOLLOWS]
57
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IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION, as Insurer
By /s/ ANN D. MCKENNA
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Title: Authorized Officer
RBMG ASSET MANAGEMENT COMPANY, INC.,
as Company
By /s/ FREDRICK R. BROKER
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Name: Fredrick R. Broker
Title: President and Secretary
OCWEN FEDERAL BANK FSB, as Sub-Servicer
By /s/ RONALD M. FARIS
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Name: Ronald M. Faris
Title: Executive Vice President
RBMG FUNDING CO. MORTGAGE LOAN
TRUST 1999-1, as Issuer
By Wilmington Trust Company, not in its individual
capacity, but solely as Owner Trustee
By /s/ DONALD G. MACKELCAN
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Title Vice President
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RBMG FUNDING CO., in its individual capacity
and as Residual Holder
By /s/ FREDRICK R. BROKER
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Name: Fredrick R. Broker
Title: President and Secretary
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RESIDENTIAL ASSET FUNDING
CORPORATION, as Depositor
By /s/ SHANKER L. MERCHANT
-------------------------------------------------------
Name: Shanker L. Merchant
Title: Senior Vice President
RESOURCE BANCSHARES MORTGAGE
GROUP, INC., in its individual capacity and as
Servicer
By /s/ JORDAN D. DORCHUCK
-------------------------------------------------------
Name: Jordan D. Dorchuck
Title: Senior Vice President
THE BANK OF NEW YORK, as Indenture Trustee
By /s/ ANNA H. FELT
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Title Assistant Treasurer
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FIRST UNION CORPORATION
By /s/ CAROLYN ESKRIDGE
-------------------------------------------------------
Name: Carolyn Eskridge
Title: Senior Vice President
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement of
Residential Asset Funding Corporation relating to RBMG Funding Co. Mortgage Loan
Trust 1999-1, of our report dated February 2, 1999, on our audits of the
consolidated financial statements of MBIA Insurance Corporation and Subsidiaries
as of December 31, 1998 and 1997 and for each of the three years in the period
ended December 31, 1998. We also consent to the reference to our firm under the
caption "Experts".
/s/ PricewaterhouseCoopers LLP
--------------------------------
PricewaterhouseCoopers LLP
June 1, 1999
