AMBAC ASSURANCE CORPORATION,
and
FIRST UNION SECURITIES, INC.
INDEMNIFICATION AGREEMENT
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-2
ASSET-BACKED NOTES
SERIES 1999-2
Dated as of November 18, 1999
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be part of this Indemnification Agreement. All capitalized
terms used in this Indemnification Agreement and not otherwise defined shall
have the meanings set forth in Article I of this Indemnification Agreement.)
Page
Section 1. DEFINED TERMS............................................1
Section 2. OTHER DEFINITIONAL PROVISIONS............................1
Section 3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER........2
Section 4. REPRESENTATIONS AND WARRANTIES OF THE NOTE INSURER.......2
Section 5. INDEMNIFICATION..........................................3
Section 6. AMENDMENTS, ETC..........................................5
Section 7. NOTICES..................................................5
Section 8. SEVERABILITY.............................................6
Section 9. GOVERNING LAW............................................6
Section 10. COUNTERPARTS............................................6
Section 11. HEADINGS................................................7
INDEMNIFICATION AGREEMENT dated as of November 18, 1999 (the
"Indemnification Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Note
Insurer and FIRST UNION SECURITIES, INC., as Underwriter.
Section 1. DEFINED TERMS. Unless the context clearly requires
otherwise, all capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Indenture, the Servicing Agreement,
the Insurance Agreement or the Policy. For purposes of this Indemnification
Agreement, the following terms shall have the following meanings:
"Indenture" means the Indenture, dated as of November 1, 1999, relating
to the RBMG Funding Co. Mortgage Loan Trust 1999-2 Asset-Backed Notes, Series
1999-2, between RBMG Mortgage Loan Trust 1999-2, as the Issuer and Bankers Trust
Company, as the Indenture Trustee (as may be amended, modified or supplemented
from time to time).
"Insurance Agreement" means the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time) dated as of November
30, 1999 by and among Ambac Assurance Corporation, as Note Insurer, Meritage
Mortgage Corporation, as Originator, Resource Bancshares Mortgage Group, Inc.,
as Servicer, Ocwen Federal Bank FSB, as Sub-Servicer, the Company, the Seller,
the Sponsor, the Issuer and the Indenture Trustee
"Note Insurer" means Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation, or any successor thereto, as issuer of the Policy.
"Note Insurer Information" has the meaning given such term in Section
4.
"Notes" means the Class A-1 and Class A-2 Notes, each substantially in
the form of Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated November 18,
1999, in respect of the Notes, and any amendment or supplement thereto, and any
other offering document in respect of the Notes that makes reference to the
Policy excluding any structural term sheet, collateral term sheet or
computational materials.
"Servicing Agreement" means the Servicing Agreement, dated as of
November 1, 1999, by and among the Servicer, the Indenture Trustee and the
Issuer (as may be amended, modified or supplemented from time to time as set
forth therein).
"Securities Act" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriter" means First Union Securities, Inc.
"Underwriter Information" has the meaning given such term in Section 3.
Section 2. OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER. The
Underwriter represents and warrants as of the Closing Date as follows:
(a) COMPLIANCE WITH LAWS. The Underwriter will comply in all
material respects with all legal requirements in connection with offers
and sales of the Notes and will make such offers and sales in the
manner to be provided in the Offering Document.
(b) OFFERING DOCUMENT. The Underwriter will not use, or
distribute to other broker-dealers for use, any Offering Document in
connection with the offer and sale of the Notes unless such Offering
Document includes such information relating to the Note Insurer as has
been furnished by the Note Insurer for inclusion therein and has been
approved by the Note Insurer.
(c) UNDERWRITER INFORMATION. All material provided by the
Underwriter for inclusion in the Offering Document (as revised from
time to time), shall be true and correct in all material respects, it
being understood and agreed that the only such information furnished by
the Underwriter consists of the following information (collectively,
the "Underwriter Information"): the information contained under the
heading "Underwriting" relating to the Underwriter in the Offering
Document.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE NOTE INSURER. The Note
Insurer represents and warrants to the Underwriter as follows:
(a) ORGANIZATION AND LICENSING. The Note Insurer is a duly
organized and licensed and validly existing Wisconsin stock insurance
corporation duly qualified to conduct an insurance business in the
State of New York.
(b) CORPORATE POWER. The Note Insurer has the corporate power
and authority to issue the Policy and execute this Indemnification
Agreement and to perform all of its obligations hereunder and
thereunder.
(c) AUTHORIZATION; APPROVALS. Proceedings legally required for
the issuance of the Policy and the execution, delivery and performance
of this Indemnification Agreement have been taken and all material
licenses, orders, consents or other authorizations or approvals of any
governmental boards or bodies legally required for the enforceability
of the Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to
the enforceability of the Policy.
(d) ENFORCEABILITY. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and
binding obligation of the Note Insurer, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting creditors'
rights generally and by general principles of equity and subject to
principles of public policy limiting the right to enforce the
indemnification provisions contained therein and herein, insofar as
such provisions relate to indemnification for liabilities arising under
federal securities laws.
(e) FINANCIAL INFORMATION. The consolidated financial
statements of the Note Insurer and subsidiaries as of December 31, 1998
and December 31, 1997, and for each of the years in the three-year
period ended December 31, 1998, prepared in accordance with generally
accepted accounting principles, included in the Annual Report on Form
10-K of Ambac Financial Group, Inc. (which was filed with the
Commission on March 30, 1999; Commission File No. 1-10777) and the
unaudited consolidated financial statements of the Note Insurer and
subsidiaries as of September 30, 1999 and for the periods ending
September 30, 1999 and September 30, 1998, included in the Quarterly
Report on Form 10-Q of Ambac Financial Group, Inc. for the period ended
September 30, 1999 (which was filed with the Commission on November 12,
1999), which are incorporated by reference in the Offering Document
fairly present in all material respects the financial condition of the
Note Insurer as of such dates and for the periods covered by such
statements in accordance with generally accepted accounting principles
consistently applied. Since September 30, 1999, there has been no
material change in such financial condition of the Note Insurer that
would materially and adversely affect its ability to perform its
obligations under the Policy.
(f) NOTE INSURER INFORMATION. The information in the Offering
Document as of the date hereof under the caption "The Note Insurer and
the Financial Guaranty Insurance Policy" (together, the "Note Insurer
Information") is true and correct in all material respects and does not
contain any untrue statement of a material fact.
(g) RATING. The Note Insurer is not aware of any facts that if
disclosed to Xxxxx'x or S&P would be reasonably expected to result in a
downgrade of the rating of the financial strength of the Note Insurer
by either of such Rating Agencies.
(h) NO LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of the Note 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 result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policy or this Indemnification Agreement.
(i) SECURITIES ACT REGISTRATION. The Policy is exempt from
registration under the Securities Act.
Section 5. INDEMNIFICATION.
(a) The Underwriter hereby agrees to pay, and to protect,
indemnify and save harmless, the Note Insurer and its officers,
directors, shareholders, employees, agents and each Person, if any, who
controls the Note 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
expenses (including reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of (i)
any nature arising out of or by reason of any untrue statement of a
material fact or an omission to state a material fact necessary in
order to make the statements therein in light of the circumstances in
which they were made not misleading, contained in the Underwriter
Information provided by the Underwriter or (ii) a breach of any of the
representations and warranties by the Underwriter contained in Section
3.
(b) The Note Insurer agrees to pay, and to protect, indemnify
and save harmless, the Underwriter and its respective officers,
directors, shareholders, employees, agents and each Person, if any, who
controls the Underwriter 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 expenses
(including reasonable fees and expenses of attorneys, consultants and
auditors and reasonable costs of investigations) of any nature arising
out of or by reason of (i) any untrue statement of a material fact or
an omission to state a material fact necessary in order to make the
statements therein in light of the circumstances in which they were
made not misleading, contained in the Note Insurer Information or (ii)
a breach of any of the representations and warranties of the Note
Insurer contained in Section 4.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the
"Indemnified Parties") in respect of which the indemnification provided
in this Section 5(a) or (b) may be sought from the Underwriter, on the
one hand, or the Note Insurer, on the other (each, an "Indemnifying
Party") hereunder, each such Indemnified Party shall promptly notify
the Indemnifying Party in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
expenses. The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof at
the expense of the Indemnified Party; provided, however, that the fees
and expenses of such separate counsel shall be at the expense of the
Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
fees and expenses, (ii) the Indemnifying Party shall have failed to
assume the defense of such action or proceeding and employ counsel
reasonably satisfactory to the Indemnified Party in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party, and the Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Indemnifying Party (in which case, if the Indemnified
Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party,
it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the Indemnified
Parties, which firm shall be designated in writing by the Indemnified
Party). The Indemnifying Party shall not be liable for any settlement
of any such action or proceeding effected without its written consent
to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding with respect to which the Indemnifying Party shall have
received notice in accordance with this subsection (c), the
Indemnifying Party agrees to indemnify and hold the Indemnified Parties
harmless from and against any loss or liability by reason of such
settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party
(other than due to application of this Section), each Indemnifying
Party shall contribute to the losses incurred by the Indemnified Party
on the basis of the relative fault of the Indemnifying Party, on the
one hand, and the Indemnified Party, on the other hand.
The relative fault of each Indemnifying Party, on the
one hand, and each Indemnified Party, on the other, 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 herein
was 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.
No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 6. AMENDMENTS, ETC. This Indemnification Agreement may be
amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto.
Section 7. 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 and
telecopied to the recipient as follows:
(a) To the Note Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department - MBS
Telecopy No.: 000-000-0000
Confirmation: 212-668-0340
(b) To the Underwriter:
First Union Securities, Inc.
000 Xxxxx Xxxxxxx Xxxxxx, XX00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Structured Finance
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
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 8. SEVERABILITY. In the event that any provision of this
Indemnification 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 9. GOVERNING LAW. This Indemnification Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Section 10. COUNTERPARTS. The Indemnification Agreement may be executed
in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.
Section 11. HEADINGS. The headings of Sections and the Table of
Contents contained in this Indemnification Agreement are provided for
convenience only. They form no part of this Indemnification Agreement and shall
not affect its construction or interpretation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement, all as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Note Insurer
By: /s/ Xxxxxxx X. Xxxx
----------------------
Name: Xxxxxxx X. Xxxx
---------------
Title: Vice President
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FIRST UNION SECURITIES, INC.,
as Underwriter
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------
Name: Xxxxxxx Xxxxxxxx
----------------
Title: Senior Vice President
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