AMBAC ASSURANCE CORPORATION
as Note Insurer,
MERITAGE MORTGAGE CORPORATION
as Originator,
RBMG, INC.
as Servicer,
OCWEN FEDERAL BANK FSB
as Sub-Servicer,
RBMG ASSET MANAGEMENT COMPANY, INC.
as Company,
RBMG FUNDING CO.
as Seller,
RESIDENTIAL ASSET FUNDING CORPORATION
as Sponsor,
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-2
as Issuer
and
BANKERS TRUST COMPANY
as Indenture Trustee
INSURANCE AND INDEMNITY AGREEMENT
RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-2
ASSET-BACKED NOTES,
SERIES 1999-2
Dated as of November 30, 1999
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Agreement. All capitalized terms used in this
Agreement and not otherwise defined shall have the meanings set forth in Article
I of this Agreement.)
Page
----
ARTICLE I
DEFINITIONS.......................................................1
Section 1.01 DEFINED TERMS........................................1
Section 1.02 OTHER DEFINITIONAL PROVISIONS........................6
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS.........................6
Section 2.01 REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR,
THE SERVICER, THE COMPANY AND THE SELLER..........................6
Section 2.02 AFFIRMATIVE COVENANTS OF THE ORIGINATOR, THE SERVICER,
THE COMPANY AND THE SELLER.......................................12
Section 2.03 NEGATIVE COVENANTS OF THE ORIGINATOR, THE SERVICER,
THE COMPANY AND THE SELLER.......................................18
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE SUB-SERVICER..18
Section 2.05 AFFIRMATIVE COVENANTS OF THE SUB-SERVICER...........22
Section 2.06 NEGATIVE COVENANTS OF THE SUB-SERVICER..............26
Section 2.07 REPRESENTATIONS AND WARRANTIES OF THE SPONSOR.......27
Section 2.08 AFFIRMATIVE COVENANTS OF THE SPONSOR................30
Section 2.09 NEGATIVE COVENANTS OF THE SPONSOR...................33
Section 2.10 REPRESENTATIONS AND WARRANTIES OF THE ISSUER........34
Section 2.11 AFFIRMATIVE COVENANTS OF THE ISSUER.................36
Section 2.12 NEGATIVE COVENANTS OF THE ISSUER....................39
Section 2.13 REPRESENTATIONS AND WARRANTIES OF THE NOTE INSURER..40
ARTICLE I
THE POLICY; REIMBURSEMENT........................................42
Section 3.01 ISSUANCE OF THE POLICY..............................42
Section 3.02 PAYMENT OF FEES AND PREMIUM.........................44
Section 3.03 REIMBURSEMENT OBLIGATION............................45
Section 3.04 INDEMNIFICATION WITH RESPECT TO THE ORIGINATOR, THE
SERVICER, THE COMPANY AND THE SELLER.............................46
(i)
Section 3.05 INDEMNIFICATION WITH RESPECT TO THE SUB-............49
Section 3.06 INDEMNIFICATION WITH RESPECT TO THE SPONSOR.........52
Section 3.07 PAYMENT PROCEDURE...................................54
ARTICLE IV
FURTHER AGREEMENTS...............................................54
Section 4.01 EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT.....54
Section 4.02 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.......55
Section 4.03 OBLIGATIONS ABSOLUTE................................55
Section 4.04 ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS........57
Section 4.05 LIABILITY OF THE NOTE INSURER.......................58
Section 4.06 ANNUAL SERVICING AUDIT AND CERTIFICATION............58
ARTICLE V
DEFAULTS AND REMEDIES............................................58
Section 5.01 DEFAULTS............................................58
Section 5.02 REMEDIES; NO REMEDY EXCLUSIVE.......................60
Section 5.03 WAIVERS.............................................60
ARTICLE VI
MISCELLANEOUS....................................................61
Section 6.01 AMENDMENTS, ETC.....................................61
Section 6.02 NOTICES.............................................61
Section 6.03 SEVERABILITY........................................63
Section 6.04 GOVERNING LAW.......................................64
Section 6.05 CONSENT TO JURISDICTION.............................64
Section 6.06 CONSENT OF THE NOTE INSURER.........................65
Section 6.07 COUNTERPARTS........................................65
Section 6.08 HEADINGS............................................65
Section 6.09 TRIAL BY JURY WAIVED................................65
Section 6.10 LIMITED LIABILITY...................................65
Section 6.11 ENTIRE AGREEMENT....................................66
Section 6.12 INDENTURE TRUSTEE...................................66
(ii)
INSURANCE AND INDEMNITY AGREEMENT (as may be amended, modified or
supplemented from time to time, this "Insurance Agreement"), dated as of
November 30, 1999, by and among AMBAC ASSURANCE CORPORATION, as Note Insurer,
MERITAGE MORTGAGE CORPORATION, as Originator, RBMG, INC., as Servicer, OCWEN
FEDERAL BANK FSB, as Sub-Servicer, RBMG ASSET MANAGEMENT COMPANY, INC., as
Company, RBMG FUNDING CO., as Seller, RESIDENTIAL ASSET FUNDING CORPORATION, as
Sponsor, RBMG FUNDING CO. MORTGAGE LOAN TRUST 1999-2, as Issuer and BANKERS
TRUST COMPANY, as Indenture Trustee.
WHEREAS, 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 the Issuer and the Indenture Trustee (as may be amended, modified or
supplemented from time to time as set forth therein, the "Indenture") provides
for, among other things, the issuance of Notes representing indebtedness secured
by the Trust Fund established thereby;
WHEREAS, the Note Insurer has issued the Policy, pursuant to which it has
agreed to pay to the Indenture Trustee for the benefit of the Holders certain
payments in respect of the Notes;
WHEREAS, the Note Insurer shall be paid a Premium as set forth herein; and
WHEREAS, the Sponsor, the Servicer, the Sub-Servicer and the Seller and
the Company have undertaken certain obligations in consideration for the Note
Insurer's issuance of its Policy;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 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 or the Policy described below. For
purposes of this Insurance Agreement, the following terms shall have the
following meanings:
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banking institutions in the State of New York, the State of
Nevada or the State of California or in the city in which the principal
corporate trust office of the Indenture Trustee is located, are authorized or
obligated by law or executive order to be closed.
"Cap Trigger Event" has the meaning given such term in the letter
agreement, dated November 30, 1999, between the Originator and the Note Insurer.
"Closing Date" means November 30, 1999.
"Commission" means the Securities and Exchange Commission.
"Company" means RBMG Asset Management Company, Inc. in its capacity as
Company.
"Company Documents" means this Insurance Agreement, the Company Sale
Agreement, the Funding Co. Sale Agreement, the Sponsor Sale Agreement, the Trust
Agreement, the Notes, the Indenture, the Servicing Agreement, the Sub-Servicing
Agreement, the Guarantee and the Cap Agreement.
"Company Information" means all information with respect to the Offering
Document under the following headings: "Summary ," "Transaction Overview
,","Description of the Mortgage Pool," "Underwriting Standards," "RBMG,"
"Certain Prepayment and Yield Considerations" and "Servicing of the Mortgage
Loans." Company Information also means information with respect to the Offering
Document under the heading "Risk Factors," except for the subsections
"Book-entry registration may reduce the liquidity of the notes," "Potential
delays in receipt of payments on the notes," "An investment in the notes may be
an illiquid investment" and "Year 2000 issue may adversely affect the
distributions to noteholders," and "Description of the Notes," except for the
subsection "Book Entry Registration and Definitive Notes."
"Company Sale Agreement" means the Loan Sale Agreement, dated as of
November 1, 1999, between the Company and the Seller.
"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.
"Event of Default" means any Event of Default specified in Section 5.01 of
this Insurance Agreement.
"Excess Cash" has the meaning given in the Indenture.
"Financial Statements" means, with respect to the Originator and the
Servicer, consolidated statements of financial condition as of December 31,
1996, 1997 and 1998 and the statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1998 and the notes thereto.
"Funding Co. Sale Agreement" means the Loan Sale Agreement, dated as of
November 1, 1999, between the Seller and the Sponsor.
"Guarantee" means the Guarantee, dated as of November 1, 1999, by Meritage
Mortgage Corporation, as Guarantor, in favor of the Sponsor, the Issuer and the
Indenture Trustee.
"Holder" has the meaning given such term in the Policy.
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"Indemnification Agreement" means the agreement dated as of November 18,
1999 between the Note Insurer and the Underwriter.
"Indenture" has the meaning given such term in the first recital hereof.
"Indenture Trustee" means Bankers Trust Company, a New York banking
corporation existing under the laws of the State of New York, as Indenture
Trustee under the Indenture, and its successors.
"Insurance Agreement" has the meaning given such term in the initial
paragraph hereof.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Issuer" means RBMG Funding Co. Mortgage Loan Trust 1999-2 in its capacity
as Issuer.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest publicly announced from time to time by Citibank, N.A. as
its prime or base lending rate (any change in such rate of interest to be
effective on the date such change is announced by Citibank, N.A.), plus 2% per
annum and (ii) the then applicable rate of interest on the Notes and (b) the
maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days.
"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 on a consolidated basis with its subsidiaries or
(ii) the ability of such Person to perform its obligations, if any, under any of
the Company Documents.
"Monthly Loss Rate" means, with respect to any Payment Date, the fraction
expressed as a percentage, equal to (x) twelve times the sum of all Realized
Losses that occurred during the related Collection Period with respect to the
Mortgage Loans over (y) the Stated Principal Balance at the beginning of the
related Collection Period.
"Moody's" means Xxxxx'x Investors Service, Inc., and any successor
thereto.
"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
3.04(a)(v).
"Notes" means the Class A-1 and Class A-2 Notes, each substantially in the
form of Exhibit A to the Indenture.
3
"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 prepared by the Sponsor that
makes reference to the Policy.
"Originator" means Meritage Mortgage Corporation in its capacity as
Originator.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, partnership or
other organization or entity (whether governmental or private).
"Policy" means the certificate guaranty insurance policy, #AB0322BE,
together with all endorsements thereto, issued by the Note Insurer to the
Indenture Trustee, for the benefit of the Holders of the Notes.
"Pool Delinquency Rate" means with respect to any Collection Period, the
fraction, expressed as a percentage, equal to (x) the aggregate Stated Principal
Balance of all Mortgage Loans 60 or more days delinquent (including, with
respect to all Mortgage Loans, all foreclosures and REO Properties) as of the
close of business on the last day of such Collection Period over (y) the Stated
Principal Balance of all Mortgage Loans.
"Premium" means the premium payable in accordance with the Policy.
"Premium Percentage" shall mean 0.23% per annum.
"Registration Statement" means the registration statement on Form S-3 (No.
333-81721), including the prospectus, relating to the Notes, at the time it
became effective.
"Required Overcollateralization Amount" means, as of any Payment Date, the
greatest of (a) (i) prior to the Stepdown Date 4.75% (or upon the occurrence of
a Cap Trigger Event, 5.50%) of the Aggregate Stated Principal Balance as of the
Cut-off Date or (ii) on or after the Stepdown Date 9.50% (or upon the occurrence
of a Cap Trigger Event, 11.00%) of the Aggregate Stated Principal Balance, (b)
the amount equal to the sum of the aggregate Stated Principal Balances of the
three largest Mortgage Loans and (c) the product of the (i) two and (ii) (1) 50%
of the sum of the aggregate Stated Principal Balances of the Mortgage Loans
which are 90 days or more delinquent (including all foreclosures and REO
Properties) minus (2) the product of (x) three and (y) the current monthly
Excess Spread; provided, however, the Required Overcollateralization Amount
shall increase to 7.00% of the Aggregate Stated Principal Balance as of the
Cut-off Date, prior to the Stepdown Date, or 14.00% of the current Aggregate
Stated Principal Balance, on or after the Stepdown Date, upon the occurrence of
a Trigger Event.
"Rolling Three Month Excess Spread" means, with respect to any Payment
Date, commencing with the fourth Payment Date, the percentage equal to the
average amount of Excess Cash for the immediately preceding three months.
4
"Rolling Twelve Month Loss Rate" means, with respect to any Payment Date,
commencing on the twelfth Payment Date, the percentage equal to the average of
Monthly Loss Rates for the immediately preceding twelve months.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., and any successor thereto.
"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.
"Seller" means RBMG Funding Co. in its capacity as Seller.
"Servicer" means RBMG, Inc. in its capacity as Servicer.
"Servicer Termination Delinquency Rate Trigger" means as of any Payment
Date commencing with the seventh Payment Date, the fraction, expressed as a
percentage, equal to the average of the Pool Delinquency Rate for each of the
six immediately preceding Collection Periods with respect to the Mortgage Loans
exceeds 10.25%.
"Servicer Termination Loss Trigger" means, with respect to any Payment
Date, upon the occurrence of the Rolling Twelve Month Loss Rate exceeding 1.25%.
"Servicing Agreement" means the Servicing Agreement, dated as of November
1, 1999, among the Servicer, the Indenture Trustee and the Issuer.
"Sponsor" means Residential Asset Funding Corporation in its capacity as
Sponsor.
"Sponsor Information" has the meaning given such term in Section
3.06(a)(iv).
"Sponsor Sale Agreement" means the Loan Sale Agreement, dated as of
November 1, 1999, between the Sponsor and the Issuer.
"Stepdown Date" means the 36th Payment Date.
"Sub-Servicer" means Ocwen Federal Bank FSB, a national banking
association existing under the laws of the United States of America, in its
capacity as Sub-Servicer.
"Sub-Servicer Information" has the meaning given such term in Section
3.05(a)(iv).
5
"Sub-Servicing Agreement" means the Sub-Servicing Agreement, dated as of
November 1, 1999, between the Servicer and the Sub-Servicer.
"Transaction" means the transactions contemplated by the Company
Documents, including the transactions described in the Offering Document.
"Trigger Event" means the occurrence of both (i) the Rolling Three Month
Excess Spread is less than 2.00% and (ii) the fixed-rate Mortgage Loans exceed
30% of the current Aggregate Stated Principal Balance.
"Trust Fund" means the trust created pursuant to the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of November 1, 1999,
among the Sponsor, the Owner Trustee and Bankers Trust Company, as trust paying
agent.
"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 Securities, Inc.
"Underwriting Agreement" means the Underwriting Agreement dated as of
November 18, 1999 among the Underwriter and the Sponsor with respect to the
offer and sale of the Notes, as may be amended, modified or supplemented from
time to time.
"Underwriter Information" has the meaning given such term in the
Indemnification Agreement.
Section 1.02 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Insurance
Agreement shall refer to this Insurance Agreement as a whole and not to any
particular provision of this Insurance Agreement, and Section, subsection,
Schedule and Exhibit references are to this Insurance 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."
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR, THE
SERVICER, THE COMPANY AND THE SELLER. The Originator, the Servicer, the Company
and the Seller represent and warrant (each with respect to itself only) as of
the Closing Date as follows:
6
(a) DUE ORGANIZATION AND QUALIFICATION.
(i) In the case of the Originator, it is a corporation, duly
organized, validly existing and in good standing under the laws of
Oregon. It 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 Company Documents in each jurisdiction in which the
failure to obtain such approvals would render any Company Document
unenforceable in any respect or would have a material adverse effect
upon the Transaction.
(ii) In the case of the Servicer, it is a corporation, duly
organized, validly existing and in good standing under the laws of
Delaware. It 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 Company Documents in each jurisdiction in which the
failure to be so qualified or to obtain such approvals would render
any Company Document unenforceable in any respect or would have a
material adverse effect upon the Transaction.
(iii) In the case of the Company, it is a corporation, duly
organized, validly existing and in good standing under the laws of
Nevada. It 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 Company Documents in each jurisdiction in which the
failure to be so qualified or to obtain such approvals would render
any Company Document unenforceable in any respect or would have a
material adverse effect upon the Transaction.
(iv) In the case of the Seller, it is a corporation, duly
organized, validly existing and in good standing under the laws of
Nevada. It 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 Company Documents in each jurisdiction in which the
failure to be so qualified or to obtain such approvals would render
any Company Document unenforceable in any respect or would have a
material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY.
7
(i) The Originator has full right, power and authority to
conduct its business as currently conducted and as described in the
Offering Document, to enter into, execute, deliver and perform its
obligations under the Company Documents and to consummate the
Transaction.
(ii) The Servicer has all necessary corporate power and
authority to conduct its business as currently conducted and as
described in the Offering Document, to enter into, execute, deliver
and perform its obligations under the Company Documents and to
consummate the Transaction.
(iii) The Company has all necessary corporate power and
authority to conduct its business as currently conducted and as
described in the Offering Document, to enter into, execute, deliver
and perform its obligations under the Company Documents and to
consummate the Transaction.
(iv) The Seller has all necessary corporate power and
authority to conduct its business as currently conducted and as
described in the Offering Document, to enter into, execute, deliver
and perform its obligations under the Company Documents and to
consummate the Transaction.
(c) DUE AUTHORIZATION.
(i) The execution, delivery and performance of the Company
Documents by the Originator has been duly authorized by all
necessary actions and does not require any additional approvals or
consents, or other action by or any notice to or filing with any
Person, including any governmental entity or any of the stockholders
of the Originator, which have not previously been obtained or given
by the Originator.
(ii) The execution, delivery and performance of the Company
Documents by the Servicer has 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 any governmental entity or any of the stockholders
of the Servicer, which have not previously been obtained or given by
the Servicer.
(iii) The execution, delivery and performance of the Company
Documents by the Company has 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 any governmental entity or any of the stockholders
of the Company, which have not previously been obtained or given by
the Company.
(iv) The execution, delivery and performance of the Company
Documents by the Servicer has been duly authorized by all necessary
corporate action and does
8
not require any additional approvals or consents, or other action by
or any notice to or filing with any Person, including any
governmental entity or any of the stockholders of the Servicer,
which have not previously been obtained or given by the Servicer.
(d) NONCONTRAVENTION. The execution and delivery by the Originator,
the Servicer, the Company and the Seller of the Company Documents to which
any is a party, the consummation of the Transaction and the satisfaction
of the terms and conditions of the Company Documents do not and will not:
(i) conflict with or result in any breach or violation of any
provision of the charter or bylaws of the Originator, the Servicer,
the Company or the Seller or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Originator, the Servicer, the
Company or the Seller or any of its respective material properties,
including regulations issued by any administrative agency or other
governmental authority having supervisory powers over the
Originator, the Servicer, the Company or the Seller;
(ii) constitute a default by the Originator, the Servicer, the
Company or the Seller under, result in the acceleration of any
obligation under, or breach any provision of any loan agreement,
mortgage, indenture or other agreement or instrument to which the
Originator, the Servicer, the Company or the Seller either is a
party or by which any of their properties are or may be bound or
affected; or
(iii) result in or require the creation of any lien upon or in
respect of any assets of the Originator, the Servicer, the Company
or the Seller, except as contemplated by the Company 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 Originator, the Servicer,
the Company or the Seller, any of their subsidiaries, any properties or
rights of any of the Originator, the Servicer, the Company or the Seller
or any of their subsidiaries or any of the Mortgage Loans pending or, to
the Originator's, the Servicer's, the Company's or the Seller's knowledge
after reasonable inquiry, threatened, which, in any case, if decided
adversely to the Originator, the Servicer, the Company or the Seller or
any such subsidiary could result in a Material Adverse Change with respect
to the Originator, the Servicer, the Company or the Seller, respectively.
(f) VALID AND BINDING OBLIGATIONS. The Company Documents (other than
the Notes), when executed and delivered by the Sponsor, the Originator,
the Servicer, the Company and the Seller, will constitute the legal, valid
and binding obligations of the Originator, the Servicer, the Company and
the Seller, enforceable in accordance with their respective terms, except
as such enforceability may be limited by insolvency, reorganization,
9
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 Notes,
when executed, authenticated and delivered in accordance with the
Indenture, will be validly issued and outstanding and entitled to the
benefits of the Indenture. The Originator, the Servicer, the Company and
the Seller will not at any time in the future deny that the Company
Documents constitute the legal, valid and binding obligations of the
Originator, the Servicer, the Company and the Seller, respectively.
(g) FINANCIAL INFORMATION. The Financial Statements of the
Originator and the Servicer, copies of which have been furnished to the
Note Insurer, (i) present fairly in all material respects the financial
condition and results of operations of the Originator, the Servicer, the
Company and the Seller as of the dates and for the periods indicated and
(ii) have been prepared in accordance with regulatory accounting
principles applicable to a national banking association 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 with respect to the Originator and the Servicer, there has been
no Material Adverse Change in respect of the Originator and the Servicer.
Except as disclosed in the Financial Statements, the Originator and the
Servicer are 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 Originator or the
Servicer.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Originator, the Servicer, the
Company or the Seller in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to the
Originator, the Servicer, the Company or the Seller, respectively, that,
if enforced, could result in a Material Adverse Change with respect to the
Originator, the Servicer, the Company or the Seller.
(i) TAXES. Each of the Originator, the Servicer, the Company and the
Seller have filed or have participated in the filing of a consolidated
filing with their parent corporation prior to the date hereof all federal
and state tax returns that are required to be filed prior to the date
hereof and has paid or made provisions for the payment of all taxes to the
extent that such taxes have become due other than (i) taxes or other
charges which are not yet delinquent or are being contested in good faith
and have not been finally determined or (ii) information returns, tax
returns, taxes or other governmental charges, the failure to file, pay or
make provisions for, either individually or in the aggregate, are not
likely in the reasonable judgment of the Originator, the Servicer, the
Company or the Seller, as applicable, to constitute a Material Adverse
Change on the Originator, the Servicer, the Company or the Seller. Any
taxes, fees and other governmental charges payable by the Originator, the
Servicer, the Company or the Seller in connection with the Transaction,
the execution and delivery of the Company Documents and the issuance of
the Notes have been paid or shall have been paid at or prior to the
Closing Date.
10
(j) ACCURACY OF INFORMATION. Neither the Company Documents nor other
information relating to the Mortgage Loans, the operations of the
Originator, the Servicer, the Company or the Seller or the financial
condition of the Originator, the Servicer, the Company or the Seller
(collectively, the "Documents"), as amended, supplemented or superseded,
furnished to the Note Insurer by the Originator, the Servicer, the Company
or the Seller contains any statement of a material fact which was untrue
or misleading in any material respect when made. None of the Originator,
the Servicer, the Company or the Seller has knowledge of any circumstances
that could reasonably be expected to cause a Material Adverse Change with
respect to the Originator, the Servicer, the Company or the Seller. Since
the furnishing of the Documents, there has been no change nor any
development or event involving a prospective change known to the
Originator, the Servicer, the Company or the Seller that would render any
of the Documents untrue or misleading in any material respect.
(k) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the Notes
comply in all material respects with all requirements of law, including
all registration requirements of applicable federal securities laws.
Without limiting 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 Note Insurer
Information, with respect to the Sponsor Information or with respect to
the Underwriter Information. The Servicing Agreement, the Sub-Servicing
Agreement, the Company Sale Agreement, the Funding Co. Sale Agreement, and
the Sponsor Sale Agreement is not, and the Indenture is, required to be
qualified under the Trust Indenture Act and the Trust Fund is not required
to be registered as an "investment company" under the Investment Company
Act.
(l) COMPANY DOCUMENTS. Each of the representations and warranties of
the Originator, the Servicer, the Company and the Seller contained in the
Company Documents is true and correct in all material respects and the
Originator, the Servicer, the Company and the Seller hereby make each such
representation and warranty to, and for the benefit of, the Note Insurer
as if the same were set forth in full herein.
(m) SOLVENCY; FRAUDULENT CONVEYANCE. The Originator, the Servicer,
the Company and the Seller are each solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the Transaction,
none of the Originator, the Servicer, the Company or the Seller will be
left with less than applicable regulatory capital requirements with which
to engage in its business, and the Originator, the Servicer, the Company
and the Seller do not intend to incur, or believe that it has incurred,
debts beyond its ability to pay as they mature. The Originator, the
Servicer, the Company and the Seller do not contemplate the commencement
of insolvency, liquidation or consolidation proceedings or the appointment
of a receiver, liquidator, conservator, trustee or similar official in
respect of the Originator, the Servicer, the Company or the Seller or any
of their respective assets. The
11
amount of consideration being received by the Company and Seller, upon the
sale of the Mortgage Loans constitutes reasonably equivalent value and
fair consideration for the interest in the Mortgage Loans backing the RBMG
Funding Co. Mortgage Loan Trust 1999-2, Asset-Backed Certificates, Series
1999-2.
(n) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Originator is Lake Oswego, Oregon.
(o) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Servicer is Columbia, South Carolina.
(p) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Company is Las Vegas, Nevada.
(q) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Seller is Las Vegas, Nevada.
Section 2.02 AFFIRMATIVE COVENANTS OF THE ORIGINATOR, THE SERVICER, THE
COMPANY AND THE SELLER. The Originator, the Servicer, the Company and the Seller
hereby agree that during the term of this Insurance Agreement, unless the Note
Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. Each of the
Originator, the Servicer, the Company and the Seller shall comply with the
terms and conditions of and perform its respective obligations under the
Company Documents to which it is a party in all cases in which failure to
so comply or perform would result in a default thereunder and shall comply
with all material requirements of any law, rule or regulation applicable
to it.
(b) CORPORATE EXISTENCE.
(i) Subject to Section 2.03(c) hereof, each of the Originator,
the Servicer, the Company and the Seller and its successors and
permitted assigns shall maintain its corporate existence and shall
at all times continue to be duly organized under the laws of the
state of its incorporation or another state 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 charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
Each of the Originator, the Servicer, the Company and the Seller shall
keep or cause to be kept in reasonable detail books and records of account
of its assets and business, including books and records relating to the
Transaction. The Seller shall clearly reflect in its books and records the
transfer of the Mortgage Loans to the Trust Fund as a sale of the Seller's
interest in the Mortgage Loans. The Originator, the Servicer, the Company
and the Seller shall furnish or cause to be furnished to the Note Insurer:
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(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 120 days after the close of each fiscal year of the
Originator and the Servicer, the audited consolidated statement of
financial condition of Resource Bancshares Mortgage Group, Inc. (the
"Parent") and its consolidated subsidiaries, including the
Originator and the Servicer, as of the end of such fiscal year and
the related audited consolidated statements of income, retained
earnings 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 Parent's independent accountants (which shall be a
nationally recognized independent public accounting firm or
otherwise acceptable to the Note Insurer) and by the certificate
specified in Section 2.02(d).
(ii) QUARTERLY FINANCIAL STATEMENTS. (A) Upon the reasonable
request of the Note Insurer following any Material Adverse Change of
the Originator or the Servicer or the reasonable belief of the Note
Insurer that a Material Adverse Change of the Originator or the
Servicer has occurred, as soon as available, and (B) in any event
within 60 days after the close of each of the first three quarters
of each fiscal year of the Originator or the Servicer, the unaudited
consolidated statement of financial condition of the Parent,
including the Originator and the Servicer, and its consolidated
subsidiaries as of the end of such quarter, and the related
unaudited consolidated statements of income, retained earnings and
cash flows for the portion of the fiscal year the ended, all in
reasonable 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 (subject to normal year-end
adjustments), and accompanied by the certificate specified in
Section 2.02(d).
(iii) INITIAL REPORT. On or before the Closing Date, a copy of
the electronic report 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" at Section 1.01 of the Servicing Agreement.
(iv) CERTAIN INFORMATION. Upon the reasonable request of the
Note Insurer, copies of any requested proxy statements, financial
statements, reports and registration statements that the Originator,
the Servicer, the Company or the Seller file with, or deliver to,
the Commission or any national securities exchange.
(v) OTHER INFORMATION. (A) Promptly upon receipt thereof,
copies of all schedules, financial statements or other similar
reports delivered to or by the Originator, the Servicer, the Company
and the Seller, pursuant to the terms of the Servicing Agreement,
the Company Sale Agreement or the Funding Co. Sale
13
Agreement, (B) promptly upon request, such other data as the Note
Insurer may reasonably request and (C) all information required to
be furnished to the Indenture Trustee or to the Holders of the Notes
simultaneously with the furnishing thereof to the Indenture Trustee
or the Holders of the Notes, as the case may be.
(d) COMPLIANCE CERTIFICATE. The Originator and the Servicer shall
deliver to the Note Insurer, at the time that the delivery of the
financial statements of the Originator and the Servicer are required
pursuant to subsection 2.02(c)(i) and (ii) certificates of one (or more)
of its officers stating that:
(i) a review of the performance of the Originator or the
Servicer, as applicable, under the Company Documents to which it is
a party during such period has been made under such officer's
supervision;
(ii) to the best of such officer'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, if the Originator or the Servicer has a right to cure
pursuant to Section 5.01, stating in reasonable detail (including,
if applicable, any supporting calculations) the steps, if any, being
taken by the Originator or the Servicer 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), if applicable,
present fairly in all material respects the financial condition and
results of operations of the Parent and its consolidated
subsidiaries, including the Originator and the Servicer, as of the
dates and for the periods indicated, in accordance with generally
accepted accounting principles consistently applied (subject as to
interim statements to normal year-end adjustments); and
(iv) the Servicer has in full force and effect a fidelity bond
(or direct surety bond) and an errors and omissions policy in
accordance with the terms and requirements of Section 2.13 of the
Servicing Agreement.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Originator, the Servicer, the Company and the Seller shall, upon the
reasonable request of the Note Insurer, permit the Note Insurer or its
authorized agents:
(i) to inspect the books and records of the Originator, the
Servicer, the Company and the Seller as they may relate to the Notes
(other than the names of Mortgagors and strategic plans which are
unrelated to the Notes), the obligations of
14
the Originator, the Servicer, the Company and the Seller under the
Company Documents and the Transaction;
(ii) to discuss the affairs, finances and accounts of the
Originator, the Servicer, the Company and the Seller with the Chief
Operating Officer and the Chief Financial Officer of the Originator,
the Servicer, the Company and the Seller; and
(iii) with the Originator's, the Servicer's, the Company's and
the Seller's consent, which consent shall not be unreasonably
withheld or delayed, to discuss the affairs, finances and accounts
of the Originator, the Servicer, the Company and the Seller with the
Originator, the Servicer, the Company and the Seller and the
independent accountants of the Originator, the Servicer, the Company
and the Seller, provided that an officer of the Originator, the
Servicer, the Company and the Seller, as applicable, shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Originator, the Servicer, the Company or the Seller, as the case may be.
The Note 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 Company Documents, provided that the
foregoing shall not limit the right of the Note Insurer to make such
information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
(f) NOTICE OF MATERIAL EVENTS. The Originator, the Servicer, the
Company and the Seller shall be obligated promptly to inform the Note
Insurer in writing of the occurrence of any of the following:
(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 Originator, the Servicer, the Company or the Seller that
would likely result in a Material Adverse Change with respect to the
Originator, the Servicer, the Company or the Seller, or the
promulgation of any proceeding or any proposed or final rule which
would likely result in a Material Adverse Change with respect to the
Originator, the Servicer, the Company or the Seller;
(ii) any change in the location of the principal office of the
Originator, the Servicer, the Company and the Seller;
15
(iii) the occurrence of any Default or Event of Default
involving the Originator, the Servicer, the Company or the Seller or
any Material Adverse Change in respect of the Originator, the
Servicer, the Company or the Seller;
(iv) the commencement of any proceedings by or against the
Originator, the Servicer, the Company or the Seller under any
applicable reorganization, liquidation, rehabilitation, insolvency
or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, conservator, Indenture Trustee or
similar official shall have been, or may be, appointed or requested
for the Originator, the Servicer, the Company or the Seller or any
of their assets; or
(v) the receipt of notice that (A) any license, permit,
charter, registration or approval necessary for the conduct of the
Originator's, the Servicer's, the Company's or the Seller's business
is to be, or may be suspended or revoked or (B) the Originator, the
Servicer, the Company or the Seller is to cease and desist any
practice, procedure or policy employed by the Originator, the
Servicer, the Company or the Seller in the conduct of its business,
but only if such suspension, revocation or cessation may result in a
Material Adverse Change with respect to the Originator, the
Servicer, the Company or the Seller.
(g) FINANCING STATEMENTS AND FURTHER ASSURANCES. The Originator, the
Servicer, the Company or the Seller 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 Fund.
The Originator, the Servicer, the Company and the Seller shall, upon the
request of the Note 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 Company Documents. In
addition, the Originator, the Servicer, the Company and the Seller agree
to cooperate with S&P and Xxxxx'x in connection with any review of the
Transaction that may be undertaken by S&P and Xxxxx'x after the date
hereof.
(h) MAINTENANCE OF LICENSES. The Originator, the Servicer, the
Company and the Seller and any successors thereof shall maintain all
licenses, permits, charters and registrations which are material to the
conduct of their business.
(i) RETIREMENT OF NOTES. The Originator, the Servicer, the Company
and the Seller shall instruct the Indenture Trustee, upon a retirement or
other payment of all of the Notes, to surrender the Policy to the Note
Insurer for cancellation.
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(j) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Notes shall clearly disclose that (i) the Policy is not
covered by the property/casualty insurance certificate fund specified in
Article 76 of the New York Insurance Law and (ii) in the event that the
Note Insurer were to become insolvent, any claims arising under the Policy
would be excluded from coverage by the California Insurance Guaranty
Association, established pursuant to the laws of the State of California.
(k) THIRD-PARTY BENEFICIARY. The Originator, the Servicer, the
Company and the Seller agree that the Note Insurer shall have all rights
of a third-party beneficiary in respect of the Servicing Agreement, the
Company Sale Agreement and the Funding Co. Sale Agreement and hereby
incorporates and restates its representations, warranties and covenants as
set forth therein for the benefit of the Note Insurer; provided that the
remedy for any breach of a representation and warranty of the Originator,
the Servicer, the Company and the Seller in Section 8.07(a) of the
Indenture and the remedy with respect to any defective Mortgage Loans
under Section 8.07(a) of the Indenture shall be limited to the remedies
specified in the Indenture.
(l) SERVICING OF MORTGAGE LOANS. All Mortgage Loans will be serviced
in compliance with the Servicing Agreement and the Sub-Servicing
Agreement.
(m) CLOSING DOCUMENTS. The Originator, the Servicer, the Company and
the Seller shall provide or cause to be provided to the Note Insurer an
executed original copy of each document executed in connection with the
Transaction within 30 Business Days after the date of closing.
(n) NOTE ACCOUNT. For so long as RBMG, Inc. is the Servicer, monies
on deposit in the Note Account shall be invested in Permitted Investments
maturing as provided in the Servicing Agreement.
(o) DUE DILIGENCE. The Note Insurer shall have the right, so long as
any Notes remain outstanding, to conduct an ongoing review of the
Servicer's practices as Servicer through reviews of the Mortgage Loans,
"drive-by" reappraisals of Mortgaged Properties and reviews of servicing
practices. Such ongoing due diligence shall be conducted at the expense of
the Note Insurer and in a reasonable manner convenient to the Servicer and
the Note Insurer.
Section 2.03 NEGATIVE COVENANTS OF THE ORIGINATOR, THE SERVICER, THE
COMPANY AND THE SELLER. The Originator, the Servicer, the Company and the Seller
hereby agree that during the term of this Insurance Agreement, unless the Note
Insurer shall otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Originator, the Servicer, the Company
and the Seller 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 specified in clause (ii) of the definition of
17
Material Adverse Change with respect to the Originator, the Servicer, the
Company or the Seller, respectively, or may not interfere with the
enforcement of any rights of the Note Insurer under or with respect to any
of the Company Documents. The Originator, the Servicer, the Company and
the Seller shall give the Note 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 Originator, the Servicer, the Company and the
Seller shall furnish to the Note Insurer all information requested by it
that is reasonably necessary to determine compliance with this paragraph.
(b) AMENDMENTS, ETC. The Originator, the Servicer, the Company and
the Seller shall not modify or amend, or consent to any modification or
amendment of, any of the terms, provisions or conditions of the Company
Documents to which it is a party without the prior written consent of the
Note Insurer thereto, but excluding any amendment to the Offering Document
required by law and excluding any modifications or amendments to which
Note Insurer's consent is not required by the terms of the related Company
Documents.
(c) LIMITATION ON MERGERS, ETC. The Originator, the Servicer, the
Company and the Seller shall not consolidate with or merge with or into
any Person or transfer all or substantially all of its assets to any
Person or liquidate or dissolve except as provided in the Servicing
Agreement and the Indenture or as permitted hereby. The Originator, the
Servicer, the Company and the Seller shall furnish to the Note Insurer all
information requested by it that is reasonably necessary to determine
compliance with this paragraph.
(d) SUCCESSORS. None of the Indenture Trustee, the Originator, the
Servicer, the Company or the Seller shall terminate or designate, or
consent to the termination or designation of, any successor Servicer,
Custodian or Indenture Trustee without the prior written approval of the
Note Insurer, which approval shall not be unreasonably withheld,
conditioned or delayed.
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE SUB-SERVICER. The
Sub-Servicer represents and warrants as of the Closing Date 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. It 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
Company Documents in each jurisdiction in which the failure to obtain such
approvals would render any Company Document unenforceable in any respect
or would have a material adverse effect upon the Transaction.
18
(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 enter into,
execute, deliver and perform its obligations under the Company Documents
and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
the Company Documents by the Sub-Servicer has 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 any governmental entity or any of the stockholders of
the Sub-Servicer, which have not previously been obtained or given by the
Sub-Servicer.
(d) NONCONTRAVENTION. The execution and delivery by the Sub-Servicer
of the Company Documents to which any is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of the
Company Documents do not and will not:
(i) conflict with or result 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 respective material properties,
including regulations issued by any administrative agency or other
governmental authority having supervisory powers over the
Sub-Servicer;
(ii) constitute a default by the Sub-Servicer under, result in
the acceleration of any obligation under, or breach any provision of
any loan agreement, mortgage, indenture or other agreement or
instrument to which the Sub-Servicer either is a party or by which
any of their properties are or may be bound or affected; or
(iii) result in or require the creation of any lien upon or in
respect of any assets of the Sub-Servicer, except as otherwise
expressly contemplated by the Company 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, any of their
subsidiaries, any properties or rights of any of the Sub-Servicer or any
of their subsidiaries or any of the Mortgage Loans pending or, to the
Sub-Servicer's knowledge after reasonable inquiry, threatened, which, in
any case, if decided adversely to the Sub-Servicer or any such subsidiary
could result in a Material Adverse Change with respect to the
Sub-Servicer.
(f) VALID AND BINDING OBLIGATIONS. The Company Documents (other than
the Notes), 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,
19
except as such enforceability may be limited by 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 Notes, when executed, authenticated and delivered in
accordance with the Indenture, will be validly issued and outstanding and
entitled to the benefits of the Indenture. The Sub-Servicer will not at
any time in the future deny that the Company Documents constitute the
legal, valid and binding obligations of the Sub-Servicer.
(g) FINANCIAL INFORMATION. The Financial Statements of the
Sub-Servicer, copies of which have been furnished to the Note Insurer, (i)
present fairly in all material respects the financial condition and
results of operations of the Sub-Servicer as of the dates and for the
periods indicated and (ii) have been prepared in accordance with
regulatory accounting principles applicable to a national banking
association 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 with respect to the Sub-Servicer, there
has been no Material Adverse Change in respect of the Sub-Servicer. Except
as disclosed in the Financial Statements, the Sub-Servicer are not subject
to any contingent liabilities or commitments that, individually or in the
aggregate, have a material possibility of causing a Material Adverse
Change in respect of the Sub-Servicer.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Sub-Servicer in the conduct
of its business violates any law, regulation, judgment, agreement, order
or decree applicable to the Sub-Servicer that, if enforced, could result
in a Material Adverse Change with respect to the Sub-Servicer.
(i) TAXES. The Sub-Servicer has filed or has participated in the
filing of a consolidated filing with their parent corporation prior to the
date hereof all federal and state tax returns that are required to be
filed prior to the date hereof and has paid or made provisions for the
payment of all taxes to the extent that such taxes have become due other
than (i) taxes or other charges which are not yet delinquent or are being
contested in good faith and have not been finally determined or (ii)
information returns, tax returns, taxes or other governmental charges, the
failure to file, pay or make provisions for, either individually or in the
aggregate, are not likely in the reasonable judgment of the Sub-Servicer,
as applicable, to constitute a Material Adverse Change on the
Sub-Servicer.
(j) ACCURACY OF INFORMATION. Neither the Company Documents nor other
information relating to the Mortgage Loans, the operations of the
Sub-Servicer or the financial condition of the Sub-Servicer (collectively,
the "Sub-Servicer Documents"), as amended, supplemented or superseded,
furnished to the Note Insurer by the Sub-Servicer contains any statement
of a material fact which was untrue or misleading in any material respect
when made. The Sub-Servicer has no knowledge of any circumstances that
could reasonably be expected to cause a Material Adverse Change with
respect to the Sub-Servicer. Since the furnishing of the Sub-Servicer
Documents, there has been no change nor any
20
development or event involving a prospective change known to the
Sub-Servicer that would render any of the Sub-Servicer Documents untrue or
misleading in any material respect.
(k) COMPANY DOCUMENTS. The representations of the Sub-Servicer
contained in the Company Documents are true and correct in all material
respects and the Sub-Servicer hereby make each such representation and
warranty to, and for the benefit of, the Note Insurer as if the same were
set forth in full herein; provided that the remedy for any breach of a
representation and warranty of the Sub-Servicer in Section 2.3 of the
Sub-Servicing Agreement and the remedy with respect to any defective
Mortgage Loans under Section 2.3 of the Sub-Servicing Agreement shall be
limited to the remedies specified in the Sub-Servicing Agreement.
(l) SOLVENCY; FRAUDULENT CONVEYANCE. 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 less than
applicable regulatory capital requirements with which to engage in its
business, and the Sub-Servicer does not 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,
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 respective assets.
(m) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Sub-Servicer is Xxxx Xxxx Xxxxx, Xxxxxxx.
Section 2.05 AFFIRMATIVE COVENANTS OF THE SUB-SERVICER. The Sub-Servicer
hereby agrees that during the term of this Insurance Agreement, unless the Note
Insurer shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Sub-Servicer
shall comply with the terms and conditions of and perform its respective
obligations under the Company Documents to which it is a party in all
cases in which failure to so comply or perform would result in a default
thereunder and shall comply with all material requirements of any law,
rule or regulation applicable to it.
(b) CORPORATE EXISTENCE. Subject to Section 2.06(c) hereof, the
Sub-Servicer and its successors and permitted assigns shall maintain its
corporate 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 and
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 its assets and business, including books and
records relating to the Transaction. The Sub-
21
Servicer shall furnish or cause to be furnished to the Note Insurer,
within 30 days of receipt of written request of the Note Insurer:
(i) ANNUAL FINANCIAL STATEMENTS. The audited consolidated
statement of financial condition of the Sub-Servicer and their
respective consolidated subsidiaries as of the end of a fiscal year
and the related audited consolidated statements of operations,
stockholders' 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
or otherwise acceptable to the Note Insurer) and by the certificate
specified in Section 2.05(d).
(ii) QUARTERLY FINANCIAL STATEMENTS. (A) Upon the reasonable
request of the Note Insurer following any Material Adverse Change of
the Sub-Servicer or the reasonable belief of the Note Insurer that a
Material Adverse Change of the Sub-Servicer has occurred, as soon as
available, and (B) in any event within 60 days after the close of
each of the first three quarters of each fiscal year of the
Sub-Servicer, the unaudited consolidated statement of financial
condition of the Sub-Servicer and its respective consolidated
subsidiaries as of the end of such quarter, and the related
unaudited consolidated statements of operations, stockholders'
equity and cash flows for the portion of the fiscal year the ended,
all in reasonable 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 (subject to normal
year-end adjustments), and accompanied by the certificate specified
in Section 2.05(d).
(iii) CERTAIN INFORMATION. Upon the reasonable request of the
Note Insurer, copies of any requested proxy statements, financial
statements, reports and registration statements that the
Sub-Servicer files with, or delivers to, the Commission or any
national securities exchange.
(iv) OTHER INFORMATION. (A) 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, (B) promptly upon request, such
other data as the Note Insurer may reasonably request and (C) all
information required to be furnished to the Indenture Trustee or to
the Holders of the Notes simultaneously with the furnishing thereof
to the Indenture Trustee or the Holders of the Notes, as the case
may be.
(d) COMPLIANCE CERTIFICATE. The Sub-Servicer shall deliver to the
Note Insurer, at the time that the delivery of the financial statements of
the Sub-Servicer are required
22
pursuant to subsection 2.05(c)(i) and (ii) certificates of one (or more)
of its officers stating that:
(i) a review of the performance of the Sub-Servicer, as
applicable, under the Company Documents to which it is a party
during such period has been made under such officer's supervision;
(ii) to the best of such officer'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, if the Sub-Servicer has a right to cure pursuant to
Section 5.01, stating in reasonable detail (including, if
applicable, any supporting calculations) the steps, if any, being
taken by the Sub-Servicer 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; and
(iii) the attached financial statements submitted in
accordance with subsection 2.05(c)(i) or (ii), if applicable,
present fairly in all material respects the financial condition and
results of operations of the Sub-Servicer as of the dates and for
the periods indicated, in accordance with regulatory accounting
principles consistently applied (subject as to interim statements to
normal year-end adjustments).
(iv) the Sub-Servicer has in full force and effect a fidelity
bond (or direct surety bond) and an errors and omissions policy in
accordance with the terms and requirements of Section 3.5 of the
Sub-Servicing Agreement.
(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 Note Insurer,
permit the Note Insurer or its authorized agents:
(i) to inspect the books and records of the Sub-Servicer as
they may relate to the Notes, the obligations of the Sub-Servicer
under the Company 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 or delayed, to discuss the affairs,
finances and accounts of the Sub-Servicer with the Sub-Servicer and
the independent accountants of the Sub-Servicer, provided that an
officer of the Sub-Servicer, as applicable, shall have the right to
be present during such discussions.
23
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Sub-Servicer, as the case may be.
The Note 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 Company Documents, provided that the
foregoing shall not limit the right of the Note Insurer to make such
information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants.
(f) NOTICE OF MATERIAL EVENTS. The Sub-Servicer shall be obligated
promptly to inform the Note Insurer in writing of the occurrence of any of
the following:
(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 would likely 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 likely
result in a Material Adverse Change with respect to the
Sub-Servicer;
(ii) any change in the location of the principal office of the
Sub-Servicer;
(iii) the occurrence of any Default or Event of Default
involving the Sub-Servicer or any Material Adverse Change in respect
of the Sub-Servicer;
(iv) the commencement of any proceedings by or against the
Sub-Servicer under any applicable 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 their assets;
or
(v) the receipt of notice that (A) 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
(B) the Sub-Servicer is to cease and desist any practice, procedure
or policy employed by the Sub-Servicer in the conduct of its
business, but only if such suspension, revocation or cessation may
result in a Material Adverse Change with respect to the
Sub-Servicer.
(g) FINANCING STATEMENTS AND FURTHER ASSURANCES. The Sub-Servicer
shall, upon the request of the Note Insurer, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, within ten days of such request, such
24
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 Company Documents. In addition, the
Sub-Servicer agrees to cooperate with S&P and Xxxxx'x in connection with
any review of the Transaction that may be undertaken by S&P and Xxxxx'x
after the date hereof.
(h) MAINTENANCE OF LICENSES. The Sub-Servicer and any successors
thereof shall maintain all licenses, permits, charters and registrations
which are material to the conduct of its business.
(i) THIRD-PARTY BENEFICIARY. The Sub-Servicer agrees that the Note
Insurer shall have all rights of a third-party beneficiary in respect of
the Sub-Servicing Agreement and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for the
benefit of the Note Insurer; provided that the remedy for any breach of a
representation and warranty of the Sub-Servicer in Section 2.3 of the
Sub-Servicing Agreement and the remedy with respect to any defective
Mortgage Loans under Section 2.3 of the Sub-Servicing Agreement shall be
limited to the remedies specified in the Sub-Servicing Agreement.
(j) SERVICING OF MORTGAGE LOANS. All Mortgage Loans will be serviced
in compliance with the Servicing Agreement.
(k) NOTE ACCOUNT. For so long as Ocwen is the Sub-Servicer, monies
on deposit in the Note Account shall be invested in Permitted Investments
maturing as provided in the Servicing Agreement.
(l) DUE DILIGENCE. The Note Insurer shall have the right, so long as
any Notes remain outstanding, to conduct an ongoing review of the
Sub-Servicer's practices as Sub-Servicer through reviews of the Mortgage
Loans, "drive-by" reappraisals of Mortgaged Properties and reviews of
servicing practices. Such ongoing due diligence shall be conducted at the
expense of the Note Insurer and in a reasonable manner convenient to the
Sub-Servicer and the Note Insurer.
Section 2.06 NEGATIVE COVENANTS OF THE SUB-SERVICER. The Sub-Servicer
hereby agrees that during the term of this Insurance Agreement, unless the Note
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 specified in clause (ii) of
the definition of Material Adverse Change with respect to the
Sub-Servicer, or may not interfere with the enforcement of any rights of
the Note Insurer under or with respect to any of the Company Documents.
The Sub-Servicer shall give the Note Insurer written notice of any such
action or failure to act on the earlier of: (i) the date
25
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 Note Insurer all information requested by it that is
reasonably necessary to determine compliance with this paragraph.
(b) AMENDMENTS, ETC. The Sub-Servicer shall not modify or amend, or
consent to any modification or amendment of, any of the terms, provisions
or conditions of the Company Documents to which it is a party without the
prior written consent of the Note Insurer thereto, but excluding any
amendment to the Offering Document required by law and excluding any
modifications or amendments to which Note Insurer's consent is not
required by the terms of the related Company Documents.
(c) SUCCESSORS. The Sub-Servicer shall not terminate or designate,
or consent to the termination or designation of, any successor Servicer,
Custodian or Indenture Trustee without the prior written approval of the
Note Insurer, which approval shall not be unreasonably withheld,
conditioned or delayed.
Section 2.07 REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
represents and warrants as of the Closing Date as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Sponsor is a
corporation, duly organized, validly existing and in good standing under
the laws of the State of North Carolina. The Sponsor 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 Company 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 Company 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 Sponsor 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 Company Documents to which it is a party and to
consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
the Company Documents to which it is a party by the Sponsor 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 any governmental entity or any of the
stockholders of the Sponsor, which have not previously been obtained or
given by the Sponsor.
26
(d) NONCONTRAVENTION. The execution and delivery by the Sponsor of
the Company Documents to which it is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of the
Company Documents to which it is a party do not and will not:
(i) conflict with or result in any breach or violation of any
provision of the charter or bylaws of the Sponsor or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to the Sponsor or
any of its respective material properties, including regulations
issued by any administrative agency or other governmental authority
having supervisory powers over the Sponsor, which conflict, breach
or violation reasonably could result in a Material Adverse Change;
(ii) constitute a default by the Sponsor under, result in the
acceleration of any obligation under, or breach any provision of any
loan agreement, mortgage, indenture or other agreement or instrument
to which the Sponsor is a party or by which any of its properties
are or may be bound or affected, which default, acceleration or
breach could reasonably result in a Material Adverse Change; or
(iii) result in or require the creation of any lien upon or in
respect of (a) any assets of the Sponsor, which lien reasonably
could result in a Material Adverse Change or (b) the Mortgage Loans,
in either case, except as otherwise expressly contemplated by the
Company 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 Sponsor, any of its
subsidiaries, any properties or rights of the Sponsor or any of its
subsidiaries or, to the Sponsor's knowledge, threatened, which, in any
case, if decided adversely to the Sponsor or any of its subsidiaries could
result in a Material Adverse Change with respect to the Sponsor.
(f) VALID AND BINDING OBLIGATIONS. The Company Documents to which it
is a party, when executed and delivered by the Sponsor, will constitute
the legal, valid and binding obligations of the Sponsor, 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 Notes, when
executed, authenticated and delivered in accordance with the Indenture,
will be validly issued and outstanding and entitled to the benefits of the
Indenture. The Sponsor will not at any time in the future deny that the
Company Documents to which the Sponsor is a party, constitute the legal,
valid and binding obligations of the Sponsor.
27
(g) COMPLIANCE WITH LAW, ETC. No current practice, procedure or
policy employed, or proposed to be employed, by the Sponsor in the conduct
of its business violates any law, regulation, judgment, agreement, order
or decree applicable to the Sponsor that, if enforced, could result in a
Material Adverse Change with respect to the Sponsor.
(h) TAXES. The Sponsor has filed prior to the date hereof all
federal and state tax returns that are required to be filed and has 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.
Any taxes, fees and other governmental charges payable by the Sponsor in
connection with the Transaction, the execution and delivery of the Company
Documents to which it is a party and the issuance of the Notes have been
paid or shall have been paid at or prior to the Closing Date if such
taxes, fees or other governmental charges were due on or prior to the
Closing Date.
(i) ACCURACY OF INFORMATION. Neither information supplied by the
Sponsor contained in the Company Documents to which it is a party nor
other material information relating to the operations of the Sponsor or
the financial condition of the Sponsor (collectively, the "Sponsor
Documents"), as amended, supplemented or superseded, furnished to the Note
Insurer in writing or in electronic format by the Sponsor contains any
statement of a material fact with respect to the Sponsor which was untrue
or misleading in any material respect when made. The Sponsor has no
knowledge of any circumstances that could reasonably be expected to cause
a Material Adverse Change with respect to the Sponsor. Since the
furnishing of the Sponsor Documents, there has been no change nor any
development or event involving a prospective change known to the Sponsor
that would render any of the Sponsor Documents untrue or misleading in any
material respect.
(j) COMPLIANCE WITH SECURITIES LAWS. At the time the Registration
Statement became effective, the Registration Statement complied in all
material respects with the requirements of the Securities Act and the
regulations thereunder. The Sponsor will comply with the Securities Act,
the Securities Exchange Act and the regulations thereunder so as to permit
the completion of the offer and sale of the Notes as contemplated by the
Underwriting Agreement. Based on representations made to the Sponsor by
the Underwriter in the Underwriting Agreement, the offer and sale of the
Notes will comply in all material respects with all requirements of law.
The Sponsor Information in 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 Note Insurer
Information, with respect to the Underwriter Information or the Company
Information. The Sponsor Sale Agreement is not, and the Indenture is,
required to be qualified under the Trust Indenture Act and the Trust Fund
is not required to be registered as an "investment company" under the
Investment Company Act. The Sponsor will satisfy any of the information
reporting requirements of the Securities Exchange Act arising out of the
Transaction to which it or the Trust Fund are subject.
28
(k) COMPANY DOCUMENTS. The representations and warranties of the
Sponsor contained in the Company Documents are true and correct in all
material respects and the Sponsor hereby makes each such representation
and warranty to, and for the benefit of, the Note Insurer as if the same
were set forth in full herein.
(l) SOLVENCY; FRAUDULENT CONVEYANCE. The Sponsor is solvent and will
not be rendered insolvent by the Transaction and, after giving effect to
the Transaction, the Sponsor will not be left with an unreasonably small
amount of capital with which to engage in the ordinary course of its
business, and the Sponsor does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay as they mature. The Sponsor does
not contemplate the commencement of insolvency, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of the Sponsor or any
of its assets. The amount of consideration being received by the Sponsor
upon the sale of the Notes constitutes reasonably equivalent value and
fair consideration for the interest in the Mortgage Loans evidenced by the
RBMG Funding Co. Mortgage Loan Trust 1999-2, Asset-Backed Notes, Series
1999-2. The Sponsor is not transferring the Mortgage Loans to the Trust
Fund or selling the Notes, as provided in the Company Documents, with any
intent to hinder, delay or defraud any of the Sponsor's creditors.
(m) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Sponsor is Charlotte, North Carolina.
Section 2.08 AFFIRMATIVE COVENANTS OF THE SPONSOR. The Sponsor hereby
agrees that during the term of this Insurance Agreement, unless the Note Insurer
shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Sponsor
shall comply with the terms and conditions of and perform its respective
obligations under the Company Documents to which it is a party in all
cases in which failure to so comply or perform would result in a default
thereunder and shall comply with all material requirements of any law,
rule or regulation applicable to it in all circumstances where
noncompliance reasonably could result in a Material Adverse Change with
respect to the Sponsor.
(b) CORPORATE EXISTENCE. The Sponsor and its successors and
permitted assigns shall maintain its corporate existence and shall at all
times continue to be duly organized under the laws of the State of North
Carolina and duly qualified and duly authorized (as described in
subsections 2.07(a), (b) and (c) hereof) and shall conduct its business in
accordance with the terms of its charter and bylaws.
(c) FINANCIAL STATEMENTS; OTHER INFORMATION. The Sponsor shall keep
or cause to be kept in reasonable detail books and records of account of
its assets and business, including books and records relating to the
Transaction, and shall clearly reflect therein the
29
transfer of the Mortgage Loans to the Trust Fund as a sale of the
Sponsor's interest in the Mortgage Loans. The Sponsor shall furnish or
cause to be furnished to the Note Insurer promptly upon request, such
other data as the Note Insurer may reasonably request and all information
required to be furnished to the Indenture Trustee or to the Holders of the
Notes simultaneously with the furnishing thereof to the Indenture Trustee
or the Holders of the Notes, as the case may be.
(d) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Sponsor shall, upon the reasonable request of the Note Insurer, permit the
Note Insurer or its authorized agents:
(i) to inspect the books and records of the Sponsor as they
may relate to the Notes, the obligations of the Sponsor under the
Company Documents to which it is a party and the Transaction;
(ii) to discuss the affairs, finances and accounts of the
Sponsor with the Chief Operating Officer and the Chief Financial
Officer of the Sponsor; and
(iii) with the Sponsor's consent, to discuss the affairs,
finances and accounts of the Sponsor with the Sponsor's independent
accountants, provided that an officer of the Sponsor shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Sponsor.
(e) NOTICE OF MATERIAL EVENTS. The Sponsor shall be obligated
promptly to inform the Note Insurer in writing of the occurrence of any of
the following:
(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 Sponsor that (A) would be required to be disclosed to
the Commission or the Sponsor's shareholders or (B) would likely
result in a Material Adverse Change with respect to the Sponsor, or,
to the best of the Sponsor's knowledge, the promulgation of any
proceeding or any proposed or final rule which would likely result
in a Material Adverse Change with respect to the Sponsor;
(ii) any change in the location of the principal office of the
Sponsor;
(iii) the occurrence of any Material Adverse Change in respect
of the Sponsor;
30
(iv) the commencement of any proceedings by or against the
Sponsor under any applicable 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 Sponsor or any of its assets; or
(v) the receipt of notice that (A) any license, permit,
charter, registration or approval necessary for the conduct of the
Sponsor's business are to be, or may be suspended or revoked or (B)
the Sponsor is to cease and desist any practice, procedure or policy
employed by the Sponsor in the conduct of its business, and such
cessation may reasonably result in a Material Adverse Change with
respect to the Sponsor.
(f) FURTHER ASSURANCES. The Sponsor shall, upon the request of the
Note 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 Company Documents. In addition, the
Sponsor agrees to cooperate with S&P and Xxxxx'x in connection with any
review of the Transaction that may be undertaken by S&P and Xxxxx'x after
the date hereof.
(g) MAINTENANCE OF LICENSES. The Sponsor and any of its successors
shall maintain all licenses, permits, charters and registrations which are
material to the conduct of its business.
(h) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Notes shall clearly disclose that (i) the Policy is not
covered by the property/casualty insurance certificate fund specified in
Article 76 of the New York Insurance Law and (ii) in the event that the
Note Insurer were to become insolvent, any claims arising under the Policy
would be excluded from coverage by the California Insurance Guaranty
Association, established pursuant to the laws of the State of California.
(i) THIRD-PARTY BENEFICIARY. The Sponsor agrees that the Note
Insurer shall have all rights of a third-party beneficiary in respect of
the Sponsor Sale Agreement and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for the
benefit of the Note Insurer.
(j) CLOSING DOCUMENTS. The Sponsor shall provide or cause to be
provided to the Note Insurer an executed original copy of each document
executed in connection with the Transaction to which it is a party within
30 Business Days after the date of closing.
31
Section 2.09 NEGATIVE COVENANTS OF THE SPONSOR. The Sponsor hereby agrees
that during the term of this Insurance Agreement, unless the Note Insurer shall
otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Sponsor 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 specified in clause (ii) of the
definition of Material Adverse Change with respect to the Sponsor, or may
not interfere with the enforcement of any rights of the Note Insurer under
or with respect to any of the Company Documents. The Sponsor shall give
the Note 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 Sponsor shall furnish to the Note Insurer all information
requested by it that is reasonably necessary to determine compliance with
this paragraph.
(b) AMENDMENTS, ETC. The Sponsor shall not modify or amend, or
consent to any modification or amendment of, any of the terms, provisions
or conditions of the Company Documents to which it is a party without the
prior written consent of the Note Insurer thereto, but excluding any
amendment to the Offering Document required by law and excluding any
modifications or amendments to which Note Insurer's consent is not
required by the terms of the related Company Document.
(c) LIMITATION ON MERGERS, ETC. The Sponsor shall not consolidate
with or merge with or into any Person or transfer all or substantially all
of its assets to any Person or liquidate or dissolve except as provided in
the Company Documents to which it is a party or as permitted hereby. The
Sponsor shall furnish to the Note Insurer all information requested by it
that is reasonably necessary to determine compliance with this paragraph.
(d) SUCCESSORS. The Sponsor shall not terminate or designate, or
consent to the termination or designation of, any successor Servicer,
Custodian or Indenture Trustee without the prior written approval of the
Note Insurer, which approval shall not be unreasonably withheld,
conditioned or delayed.
Section 2.10 REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants as of the Closing Date as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Issuer is a business
trust, duly organized, validly existing and in good standing under the
laws of Delaware and the United States of America. 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 Company Documents in each
jurisdiction in which the failure to be so qualified or to obtain such
32
approvals would render any Company Document unenforceable in any respect
or would have a material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Issuer 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 their
obligations under the Company Documents and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
the Company Documents by the Issuer has 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 any governmental entity or any of the stockholders of
the Trust or the Owner Trustee, which have not previously been obtained or
given by the Trust or the Owner Trustee.
(d) NONCONTRAVENTION. The execution and delivery by the Issuer of
the Company Documents to which it is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of the
Company Documents do not and will not:
(i) conflict with or result in any breach or violation of any
provision of the charter or bylaws of the Issuer 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 respective material properties, including regulations
issued by any administrative agency or other governmental authority
having supervisory powers over the Issuer;
(ii) constitute a default by the Issuer under, result in the
acceleration of any obligation under, or breach any provision of any
loan agreement, mortgage, indenture or other agreement or instrument
to which the Issuer either is a party or by which any of their
properties are or may be bound or affected; or
(iii) result in or require the creation of any lien upon or in
respect of any assets of the Issuer, except as otherwise expressly
contemplated by the Company Documents;
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Issuer, any of their
subsidiaries, any properties or rights of the Issuer or any of their
subsidiaries or any of the Mortgage Loans pending or, to the Issuer's
knowledge after reasonable inquiry, threatened, which, in any case, if
decided adversely to the Issuer or any such subsidiary could result in a
Material Adverse Change with respect to the Issuer.
33
(f) VALID AND BINDING OBLIGATIONS. The Company Documents (other than
the Notes), 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 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 Notes, when executed,
authenticated and delivered in accordance with the Indenture, will be
validly issued and outstanding and entitled to the benefits of the
Indenture. The Issuer will not at any time in the future deny that the
Company Documents 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 the Issuer that, if enforced, would 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 has 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.
Any taxes, fees and other governmental charges payable by the Issuer in
connection with the Transaction, the execution and delivery of the Company
Documents and the issuance of the Notes have been paid or shall have been
paid at or prior to the Closing Date.
(i) ACCURACY OF INFORMATION. Neither the Company Documents nor other
information relating to the Mortgage Loans, the operations of the Issuer
or the financial condition of the Issuer (collectively, the "Issuer
Documents"), as amended, supplemented or superseded, furnished to the Note
Insurer by the Issuer contains any statement of a material fact which was
untrue or misleading in any material respect when made. The Issuer has no
knowledge of any circumstances that could reasonably be expected to cause
a Material Adverse Change with respect to the Issuer. Since the furnishing
of the Issuer Documents, there has been no change nor any development or
event involving a prospective change known to the Issuer that would render
any of the Issuer Documents untrue or misleading in any material respect.
(j) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the Notes
comply in all material respects with all requirements of law, including
all registration requirements of applicable securities laws. Without
limiting 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 Note Insurer
Information or with respect to the Underwriter Information. Neither the
offer nor sale of the Notes by the Issuer have been or will be in
violation of the Securities Act or any other federal or state securities
laws. The Indenture is required to be qualified under
34
the Trust Indenture Act, and the Trust Fund is not required to be
registered as an "investment company" under the Investment Company Act.
The Issuer will satisfy or cause to be satisfied any of the information
reporting requirements of the Securities Exchange Act arising out of the
Transaction to which it or the Trust Fund are subject.
(k) COMPANY DOCUMENTS. Each of the representations and warranties of
the Issuer contained in the Company Documents is true and correct in all
material respects and the Issuer hereby make each such representation and
warranty to, and for the benefit of, the Note Insurer as if the same were
set forth in full herein.
(l) SOLVENCY; FRAUDULENT CONVEYANCE. 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, and the Issuer
does not 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, liquidation or consolidation proceedings or
the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Issuer or any of their assets. The amount of
consideration being received by the Issuer, as Issuer, upon the sale of
the Notes constitutes reasonably equivalent value and fair consideration
for the interest in the Mortgage Loans evidenced by the RBMG Funding Co.
Mortgage Loan Trust 1999-2, Asset-Backed Notes, Series 1999-2. The Issuer
is not transferring or selling the Notes, as provided in the Company
Documents, with any intent to hinder, delay or defraud any of the Issuer's
creditors.
(m) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Issuer is Wilmington, Delaware.
Section 2.11 AFFIRMATIVE COVENANTS OF THE ISSUER. The Issuer hereby agrees
that during the term of this Insurance Agreement, unless the Note Insurer shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Issuer shall
comply with the terms and conditions of and perform its respective
obligations under the Company Documents to which it is a party in all
cases in which failure to so comply or perform would result in a default
thereunder and shall comply with all material requirements of any law,
rule or regulation applicable to it.
(b) CORPORATE EXISTENCE. The Issuer and its successors and permitted
assigns shall maintain its corporate 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 2.10(a), (b)
and (c) hereof) and shall conduct its business in accordance with the
terms of its certificate of trust and the Trust Agreement.
35
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Issuer shall keep or cause to be kept in reasonable detail books and
records of account of its assets and business, including books and records
relating to the Transaction, and shall clearly reflect therein the
transfer of the Mortgage Loans to the Trust Fund and the sale of the RBMG
Funding Co. Mortgage Loan Trust 1999-2, Asset-Backed Notes, Series 1999-2
as a sale of the Sponsor's interest in the Mortgage Loans evidenced by the
Notes. The Issuer shall furnish or cause to be furnished to the Note
Insurer:
(d) INITIAL REPORT. On or before the Closing Date, 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 to be
included in the Schedule of Mortgage Loans.
(e) CERTAIN INFORMATION. Upon the reasonable request of the Note
Insurer, copies of any requested financial statements, reports and
registration statements that the Issuer files with, or delivers to, the
Commission or any national securities exchange.
(f) OTHER INFORMATION. (A) Promptly upon receipt thereof, copies of
all schedules, financial statements or other similar reports delivered to
or by the Issuer, pursuant to the terms of the Sale and Servicing
Agreement, (B) promptly upon request, such other data as the Note Insurer
may reasonably request and (C) all information required to be furnished to
the Indenture Trustee or to the Holders simultaneously with the furnishing
thereof to the Indenture Trustee or the Holders, as the case may be.
(g) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Issuer shall, upon the reasonable request of the Note Insurer, permit the
Note Insurer or its authorized agents:
(i) to inspect the books and records of the Issuer as they may
relate to the Notes (other than the names and addresses of
Mortgagors and strategic plans which are unrelated to the Notes),
the obligations of the Issuer under the Company Documents and the
Transaction;
(ii) to discuss the affairs, finances and accounts of the
Issuer with the Sponsor on behalf of the Issuer; and
(iii) with the Issuer's consent, which consent shall not be
unreasonably withheld or delayed, to discuss the affairs, finances
and accounts of the Issuer with the Issuer's independent
accountants, provided that an officer of the Issuer shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Issuer.
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(h) NOTICE OF MATERIAL EVENTS. The Issuer shall be obligated
promptly to inform the Note Insurer in writing of the occurrence of any of
the following:
(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 the Issuer's shareholders or (B) would likely 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 likely result in a Material Adverse Change with respect to the
Issuer;
(ii) any change in the location of the principal office of the
Issuer;
(iii) the occurrence of any Event of Default, or any Material
Adverse Change in respect of the Issuer;
(iv) the commencement of any proceedings by or against the
Issuer under any applicable 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 their assets; or
(v) the receipt of notice that (A) any license, permit,
charter, registration or approval necessary for the conduct of the
Issuer's business are to be, or may be suspended or revoked or (B)
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.
(i) FINANCING STATEMENTS AND FURTHER ASSURANCES. 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 Fund. The Issuer shall, upon the request of the Note 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 Company Documents. In addition, the
Issuer agrees to cooperate with S&P and Xxxxx'x in connection with any
review of the Transaction that may be undertaken by S&P and Xxxxx'x after
the date hereof.
(j) MAINTENANCE OF LICENSES. The Issuer and any successors thereof
shall maintain all licenses, permits, charters and registrations which are
material to the conduct of their business.
37
(k) RETIREMENT OF NOTES. The Issuer shall instruct the Indenture
Trustee, upon a retirement or other payment of all of the Notes, to
surrender the Policy to the Note Insurer for cancellation.
(l) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Notes shall clearly disclose that (i) the Policy is not
covered by the property/casualty insurance certificate fund specified in
Article 76 of the New York Insurance Law and (ii) in the event that the
Note Insurer were to become insolvent, any claims arising under the Policy
would be excluded from coverage by the California Insurance Guaranty
Association, established pursuant to the laws of the State of California.
(m) THIRD-PARTY BENEFICIARY. The Issuer agrees that the Note Insurer
shall have all rights of a third-party beneficiary in respect of the
Indenture and hereby incorporates and restates its representations,
warranties and covenants as set forth therein for the benefit of the Note
Insurer.
(n) CLOSING DOCUMENTS. The Issuer shall provide or cause to be
provided to the Note Insurer an executed original copy of each document
executed in connection with the Transaction within 30 Business Days after
the date of closing.
Section 2.12 NEGATIVE COVENANTS OF THE ISSUER. The Issuer hereby agrees
that during the term of this Insurance Agreement, unless the Note 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 specified in clause (ii) of the
definition of Material Adverse Change with respect to the Issuer,
respectively, or may not interfere with the enforcement of any rights of
the Note Insurer under or with respect to any of the Company Documents.
The Issuer shall give the Note 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 Note Insurer all
information requested by it that is reasonably necessary to determine
compliance with this paragraph.
(b) AMENDMENTS, ETC. The Issuer shall modify or amend, or consent to
any modification or amendment of, any of the terms, provisions or
conditions of the Company Documents to which it is a party without the
prior written consent of the Note Insurer thereto, but excluding any
amendment to the Offering Document required by law and excluding any
modifications or amendments to which Note Insurer's consent is not
required.
38
(c) LIMITATION ON MERGERS, ETC. The Issuer shall not consolidate
with or merge with or into any Person or transfer all or substantially all
of its assets to any Person or liquidate or dissolve except as provided in
the Indenture or as permitted hereby. The Issuer shall furnish to the Note
Insurer all information requested by it that is reasonably necessary to
determine compliance with this paragraph.
Section 2.13 REPRESENTATIONS AND WARRANTIES OF THE NOTE INSURER. The Note
Insurer represents and warrants to the Indenture Trustee, the Issuer, the
Sponsor, the Originator, the Servicer, the Company and the Seller as follows:
(a) ORGANIZATION AND LICENSING. The Note Insurer is a duly organized
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 and deliver this Insurance
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
Insurance Agreement have been taken and all licenses, orders, consents or
other authorizations or approvals of the Note Insurer's Board of Directors
or stockholders or 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 Insurance
Agreement will each constitute a legal, valid and binding obligation of
the Note Insurer, enforceable in accordance with its terms, subject to
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
39
Commission on November 12, 1999), 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 Note Insurer Information is true
and correct in all material respects and does not contain any untrue
statement of a material fact.
(g) 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 Insurance Agreement.
(h) The execution by the Note Insurer of this Insurance Agreement
will not, and the satisfaction of the terms hereof will not, conflict with
or result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or By-Laws of the Note Insurer, or any
restriction contained in any contract, agreement or instrument to which
the Note Insurer is a party or by which it is bound or constitute a
default under any of the foregoing.
(i) CONFIDENTIAL INFORMATION. The Note Insurer agrees that it and
its shareholders, directors, agents, accountants and attorneys shall not
use or disclose any information provided to the Note Insurer pursuant to
or in connection with this Insurance Agreement or the issuance of the
Policy or otherwise related to the Transactions, including any matter of
which it becomes aware during the inspections conducted or discussions had
pursuant to Sections 2.02(e), 2.05(e), 2.08(d) and 2.11(g), unless such
information is readily available from public sources or 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 Company Documents; provided,
however, that the foregoing shall not limit the right of the Note Insurer
to make such information available to its regulators, securities rating
agencies, reinsurers, credit and liquidity providers, counsel and
accountants. If the Note Insurer is requested or required (by oral
questions, interrogatories, requests for information or documents
subpoena, civil investigative demand or similar process) to disclose any
information provided to the Note Insurer pursuant to or in connection with
this Insurance Agreement or the issuance of the Policy or otherwise
related to the Transactions, including any information of which it becomes
aware through such inspections or discussions, the Note Insurer will
promptly notify the Originator, the Servicer, the Company, the Seller, the
Sponsor and the Issuer of such request(s) so that the Originator, the
Servicer, the Company, the Seller, the Sponsor and the Issuer may seek an
appropriate
40
protective order and/or waive the Note Insurer's compliance with the
provisions of this Insurance Agreement. If, in the absence of a protective
order or the receipt of a waiver hereunder, the Note Insurer is,
nonetheless, in the opinion of its counsel (which shall be delivered to
the Originator, the Servicer, the Company, the Seller, the Sponsor and the
Issuer), compelled to disclose such information to any tribunal or else
stand liable for contempt or suffer other censure of significant penalty,
the Note Insurer may disclose such information to such tribunal that the
Note Insurer is compelled to disclose, provided that a copy of all
information disclosed is provided to the Originator, the Servicer, the
Company, the Seller, the Sponsor and the Issuer promptly upon such
disclosure.
(j) RATING. The Note Insurer is not aware of any facts that if
disclosed to Moody's or S&P would be reasonably expected to result in a
downgrade of the rating of the claims paying ability of the Note Insurer
by either of such Rating Agencies.
(k) SECURITIES ACT REGISTRATION. The Policy is exempt from
registration under the Securities Act.
ARTICLE I
THE POLICY; REIMBURSEMENT
Section 3.01 ISSUANCE OF THE POLICY. The Note Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) PAYMENT OF INITIAL PREMIUM AND EXPENSES. The Note Insurer shall
have been paid by the Originator, the fees and expenses payable on the
Closing Date in accordance with Section 3.02;
(b) COMPANY DOCUMENTS. The Note Insurer shall have received a copy
of each of the Company Documents, in form and substance reasonably
satisfactory to the Note Insurer, duly authorized, executed and delivered
by each party thereto;
(c) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Note Insurer shall have
received (i) a copy of the charter and bylaws of the Originator, the
Servicer, the Sub-Servicer, the Company, the Seller, the Sponsor and the
Issuer and (ii) a certificate of the Secretary or Assistant Secretary of
the Originator, the Servicer, the Sub-Servicer, the Company, the Seller,
the Sponsor and the Issuer stating that attached thereto is a true,
complete and correct copy of resolutions duly adopted by the Board of
Directors or a duly authorized Committee of the Originator, the Servicer,
the Sub-Servicer, the Company, the Seller, the Sponsor and the Issuer
authorizing the issuance of the Notes, the execution, delivery and
performance by the Originator, the Servicer, the Sub-Servicer, the
Company, the Seller, the Sponsor and the Issuer of the Company Documents
to which it is a party and the consummation of the
41
Transaction and that such charter, bylaws and resolutions are in full
force and effect without amendment or modification on the Closing Date;
(d) INCUMBENCY CERTIFICATE. The Note Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of the Originator,
the Servicer, the Sub-Servicer, the Company, the Seller, the Sponsor and
the Issuer certifying the names and signatures of the officers of the
Originator, the Servicer, the Sub-Servicer, the Company, the Seller, the
Sponsor and the Issuer authorized to execute and deliver the Company
Documents to which it is a party;
(e) REPRESENTATIONS AND WARRANTIES; CERTIFICATE. The representations
and warranties of the Originator, the Servicer, the Sub-Servicer, the
Company, the Seller, the Sponsor and the Issuer set forth or incorporated
by reference in this Insurance Agreement shall be true and correct on and
as of the Closing Date as if made on the Closing Date, and the Note
Insurer shall have received a certificate of appropriate officers of the
Originator, the Servicer, the Sub-Servicer, the Company, the Seller, the
Sponsor and the Issuer to that effect;
(f) OPINIONS OF COUNSEL. The Note Insurer shall have received all
opinions of counsel addressed to any of Moody's, S&P, the Indenture
Trustee, the Originator, the Servicer, the Sub-Servicer, the Company, the
Seller, the Sponsor, the Issuer and the Underwriter, in respect of the
Originator, the Servicer, the Sub-Servicer, the Company, the Seller, the
Sponsor and the Issuer, the other parties to the Company Documents and the
Transaction in form and substance reasonably satisfactory to the Note
Insurer, addressed to the Note Insurer and opinions addressing such
matters as the Note Insurer may reasonably request, and the counsel
providing each such opinion shall have been instructed by its client to
deliver such opinion to the addressees thereof;
(g) APPROVALS, ETC. The Note Insurer shall have received true and
correct copies of all approvals, licenses and consents, if any, including
any required approval of the shareholders of the Originator, the Servicer,
the Sub-Servicer, the Company, the Seller, the Sponsor and the Issuer,
required in connection with the Transaction;
(h) 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, governmental or administrative
agency or arbitrator in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with any of the Company
Documents or the consummation of the Transaction;
(i) 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 Transaction illegal or
otherwise prevent the consummation thereof;
42
(j) SATISFACTION OF CONDITIONS OF THE UNDERWRITING AGREEMENT. All
conditions in the Underwriting Agreement relating to the Underwriter's
obligation to purchase the Notes shall have been satisfied, without taking
into account any waiver by the Underwriters of any condition unless such
waiver has been approved by the Note Insurer. The Note 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 Underwriting Agreement;
(k) ISSUANCE OF RATINGS. The Note Insurer shall have received
confirmation that the risk insured by the Policy constitutes at least a
"BBB" risk by S&P and a "Baa2" risk by Moody's and that the Notes, 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 Note Insurer shall have received such
other documents, instruments, approvals or opinions reasonably requested
by the Note Insurer as may be reasonably necessary to effect the
Transaction, including evidence reasonably satisfactory to the Note
Insurer that the conditions precedent, if any, in the Company Documents
have been satisfied; and
(n) SATISFACTORY DOCUMENTATION. The Note Insurer and its counsel
shall have determined that all documents, certificates and opinions to be
delivered in connection with the Notes conform to the terms of the
Indenture, the Trust Agreement, the Registration Statement, the Offering
Document and this Insurance Agreement.
Section 3.02 PAYMENT OF FEES AND PREMIUM.
(a) LEGAL AND ACCOUNTING FEES. The Originator shall pay or cause to
be paid to the Note Insurer, on the Closing Date, legal, appraisal and
accounting fees in an amount not to exceed $65,000, incurred by the Note
Insurer in connection with the issuance of the policy. Any additional fees
of the Note Insurer's auditors payable in respect of any amendment or
supplement to the Offering Document incurred after the Closing Date shall
be paid by the Originator on demand.
(b) RATING AGENCY FEES. The Originator shall promptly pay the
initial fees of S&P and Moody's with respect to the Notes and the
transactions contemplated hereby following receipt of a statement with
respect thereto. All periodic and subsequent fees of S&P or Moody's with
respect to, and directly allocable to, the Notes shall be for the account
of, and shall be billed to the Originator. The fees for any other rating
agency shall be paid by the party requesting such other agency's rating
unless such other agency is a substitute for S&P or Moody's in the event
that S&P or Xxxxx'x is no longer rating the Notes, in which case the fees
for such agency shall be paid by the Originator.
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(c) [Reserved]
(d) [Reserved]
(e) PREMIUM.
(i) In consideration of the issuance by the Note Insurer of
the Policy, the Note Insurer shall be entitled to receive the
Premium as and when due in accordance with and from the funds
specified by Section 8.02(c) of the Indenture.
(ii) The Premium paid under the Indenture shall be
nonrefundable without regard to whether any Notice for Payment is
delivered to the Note Insurer requiring the Note Insurer to make any
payment under the Policy or any other circumstances relating to the
Notes or provision being made for payment of the Notes prior to
maturity. The Premium due on each Payment Date shall be an amount
equal to 1/12th of the product of Premium Percentage and the Note
Balance (after giving effect to any distributions of principal to be
made on the Notes on such Payment Date); provided that the initial
premium will be equal to $23,958.33 and will be paid on the Closing
Date.
Section 3.03 REIMBURSEMENT OBLIGATION.
(a) As and when due in accordance with and from the funds specified
in Section 8.02(c) of the Indenture, the Note Insurer shall be entitled to
reimbursement for any payment made by the Note Insurer under the Policy,
which reimbursement shall be due and payable on the date that any amount
is paid thereunder, 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) The Originator agrees to pay to the Note Insurer as follows: any
and all charges, fees, costs and expenses that the Note Insurer may
reasonably pay or incur, including reasonable attorneys' and accountants'
fees and expenses ("Reimbursable Expenses") in connection with (i) the
enforcement, defense or preservation of any rights in respect of any of
the Company Documents, including defending, monitoring or participating in
any litigation or proceeding (including any insolvency proceeding in
respect of any Transaction participant or any affiliate thereof) relating
to any of the Company Documents, any party to any of the Company Documents
(in its capacity as such a party) or the Transaction, or (ii) any
amendment, waiver or other action with respect to, or related to, any
Company Document, whether or not executed or completed.
44
(c) The Originator agrees to pay to the Note Insurer as follows:
interest on any and all amounts described in subclause (b) of this Section
3.03 for which such party is responsible 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 (a) and (b) for which such party is
responsible from the date due until payment thereof in full and interest
on any and all amounts described in Section 3.04 for which such party is
responsible from the date due until payment thereof in full and interest
on any and all amounts described in Section 3.04 for which such party is
responsible from the date due until payment thereof in full, in each case,
payable to the Note Insurer at the Late Payment Rate.
Section 3.04 INDEMNIFICATION WITH RESPECT TO THE ORIGINATOR, THE SERVICER,
THE COMPANY AND THE SELLER.
(a) In addition to any and all of the Note Insurer's rights of
reimbursement, indemnification, subrogation and to any other rights of the
Note Insurer pursuant hereto or under law or in equity, the Originator,
the Servicer, the Company and the Seller, severally and not jointly, each
agree 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 any
nature arising out of or relating to the transactions contemplated by the
Company Documents by reason of:
(i) any omission or action (other than of or by the Note
Insurer or the Underwriter and other than any omission or action
which is expressly required by the Originator, the Servicer, the
Company and the Seller in the Company Documents) in connection with
the offering, issuance, sale or delivery of any of the RBMG Funding
Co. Mortgage Loan Trust 1999-2, Asset-Backed Notes, Series 1999-2 by
the Originator, the Servicer, the Company and the Seller;
(ii) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director,
officer, employee or agent of the Originator, the Servicer, the
Company and the Seller in connection with any Transaction arising
from or relating to the Company Documents;
(iii) the violation by the Originator, the Servicer, the
Company or the Seller of any domestic or foreign law, rule or
regulation, or any judgment, order or decree applicable to it, which
violation reasonably could result in a Material Adverse Change;
45
(iv) the breach by the Originator, the Servicer, the Company
or the Seller of any representation, warranty or covenant under any
of the Company Documents or the occurrence, in respect of the
Originator, the Servicer, the Company or the Seller, under any of
the Company Documents of any Event of Default or any event which,
with the giving of notice or the lapse of time or both, would
constitute any Event of Default; or
(v) any untrue statement or alleged untrue statement of a
material fact contained in any Offering Document or the Registration
Statement or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, except insofar as such 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) arise out of or are based upon any untrue
statement in the an Offering Document other than the Sponsor
Information, Underwriter Information and information furnished by
the Note Insurer in writing expressly for use therein (such
information so furnished being referred to herein as "Note Insurer
Information"), it being understood that, in respect of the initial
Offering Document, the Note Insurer Information is limited to the
information with respect to the Note Insurer included under the
caption "The Note Insurer and the Financial Guaranty Policy" and the
financial statements of the Note Insurer incorporated by reference
therein.
(b) The Note Insurer agrees to pay, and to protect, indemnify and
save harmless, the Originator, the Servicer, the Company and the Seller
and its respective officers, directors, shareholders, employees, agents
and each Person, if any, who controls the Originator, the Servicer, the
Company and the Seller 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 any untrue statement or alleged untrue statement of a material
fact contained in the Note Insurer Information in any Offering Document,
in light of the circumstances under which they were made, not misleading
or a breach of any of the representations and warranties of the Note
Insurer contained in Section 2.13.
(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 indemnity provided in Section 3.04(a) or
(b) may be sought from the Originator, the Servicer, the Company and the
Seller, 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
46
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel 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 are 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.
47
Section 3.05 INDEMNIFICATION WITH RESPECT TO THE SUB-SERVICER.
(a) In addition to any and all of the Note Insurer's rights of
reimbursement, indemnification, subrogation and to any other rights of the
Note Insurer pursuant hereto or under law or in equity, the Sub-Servicer
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 any
nature arising out of or relating to the breach by the Sub-Servicer of any
of its representations or warranties contained in Section 2.04 or arising
directly out of or relating directly to the Transaction contemplated by
the Company Documents by reason of:
(i) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director,
officer, employee or agent of the Sub-Servicer in connection with
any Transaction arising from or relating to the Company Documents;
(ii) the violation by the Sub-Servicer of any domestic or
foreign law, rule or regulation, or any judgment, order or decree
applicable to it, which violation reasonably could result in a
Material Adverse Change;
(iii) the breach by the Sub-Servicer of any of its
representations, warranties or covenants under any of the Company
Documents to which it is a party or the occurrence, in respect of
the Sub-Servicer, under any of the Company Documents of any Event of
Default or any event which, with the giving of notice or the lapse
of time or both, would constitute any Event of Default; or
(iv) any untrue statement or alleged untrue statement of a
material fact contained in the Offering Document and the entire
Registration Statement, other than in the Underwriter Information,
Company Information, the Servicer Information and Note Insurer
Information (such information, the "Sub-Servicer Information") or
any omission or alleged omission to state in the Sub-Servicer
Information a material fact required to be stated in the
Sub-Servicer Information or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, except insofar as such 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) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact or omission or
alleged omission of a material fact in information included in the
Note Insurer Information, the Company Information, the Subservicer
Information or the Underwriter Information.
48
(b) The Note Insurer agrees to pay, and to protect, indemnify and
save harmless, the Sub-Servicer and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls the Sub-Servicer
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 or alleged untrue statement of a material fact contained
in the Note Insurer Information or any omission or alleged omission to
state in the Note Insurer Information a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, (ii) any
failure of the Note Insurer to make a payment required to be made under
the Policy or (iii) a breach of any of the representations and warranties
of the Note Insurer contained in Section 2.13.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party") in respect of which the indemnity
provided in Section 3.05(a) or (b) may be sought from the Sub-Servicer, 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 within a reasonable period of
time 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 and shall be reasonably satisfactory to the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of
any such action or proceeding effected without its written
49
consent, which consent shall not be unreasonably withheld, conditioned or
delayed, 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 Party 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 the Indemnified Party (other
than due to application of this Section), the 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 are 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 3.06 INDEMNIFICATION WITH RESPECT TO THE SPONSOR.
(a) In addition to any and all of the Note Insurer's rights of
reimbursement, indemnification, subrogation and to any other rights of the
Note Insurer pursuant hereto or under law or in equity, the Sponsor 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 any nature arising out
of or relating to the breach by the Sponsor of any of its representations
or warranties contained in Section 2.07 or arising directly out of or
relating directly to the Transaction contemplated by the Company Documents
by reason of:
(i) the negligence, bad faith, willful misconduct,
misfeasance, malfeasance or theft committed by any director,
officer, employee or agent of the Sponsor in connection with any
Transaction arising from or relating to the Company Documents;
50
(ii) the violation by the Sponsor of any domestic or foreign
law, rule or regulation, or any judgment, order or decree applicable
to it, which violation reasonably could result in a Material Adverse
Change;
(iii) the breach by the Sponsor of any of its representations,
warranties or covenants under any of the Company Documents to which
it is a party or the occurrence, in respect of the Sponsor, under
any of the Company Documents of any Event of Default or any event
which, with the giving of notice or the lapse of time or both, would
constitute any Event of Default; or
(iv) any untrue statement or alleged untrue statement of a
material fact contained in the Offering Document and the entire
Registration Statement, other than in the Underwriter Information,
Company Information, the Subservicer Information and Note Insurer
Information (such information, the "Sponsor Information") or any
omission or alleged omission to state in the Sponsor Information a
material fact required to be stated in the Sponsor Information or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
insofar as such 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) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact in
information included in the Note Insurer Information, the Company
Information, the Subservicer Information or the Underwriter
Information.
(b) The Note Insurer agrees to pay, and to protect, indemnify and
save harmless, the Sponsor and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls the Sponsor 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 or alleged untrue statement of a material fact contained
in the Note Insurer Information or any omission or alleged omission to
state in the Note Insurer Information a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, (ii) any
failure of the Note Insurer to make a payment required to be made under
the Policy or (iii) a breach of any of the representations and warranties
of the Note Insurer contained in Section 2.13.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party") in respect of which the indemnity
provided in Section 3.06(a) or (b) may be sought from the Sponsor, on the
one hand, or the Note Insurer, on the other (each, an "Indemnifying
Party") hereunder,
51
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 within a reasonable period of time 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 and shall be reasonably satisfactory to the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of
any such action or proceeding effected without its written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, 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 Party 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 the Indemnified Party (other
than due to application of this Section), the 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 are 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.
52
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 3.07 PAYMENT PROCEDURE. In the event of any payment by the Note
Insurer, the Indenture Trustee and the Originator, the Servicer, the Company,
the Seller, the Sponsor and the Issuer agree to accept the voucher or other
evidence of payment as prima facie evidence of the propriety thereof and the
liability, if any, described in Section 3.03 therefor to the Note Insurer. All
payments to be made to the Note Insurer under this Insurance Agreement shall be
made to the Note Insurer in lawful currency of the United States of America in
immediately available funds at the notice address for the Note Insurer as
specified in the Indenture on the date when due or as the Note Insurer shall
otherwise direct by written notice to the other parties hereto. In the event
that the date of any payment to the Note Insurer or the expiration of any time
period hereunder occurs on a day that 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.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01 EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Closing Date and shall remain in
effect until the later of (a) such time as the Note Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Note Insurer for cancellation and (b) all amounts payable to the Note Insurer by
the Sponsor, the Originator, the Servicer, the Company and the Seller hereunder
or from any other source hereunder or under the Company Documents and all
amounts payable under the Notes have been paid in full; provided, however, that
the provisions of Sections 3.02, 3.03, 3.04, 3.05 and 3.06 hereof shall survive
any termination of this Insurance Agreement.
Section 4.02 FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
(a) Except at such times as a Note Insurer Default (as defined in
the Indenture) shall exist or shall have occurred, neither the Sponsor,
the Servicer, the Sub-Servicer or the Indenture Trustee shall grant any
waiver of rights under any of the Company Documents to which any of them
is a party without the prior written consent of the Note Insurer, which
shall not be unreasonably withheld, conditioned or delayed and any such
waiver without prior written consent of the Note Insurer shall be null and
void and of no force or effect.
(b) To the extent permitted by law, the Issuer, the Sponsor, the
Originator, the Servicer, the Sub-Servicer, the Company and the Seller
agree that each 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 Note Insurer may
53
reasonably request and as may be required in the Note Insurer's reasonable
judgment to effectuate the intention of or facilitate the performance of
this Insurance Agreement.
Section 4.03 OBLIGATIONS ABSOLUTE.
(a) The obligations of the Issuer, the Sponsor, the Originator, the
Servicer, the Sub-Servicer, the Company and the Seller 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 Company Documents or the Notes;
(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 Issuer, the Sponsor, the
Originator, the Servicer, the Sub-Servicer, the Company and the
Seller may have at any time against the Note Insurer or any other
Person;
(iv) any document presented in connection with the Policy
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) any payment by the Note 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 Issuer, the Sponsor, the Originator,
the Servicer, the Sub-Servicer, the Company and the Seller to
receive the proceeds from the sale of the Notes; and
(vii) any other circumstances, other than payment in full,
that might otherwise constitute a defense available to, or discharge
of, the Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company and the Seller in respect of any Company
Document.
(b) The Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company and the Seller and any and all others who are
now or may become liable for all or part of the obligations of the Issuer,
the Sponsor, the Originator, the Servicer, the Sub-Servicer, the Company
or the Seller 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
54
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness and obligations evidenced
by any Company 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 Company Documents; (iv) waive all
rights of abatement, diminution, postponement or deduction, or to any
defense other than payment, or to any right of setoff or recoupment
arising out of any breach under any of the Company Documents, by any party
thereto or any beneficiary thereof, or out of any obligation at any time
owing to the Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company or the Seller; (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 Persons 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 Note
Insurer with respect to any payment hereunder or other provisions hereof
and to the release of any security at any time given for any payment
hereunder, or any part thereof, with or without substitution, and to the
release of any Person or entity liable for any such payment; and (viii)
consent to the addition of any and all other makers, endorsers, guarantors
and other obligors for any payment hereunder, and to the acceptance of any
and all other security for any payment hereunder, and agree that the
addition of any such obligors or security shall not affect the liability
of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Issuer, the
Sponsor, the Originator, the Servicer, the Sub-Servicer the Company and
the Seller from pursuing any rights or remedies it may have against any
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.
Except with respect to or in connection with a merger or other transaction
permitted under Section 2.03(c), 2.06(c), 2.09(c) and 2.12(c) hereof, the
Issuer, the Sponsor, the Originator, the Servicer, the Sub-Servicer, the
Company and the Seller may not assign their respective rights under this
Insurance Agreement, or delegate any of its duties hereunder, without the
prior written consent of the Note Insurer. Any assignments made in
violation of this Insurance Agreement shall be null and void.
(b) The Note 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 Note Insurer may in its discretion determine; provided, however, that
no such participation or reinsurance agreement or arrangement shall
relieve the
55
Note Insurer of any of its obligations hereunder or under the Policy and
provided further that any reinsurer or participant will not have any
rights against the Trust, the Issuer, the Sponsor, the Originator, the
Servicer, the Sub-Servicer, the Company, the Seller, the Holders of the
Notes or the Indenture Trustee and that the Trust, the Issuer, the
Sponsor, the Originator, the Servicer, the Sub-Servicer, the Company, the
Seller, the Holders of the Notes and the Indenture Trustee shall have no
obligation to have any communication or relationship with any reinsurer or
participant in order to enforce the obligations of the Note Insurer
hereunder and under the Policy.
(c) 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 Holder, other than the Note Insurer against the Issuer,
the Sponsor, the Originator, the Servicer, the Sub-Servicer, the Company
and the Seller or the Issuer, the Sponsor, the Originator, the Servicer,
the Sub-Servicer, the Company and the Seller against the Note Insurer 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 Holder shall have any right to payment from any Premiums paid or
payable hereunder or under the Indenture or from any amounts paid by the
Issuer, the Sponsor, the Originator, the Servicer, the Sub-Servicer, the
Company and the Seller pursuant to Sections 3.02 or 3.03.
Section 4.05 LIABILITY OF THE NOTE INSURER. Neither the Note 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
Note Insurer 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 Note
Insurer shall have actual knowledge thereof). In furtherance and not in
limitation of the foregoing, the Note Insurer may accept documents that appear
on their face to be in order, without responsibility for further investigation.
Section 4.06 ANNUAL SERVICING AUDIT AND CERTIFICATION. The annual
servicing audit required pursuant to Section 2.20 of the Servicing Agreement and
Section 3.10 of the Sub-Servicing Agreement shall be performed by an independent
third party acceptable to the Note Insurer. Any one of the five major nationally
recognized firms of independent public accountants is deemed to be acceptable.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01 DEFAULTS. The occurrence of any of the following events shall
constitute an Event of Default hereunder:
56
(a) Any representation or warranty made by the Issuer, the Sponsor,
the Originator, the Servicer, the Sub-Servicer, the Company or the Seller
hereunder or under the Company Documents, or in any certificate furnished
hereunder or under the Company Documents, shall prove to be untrue or
incomplete in any material respect; provided, however, that if the Issuer,
the Sponsor, the Originator, the Servicer, the Sub-Servicer, the Company
or the Seller effectively cures any such defects in any representation or
warranty under any Transaction Document or certificate or report furnished
under any Company Document, within the time period specified in the
related document as the cure period therefor, such defect shall not in and
of itself constitute an Event of Default;
(b) (i) the Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company or the Seller shall fail to pay when due any
amount payable by the Issuer, the Sponsor, the Originator, the Servicer,
the Sub-Servicer, the Company or the Seller unless such amounts are paid
in full within the cure period therefor, respectively, hereunder or (ii) a
legislative body has enacted any law that declares or a court of competent
jurisdiction shall find or rule that this Insurance Agreement or the
Company Documents are not valid and binding on the Issuer, the Sponsor,
the Originator, the Servicer, the Sub-Servicer, the Company or the Seller;
(c) The occurrence and continuance of an "Event of Default" under
the Indenture;
(d) Any failure on the part of the Issuer, the Sponsor, the
Originator, the Servicer, the Sub-Servicer, the Company or the Seller duly
to observe or perform in any material respect any other of the covenants
or agreements on the part of the Issuer, the Sponsor, the Originator, the
Servicer, the Sub-Servicer, the Company or the Seller contained in this
Insurance Agreement or in any other Company Document which continues
unremedied beyond any cure period provided therein, or, in the case of
this Insurance Agreement, for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Issuer, the Sponsor, the Originator, the Servicer,
the Sub-Servicer, the Company or the Seller by the Note Insurer (with a
copy to the Indenture Trustee) or by the Indenture Trustee (with a copy to
the Note Insurer); provided, further, that if such failure shall be of a
nature that it cannot be cured within 30 days, such failure shall not
constitute an Event of Default hereunder, if within such 30-day period the
Issuer, the Sponsor, the Originator, the Servicer, the Sub-Servicer, the
Company or the Seller, as the case may be, shall have given notice to the
Note Insurer of corrective action it proposes to take, which corrective
action is agreed, in writing by the Note Insurer to be satisfactory and
the Issuer, the Sponsor, the Originator, the Servicer, the Sub-Servicer,
the Company or the Seller shall thereafter pursue such corrective action
diligently until such default is cured;
(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
57
insolvency or similar law or the appointment of a conservator or receiver
or liquidator or other similar official in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company or the Seller and such decree or order shall
have remained in force undischarged or unstayed for a period of 90
consecutive days;
(f) The Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company and the Seller shall consent to the appointment
of a conservator or receiver or liquidator or other similar official in
any involuntary insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Issuer, the
Sponsor, the Originator, the Servicer, the Sub-Servicer, the Company or
the Seller or of or relating to all or substantially all of its property
and if the Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company and the Seller shall fail to take appropriate
action resulting in the withdrawal or dismissal of such proceeding within
30 Business Days; or
(g) The Issuer, the Sponsor, the Originator, the Servicer, the
Sub-Servicer, the Company and the Seller 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 insolvency, reorganization or other
similar statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations.
(h) The occurrence of a Servicer Termination Delinquency Rate
Trigger or a Servicer Termination Loss Trigger.
Section 5.02 REMEDIES; NO REMEDY EXCLUSIVE.
(a) Upon the occurrence of an Event of Default, the Note Insurer may
take whatever action at law or in equity as may appear necessary or
desirable in its judgment to collect the amounts, if any, then due under
this Insurance Agreement or the Indenture or to enforce performance and
observance of any obligation, agreement or covenant of the Issuer, the
Sponsor, the Originator, the Servicer, the Sub-Servicer, the Company or
the Seller under this Insurance Agreement or the Indenture.
(b) Unless otherwise expressly provided, no remedy herein conferred
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 this Insurance Agreement, the Indenture or existing at law or
in equity. No delay or omission to exercise any right or power accruing
under this Insurance Agreement or the Indenture upon the happening of any
event set forth in Section 5.01 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 Note Insurer to exercise any remedy
58
reserved to the Note Insurer in this Article, it shall not be necessary to
give any notice, other than such notice as may be required by this
Article.
Section 5.03 WAIVERS.
(a) No failure by the Note Insurer to exercise, and no delay by the
Note Insurer in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by the Note Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein
to the Note Insurer are declared in every case to be cumulative and not
exclusive of any remedies provided by law or equity.
(b) The Note 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 Note Insurer and delivered to the Issuer, the Sponsor, the Originator,
the Servicer, the Sub-Servicer, the Company or the Seller, as the case may
be. 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, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto. The Issuer, the Sponsor, the
Originator, the Servicer, the Sub-Servicer, the Company and the Seller agree to
provide a copy of any amendment to this Insurance Agreement promptly to the
Indenture Trustee and the rating agencies maintaining a rating on any of the
Notes at the request of the Issuer, the Sponsor, the Originator, the Servicer,
the Sub-Servicer, the Company or the Seller. No act or course of dealing shall
be deemed to constitute an amendment, modification, supplement or termination
hereof.
59
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 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
(in each case in which notice or other communication to the
Note Insurer refers to an Event of Default, a claim on the
Policy or with respect to which failure on the part of the
Note 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 the
general counsel of each of the Issuer, the Sponsor, the
Originator, the Servicer, the Company, the Seller and the
Indenture Trustee and shall be marked to indicate "URGENT
MATERIAL ENCLOSED.")
(b) To the Originator:
Meritage Mortgage Corporation
0000 XX Xxxxxxx Xxxx
Xxxx Xxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
60
(c) To the Servicer:
RBMG, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(d) To the Sub-Servicer:
Ocwen Federal Bank FSB
0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Senior V.P., Law Dept.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(e) To the Company:
RBMG Asset Management Company, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(f) To the Seller:
RBMG Funding Co.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
61
(g) To the Sponsor:
Residential Asset Funding Corporation
000 Xxxxx Xxxxxxx Xxxxxx, XX-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(h) To the Issuer:
RBMG Funding Co. Mortgage Loan Trust 1999-2
c/o Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(i) To the Indenture Trustee:
Bankers Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: RBMG 1999-2
Facsimile: (000) 000-0000
Telephone: (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 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.
Section 6.05 CONSENT TO JURISDICTION.
62
(a) The parties hereto hereby irrevocably submit to the
non-exclusive 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 Company Documents or the Transaction 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 unappealable 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) Service on the Issuer, Originator, the Servicer, the Company,
the Seller and the Issuer may be made by mailing or delivering copies of
the summons and complaint and other process which may be served in any
suit, action or proceeding to the Servicer addressed as follows: Meritage
Mortgage Corporation, 0000 XX Xxxxxxx Xxxx, Xxxx Xxxxxx, Xxxxxx 00000,
Attention: Xxxxx Xxxx, Facsimile: (000) 000-0000, Telephone: (503) 598-
5270; RBMG, Inc., as Servicer, 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Xxxxx Xxxxxx, Facsimile: (000) 000-0000,
Telephone: (000) 000-0000; Ocwen Federal Bank FSB, as Sub-Servicer, Ocwen
Federal Bank FSB, 1675 Palm Beach Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxx
Xxxxx, Xxxxxxx 00000, Attention: Senior V.P., Law Dept., Facsimile: (561)
000-0000, Telephone: (000) 000-0000; RBMG Asset Management Company, Inc.,
as Company, 0000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx 00000,
Attention: President, Facsimile: (000) 000-0000; Telephone: (702)
000-0000; RBMG Funding Co., as Seller, 0000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxx
Xxxxx, Xxxxxx 00000, Attention: President, Facsimile: (000) 000-0000,
Telephone: (000) 000-0000; Residential Asset Funding Corporation, as
Sponsor, 000 Xxxxx Xxxxxxx Xxxxxx, XX-00, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000-0000, Facsimile: (000) 000-0000, Telephone: (000) 000-0000; and RBMG
Funding Co. Mortgage Loan Trust 1999-2, as Issuer, c/o Wilmington Trust
Company, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Facsimile:
(000) 000-0000, Telephone: (000) 000-0000. Such address may be changed by
the applicable party or parties, with the prior written consent of the
Note Insurer, by written notice to the other parties hereto.
63
(d) Nothing contained in this Insurance Agreement shall limit or
affect any party's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Company Documents
against any other party or its properties in the courts of any
jurisdiction.
Section 6.06 CONSENT OF THE NOTE INSURER. In the event that the consent of
the Note Insurer is required under any of the Company Documents, the
determination whether to grant or withhold such consent shall be made by the
Note Insurer in its sole discretion without any implied duty towards any other
Person, except as otherwise expressly provided therein.
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 and shall not affect its construction or interpretation.
Section 6.09 TRIAL BY JURY WAIVED. Each party 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 Company 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 Company Documents to which it is a
party by, among other things, this waiver.
Section 6.10 LIMITED LIABILITY. No recourse under any Company Document or
the Underwriting Agreement shall be had against, and no personal liability shall
attach to, any 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 Company Documents or the Underwriting Agreement, the Notes or the Policy, it
being expressly agreed and understood that each Company Document or the
Underwriting Agreement is solely a corporate obligation of each party hereto,
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 of any party hereto of any obligations under any
Company Document or the Underwriting Agreement 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. This Insurance Agreement and the Policy set
forth the entire agreement between the parties with respect to the subject
matter hereof and 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.
64
Section 6.12 INDENTURE TRUSTEE. The Indenture Trustee hereby acknowledges
and agrees to perform all its obligations and duties pursuant to the Company
Documents to which it is a party thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
65
IN WITNESS WHEREOF, the parties hereto have executed this 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
MERITAGE MORTGAGE CORPORATION
as Originator
By: /s/ Xxxxx Xxxx
-----------------------------
Name: Xxxxx Xxxx
Title: President and CEO
RBMG, INC.
as Servicer
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
OCWEN FEDERAL BANK FSB
as Sub-Servicer
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice-President
RBMG ASSET MANAGEMENT COMPANY, INC.
as Company
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
RBMG FUNDING CO.
as Seller
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
RESIDENTIAL ASSET FUNDING
CORPORATION
as Sponsor
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
RBMG FUNDING CO. MORTGAGE LOAN
TRUST 1999-2
as Issuer
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee
By: /s/ Xxxxxx X. XxxXxxxxx
-----------------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Vice President
BANKERS TRUST COMPANY
as Indenture Trustee
By: /s/ Xxxx X. Xxx
-----------------------------
Name: Xxxx X. Xxx
Title: Vice President
