Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Current Report 8 31K
2: EX-1.1 Asset Backed Notes 27 99K
3: EX-1.2 Indemnification Agreeement 16 62K
4: EX-4.1 Indenture 88 434K
5: EX-4.2 Sale and Servicing Agreement 116 417K
6: EX-4.3 Form of Note Insurance Policy and Endorsement 9 37K
7: EX-4.4 Unaffiliated Seller's Agreement 66 226K
8: EX-4.5 Purchase Agreement and Assignment 54 196K
9: EX-4.6 Glossary of Defined Terms 37 141K
10: EX-23.1 Consent of Independent Accountants 1 8K
EX-4.3 — Form of Note Insurance Policy and Endorsement
EX-4.3 | 1st Page of 9 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
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FINANCIAL GUARANTY
FINANCIAL INSURANCE POLICY
SECURITY
ASSURANCE
Obligor: As described in Endorsement No. 1 Policy No.: 50816-N
Obligations: HomeGold Home Equity Loan Trust 1999-1, Date of Issuance: 5/27/99
$53,946,000 HomeGold Home Equity Loan Asset
Backed Notes, Series 1999-1
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
each Holder, subject only to the terms of this Policy (which includes each
endorsement hereto), the full and complete payment by the Obligor of Scheduled
payments of principal of, and interest on, the Obligations.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees:
(a) payment of the amount of any distribution of principal of, or
interest on, the Obligations made during the Term of this Policy to such
Holder that is subsequently avoided in whole or in part as a preference
payment under applicable law (such payment to be made by Financial
Security in accordance with Endorsement No. 1 hereto).
(b) payment of any amount required to be paid under this Policy by
Financial Security following Financial Security's receipt of notice as
described in Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive payments under the Obligations to the extent of any payment by
Financial Security hereunder.
Except to the extent expressly modified by an endorsement hereto, the
following terms shall have the meaning specified for all purposes of this
Policy. "Holder" means the registered owner of any obligation as indicated on
the registration books maintained by or on behalf of the Obligor for such
purpose or, if the Obligation is in bearer form, the holder of the Obligation.
"Scheduled Payments" means payments which are scheduled to be made during the
Term of this Policy in accordance with the original terms of the Obligations
when issued and without regard to any amendment or modification of such
Obligations thereafter; payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) an election by the Obligor to pay
principal on an accelerated basis or (c) any other cause, shall not constitute
"Scheduled Payments" unless Financiual Security shall elect, in its sole
discretion, to pay such principal due upon such acceleration together with any
accrued interest to the date of acceleration. "Term of this Policy" shall have
the meaning set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto, or by the merger,
consolidation or dissolution of the Obligor. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever, including payment, or provision
being made for payment, of the Obligations prior to maturity. This Policy may
not be canceled or revoked during the Term of this Policy. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE
76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Russell B. Brewer II
--------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, NY 10022-6022 (212) 826-0100
Form 100NY (5/89)
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
OBLIGOR: HOMEGOLD HOME EQUITY TRUST 1999-1
OBLIGATIONS: HomeGold Home Equity Loan Trust 1999-1, $53,946,000
HomeGold Home Equity Loan Asset Backed Notes, Series 1999-1
POLICY NO.: 50816-N
DATE OF ISSUANCE: May 27, 1999
1. Definitions. For all purposes of this Policy, the terms specified
below shall have the meaning or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided
in the Sale and Servicing Agreement and the Indenture unless the context shall
otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in New York are authorized or
obligated by law or executive order to be closed.
"Holder" shall not include the Obligor or any affiliates or successors
thereof in the event the Obligor, or any such affiliate or successor, is a
registered or beneficial owner of the Obligation.
"Indenture" means the Indenture, dated as of May 1, 1999, between the
Obligor as Issuer and the Indenture Trustee, as amended from time to time with
the consent of Financial Security.
"Indenture Trustee" means First Union National Bank, in its capacity
as Indenture Trustee under the Indenture and the Sale and Servicing Agreement
and any successor in such capacity.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial Security
and to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon,
New York City time on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate given
hereunder by the Indenture Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial
Policy No.: 50816-N Date of Issuance: May 27, 1999
Security or its Fiscal Agent shall promptly so advise the Indenture Trustee and
the Indenture Trustee may submit an amended notice.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of May 1, 1999, among the Obligor as Issuer, Prudential Securities
Secured Financing corporation as Depositor, HomeGold Inc. as Servicer and the
Indenture Trustee, a amended from time to time with consent of Financial
Security.
"Scheduled Payments" means, with respect to any Payment Date and the
Obligations, the Insured Payments, without regard to any amendment or
modification of the Notes, the Indenture or the Sale and Servicing Agreement,
except such amendments or modifications to which Financial Security has given
its prior written consent. Scheduled Payments shall not include any amounts due
in respect of the obligations attributable to any increase in interest rate,
penalty or other sum payable by the Obligor by reason of any default or event
of default in respect of the Obligations, or by reason of any deterioration of
the credit worthiness of the Obligor, nor shall Scheduled payments include, nor
shall coverage be provided under this Policy in respect of, any taxes,
withholding or other charge imposed by any governmental authority due in
connection with the payment of any Scheduled Payment to a Holder.
"Term of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) all Scheduled Payments have been
paid or deemed to have been paid within the meaning of Section 4.1 of the
Indenture, (ii) any period during which any Scheduled payment on the Notes could
have been avoided in whole or in part as a preference payment under applicable
bankruptcy, insolvency, receivership or similar law has expired, and (iii) if
any proceedings requisite to avoidance as a preference payment have been
commenced prior to the occurrence of (i) and (ii), a final and non-appealable
order in resolution of each such proceeding has been entered.
2. Notices and Conditions to Payment in Respect of Scheduled Payments.
Following Receipt by financial Security of a notice and certificate from the
Indenture Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of Scheduled
payments out of the funds of Financial Security on the later to occur of (a)
12:00 noon, New York City time, on the second Business Day following such
Receipt; and (b) 12:00 noon, New York City time, on the Payment Date to which
such claim relates. Payments due hereunder in respect of Scheduled Payments will
be disbursed by wire transfer of immediately available funds to the Policy
Payments Account established pursuant to the Indenture or, if no such Policy
Payments Account has been established, to the Indenture Trustee.
Financial Security shall be entitled to pay any amount hereunder in
respect of Scheduled Payments, including any amounts due on the obligations on
an accelerated basis, whether or not any notice and certificate shall have been
Received by Financial Security as provided above, provided, however, that by
acceptance of this Policy the Indenture Trustee agrees to provide upon request
to Financial Security a notice and certificate in respect of any such payments
made by Financial Security. Financial Security shall be entitled to pay
hereunder any amount in respect of
2
Policy No.: 50816-N Date of Issuance: May 27, 1999
Scheduled Payments on an accelerated basis at any time or from time to time, in
whole or in part, prior to the scheduled date of payment thereof. Scheduled
Payments insured hereunder shall not include interest in respect of principal
paid hereunder on an accelerated basis accruing from after the date of such
payment of principal. Financial security's obligations hereunder in respect of
Scheduled payments shall be discharged to the extent such amounts are paid by
the Issuer in accordance with the Indenture or disbursed by Financial Security
as provided herein whether or not such funds are properly applied by the
Indenture Trustee except as otherwise provided in paragraph 3 of this
Endorsement.
3. Notices and Conditions to Payment in Respect of Scheduled Payments
Avoided as Preference Payments. If any Scheduled Payment is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth
business Day following Receipt by Financial Security from the Indenture Trustee
of (A) a certified copy of the order of the court or other governmental body
which exercised jurisdiction to the effect that the relevant Holder is required
to return principal or interest distributed with respect to the Obligations
during the Term of this Policy because such distributions were avoidable as
preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the relevant Holder that the Order has been entered and is not
subject to any stay and (C) an assignment duly executed and delivered by the
relevant Holder, in such form as is reasonably required by Financial Security
and provided to the relevant Holder by financial Security, irrevocably
asignning to Financial Security all rights and claims of the relevant Holder
relating to or arising under the Notes against the debtor which made such
preference payment or otherwise with respect to such preference payment or (ii)
the date of Receipt by financial Security from the Indenture Trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four Business
Days prior to such date of Receipt, financial security shall have Received
written notice from the Indenture Trustee that such items were to be delivered
on such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order and not to the Indenture Trustee or any Holder
directly (unless such Holder has previously paid such amount to the receiver,
conservator, debtor-in possession or trustee in bankruptcy named in the Order,
in which case such payment reasonably satisfactory to Financial Security). In
connection with the foregoing, financial Security shall have the rights
provided pursuant to Section 5.17 and Section 5.18 of the Indenture.
4. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Indenture Trustee at the notice address
specified in the Indenture specifying the name and notice address of the Fiscal
Agent. From and after the date of receipt of such notice by the Indenture
3
Policy No.: 50816-N Date of Issuance: May 27, 1999
Trustee, (i) copies of all notices and documents required to be delivered to
Financial Security pursuant to this Policy shall be simultaneously delivered
to the Fiscal Agent and to Financial Security and shall not be deemed Received
until Received by both and (ii) all payments required to be made by Financial
Security under this Policy may be made directly by Financial Security or by the
Fiscal Agent on behalf of Financial Security. The Fiscal Agent is the agent of
Financial Security only and the Fiscal Agent shall in no event be liable to any
Holder for any acts of the Fiscal Agent or any failure of Financial Security to
deposit or cause to be deposited, sufficient funds to make payments due under
this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provision of this
Policy.
7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President--Surveillance Department
Re: HomeGold Home Equity Loan Trust 1999-1
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Indenture Trustee.
8. Priorities. In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not covered
by the Property/Casualty Insurance Security Fund specified in Article 76 o the
New York Insurance Law. This Policy is not covered by the Florida Insurance
Guaranty Association created under Part II of chapter 631 of the Florida
Insurance Code. In the event Financial Security were to become insolvent, any
claims arising under this Policy are excluded from coverage by the California
Insurance Guaranty Association, established pursuant to Article 14.2 of Chapter
1 of Part 2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Indenture Trustee shall surrender this
Policy to Financial Security for cancellation upon expiration of the Term of
this Policy.
4
Policy No.: 50816-N Date of Issuance: May 27, 1999
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized officer.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Russell B. Brewer II
----------------------------------
Authorized Officer
5
Policy No.: 50816-N Date of Issuance: May 27, 1999
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of First Union National Bank
(the "Indenture Trustee"), hereby certifies to Financial Security Assurance Inc.
("Financial Security"), with reference to Financial Guaranty Insurance Policy
No. 50816-N, dated May 27, 1999 (the "Policy"), issued by Financial Security
in respect of the HomeGold Home Equity Loan Trust 1999-1, $53,964,000 HomeGold
Home Equity Loan Asset Backed Notes Series 1999-1 that:
(i) The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the distribution Account and available for distribution to
the Holders of the Class A Notes (the "Securities") pursuant to the
Indenture and Sale and Servicing Agreement will be $____________ (the
"Shortfall") less than the aggregate amount of Scheduled Payments due
on _______________.
(iii) The Indenture Trustee is making a claim under the Policy for
the Shortfall to be applied to the payment of Scheduled Payments.
(iv) The Indenture Trustee agrees that, following receipt of
funds from Financial Security, it shall (a) hold such amounts in trust
and apply the same directly to the payment of Scheduled Payments on the
Obligations when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Indenture
Trustee and (d) maintain an accurate record of such payments with
respect to each Obligation is required to be surrendered for such
payment, shall stamp on each such Obligation the legend "$[insert
applicable amount] paid by Financial Security and the balance hereof
has been cancelled and reissued" and then shall deliver such Obligation
to Financial Security.
(v) The Indenture Trustee, on behalf of the Holders, hereby
assigns to Financial Security the rights of the Holders with respect to
the Trust Property to the extent of any payments under the Policy,
including, without limitation, any amounts due to the Holders in respect
of securities law violations arising from the offer and sale of the
Obligations. The foregoing assignment is in addition to, and
A-1
Policy No.: 50816-N Date of Issuance: May 27, 1999
not in limitation of, rights of subrogation otherwise available to
Financial Security in respect of such payments. The Indenture Trustee
shall take such action and delivery such instruments as may be
reasonably requested or required by Financial Security to effectuate
the purpose or provisions of this clause (v).
(vi) The Indenture Trustee, on its behalf and on behalf of the
Holders, hereby appoints Financial Security as agent and attorney-in-
fact for the Indenture Trustee and each such Holder in any legal
proceeding with respect to the Obligations. The Indenture Trustee hereby
agrees that Financial Security may at any time during the continuation
of any proceeding by or against the Servicer under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding")
direct all matters relating to such Insolvency Proceeding, including
without limitation, (A) all matters relating to any claim in connection
with an Insolvency Proceeding seeking the avoidance as a preferential
transfer of any payment with respect to the Obligations (a "Preference
Claim"), (B) the direction of any appeal of any order relating to any
Preference Claim at the expense of Financial Security but subject to
reimbursement as provided in the Insurance Agreement and (C) the posting
of any surety, supersedeas or performance bond pending any such appeal.
In addition, the Indenture Trustee hereby agrees that Financial Security
shall be subrogated to, and the Indenture Trustee on its behalf and on
behalf of each Holder, hereby delegates and assigns, to the fullest
extent permitted by law, the rights of the Indenture Trustee and each
Holder in the conduct of any Insolvency Proceeding, including, without
limitation, all rights of any party to an adversary proceeding or action
with respect to any court order issued in connection with any such
Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to the
[SPECIFY POLICY PAYMENTS ACCOUNT].
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
A-2
Policy No.: 50816-N Date of Issuance: May 27, 1999
IN WITNESS WHEREOF, the Indenture Trustee has executed and delivered
this Notice of Claim and Certificate as of the _________ day of _______________,
_______.
FIRST UNION NATIONAL BANK,
as Indenture Trustee
By:
-------------------------------
Title:
----------------------------
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For Financial Security or Fiscal Agent Use Only
Wire Transfer sent
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Confirmation Number
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Dates Referenced Herein and Documents Incorporated by Reference
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