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POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1998
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among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Seller and Servicer,
CONTIWEST CORPORATION,
as Seller
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
Home Equity Loan Pass-Through Certificates
Series 1998-4
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TABLE OF CONTENTS
Page
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Article I DEFINITIONS; RULES OF CONSTRUCTION.............................................................3
Section 1.01 Definitions.......................................................................3
Section 1.02 Use of Words and Phrases.........................................................24
Section 1.03 Captions; Table of Contents......................................................24
Section 1.04 Opinions.........................................................................25
Article II ESTABLISHMENT AND ORGANIZATION OF THE TRUST..................................................26
Section 2.01 Establishment of the Trust.......................................................26
Section 2.02 Office...........................................................................26
Section 2.03 Purposes and Powers..............................................................26
Section 2.04 Appointment of the Trustee; Declaration of Trust.................................26
Section 2.05 Expenses of the Trust............................................................26
Section 2.06 Ownership of the Trust...........................................................27
Section 2.07 Situs of the Trust...............................................................27
Section 2.08 Miscellaneous REMIC Provisions...................................................27
Article III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE SERVICER AND THE
SELLERS; COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS..............................29
Section 3.01 Representations and Warranties of the Depositor..................................29
Section 3.02 Representations and Warranties of the Servicer...................................31
Section 3.03 Representations and Warranties of the Sellers....................................33
Section 3.04 Covenants of the Sellers to Take Certain Actions with Respect to the
Home Equity Loans In Certain Situations..........................................39
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement Mortgages..........47
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee.........................................................51
Article IV ISSUANCE AND SALE OF CERTIFICATES............................................................54
Section 4.01 Issuance of Certificates.........................................................54
Section 4.02 Sale of Certificates.............................................................54
Article V CERTIFICATES AND TRANSFER OF INTERESTS........................................................55
Section 5.01 Terms............................................................................55
Section 5.02 Forms............................................................................55
Section 5.03 Execution, Authentication and Delivery...........................................55
Section 5.04 Registration and Transfer of Certificates........................................56
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Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates................................58
Section 5.06 Persons Deemed Owners............................................................59
Section 5.07 Cancellation.....................................................................59
Section 5.08 Limitation on Transfer of Ownership Rights.......................................59
Section 5.09 Assignment of Rights.............................................................61
Article VI COVENANTS....................................................................................62
Section 6.01 Distributions....................................................................62
Section 6.02 Money for Distributions to be Held in Trust; Withholding.........................62
Section 6.03 Protection of Trust Estate.......................................................63
Section 6.04 Performance of Obligations.......................................................64
Section 6.05 Negative Covenants...............................................................64
Section 6.06 No Other Powers..................................................................65
Section 6.07 Limitation of Suits..............................................................65
Section 6.08 Unconditional Rights of Owners to Receive Distributions..........................66
Section 6.09 Rights and Remedies Cumulative...................................................66
Section 6.10 Delay or Omission Not Waiver.....................................................66
Section 6.11 Control by Owners................................................................66
Section 6.12 Indemnification..................................................................67
Section 6.13 Access to Names and Addresses of Owners of Certificates..........................67
Article VII ACCOUNTS, DISBURSEMENTS AND RELEASES........................................................69
Section 7.01 Collection of Money..............................................................69
Section 7.02 Establishment of Accounts........................................................69
Section 7.03 Flow of Funds....................................................................69
Section 7.04 [Reserved].......................................................................72
Section 7.05 Investment of Accounts...........................................................72
Section 7.06 Payment of Trust Expenses........................................................73
Section 7.07 Eligible Investments.............................................................73
Section 7.08 Accounting and Directions by Trustee.............................................75
Section 7.09 Reports by Trustee to Owners and the Certificate Insurer.........................76
Section 7.10 Reports by Trustee...............................................................81
Section 7.11 Preference Payments..............................................................81
Article VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS..........................................83
Section 8.01 Servicer and Sub-Servicers.......................................................83
Section 8.02 Collection of Certain Home Equity Loan Payments..................................84
Section 8.03 Sub-Servicing Agreements.........................................................84
Section 8.04 Successor Sub-Servicers..........................................................85
Section 8.05 Liability of Servicer; Indemnification...........................................85
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the Owners..........86
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee..................86
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Section 8.08 Principal and Interest Account...................................................86
Section 8.09 Delinquency Advances and Servicing Advances......................................88
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans...........................89
Section 8.11 Maintenance of Insurance.........................................................90
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements......................90
Section 8.13 Realization Upon Defaulted Home Equity Loans; Modification.......................91
Section 8.14 Trustee to Cooperate; Release of Files...........................................93
Section 8.15 Servicing Compensation...........................................................94
Section 8.16 Annual Statement as to Compliance................................................94
Section 8.17 Annual Independent Certified Public Accountants' Reports.........................95
Section 8.18 Access to Certain Documentation and Information Regarding the Home
Equity Loans.....................................................................95
Section 8.19 Assignment of Agreement..........................................................95
Section 8.20 Removal of Servicer; Resignation of Servicer.....................................95
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance..............100
Article IX TERMINATION OF TRUST........................................................................102
Section 9.01 Termination of Trust............................................................102
Section 9.02 Termination Upon Option of Owners of Class R Certificates.......................102
Section 9.03 Termination Upon Loss of REMIC Status...........................................103
Section 9.04 Disposition of Proceeds.........................................................105
Article X THE TRUSTEE..................................................................................106
Section 10.01 Certain Duties and Responsibilities.............................................106
Section 10.02 Removal of Trustee for Cause....................................................107
Section 10.03 Certain Rights of the Trustee...................................................109
Section 10.04 Not Responsible for Recitals or Issuance of Certificates........................110
Section 10.05 May Hold Certificates...........................................................110
Section 10.06 Money Held in Trust.............................................................111
Section 10.07 Compensation and Reimbursement; No Lien for Fees................................111
Section 10.08 Corporate Trustee Required; Eligibility.........................................111
Section 10.09 Resignation and Removal; Appointment of Successor...............................111
Section 10.10 Acceptance of Appointment by Successor Trustee..................................113
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
Trustee.........................................................................113
Section 10.12 Reporting; Withholding..........................................................114
Section 10.13 Liability of the Trustee........................................................114
Section 10.14 Appointment of Co-Trustee or Separate Trustee...................................115
Article XI MISCELLANEOUS...............................................................................117
Section 11.01 Compliance Certificates and Opinions............................................117
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Section 11.02 Form of Documents Delivered to the Trustee......................................117
Section 11.03 Acts of Owners..................................................................118
Section 11.04 Notices, etc. to Trustee.......................................................119
Section 11.05 Notices and Reports to Owners; Waiver of Notices................................119
Section 11.06 Rules by Trustee................................................................119
Section 11.07 Successors and Assigns..........................................................120
Section 11.08 Severability....................................................................120
Section 11.09 Benefits of Agreement...........................................................120
Section 11.10 Legal Holidays..................................................................120
Section 11.11 Governing Law; Submission to Jurisdiction.......................................120
Section 11.12 Counterparts....................................................................121
Section 11.13 Usury...........................................................................121
Section 11.14 Amendment.......................................................................122
Section 11.15 Paying Agent; Appointment and Acceptance of Duties..............................122
Section 11.16 REMIC Status....................................................................123
Section 11.17 Additional Limitation on Action and Imposition of Tax...........................125
Section 11.18 Appointment of Tax Matters Person...............................................125
Section 11.19 The Certificate Insurer.........................................................125
Section 11.20 Reserved........................................................................126
Section 11.21 Third Party Rights..............................................................126
Section 11.22 Notices.........................................................................126
SCHEDULE I.......................................................................................I-1
SCHEDULE II.....................................................................................II-1
SCHEDULE III...................................................................................III-1
SCHEDULE IV.....................................................................................IV-1
EXHIBIT A........................................................................................A-1
EXHIBIT B........................................................................................B-I
EXHIBIT R........................................................................................R-1
EXHIBIT D........................................................................................D-1
EXHIBIT E........................................................................................E-1
EXHIBIT F........................................................................................F-1
EXHIBIT G........................................................................................G-1
EXHIBIT H........................................................................................H-1
EXHIBIT I........................................................................................I-1
EXHIBIT J........................................................................................J-1
EXHIBIT K........................................................................................K-1
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POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME
EQUITY LOAN TRUST 1998-4, dated as of December 1, 1998 by and among
CONTISECURITIES ASSET FUNDING CORP., a Delaware corporation, in its capacity
as Depositor (the "Depositor"), CONTIMORTGAGE CORPORATION, a Delaware
corporation in its capacities as a Seller (in such capacity, a "Seller") and
as Servicer (in such capacity, the "Servicer"), CONTIWEST CORPORATION, a
Nevada corporation, in its capacity as a Seller (a "Seller" and together with
ContiMortgage Corporation, the "Sellers") and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, in its capacity as the trustee (the
"Trustee") of the Trust.
WHEREAS, the Depositor wishes to establish the Trust and to provide
for the allocation and sale of the beneficial interests therein and the
maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve
in the capacity of Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sellers, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal
of the Certificates in accordance with their terms, all of the sums
distributable under this Agreement with respect to the Certificates and the
performance of the covenants contained in this Agreement, each Seller hereby
bargains, sells, conveys, assigns and transfers to the Depositor and the
Depositor hereby bargains, sells, conveys, assigns and transfers to the Trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates and the Certificate Insurer, all of its respective right, title
and interest in and to any and all benefits accruing to it from (a) the Home
Equity Loans (other than any principal and interest payments received thereon
on or prior to the Cut-Off Date) listed in Schedule I to this Agreement which
the Sellers are causing to be delivered to the Depositor and the Depositor is
causing to be delivered to the Trustee herewith (and all substitutions
therefor as provided by Sections 3.03, 3.04 and 3.06), together with the
related Home Equity Loan documents and each Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as
may be held by the Trustee in the Certificate Account together with investment
earnings on such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive of investment
earnings thereon (except as otherwise provided herein), whether in the form of
cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); (c) the Insurance Agreement; (d) the
Certificate Insurance Policy; and (e) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified herein (a)-(e) above shall be
collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein
to the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
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DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have
the meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to any Payment Date, the calendar
month immediately preceding the month in which the Payment Date occurs (or the
period from the Cut-Off Date to the end of the calendar month in which the
Cut-Off Date occurs in the case of the first Payment Date). A "calendar month"
shall be deemed to be 30 days.
"Aggregate Certificate Principal Balance": As of any time of
determination thereof, the sum of the Class A Certificate Principal Balance
and the Class B Certificate Principal Balance, in each case as of such time.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the
related Home Equity Loan, or, in the case of a Home Equity Loan which is a
purchase money mortgage, the sales price of the Property at such time of
origination, if such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the
Closing; with respect to the Trustee, any Vice President, Assistant Vice
President, Trust Officer or any Officer of the Trustee located at the
Corporate Trust Office.
"Available Funds": As defined in Section 7.03(b).
"Balloon Loans": Home Equity Loans having scheduled amortization
based on a longer remaining term than the actual remaining term, with the
result that a relatively large principal amount is due on the final scheduled
due date (i.e., "30 due in 10").
"Business Day": Any day that is not a Saturday, Sunday or other day
on which the Certificate Insurer or commercial banking institutions in The
City of New York, or in the city in which the principal corporate trust office
of the Trustee is located, are authorized or obligated by law or executive
order to be closed.
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"Certificate": Any one of the Class A Certificates, Class B
Certificates or Class R Certificates, each representing the interests and the
rights described in this Agreement.
"Certificates": The Class A Certificates, the Class B Certificates
and the Class R Certificates.
"Certificate Account": The certificate account established in
accordance with Section 7.02 hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not
be commingled with other funds held by the Trustee.
"Certificate Insurance Policy": With respect to the Class A
Certificates, the certificate guaranty insurance policy (number 28225) dated
December 17, 1998 issued by the Certificate Insurer for the benefit of the
Class A Certificates pursuant to which the Certificate Insurer guarantees
Insured Payments.
"Certificate Insurer": MBIA Insurance Corporation, a New York stock
insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
"Certificate Insurer Default": The existence and continuance of any
of the following:
(a) the Certificate Insurer fails to make a payment required under a
Certificate Insurance Policy in accordance with its terms; or
(b) (i) the entry by a court having jurisdiction in the premises of
(A) a final and nonappealable decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (B) a final and nonappealable decree or
order adjudging the Certificate Insurer as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganizing, rehabilitation,
arrangement, adjustment or composition of or in respect of the Certificate
Insurer under any applicable United States federal or state law, or appointing
a custodian, receiver, liquidator, rehabilitator, assignee, trustee,
sequestrator or other similar official of the Certificate Insurer or of any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case
or proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate Insurer to
pay debts generally as they become due, or the
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admission by the Certificate Insurer in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the
Certificate Insurer in furtherance of any such action.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class Initial Certificate
---------------- Principal
Balance
-------------------
Class A $1,000,000,000
Class B $49,318,000
The Class R Certificates do not have a Certificate Principal Balance.
As of any time of determination, the Certificate Principal Balance of
any Class of Certificates is the Certificate Principal Balance as of the
Startup Day of such Class less any amounts actually distributed on such Class
with respect to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation rights, that
portion of Insured Payments made in respect of principal) and, additionally in
the case of the Class B Certificates, less the amount of any reduction in the
Class B Certificate Principal Balance on all prior Payment Dates pursuant to
Section 7.03(i).
"Chapter 13 Loan": A Home Equity Loan with a Mortgagor in bankruptcy
under a "Chapter 13" Plan.
"Class": The Class A Certificates, the Class B Certificates or the
Class R Certificates.
"Class A Certificate": Any one of the Certificates designated on the
face thereof as a Class A Certificate, substantially in the form annexed
hereto as Exhibit A, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A Certificate Principal Balance": As of any time of
determination and with respect to the Class A Certificates, the Certificate
Principal Balance as of the Startup Day of the Class A Certificates plus any
amount previously distributed thereon with respect to principal that is
recovered as a voidable preference by a trustee in bankruptcy pursuant to a
final nonappealable order less any amounts actually distributed to the Owners
of such Class of the Class A Certificates with respect to the related Class A
Principal Distribution Amount pursuant to Section 7.03(b) hereof on all prior
Payment Dates (except, for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments made in respect of
principal).
"Class A Current Interest": With respect to any Payment Date and with
respect to the Class A Certificates, the amount of interest accrued during the
related Accrual Period on the Class A Certificate Principal Balance
immediately prior to such Payment Date at the Class A
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Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A
Certificates as it relates to interest previously paid on the Class A
Certificates of such Class prior to such Payment Date.
"Class A Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A Current Interest, (y) the Class A Interest Carry
Forward Amount and (z) the portion of Class A Principal Distribution Amount
payable to the Owners of the Class A Certificates pursuant to Section 7.03(b)
hereof.
"Class A Enhancement Percentage": As of any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the excess of
(x) the Pool Balance for such Payment Date over (y) the Class A Certificate
Principal Balance after taking into account the payment of the Class A
Principal Distribution Amount on such Payment Date, assuming that no
Delinquency Trigger Event is in effect, and the denominator of which is the
Pool Balance for such Payment Date.
"Class A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A Interest Carry Forward Amount as of the immediately preceding
Payment Date exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A
Pass-Through Rate.
"Class A Optimal Balance": means, as of any Payment Date, as follows,
but in no event less than zero:
I. Prior to the Stepdown Date:
(a) if a Cumulative Realized Loss Trigger Event is not then in
effect, the excess of (x) the Pool Balance over (y) an
amount equal to (i) prior to the 5th Payment Date, 4.70% of
the Original Pool Balance (i.e., $49,317,946.00) and (ii) on
and after the 5th Payment Date, 7.00% of the Original Pool
Balance (i.e., $73,452,260.00); or
(b) if a Cumulative Realized Loss Trigger Event is in effect,
the excess of (x) the Pool Balance over (y) an amount equal
to 8.30% of the Original Pool Balance (i.e.,
$87,093,394.00).
II. On and after the Stepdown Date:
(a) if neither a Delinquency Trigger Event nor a Cumulative
Realized Loss Trigger Event is then in effect, the lesser
of:
(i) the product of (x) 86.00% and (y) the Pool Balance;
and
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(ii) the excess of (x) the Pool Balance over (y) an
amount equal to 0.50% of the Original Pool Balance
(i.e., $5,246,590.00); or
(b) if a Delinquency Trigger Event is then in effect, but as to
which a Cumulative Realized Loss Trigger Event is not in
effect, the lesser of:
(i) the product of (x) 100% minus the product of 85.25%
and the Three-Month Rolling Average 60+ Delinquency
Rate and (y) the Pool Balance; and
(ii) the excess of (x) the Pool Balance over (y) an
amount equal to 0.50% of the Original Pool Balance
(i.e., $5,246,590.00); or
(c) if a Cumulative Realized Loss Trigger Event is in effect but
as to which a Delinquency Trigger Event is not in effect,
the product of (x) 90.60% minus the percentage equivalent of
a fraction, the numerator of which is 3.60% of the Original
Pool Balance (i.e., $37,775,448.00) and the denominator of
which is the Pool Balance and (y) the Pool Balance;
(d) if both a Delinquency Trigger Event and a Cumulative
Realized Loss Trigger Event are then in effect, the lesser
of:
(i) the product of (x) 100% minus the product of 85.25%
and the Three-Month Rolling Average 60+ Delinquency
Rate and (y) the Pool Balance; and
(ii) the product of (x) 90.60% minus the percentage
equivalent of a fraction, the numerator of which is
3.60% of the Original Pool Balance (i.e.,
$37,775,448.00) and the denominator of which is the
Pool Balance and (y) the Pool Balance.
"Class A Pass-Through Rate": With respect to any Payment Date, 6.415%
per annum.
"Class A Principal Distribution Amount": As of any Payment Date, the
actual amount distributed as principal to the Owners of the Class A
Certificates pursuant to Section 7.03(b)(v) on such Payment Date.
"Class B Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the Aggregate Certificate Principal Balance on such Payment
Date, after taking into account all distributions of principal of the Class A
Certificates and the Class B Certificates on such Payment Date, but prior to
the reduction of the Class B Certificate Principal Balance pursuant to Section
7.03(i), if any, on such Payment Date over (y) the Pool Balance.
"Class B Available Funds Cap": With respect to any Payment Date, the
weighted average Coupon Rate of the Home Equity Loans as of the opening of
business on the first day of the related Remittance Period, less the
annualized percentage equivalent of a fraction equal to
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(a) the sum of the Premium Amount plus the Trustee Fee plus the Servicing Fee
divided by (b) the Loan Balance of the Home Equity Loans as of the opening of
business on the first day of the related Remittance Period.
"Class B Certificate": Any one of the Certificates designated on the
face thereof as a Class B Certificate, substantially in the form annexed
hereto as Exhibit B, executed authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class B Certificate Principal Balance": As of any time of
determination and with respect to the Class B Certificates, the Certificate
Principal Balance as of the Startup Day of all Class B Certificates plus any
amount previously distributed thereon with respect to principal that is
recovered as a voidable preference by a trustee in bankruptcy pursuant to a
final, nonappealable order, less the sum of (x) any amounts of the Class B
Principal Distribution Amount actually distributed to the Owners of the Class
B Certificates pursuant to Section 7.03(b) hereof on all prior Payment Dates
and (y) the aggregate, cumulative amount of the Class B Applied Realized Loss
Amounts with respect to such Class on all prior Payment Dates.
"Class B Current Interest": With respect to any Payment Date, the
amount of interest accrued during the related Accrual Period on the Class B
Certificate Principal Balance of such Class immediately prior to such Payment
Date during the related Accrual Period at the Class B Pass-Through Rate plus
the Preference Amount owed to the Owners of the Class B Certificates as it
relates to interest previously paid on the Class B Certificates of such Class
prior to such Payment Date.
"Class B Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B Current Interest, (x) the Class B Principal
Distribution Amount, if any, payable to the Owners of the Class B Certificates
pursuant to Section 7.03(b) hereof, (y) the Class B Interest Carry Forward
Amount, if any, and (z) the Class B Realized Loss Amortization Amount, if any.
"Class B Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B Interest Carry Forward Amount as of the immediately preceding
Payment Date exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class B Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class B
Pass-Through Rate.
"Class B Optimal Balance": As of any Payment Date:
I. Prior to the Stepdown Date and if the Class A Certificate
Principal Balance is then greater than zero, the Class B
Initial Certificate Principal Balance; and
II. On and after the Stepdown Date, or if the Class A
Certificate Principal
8
Balance then equals zero, the excess of (a) the Pool Balance
over (b) the Class A Certificate Principal Balance (after
taking into account any reduction thereof on such Payment
Date) plus the Targeted Overcollateralization Amount.
"Class B Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) 8.815% per annum and (y) the Class B Available Funds Cap.
"Class B Principal Distribution Amount": With respect to any Payment
Date, the actual amount distributed as principal to the Owners of the Class B
Certificates in accordance with priority "Sixth" in Section 7.03(b) hereof on
such Payment Date.
"Class B Realized Loss Amortization Amount": With respect to the
Class B Certificates and as of any Payment Date, the lesser of (x) the Class B
Unpaid Realized Loss Amount as of such Payment Date and (y) the amount of
Available Funds remaining after funding priorities "First" through "Seventh"
of Section 7.03(b) hereof.
"Class B Unpaid Realized Loss Amount": With respect to the Class B
Certificates and any Payment Date, the excess of (x) the aggregate cumulative
amount of Class B Applied Realized Loss Amounts with respect to the Class B
Certificates for all prior Payment Dates over (y) the aggregate, cumulative
amount of Class B Realized Loss Amortization Amounts with respect to the Class
B Certificates for all prior Payment Dates.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed
hereto as Exhibit R, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as a "residual interest" in the Trust Estate for the purposes of
the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date immediately
following the date on which the aggregate Loan Balances of the Home Equity
Loans has declined to $104,931,800.00 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"ContiMortgage": ContiMortgage Corporation, a Delaware corporation,
and the originator of each Home Equity Loan, one of the Sellers and the
Servicer.
"ContiWest": ContiWest Corporation, a Nevada corporation, and one of
the Sellers.
"Corporate Trust Office": The principal office of the Trustee at Xxx
X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000.
9
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Loss Termination Trigger Event": A Cumulative
Realized Loss Termination Trigger Event occurs on any date of determination if
the amount of Cumulative Realized Losses expressed as a percentage of the
Original Pool Balance on any date of determination equals or exceeds the
percentage for such date set out below:
Date Percentage
---- ----------
January 1999- December 2000 1.800%
January 2001- December 2001 2.550%
January 2002- December 2002 3.150%
January 2003- December 2003 3.600%
January 2004- December 2004 4.000%
January 2005 and thereafter 4.500%
"Cumulative Realized Loss Trigger Event": A Cumulative Realized Loss
Trigger Event occurs on any date of determination if the amount of Cumulative
Realized Losses expressed as a percentage of the Original Pool Balance on any
date of determination equals or exceeds the percentage for such date set out
below:
Date Percentage
---- ----------
January 1999- December 2000 1.05%
January 2001- December 2001 1.80%
January 2002- December 2002 2.40%
January 2003- December 2003 2.85%
January 2004 and thereafter 3.00%
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Equity Loans
since the Startup Day.
"Curtailment": Prepayment of principal by a Mortgagor which does not
satisfy the Note in full, and which is not intended as a Prepaid Installment.
10
"Cut-Off Date": As of the close of business on December 7, 1998.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which, pursuant
to the Note relating thereto, interest is computed and charged to the
Mortgagor at the Coupon Rate on the outstanding principal balance of such Note
based on the number of days elapsed between receipt of the Mortgagor's last
payment through receipt of the Mortgagor's most current payment.
"Deed in Lieu": The Servicer's acceptance of a deed in lieu of
foreclosure.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such
payment has not been received by the close of business on the corresponding
day of the month immediately succeeding the month in which such payment was
due, or, if there is no such corresponding day (e.g., as when a 30-day month
follows a 31-day month in which a payment was due on the 31st day of such
month) then on the last day of such immediately succeeding month. Similarly
for "60 days Delinquent," "90 days Delinquent" and so on.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquency Trigger Event": A Delinquency Trigger Event will be
deemed to have occurred with respect to any Payment Date on or after the
Stepdown Date if 85.25% of the Three-Month Rolling Average 60+ Day Delinquency
Rate equals or exceeds the Class A Enhancement Percentage for such Payment
Date.
"Delivery Order": Each delivery order in the form set forth as
Exhibit G hereto and delivered by the Depositor to the Trustee on the Startup
Day pursuant to Section 4.01 hereof.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Principal
and Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the
Certificate Insurer acting in its fiduciary capacity, having combined capital
and surplus of at least $50,000,000; provided, however, that if the Principal
and Interest Account is not maintained with the Trustee, (i) such institution
shall have a long-term debt rating of at least "A2" by Moody's, and, if rated
by Fitch, at least "A" by Fitch (ii) a short-term debt rating of at least
"A-1" by Standard & Poor's and (iii) if such Principal and Interest Account is
moved to a new institution, the Servicer shall provide the Trustee, the
Certificate Insurer and the Owners with a statement identifying the location
of the Principal and Interest Account.
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"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time
in the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Extra Principal Distribution Amount": As of any Payment Date, the
excess, if any, of (x) the Class A Principal Distribution Amount plus the
Class B Principal Distribution Amount over (y) the Principal Remittance
Amount, in each case with respect to such Payment Date.
"Xxxxxx Xxx": Xxxxxx Xxx, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"Xxxxxx Mae Guide": Xxxxxx Mae's Servicing Guide, as the same may be
amended by Xxxxxx Mae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"File": The documents delivered to the Trustee pursuant to Section
3.05 hereof pertaining to a particular Home Equity Loan and any additional
documents required to be added to the File pursuant to this Agreement.
"Final Determination": As defined in Section 9.03 hereof.
"Final Scheduled Payment Date": For each Class of Certificates, as
set out in Section 2.08(f).
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to the related Property.
"Fiscal Agent": State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Certificate Insurer under the Certificate Insurer Policy or any
successor thereto appointed by the Certificate Insurer.
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"Fitch": Fitch IBCA, Inc.
"Fixed Rate Loans": Home Equity Loans bearing interest at fixed rate.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the
Emergency Home Finance Act of 1970, as amended, or any successor thereof.
"Highest Lawful Rate": As defined in Section 11.13.
"Home Equity Loans": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Home Equity Loans originally so held being identified in the Schedules of Home
Equity Loans. The term "Home Equity Loan" includes the terms "First Mortgage
Loan" and "Second Mortgage Loan". The term "Home Equity Loan" includes any
Home Equity Loan which is Delinquent, which relates to a foreclosure or which
relates to a Property which is REO Property prior to such Property's
disposition by the Trust. Any home equity loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and
assigned to the Trust by the Depositor, in fact was not transferred and
assigned to the Trust for any reason whatsoever, including, without
limitation, the incorrectness of the statement set forth in Section 3.04(b)(x)
hereof with respect to such home equity loan, shall nevertheless be considered
a "Home Equity Loan" for all purposes of this Agreement.
"Indemnification Agreement": The Indemnification Agreement dated
December 17, 1998 among the Certificate Insurer, the Depositor, the Sellers,
the Servicer, and the Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Insurance Agreement": The Insurance Agreement dated as of December
1, 1998, among the Depositor, the Sellers, the Servicer, the Certificate
Insurer, and the Trustee as it may be amended from time to time.
"Insurance Commitment Letter": The letter dated December 2, 1998 from
MBIA to ContiMortgage Corporation evidencing the commitment by MBIA to issue
the insurance policies with respect to the Class A Certificates.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"Insurance Proceeds": Payments received with respect to any Insurance
Policy, except the Certificate Insurance Policy.
"Insured Payment": With respect to any Payment Date, without
duplication, (A) the excess, if any, of (i) the sum of the Current Interest of
the Class A Certificates and the
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then existing Class A Overcollateralization Deficit, if any, over (ii) the
Total Available Funds after taking into account the portion of any Class A
Principal Distribution Amount to be actually distributed on such Payment Date
without regard to any Insured Payment to be made with respect to such Payment
Date, plus (B) an amount equal to the Preference Amount with respect to the
Class A Certificates, plus (C) on the December 2029 Payment Date only, the
excess, if any, of (i) the Class A Certificate Principal Balance over (ii) the
Class A Principal Distribution Amount for such Payment Date.
"Interest Amount Available": As defined in Section 7.03(b) hereof.
"Interest Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) all interest due during the related
Remittance Period with respect to the Home Equity Loans (less the Servicing
Fee with respect to such Home Equity Loans), (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date, (iii) the portion of the
Substitution Amount relating to interest on such Home Equity Loans substituted
during the related Remittance Period, (iv) the portion of any Loan Purchase
Price relating to interest on any such Home Equity Loan repurchased during the
related Remittance Period and (v) the portion of Net Liquidation Proceeds
relating to interest in such in Home Equity Loans liquidated during the
related Remittance Period.
"Involuntary Payoff": The amount of Net Liquidation Proceeds received
with respect to a Liquidated Loan.
"Late Payment Rate": For any Payment Date, the fluctuating rate of
interest, as it is published from time to time in the New York, New York
edition of The Wall Street Journal under the caption "Money Rates" as the
"prime rate," to change when and as such published prime rate changes plus 2%.
The Late Payment Rate shall be computed on the basis of a year of 360 days
calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of any
defaulted Home Equity Loan, such expenses including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.09(b) with respect to the related Home Equity
Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Liquidity Agreement": As defined in Section 8.3(b).
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the
Cut-Off Date, less any principal payments relating to such Home Equity Loan
included in previous Monthly Remittance
14
Amounts; provided, however, that the Loan Balance for any Home Equity Loan
that has become a Liquidated Loan shall be zero as of the first day of the
Remittance Period following the Remittance Period in which such Home Equity
Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of
such Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed
at the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances and Servicing Advances which the Servicer has theretofore
failed to remit with respect to such Home Equity Loan and (iii) all reimbursed
Delinquency Advances to the extent that reimbursement is not made from the
Mortgagor or from Liquidation Proceeds from the respective Home Equity Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised
Value into the original principal balance of the Note relating to such First
Mortgage Loan and (ii) with respect to any Second Mortgage Loan, the
percentage obtained by dividing the Appraised Value as of the date of
origination of such Second Mortgage Loan into an amount equal to the sum of
(a) the remaining principal balance of the Senior Lien note relating to such
First Mortgage Loan as of the date of origination of the related Second
Mortgage Loan and (b) the original principal balance of the Note relating to
such Second Mortgage Loan.
"Maximum Certificate Insurer Current Reimbursement Amount" With
respect to any Payment Date, equals the lesser of (x) the Available Funds
remaining in the Certificate Account after taking into account all
distributions described in clauses "First" through "Third" in Section 7.03(b)
hereof and (y) the excess of (1) the sum of (a) the Pool Balance plus (b) the
amount described in the immediately preceding clause (x) over (2) the
aggregate Class A Certificate Principal Balance prior to taking into account
any payment of principal on such Payment Date.
"Monthly Excess Cashflow Amount": As defined in Section 7.03(b)(ix)
hereof.
"Monthly Remittance Amount": As of any Monthly Remittance Date, the
sum of (i) the Interest Remittance Amount and (ii) the Principal Remittance
Amount, in each case, for such Monthly Remittance Date.
"Monthly Remittance Date": The 10th day of each month or, if such day
is not a Business Day, the Business Day succeeding such day, commencing in the
month following the Startup Day.
"Moody's": Xxxxx'x Investors Service, Inc.
15
"Mortgage": The mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"Net Post-REMIC Recovery Proceeds": With respect to any Optional
Buyout Loan, Post-REMIC Recovery Proceeds less the costs and expenses incurred
by the Servicer in conducting its loss mitigation strategy with respect
thereto, including, without limitation, legal fees and expenses.
"No Equity Secured Mortgage": A Home Equity Loan in which no material
equity in the related Mortgaged Property secures the related Note.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the
Trustee.
"Operative Documents": Collectively, this Agreement, the Underwriting
Agreement, the Certificates, the Certificate Insurance Policies, the Insurance
Agreement, the Indemnification Agreement and the Auction Agent Agreement.
"Optional Buyout Loan": A Home Equity Loan repurchased from the Trust
for the purpose of allowing the Servicer to use its loss mitigation strategy
in maximizing the Post-REMIC Recovery Proceeds thereof. A Home Equity Loan
must be in default, or default is reasonably forseeable, for such Home Equity
Loan to be so repurchased.
"Original Pool Balance": The original aggregate Loan Balance of the
Home Equity Loans as of the Cut-Off Date.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and
final payment of money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust for the
Owners of such Certificates;
16
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as
provided for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever
returned to the Trustee.
"Overcollateralization Amount": As of any Payment Date means the
positive difference, if any, between (x) the Pool Balance and (y) the
Aggregate Certificate Principal Balance (after taking into account all
distributions of principal on such Payment Date).
"Overcollateralization Floor": An amount equal to 0.50% of the
Original Pool Balance.
"Owner": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section 5.06
and Section 7.03 (n) hereof, respectively hereof; provided that solely for the
purposes of determining the exercise of any voting rights hereunder, if any
Class A or Class B Certificates are beneficially owned by a Seller or any
affiliate thereof, such Seller or such affiliate shall not be considered an
Owner hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee
or any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing
in the month following the Startup Day.
"Percentage Interest": With respect to a Class of Class A or Class B
Certificates, a fraction, expressed as a percentage, the numerator of which is
the initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the aggregate initial Certificate Principal
Balance represented by all the Certificates in such Class. With respect to a
Class R Certificate, the portion of the Class evidenced thereby, expressed as
a percentage, as stated on the face of such Certificate, all of which shall
total 100% with respect to the related Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
17
"Pool Balance": For any Payment Date, the aggregate outstanding Loan
Balance of the Home Equity Loans as of the last day of the related Remittance
Period.
"Post-REMIC Recovery Proceeds": With respect to any Optional Buyout
Loan, any amounts (including the proceeds of any Insurance Policy) recovered
by the Servicer in connection with such Optional Buyout Loan, whether through
trustee's sale, foreclosure sale, a "short sale", or otherwise.
"Preference Amount": With respect to the Class A Certificates and
Class B Certificates, any amounts of Current Interest and principal included
in previous distributions to the Owners of such Certificates which are
recoverable and sought to be recovered from such Owners as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code in accordance with a final, nonappealable order of a court having
competent jurisdiction and which have not theretofore been repaid to such
Owners.
"Premium Amount": As of any Payment Date the product of (x)
one-twelfth of the Premium Percentage and (y) the Class A Certificate
Principal Balance.
"Premium Percentage": As defined in the Insurance Commitment Letter.
"Prepaid Installment": With respect to any Home Equity Loan, any
installment of principal thereof and interest thereon received by the Servicer
prior to the scheduled due date for such installment, intended by the
Mortgagor as an early payment thereof and not as a Prepayment with respect to
such Home Equity Loan.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment
of such principal (other than the principal portion of any Prepaid
Installment), Substitution Amounts, the portion of the purchase price of any
Home Equity Loan purchased from the Trust pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof representing principal and the proceeds of
any Insurance Policy which are to be applied as a payment of principal on the
related Home Equity Loan shall be deemed to be Prepayments for all purposes of
this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation
thereof, including, without limitation, expenditures for real estate property
taxes, hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal actually collected
18
by the Servicer on the Home Equity Loans during the related Remittance Period,
(ii) the Loan Balance of each Home Equity Loan that was repurchased from the
Trust during the related Remittance Period, (iii) any Substitution Amount
relating to principal delivered by the Seller in connection with a
substitution of a Home Equity Loan during the related Remittance Period, (iv)
any Insurance Proceeds actually collected by the Servicer during the related
Remittance Period with respect to a Home Equity Loan (to the extent such
Insurance Proceeds relate to principal) and (v) all Net Liquidation Proceeds
actually collected by the Servicer during the related Remittance Period (to
the extent such Net Liquidation Proceeds relate to principal).
"Private Certificate": Any Class B Certificate or any Class R
Certificate.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property (including all building thereon)
securing a Home Equity Loan.
"Prospectus": The Prospectus dated September 17, 1998 constituting
part of the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1998-4 Prospectus Supplement dated December 2, 1998 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03 hereof.
"Qualified Liquidation": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan being
replaced, (ii) is of the same property type or is a single family dwelling and
the same occupancy status or is a primary residence as the replaced Home
Equity Loan, (iii) shall mature no later than November 30, 2028, (iv) has a
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall
be of the same or higher credit quality classification (determined in
accordance with ContiMortgage's credit underwriting guidelines set forth in
ContiMortgage's underwriting manual) as the Home Equity Loan which such
Qualified Replacement Mortgage replaces, (vi) has a Loan Balance as of the
related Replacement Cut-Off Date equal to or less than the Loan Balance of the
replaced Home Equity Loan as of such Replacement Cut-Off Date, (vii) shall not
provide for a "balloon" payment if the related Home Equity Loan did not
provide for a "balloon" payment (and if such related Home Equity Loan provided
for a "balloon" payment, such Qualified Replacement Mortgage shall have an
original maturity of not less than the original maturity of such related Home
Equity Loan), (viii) shall be a Fixed Rate Home Equity Loan and (ix) satisfies
the criteria set forth from time to time in the
19
definition thereof at Section 860G(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Xxxxx'x, Standard & Poor's and Fitch
or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess of
Net Liquidation Proceeds realized thereon applied in reduction of such Loan
Balance. As to any Optional Buyout Loan, the amount, if any, by which the Loan
Balance thereof as of the date of the Servicer's final loss determination with
respect thereto is in excess of the Net Post-REMIC Recovery Proceeds realized
thereon applied in reduction of such Loan Balance.
"Record Date": With respect to any Payment Date, the last day of the
calendar month immediately preceding the calendar month in which such Payment
Date occurs.
"Register": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39505), including all amendments thereto and including the Prospectus
relating to the Class A Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date and as to the
Certificate Insurance Policy, the sum of (x)(i) all Insured Payments
previously paid to the Trustee by the Certificate Insurer and not previously
repaid to the Certificate Insurer pursuant to Section 7.03(b)(iv) hereof plus
(ii) interest accrued on each such Insured Payment not previously repaid
calculated at the Reimbursement Late Payment Rate and (y)(i) any amounts then
due and owing to the Certificate Insurer under the Insurance Agreement plus
(ii) interest on such amounts at the Late Payment Rate. The Certificate
Insurer shall notify the Trustee, the Depositor and the Sellers of the amount
of any Reimbursement Amount.
"Reimbursement Late Payment Rate": For any Payment Date, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank,
N.A.) plus 3%. The Reimbursement Late Payment Rate shall be computed on the
basis of a year of 365 days elapsed. In no event shall the Reimbursement Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
20
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing
may be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the
month in which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Register under the nominee name of the
Depository.
"Schedule of Home Equity Loans": The Schedule of Home Equity Loans to
be conveyed on the Startup Day. Such Schedule of Home Equity Loans shall
identify each Home Equity Loan by the Servicer's loan number and the
borrower's name and address (including the state) of the Property and shall
set forth as to each Home Equity Loan the lien status thereof, the
Loan-to-Value Ratio and the Loan Balance as of the Cut-Off Date, the Coupon
Rate thereof, the current scheduled monthly payment of principal and interest
and the maturity of the related Note, the property type, occupancy status,
Appraised Value and original term-to-maturity thereof, whether or not such
Home Equity Loan (including the related Note) has been modified and the
aggregate Loan Balances of all Home Equity Loans. Such Schedules shall also
identify the Seller of each Home Equity Loan.
"Scheduled Payment": As of any date of calculation, with respect to a
Home Equity Loan, the then stated scheduled monthly installment of principal
and interest payable thereunder which, if timely paid, would result in the
full amortization of principal over the term thereof (or, in the case of a
"balloon" Note, the term to the nominal maturity date for amortization
purposes, without regard to the actual maturity date).
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Sellers": ContiMortgage and ContiWest.
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"Senior Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Property having a first priority lien.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and
its permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicing Advance": As defined in Section 8.09(b) and Section
8.13(a) hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration
duties relating to such Home Equity Loan pursuant to Section 8.15 and equal to
the Servicing Fee Rate times the then outstanding principal amount of such
Home Equity Loan as of the first day of each calendar month payable on a
monthly basis.
"Servicing Fee Rate": 0.50% per annum.
"60+ Day Delinquent Loan": With respect to any Determination Date,
all REO Properties, each Home Equity Loan with respect to which any portion of
a Monthly Payment is, as of the last day of the prior Remittance Period, two
months or more past due (without giving effect to any grace period), each Home
Equity Loan in Foreclosure and each Home Equity Loan for which the mortgagor
has filed for bankruptcy.
"Short Sale": A sale of a Home Equity Loan at a price less than the
outstanding Loan Balance thereof.
"Standard & Poor's": Standard & Poor's Ratings Services, a division
of the XxXxxx-Xxxx Companies, Inc.
"Startup Day": December 17, 1998.
"Stepdown Date": With respect to each Loan Group, the later to occur
of (x) the Payment Date in January 15, 2002 and (y) the first Payment Date on
which the Class A Certificate Principal Balance is less than or equal to the
Class A Optimal Balance for such Payment Date.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain
Home Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
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"Targeted Overcollateralization Amount": As of any Payment Date
means:
(i) on or prior to the fourth Payment Date, zero;
(ii) after the fourth Payment Date, but prior to the Stepdown Date:
(A) if no Cumulative Realized Loss Trigger Event is in
effect, 2.30% of the Original Pool Balance (i.e.,
$24,134,314.00); or
(B) if a Cumulative Realized Loss Trigger Event is in
effect, an amount equal to 3.60% of the Original
Pool Balance (i.e., $37,775,448.00);
(iii) on and after the Stepdown Date:
(A) if neither a Delinquency Trigger Event nor a Cumulative
Realized Loss Trigger Event is in effect, the greater of (I)
4.60% of the Pool Balance and (II) 0.50% of the Original
Pool Balance (i.e., $5,246,590); or
(B) if a Delinquency Trigger Event is in effect but a Cumulative
Realized Loss Trigger Event is not in effect, the Targeted
Overcollateralization Amount shall be equal to the Targeted
Overcollateralization Amount for the immediately preceding
Payment Date; or
(C) if a Cumulative Realized Loss Trigger Event is in effect
(whether or not a Delinquency Trigger Event is in effect),
an amount equal to 3.60% of the Original Pool Balance (i.e.,
$37,775,448.00).
"Tax Matters Certificate": Each of the Class R Certificates initially
issued to ContiFunding Corporation as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates which shall be issued to and held by ContiFunding
Corporation throughout the term hereof unless another Person shall accept an
assignment of such interest and the designation of Tax Matters Person pursuant
to Section 11.18 hereof.
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)
Weighted Average Pass-Through Rate, (b) any portion of the Trustee Fee
(calculated as a percentage of the outstanding principal amount of the Class A
and Class B Certificates) then accrued and outstanding and (c) the Premium
Amount (calculated as a percentage of the outstanding principal amount of the
Class A Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03 hereof.
23
"Three-Month Rolling Average 60+ Day Delinquency Rate": With respect
to a Payment Date, the fraction, expressed as a percentage (A) the numerator
of which is the sum of the following three percentages for each of the past
three Remittance Periods (x) the aggregate principal amount of 60+ Day
Delinquent Loans as of the last day of the related Remittance Period divided
by (y) the aggregate outstanding Pool Balance for each of the past three
Remittance Periods and (B) the denominator of which is 3.
"Total Available Funds": As of any Payment Date, means in the
aggregate, the Monthly Remittance Amount, less the sum of (i) the aggregate
amount applied to the payment of the Trustee Fee and the Premium Amount and
(ii) any such amount that cannot be distributed to the Owners of the Class A
Certificates as a result of proceedings under the United States Bankruptcy
Code.
"Trust": ContiMortgage Home Equity Loan Trust 1998-4, the trust
created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Manufacturers and Traders Trust Company, a New York
banking corporation, the Corporate Trust Department of which is located on the
date of execution of this Agreement at Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000,
not in its individual capacity but solely as Trustee under this Agreement, and
any successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date in an
amount equal to one-twelfth of the sum of (i) 0.0020% multiplied by the
then-outstanding Aggregate Certificate Principal Balance and (ii) $4,750.00.
"Underwriters": Credit Suisse First Boston Corporation and
ContiFinancial Services Corporation.
"Voluntary Payoff": A Prepayment which satisfies the related Note in
full, and did not result from a liquidation of the related Home Equity Loan,
or its repurchase from the Trust.
Section 1.02 Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole
and not solely to the particular section of this Agreement in which any such
word is used. The definitions set forth in Section 1.01 hereof include both
the singular and the plural. Whenever used in this Agreement, any pronoun
shall be deemed to include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
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Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent
that the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law) and may state that
no opinion is expressed on the availability of the remedy of specific
enforcement, injunctive relief or any other equitable remedy. Any opinion
required to be furnished by any Person hereunder must be delivered by counsel
upon whose opinion the addressee of such opinion may reasonably rely, and such
opinion may state that it is given in reasonable reliance upon an opinion of
another, a copy of which must be attached, concerning the laws of a foreign
jurisdiction.
END OF ARTICLE I
ARTICLE II
25
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the
laws of the State of New York and this Agreement, the Trust, which, for
convenience, shall be known as "ContiMortgage Home Equity Loan Trust 1998-4."
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000, Attention Corporate Trust
Administration, or at such other address as the Trustee may designate by
notice to the Depositor, the Seller, the Certificate Insurer and the Servicer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and
(iii) such other activities as may be required in connection with conservation
of the Trust Estate and distributions to the Owners; provided, however, that
nothing contained herein shall permit the Trustee to take any action which
would adversely affect any of the Trust's status as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section 7.03(b)
hereof), (ii) any reasonable expenses of the Trustee, and (iii) any other
expenses of the Trust that have been reviewed by ContiMortgage, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly
by ContiMortgage. ContiMortgage shall pay directly the reasonable fees and
expenses of counsel to the Trustee. The reasonable fees and expenses of the
Trustee's counsel in connection with the
26
review and delivery of this Agreement and related documentation shall be paid
by ContiMortgage on the Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in
the State of New York and payments will be received by the Trustee only in the
State of New York and payments from the Trustee will be made only from the
State of New York. The Trust's only office will be at the office of the
Trustee as set forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The Trustee shall elect that the Trust shall be treated as a
REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of this Agreement shall be resolved in
a manner that preserves the validity of such REMIC election. The assets of the
REMIC shall include the Home Equity Loans, the Accounts, any REO Property, and
any proceeds of the foregoing.
(b) The Class A and Class B Certificates are hereby designated as
"regular interests" with respect to the REMIC (the "REMIC Regular Interests")
and the Class R Certificate is hereby designated as the single "residual
interest" with respect to the REMIC. On each Payment Date, available funds, if
any, remaining in the REMIC after payments of interest and principal as
designated herein shall be distributed to the Class R Certificates.
(c) For federal income tax purposes, the "latest possible maturity
date" for each of the REMIC Regular Interests is hereby set to be the Payment
Date of December 15, 2029.
(d) The Final Scheduled Payment Date for each Class of Certificates
is hereby set to be the Payment Date indicated below:
Class Final Scheduled Payment Date
--------------------------------- ------------------------------------------
Class A December 15, 2029
Class B December 15, 2029
(e) The Startup Day is hereby designated for the REMIC as the
"startup day" within the meaning of Section 860G(a)(9) of the Code.
27
(f) The Trustee shall provide to the Internal Revenue Service and to
the persons described in Section 860E(e)(3) and (6) of the Code, the
information described in Treasury regulations Section 1.860D-1(b)(5)(ii), or
any successor regulation thereto, with respect to the REMIC. Such information
will be provided in the manner described in Treasury regulations Section
1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
ARTICLE III
28
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and
is in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate
the Depositor's Certificate of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor
is bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in accordance with
the terms hereof and thereof, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles
of equity (whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Depositor or
its properties or the consequences of which would materially and adversely
affect its performance hereunder or under the other Operative Documents to
which the Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor
29
which litigation might have consequences that would prohibit its entering into
this Agreement or any other Operative Documents to which it is a party or that
would materially and adversely affect the condition (financial or otherwise)
or operations of the Depositor or its properties or might have consequences
that would materially and adversely affect its performance hereunder and under
the other Operative Documents to which the Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are
attributable to the Depositor therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Depositor required to be stated therein
or necessary to make the statements contained therein with respect to the
Depositor, in light of the circumstances under which they were made, not
misleading. The Registration Statement does not contain any untrue statement
of a material fact required to be stated therein or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
known to the Depositor that materially adversely affects or in the future may
(so far as the Depositor can now reasonably foresee) materially adversely
affect the Depositor or the Home Equity Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained, as the case may be, by or from any federal, state
or other governmental authority or agency (other than any such actions,
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which the Depositor makes no such representation or
warranty), that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by the Depositor of
the Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom
may be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Depositor and the
performance by the Depositor of its obligations under this Agreement and such
of the other Operative Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any
pending insolvency.
30
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive delivery of the respective Home
Equity Loans to the Trustee.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any
Property is located to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Servicer and each
Sub-Servicer has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
The Servicer is designated as an approved seller-servicer by FannieMae for
first and second mortgage loans and has combined equity and subordinated debt
of at least $1,500,000, as determined in accordance with generally accepted
accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which the Servicer is a
party or by which the Servicer is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
31
(d) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or otherwise)
or operations of the Servicer or its properties or might have consequences
that would materially and adversely affect its performance hereunder or under
the other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative
Documents to which the Servicer is a party or that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially
and adversely affect its performance hereunder and the other Operative
Documents to which the Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed
to the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material
fact with respect to the Servicer or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they were
made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained, as the case may be, by or from any federal, state
or other governmental authority or agency (other than any such actions,
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which the Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the execution
and delivery by the Servicer of the Operative Documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in
full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative
32
Documents on the part of the Servicer and the performance by the Servicer of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with
relevant FannieMae guidelines.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Home Equity Loans
to the Trustee.
Upon discovery by any of either Seller, the Servicer, any
Sub-Servicer, any Owner, the Certificate Insurer or the Trustee (each, for
purposes of this paragraph, a party) of a breach of any of the representations
and warranties set forth in this Section 3.02 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
Within 60 days of its discovery or its receipt of notice of breach, the
Servicer shall cure such breach in all material respects and, upon the
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee pursuant to Section 8.20 hereof; provided, however, that if any
party can establish to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Sellers.
(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) ContiMortgage is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and
is in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it, make such
qualification necessary. ContiMortgage has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement by ContiMortgage and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of ContiMortgage and will not violate
ContiMortgage's Certificate of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiMortgage is a party or by which ContiMortgage
is bound or violate any
33
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over ContiMortgage or any of its
properties.
(c) This Agreement and the other Operative Documents to which
ContiMortgage is a party, assuming due authorization, execution and delivery
by the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of ContiMortgage, enforceable against it in accordance with
the terms hereof and thereof, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles
of equity (whether considered in a proceeding or action in equity or at law).
(d) ContiMortgage is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiMortgage or
its properties or the consequences of which would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which ContiMortgage is a party.
(e) No litigation is pending with respect to which ContiMortgage has
received service of process or, to the best of ContiMortgage's knowledge,
threatened against ContiMortgage which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of ContiMortgage or its
properties or might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which ContiMortgage is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiMortgage contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiMortgage or matters or activities for which ContiMortgage is
responsible in accordance with the Operative Documents or which are
attributable to ContiMortgage therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to ContiMortgage required to be stated therein
or necessary to make the statements contained therein with respect to
ContiMortgage, in light of the circumstances under which they were made, not
misleading. The Registration Statement does not contain any untrue statement
of a material fact required to be stated therein or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
known to ContiMortgage that materially adversely affects or in the future may
(so far as ContiMortgage can now reasonably foresee) materially adversely
affect ContiMortgage or the Home Equity Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
34
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate delivered by ContiMortgage to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) Neither ContiMortgage nor any affiliate thereof will report on
any financial statement any part of the Servicing Fee as an adjustment to the
sales price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained, as the case may be, by or from any federal, state
or other governmental authority or agency (other than any such actions,
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which ContiMortgage makes no such representation or
warranty), that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by ContiMortgage of
the Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom
may be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiMortgage and the
performance by ContiMortgage of its obligations under this Agreement and such
of the other Operative Documents to which it is a party.
(k) The origination practices used by ContiMortgage with respect to
the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiMortgage.
(m) ContiMortgage is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is ContiMortgage aware of any
pending insolvency.
(n) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiMortgage hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(o) ContiMortgage is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03(1) shall survive delivery of the respective
Home Equity Loans to the Trustee.
35
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of this
paragraph, a "party") of a breach of any of the representations and warranties
set forth in this Section 3.03 which materially and adversely affects the
interests of the Owners or of the Certificate Insurer, the party discovering
such breach shall give prompt written notice to the other parties.
ContiMortgage hereby covenants and agrees that within 60 days of its discovery
or its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, ContiMortgage may
(or may cause an affiliate of ContiMortgage to) on the Monthly Remittance Date
next succeeding such discovery or receipt of notice (i) if such monthly
Remittance Date is within two years following the Startup Day substitute in
lieu of any Home Equity Loan not in compliance with clause (h) a Qualified
Replacement Mortgage and, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date
is less than the Loan Balance of such Home Equity Loan as of such Replacement
Cut-Off Date, deliver an amount equal to such difference together with the
aggregate amount of (A) all Delinquency Advances and Servicing Advances
theretofore made with respect to such Home Equity Loan and (B) all Delinquency
Advances and Servicing Advances which the Servicer has theretofore failed to
remit with respect to such Home Equity Loan (a "Substitution Amount") to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase
such Home Equity Loan from the Trust at the Loan Purchase Price, which
purchase price shall be delivered to the Servicer for deposit in the Principal
and Interest Account. Notwithstanding any provision of this Agreement to the
contrary, with respect to any Home Equity Loan which is not in default or as
to which no default is imminent, no repurchase or substitution pursuant to
Section 3.03, 3.04 or 3.06 shall be made unless ContiMortgage obtains for the
Trustee and the Certificate Insurer an opinion of counsel experienced in
federal income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for the Trust or
any REMIC therein or otherwise subject the Trust or any REMIC therein to tax
and would not jeopardize the status of any REMIC therein as a REMIC (a "REMIC
Opinion") addressed to the Trustee and the Certificate Insurer and acceptable
to the Trustee and the Certificate Insurer. Any Home Equity Loan as to which
repurchase or substitution was delayed pursuant to this Section shall be
repurchased or substituted for (subject to compliance with Sections 3.03, 3.04
or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
(2) ContiWest hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) ContiWest is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it, make such
qualification necessary. ContiWest has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
36
(b) The execution and delivery of this Agreement by ContiWest and its
performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of ContiWest and will not violate
ContiWest's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiWest is a party or by which ContiWest is bound
or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over
ContiWest or any of its properties.
(c) This Agreement and the other Operative Documents to which
ContiWest is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of ContiWest, enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) ContiWest is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiWest or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest has
received service of process or, to the best of ContiWest's knowledge,
threatened against ContiWest which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of ContiWest or its
properties or might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which ContiWest is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiWest contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiWest or matters or activities for which ContiWest is responsible
in accordance with the Operative Documents or which are attributable to
ContiWest therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material
fact with respect to ContiWest required to be stated therein or necessary to
make the statements contained therein with respect to ContiWest, in light of
the circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact
37
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
known to ContiWest that materially adversely affects or in the future may (so
far as ContiWest can now reasonably foresee) materially adversely affect
ContiWest or the Home Equity Loans or the ownership interests therein
represented by the Certificates that has not been set forth in the
Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate delivered by ContiWest to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to
be taken, given or obtained, as the case may be, by or from any federal, state
or other governmental authority or agency (other than any such actions,
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which ContiWest makes no such representation or
warranty), that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by ContiWest of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom
may be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiWest and the performance
by ContiWest of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiWest.
(k) ContiWest is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is ContiWest aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiWest hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(m) ContiWest is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03(2) shall survive delivery of the respective
Home Equity Loans to the Trustee.
38
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of this
paragraph, a "party") of a breach of any of the representations and warranties
set forth in this Section 3.03 which materially and adversely affects the
interests of the Owners or of the Certificate Insurer, the party discovering
such breach shall give prompt written notice to the other parties. ContiWest
hereby covenants and agrees that within 60 days of its discovery or its
receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, ContiWest may (or
may cause an affiliate of ContiWest to) on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) if such monthly Remittance
Date is within two years of the startup day substitute in lieu of any Home
Equity Loan not in compliance with clause (h) a Qualified Replacement Mortgage
and, if the outstanding principal amount of such Qualified Replacement
Mortgage as of the applicable Replacement Cut-Off Date is less than the Loan
Balance of such Home Equity Loan as of such Replacement Cut-Off Date, deliver
an amount equal to such difference together with the aggregate amount of (A)
all Delinquency Advances and Servicing Advances theretofore made with respect
to such Home Equity Loan and (B) all Delinquency Advances and Servicing
Advances which the Servicer has theretofore failed to remit with respect to
such Home Equity Loan (a "Substitution Amount") to the Servicer for deposit in
the Principal and Interest Account or (ii) purchase such Home Equity Loan from
the Trust at the Loan Purchase Price, which purchase price shall be delivered
to the Servicer for deposit in the Principal and Interest Account.
Notwithstanding any provision of this Agreement to the contrary, with respect
to any Home Equity Loan which is not in default or as to which no default is
imminent, no repurchase or substitution pursuant to Section 3.03, 3.04 or 3.06
shall be made unless ContiWest obtains for the Trustee and the Certificate
Insurer an opinion of counsel experienced in federal income tax matters to the
effect that such a repurchase or substitution would not constitute a
Prohibited Transaction for the Trust or any REMIC therein or otherwise subject
the Trust or any REMIC therein to tax and would not jeopardize the status of
any REMIC therein as a REMIC (a "REMIC Opinion") addressed to the Trustee and
the Certificate Insurer and acceptable to the Trustee and the Certificate
Insurer. Any Home Equity Loan as to which repurchase or substitution was
delayed pursuant to this Section shall be repurchased or substituted for
(subject to compliance with Sections 3.03, 3.04 or 3.06, as the case may be)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such Home Equity Loan and (b) receipt by the Trustee and the
Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of the Sellers to Take Certain Actions with
Respect to the Home Equity Loans In Certain Situations.
(a) Upon the discovery by either Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee (i) that any of the
statements set forth in subsection (b) below were untrue as of the Startup Day
with the result that the interests of the Owners or the Certificate Insurer
are materially and adversely affected or (ii) that statements set forth in
Clauses (ix), (x), (xiii), (xxxvi), (xl), or (xli) of subsection (b) below
were untrue in any material respect as of the Startup Day, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of such Seller's discovery, its receipt of notice
of breach from any one of the other parties or such time as a situation
resulting from an existing statement which is untrue materially and adversely
affects the interests of the Owners or of the Certificate Insurer, such Seller
hereby covenants and warrants that it shall promptly cure such breach in all
39
material respects or subject to the last two sentences of Section 3.03 it
shall on the second Monthly Remittance Date next succeeding such discovery,
receipt of notice or such time (i) if such Monthly Remittance Date is within
two years of the Startup Day substitute in lieu of each Home Equity Loan which
has given rise to the requirement for action by such Seller a Qualified
Replacement Mortgage and deliver the Substitution Amount to the Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Home
Equity Loan from the Trust at a purchase price equal to the Loan Purchase
Price thereof, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Other than as specified in
Section 6.12 hereof, it is understood and agreed that the obligation of a
Seller so to substitute or purchase any Home Equity Loan as to which such a
statement set forth below is untrue in any material respect and has not been
remedied shall constitute the sole remedy under this Agreement respecting a
discovery of any such statement which is untrue in any material respect in
this Section 3.04 available to the Owners, the Certificate Insurer and the
Trustee, the Certificate Insurer.
(b) Unless otherwise specified, the information set out below
specifies as of the Startup Day:
(i) The information with respect to each Home Equity Loan
and the aggregate Loan Balance of all Home Equity Loans set forth in
the related Schedule of Home Equity Loans is true and correct as of
the Cut-Off Date;
(ii) All the original or certified documentation set forth
in Section 3.05 (including all material documents related thereto)
with respect to each Home Equity Loan has been or will be delivered
to the Trustee on the Startup Day or as otherwise provided in Section
3.05;
(iii) Each Home Equity Loan being transferred to the Trust
is a Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums and
townhouses, manufactured housing or small multifamily or mixed-use
property but shall not include co-operatives or mobile homes;
provided, however, that not more than .06% of the Original Pool
Balance are secured by condominiums with more than four stories and
no more than .61% of the Original Pool Balance are secured by
condominiums of less than four stories;
(v) No Home Equity Loan has a Combined Loan-to-Value Ratio
in excess of 85%, except 24.61% of such Home Equity Loans which have
a Combined Loan-to-Value Ratio not greater than 100%;
(vi) Each Home Equity Loan is being serviced by the
Servicer;
(vii) The Note related to each Home Equity Loan bears a
fixed Coupon Rate of at least 7.08% per annum. The weighted average
Coupon Rate of the Home Equity Loans is at least 10.41%;
40
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal monthly
Scheduled Payments which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date (other
than Notes representing not more than 29.63% of the Original Pool
Balance, which may provide for a "balloon" payment due no later than
the end of the 20th year, which maturity date is not more than 15
years from the date of origination);
(ix) As of the Startup Day, each Mortgage is a valid and
subsisting first or second lien of record on the Property subject in
the case of any Second Mortgage Loan only to a Senior Lien on such
Property and subject in all cases to the exceptions to title set
forth in the title insurance policy or attorney's opinion of title
with respect to the related Home Equity Loan, which exceptions are
generally acceptable to banking institutions in connection with their
regular mortgage lending activities, and such other exceptions to
which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by such
Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the related Seller to the Depositor and by the
Depositor to the Trust herein contemplated, such Seller and the
Depositor, as the case may be, held good and indefeasible title to,
and was the sole owner of, each Home Equity Loan (including the
related Note) conveyed by such Seller subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
clause (ix) or other liens which will be released simultaneously with
such transfer and assignment; and immediately upon the transfer and
assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity
Loan subject to no liens, charges, mortgages, encumbrances or rights
of others except as set forth in paragraph (ix) or other liens which
will be released simultaneously with such transfer and assignment;
(xi) As of the Startup Day, (a) no more than 3.17% of the
Home Equity Loans as a percentage of the Original Pool Balance are
30-59 days Delinquent, (b) no more than 0.26% of the Home Equity
Loans as a percentage of the Original Pool Balance of such Home
Equity Loans, are 60-89 days Delinquent, (c) none of the Home Equity
Loans is 90 or more days Delinquent, (d) no Mortgagor of any Home
Equity Loan has been 30 days or more Delinquent more than once during
the 12 months immediately preceding the Startup Day [except as
indicated on Schedule II attached hereto and (e) no Mortgagor of any
Home Equity Loan has been 90 or more days Delinquent during the 12
months immediately preceding the Startup Day except as indicated on
Schedule II] attached hereto;
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal of or interest on such
Note;
41
(xiv) There is no mechanics' lien or claim for work, labor
or material affecting any Property which is or may be a lien prior
to, or equal with, the lien of the related Mortgage except those
which are insured against by any title insurance policy referred to
in paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied
in all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, usury, equal
credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no title policy has
been obtained (provided that no title policy has been obtained with
respect to not more than 1.0% of the Original Pool Balance of the
Home Equity Loans), or (b) a lender's title insurance policy, issued
in standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the
related Property is situated, in an amount at least equal to the
original balance of such Home Equity Loan together, in the case of a
Second Mortgage Loan, with the then-current principal balance of the
mortgage note relating to the Senior Lien, insuring the mortgagee's
interest under the related Home Equity Loan as the holder of a valid
first or second mortgage lien of record on the real property
described in the related Mortgage, as the case may be, subject only
to exceptions of the character referred to in paragraph (ix) above,
was effective on the date of the origination of such Home Equity
Loan, and, as of the Startup Day, such policy is valid and thereafter
such policy shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as
defined in Section 8.03 with respect to the Home Equity Loans
serviced by it;
(xviii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Property;
(xix) If any Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien), (B)
the minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973;
42
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity Loan
had full legal capacity to execute all documents relating to such
Home Equity Loan and convey the estate therein purported to be
conveyed;
(xxi) Each Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by such Seller, including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee;
(xxii) As of the Startup Day, no more than .32% of the
Original Pool Balance will be secured by Properties located within
any single zip code area;
(xxiii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of or
purchasers from the Seller delivering the related Home Equity Loan
(or, subject to Section 3.05 hereof, are in the process of being
recorded);
(xxiv) The terms of each Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect
the interest of the Owners and the Certificate Insurer and which has
been delivered to the Trustee. The substance of any such alteration
or modification is reflected on the related Schedule of Home Equity
Loans;
(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Home Equity Loans were paid;
(xxvi) The related Note is not and has not been secured by
any collateral, pledged account or other security except the lien of
the corresponding Mortgage;
(xxvii) No Home Equity Loan was originated under a buydown
plan;
(xxviii) No Home Equity Loan has a shared appreciation
feature, or other contingent interest feature;
43
(xxix) Each Property is located in the state identified in
the respective Schedule of Home Equity Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon;
(xxx) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
related Home Equity Loan in the event the related Property is sold
without the prior consent of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date have been consolidated
with the outstanding principal amount secured by the related
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the
respective Schedule of Home Equity Loans. The consolidated principal
amount does not exceed the original principal amount of the related
Home Equity Loan. No Note permits or obligates the Servicer to make
future advances to the related Mortgagor at the option of the
Mortgagor;
(xxxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement;
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, unless any such improvements are stated in the title
insurance policy and affirmatively insured;
(xxxiv) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and,
with respect to the use and occupancy of the same, including, but not
limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxv) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the
benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption
available to the related Mortgagor which
44
would materially interfere with the right to sell the related
Property at a trustee's sale or the right to foreclose the related
Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and neither the Servicer
nor the related Seller has waived any default, breach, violation or
event of acceleration;
(xxxviii) No instrument of release or waiver has been
executed in connection with any Home Equity Loan, and no Mortgagor
has been released, in whole or in part, except in connection with an
assumption agreement which has been approved by the primary mortgage
guaranty insurer, if any, and which has been delivered to the
Trustee;
(xxxix) The maturity date of each Home Equity Loan is at
least twelve months prior to the maturity date of the related first
mortgage loan if such first mortgage loan provides for a balloon
payment;
(xl) Each Home Equity Loan conforms, and all such Home
Equity Loans in the aggregate conform, in all material respects to
the description thereof set forth in the Prospectus Supplement;
(xli) The credit underwriting guidelines applicable to each
Home Equity Loan conform in all material respects to the description
thereof set forth in the Prospectus Supplement;
(xlii) Each Home Equity Loan was originated based upon a
full appraisal, which included an interior inspection of the subject
property;
(xliii) The Home Equity Loans were not selected for
inclusion in the Trust by the Sellers on any basis intended to
adversely affect the Trust;
(xliv) No more than 5.49% of the Original Pool Balance are
secured by Properties that are non-owner occupied Properties (i.e.,
investor-owned and vacation);
(xlv) No more than 3.35% of the Original Pool Balance of the
Home Equity Loans are secured by Home Equity Loans which were
originated under ContiMortgage's non-income verification program;
(xlvi) Neither Seller has any actual knowledge that there
exist any hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation on any Property;
(xlvii) Both Sellers were properly licensed or otherwise
authorized, to the extent required by applicable law, to originate or
purchase each Home Equity Loan; and
45
the consummation of the transactions herein contemplated, including,
without limitation, the receipt of interest by the Owners and the
ownership of the Home Equity Loans by the Trustee as trustee of the
Trust will not involve the violation of such laws;
(xlviii) With respect to each Property subject to a ground
lease (i) the current ground lessor has been identified and all
ground rents which have previously become due and owing have been
paid; (ii) the ground lease term extends, or is automatically
renewable, for at least five years beyond the maturity date of the
related Home Equity Loan; (iii) the ground lease has been duly
executed and recorded; (iv) the amount of the ground rent and any
increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (v) the ground rent
payment is included in the borrower's monthly payment as an expense
item; (vi) the Trust has the right to cure defaults on the ground
lease; and (vii) the terms and conditions of the leasehold do not
prevent the free and absolute marketability of the Property. As of
the Cut-Off Date, the Loan Balance of the Home Equity Loans with
related Properties subject to ground leases does not exceed 1% of the
Original Aggregate Loan Balance;
(xlix) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or
an escrow of funds has been established in an amount sufficient to
pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;
(l) As of the Startup Day, neither Seller has received a
notice of default of any first mortgage loan secured by any Property
which has not been cured by a party other than such Seller;
(li) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $274,924.30;
(lii) Each Home Equity Loan is secured by a mortgage on
property which, at the time of origination of each Home Equity Loan,
has an appraised value of not more than $625,000.00; and
(liii) No more than 5.55% of the Home Equity Loans are in a
second priority position.
(c) In the event that any such repurchase results in a prohibited
transaction tax, the Trustee shall immediately notify the related Seller in
writing thereof and such Seller will, within 10 days of receiving notice
thereof from the Trustee, deposit the amount due from the Trust with the
Trustee for the payment thereof, including any interest and penalties, in
immediately available funds. In the event that any Qualified Replacement
Mortgage is delivered by either Seller to the Trust pursuant to Section 3.03,
Section 3.04 or Section 3.06 hereof, such Seller shall be obligated to take
the actions described in Section 3.04(a) with respect to such Qualified
Replacement Mortgage upon the discovery by any of the Owners, the other
Seller, the Servicer, any Sub-Servicer, the Certificate Insurer or the Trustee
that the statements set forth in
46
clause (ix), (x), (xiii), (xxxvi), (xl) or (xli) of subsection (b) above are
untrue in any material respect on the date such Qualified Replacement Mortgage
is conveyed to the Trust or that any of the other statements set forth in
subsection (b) above are untrue on the date such Qualified Replacement
Mortgage is conveyed to the Trust such that the interests of the Owners or the
Certificate Insurer in the related Qualified Replacement Mortgage are
materially and adversely affected; provided, however, that for the purposes of
this subsection (c) the statements in subsection (b) above referring to items
"as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer
to such items as of the date such Qualified Replacement Mortgage is conveyed
to the Trust. Notwithstanding the fact that a representation contained in
subsection (b) above may be limited to a Seller's knowledge, such limitation
shall not relieve a Seller of its repurchase obligation under this Section and
Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any
Home Equity Loan pursuant to this Article III or the eligibility of any Home
Equity Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day each Seller, concurrently with the execution
and delivery hereof, hereby transfers, assigns, sets over and otherwise
conveys to the Depositor and the Depositor, concurrently with the execution
and delivery hereof, transfers, assigns, sets over and otherwise conveys,
without recourse, to the Trust all of their respective right, title and
interest in and to the Trust Estate; provided, however, that each Seller
reserves and retains all of its right, title and interest in and to principal
(including Prepayments) collected and interest accrued on each Home Equity
Loan on or prior to the Cut-Off Date. The transfer by the Depositor of the
Home Equity Loans set forth on the Schedule of Home Equity Loans to the
Trustee is absolute and is intended by the Owners and all parties hereto to be
treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Home Equity Loans conveying good
title thereto free and clear of any liens and encumbrances from each Seller to
the Depositor and from the Depositor to the Trust and that the Home Equity
Loans not be part of the Depositor's or either Seller's estate in the event of
insolvency. In the event that such conveyance is deemed to be a loan, the
parties intend that each Seller shall be deemed to have granted to the
Depositor and the Depositor shall be deemed to have granted to the Trustee a
first priority perfected security interest in the Trust Estate, and that this
Agreement shall constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance
from the Sellers to the Depositor, each Seller has filed, in the appropriate
office or offices in the States of
47
Delaware, Pennsylvania and Nevada, as the case may be, a UCC-1 financing
statement executed by such Seller as debtor, naming the Depositor as secured
party and listing the Home Equity Loans and the other property described above
as collateral. The characterization of a Seller as debtor and the Depositor as
secured party on such financing statements is solely for protective purposes
and shall in no way be construed as being contrary to the intent of the
parties that this transaction be treated as a sale of such Seller's entire
right, title and interest in and to the Trust Estate. In connection with such
filing, each Seller agrees that it shall cause to be filed all necessary
continuation statements thereof and to take or cause to be taken such actions
and execute such documents as are necessary to perfect and protect the
Trustee's, the Certificate Insurer's and the Owners' interest in the Trust
Estate.
In connection with such sale, transfer, assignment, and conveyance
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of New York, Nevada and Delaware, a UCC-1
financing statement executed by the Depositor as debtor, naming the Trustee as
secured party and listing the Home Equity Loans and the other property
described above as collateral. The characterization of the Depositor as debtor
and the Trustee as secured party in such financing statements is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale of the
Depositor's entire right, title and interest in and to the Trust Estate. In
connection with such filing, the Depositor agrees that it shall cause to be
filed all necessary continuation statements thereof and to take or cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Trustee's, the Certificate Insurer's and the Owners' interest in
the Trust Estate.
(b) In connection with the transfer and assignment of the Home Equity
Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the Startup
Day with respect to each Home Equity Loan (A) the original Notes
endorsed in blank or to the order of the Trustee, (B) the original
title insurance policy or a copy certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals
or certified copies of all intervening assignments, showing a
complete chain of title from origination to the Trustee, if any,
including warehousing assignments, with evidence of recording
thereon, (D) originals of all assumption and modification agreements,
if any and (E) either: (1) the original Mortgage, with evidence of
recording thereon (if such original Mortgage has been returned to the
related Seller from the applicable recording office or a certified
copy thereof if such original Mortgage has not been returned to the
related Seller from the applicable recording office), or (2) a copy
of the Mortgage certified by the public recording office in those
instances where the original recorded Mortgage has been lost;
(ii) cause, within 60 days following the Startup Day or 15
days following the receipt from the relevant state authorities,
assignments of the Mortgages to "Manufacturers and Traders Trust
Company, as Trustee of ContiMortgage Home Equity Loan Trust 1998-4
under the Pooling and Servicing Agreement dated as of December 1,
1998" to be submitted for recording in the appropriate jurisdictions;
provided, however, that the Depositor shall not be required to record
an assignment of a Mortgage if the
48
Depositor furnishes to the Trustee and the Certificate Insurer, on or
before the Startup Day, at the Depositor's expense an opinion of
counsel with respect to the relevant jurisdiction that such recording
is not necessary to perfect the Trustee's interest in the related
Home Equity Loans (in form and substance and from counsel
satisfactory to the Rating Agencies and the Certificate Insurer);
notwithstanding the furnishing of such opinion of counsel, however,
the Certificate Insurer may, in its reasonable discretion after
consultation with the Depositor prior to the date on which all
assignments of Mortgages are required to be filed hereunder, require
the filing of assignments of Mortgages in any state that is the
subject of such opinions; and
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments,
to the Trustee within 15 days of receipt thereof by the Depositor
(but in any event, with respect to any Mortgage as to which original
recording information has been made available to the Depositor,
within one year after the Startup Day).
Notwithstanding the delivery of opinions specified in clause (i)
above the Trustee shall cause to be recorded each assignment of a Mortgage
upon the earliest to occur of (a) the reasonable direction of the Certificate
Insurer, (b) the removal of the Servicer pursuant to Section 8.20 hereof or
(c) notification to the Trustee of the occurrence of a bankruptcy or
insolvency relating to the Mortgagor.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the
original Mortgage, the assignment of a Mortgage or the intervening assignments
of the Mortgage after it has been recorded, the Depositor shall be deemed to
have satisfied its obligations hereunder upon delivery to the Trustee of a
copy of such Mortgage, such assignment or assignments of Mortgage certified by
the public recording office to be a true copy of the recorded original
thereof.
Not later than ten days following the end of the 60-day period
referred in clause (ii) of the second preceding paragraph, each Seller shall
deliver to the Trustee a list of all Mortgages with respect to Home Equity
Loans delivered by such Seller for which no Mortgage assignment has yet been
submitted for recording by such Seller, which list shall state the reason why
such Seller has not yet submitted such Mortgage assignments for recording.
With respect to any Mortgage assignment disclosed on such list as not yet
submitted for recording for a reason other than a lack of original recording
information, the Trustee shall make an immediate demand on such Seller to
prepare such Mortgage assignments, and shall inform the Certificate Insurer of
such Seller's failure to prepare such Mortgage assignments. Thereafter, the
Trustee shall cooperate in executing any documents prepared by the Certificate
Insurer and submitted to the Trustee in connection with this provision.
Following the expiration of the 60-day period referred to in clause (ii) of
the second preceding paragraph, each Seller shall promptly prepare a Mortgage
assignment for any Mortgage with respect to Home Equity Loans delivered by
such Seller for which original recording information is subsequently received
by such Seller, and shall promptly deliver a copy of such Mortgage assignment
to the Trustee. Each Seller agrees that it will follow its normal servicing
procedures and attempt to obtain the original recording information
49
necessary to complete a Mortgage assignment with respect to Home Equity Loans
delivered by such Seller. In the event that a Seller is unable to obtain such
recording information with respect to any Mortgage prior to the end of the
18th calendar month following the Startup Day and has not provided to the
Trustee a Mortgage assignment with evidence of recording thereon relating to
the assignment of such Mortgage to the Trustee, the Trustee shall notify such
Seller of such Seller's obligation to provide a completed assignment (with
evidence of recording thereon) on or before the end of the 20th calendar month
following the Startup Day with respect to the Home Equity Loans. A copy of
such notice shall be sent by the Trustee to the Certificate Insurer. If no
such completed assignment (with evidence of recording thereon) is provided
before the end of such 20th calendar month, the related Home Equity Loan shall
be deemed to have breached the representation contained in clause (xxiii) of
Section 3.04(b) hereof; provided, however, that if as of the end of such 20th
calendar month either Seller then required to deliver such a completed
assignment demonstrates to the satisfaction of the Certificate Insurer that it
is exercising its best efforts to obtain such completed assignment and, during
each month thereafter until such completed assignment is delivered to the
Trustee, such Seller continues to demonstrate to the satisfaction of the
Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment, the related Home Equity Loan will not be deemed to have
breached such representation. The requirement to deliver a completed
assignment with evidence of recording thereon will be deemed satisfied upon
delivery of a copy of the completed assignment certified by the applicable
public recording office.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 with respect to
one or more Home Equity Loans shall be accomplished at the expense of the
Seller delivering such Home Equity Loan.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise
convey, without recourse, to the Trustee all right, title and interest of such
Seller in and to any Qualified Replacement Mortgage delivered to the Trustee
on behalf of the Trust by such Seller pursuant to Section 3.03, 3.04 or 3.06
hereof and all its right, title and interest to principal and interest due on
such Qualified Replacement Mortgage after the applicable Replacement Cut-Off
Date; provided, however, that such Seller shall reserve and retain all right,
title and interest in and to payments of principal and interest due on such
Qualified Replacement Mortgage on or prior to the applicable Replacement
Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the order of the Seller delivering such Home Equity Loan,
all of its right, title and interest in and to such released Home
50
Equity Loan and all the Trust's right, title and interest to principal and
interest due on such released Home Equity Loan after the applicable
Replacement Cut-Off Date; provided, however, that the Trust shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such released Home Equity Loan on or prior to the applicable
Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, each Seller agrees
to (i) deliver without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating thereto, endorsed in
blank or to the order of the Trustee, (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by such Seller (but in any event
within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title in the same manner required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and
on the order of the Seller delivering such Qualified Replacement Mortgage (i)
the original Note relating thereto, endorsed without recourse or
representation, to such Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller that delivered the corresponding Home Equity Loan shall prepare a
substitute assignment or cure such defect, as the case may be, and thereafter
cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and
the Depositor in the form attached as Exhibit E hereto, and declares that it
will hold such documents and any amendments, replacement or supplements
thereto, as well as any other assets included in the definitions of Trust
Estate and delivered to the Trustee, as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Owners. The Trustee
agrees, for the benefit of the Owners, to review such items within 45 days
after the Startup Day (or, with respect to any document delivered after the
Startup Day, within 45 days of receipt and with respect to any Qualified
Replacement Mortgage, within 45 days after the assignment thereof) and to
deliver to the Depositor, each of the Sellers, the Certificate Insurer and the
Servicer a certification in the form attached hereto as Exhibit F (a "Pool
Certification") to the effect that, as to each Home Equity Loan listed in the
Schedule of Home Equity Loans (other than any Home Equity Loan
51
paid in full or any Home Equity Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this
Agreement are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged or torn and relate to such Home Equity
Loan and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Schedule of Home Equity Loans
accurately reflects the information set forth in the File. The Trustee shall
have no responsibility for reviewing any File except as expressly provided in
this subsection 3.06(a). Without limiting the effect of the preceding
sentence, in reviewing any File, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that
they are genuine, enforceable, or appropriate for the represented purpose or
that they are other than what they purport to be on their face, nor shall the
Trustee be under any duty to determine independently whether there are any
intervening assignments or assumption or modification agreements with respect
to any Home Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home
Equity Loans, or that any Home Equity Loan does not conform to the description
thereof as set forth in the Schedule of Home Equity Loans, the Trustee shall
promptly so notify the Depositor, each of the Sellers, the Certificate Insurer
and the Owners. In performing any such review, the Trustee may conclusively
rely as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the Trustee's review of the items
delivered by each of the Sellers pursuant to Section 3.05(b)(i) is limited
solely to confirming that the documents listed in Section 3.05(b)(i) have been
executed and received, relate to the Files identified in the Schedule of Home
Equity Loans and conform to the description thereof in the Schedule of Home
Equity Loans. Each Seller agrees to use reasonable efforts to remedy a
material defect in a document constituting part of a File delivered by such
Seller of which it is so notified by the Trustee. If, however, within 60 days
after the Trustee's notice to it respecting such defect the related Seller has
not remedied the defect and the defect materially and adversely affects the
interest of the Owners or the Certificate Insurer in the related Home Equity
Loan such Seller will (or will cause an affiliate of such Seller to) on the
next succeeding Monthly Remittance Date (i) if such Monthly Remittance Date is
within two years following the Startup Day, substitute in lieu of such Home
Equity Loan a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or
(ii) purchase such Home Equity Loan at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. However, such
substitution or purchase must occur within 90 days of the Trustee's notice of
the defect if the defect would prevent the Home Equity Loan from being a
Qualified Mortgage, and no substitution or purchase of a Home Equity Loan
52
that is not in default or for which no default is imminent shall be made
unless such Seller obtains for the Trustee and Certificate Insurer a REMIC
Opinion, addressed to and acceptable to the Trustee and Certificate Insurer.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 18th month after the Startup Day indicating the current
status of the exceptions previously indicated on the Pool Certification (the
"Final Certification"). After delivery of the Final Certification, the Trustee
and the Servicer shall monitor and upon request from the Certificate Insurer
provide no less frequently than monthly, updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
END OF ARTICLE III
ARTICLE IV
53
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Depositor of
an executed Delivery Order in the form set forth as Exhibit G hereto, the
Trustee shall execute, authenticate and deliver the Certificates on behalf of
the Trust.
Section 4.02 Sale of Certificates.
At 11:00 a.m. New York City time on the Startup Day (the "Closing"),
at the offices of Xxxxx Xxxxxxxxxx LLP, 1301 Sixth Avenue, New York, New York
(or at such other location acceptable to the Seller), the Sellers will sell
and convey the Home Equity Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the
Home Equity Loans and the money, instruments and other property related
thereto to the Trustee, and the Trustee will deliver (i) to the Underwriters
the Class A Certificates with an aggregate Percentage Interest in each Class
equal to 100%, registered in the name of Cede & Co., or in such other names as
the Underwriters shall direct, against payment of the purchase price thereof
by wire transfer of immediately available funds to the Trust; (ii) to the
purchaser designated by the Depositor, the Class B Certificates with an
aggregate Percentage Interest in such Class equal to 100%, registered in such
name or names as the Depositor shall direct; and (iii) to the respective
registered Owners thereof, a Class R Certificate, with a Percentage Interest
equal to 99.999%, registered in the name of ContiSecurities Holding
Corporation and a Class R Certificate, with a Percentage Interest equal to
0.001%, registered in the name of ContiFunding Corporation.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
ARTICLE V
54
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein
with respect to the Certificates to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law) and except for the rights
of the Trustee on behalf of the Owners of the Class A Certificates with
respect to the Certificate Insurance Policies. The Certificates are payable
solely from payments received on or with respect to the Home Equity Loans
(other than the Servicing Fees), moneys in the Principal and Interest Account,
earnings on moneys and the proceeds of property held as a part of the Trust
Estate. Each Certificate entitles the Owner thereof to receive monthly on each
Payment Date, in order of priority of distributions with respect to such Class
of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Home Equity Loans, pro rata in accordance with
such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has
made the final distribution thereon shall be deemed canceled and shall no
longer be Outstanding for any purpose of this Agreement, whether or not such
Certificate is ever returned to the Trustee.
Section 5.02 Forms.
The Class A, the Class B and the Class R Certificates shall be in
substantially the forms set forth in Exhibits A, B, and R hereof,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement or as may in
the Depositor's judgment be necessary, appropriate or convenient to comply, or
facilitate compliance, with applicable laws, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any applicable
securities laws or as may, consistently herewith, be determined by the
Authorized Officer of the Depositor executing such Certificates, as evidenced
by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated by the manual or
facsimile signature of one of the Trustee's Authorized Officers. Upon proper
authentication by the Trustee, the Certificates shall bind the Trust.
55
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners, the Certificate Insurer and the Trustee shall
have the right to inspect the Register during the Trustee's normal hours and
to obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer
thereof as to the names and addresses of the Owners of the Certificates and
the principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates and the Class B Certificates then Outstanding with the
consent of the Certificate Insurer, or if there are no longer any Class A
Certificates or Class B Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, the Trustee will
give the Owners and the Certificate Insurer prompt written notice of the
appointment of such Registrar and of the location, and any change in the
location, of the Register. In connection with any such appointment the annual
fees of the bank then serving as Trustee and Registrar shall thenceforth be
reduced by the amount to be agreed upon by the Trustee and the Depositor at
such time and the reasonable fees of the Registrar shall be paid, as expenses
of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as
the location of the Register, upon the direction of the Registrar the Trustee
shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of a like Class and in
the aggregate principal amount or percentage interest of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class
and tenor and a like aggregate original principal amount or percentage
interest and bearing numbers not contemporaneously outstanding, upon surrender
of the Certificates to be exchanged at the office designated as the location
of the Register. Whenever any Certificate is so surrendered for exchange, upon
the direction of the Registrar, the Trustee shall execute, authenticate and
deliver the Certificate or Certificates which the Owner making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to
56
the same benefits under this Agreement as the Certificates surrendered upon
such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration
of transfer or exchange of Certificates, but the Registrar or Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer
or exchange shall be an expense of the Trust.
(g) The Private Certificates will be in physical, certificated form.
It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. The Class A Certificates shall, except as otherwise provided in
Subsection (h), be initially issued in the form of a single fully registered
Certificate of such Class. Upon initial issuance, the ownership of each such
Certificate shall be registered in the Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository.
On the Startup Day, the Class A Certificates shall be issued in
denominations of no less than $1,000 and integral multiples thereof. On the
Startup Day, the Class B Certificates shall be issued in denominations of no
less than $1,000,000 and integral multiples of $1,000 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Class A Certificates registered in the Register
in the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Sellers, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Class A
Certificates, (ii) the delivery to any Direct or Indirect Participant or any
other Person, other than a registered Owner of a Class A Certificate as shown
in the Register, of any notice with respect to the Class A Certificates or
(iii) the payment to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Class A Certificate as shown in the
Register, of any amount with respect to any distribution of principal or
interest on the Class A Certificates. No Person other than a registered Owner
of a Class A Certificate as shown in the Register shall receive a certificate
evidencing such Class A Certificate.
57
Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered
Owners of Class A Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Class A Certificates and the Depositor or the Trustee is unable to
locate a qualified successor or (ii) the Depositor at its sole option elects
to terminate the book-entry system through the Depository, the Class A
Certificates shall no longer be restricted to being registered in the Register
in the name of Cede & Co. (or a successor nominee) as nominee of the
Depository. At that time, the Depositor may determine that the Class A
Certificates shall be registered in the name of and deposited with a successor
depository operating a global book-entry system, as may be acceptable to the
Depositor and at the Depositor's expense, or such depository's agent or
designee but, if the Depositor does not select such alternative global
book-entry system, then the Class A Certificates may be registered in whatever
name or names registered Owners of Class A Certificates transferring the Class
A Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the Class A Certificates is registered in the name
of Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates and all notices with respect to such
Class A Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in
the case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it an unsecured indemnity agreement of any Owner with a net worth
at least equal to $50,000,000 containing terms reasonably satisfactory to the
Trustee and (only insofar as it relates to a Class A Certificate) the
Certificate Insurer being sufficient for such security or indemnity
requirement to hold the Trustee and (only insofar as it relates to a Class A
Certificate) the Certificate Insurer harmless, then, in the absence of notice
to the Trustee or the Registrar that such Certificate has been acquired by a
bona fide purchaser, and the Trustee shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental
58
charge that may be imposed in relation thereto; any other expenses in
connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately
with any and all other Certificates of the same Class duly issued hereunder
and such mutilated, destroyed, lost or stolen Certificate shall not be valid
for any purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and the Certificate Insurer and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner
of such Certificate for the purpose of receiving distributions with respect to
such Certificate and for all other purposes whatsoever and the Trustee and the
Certificate Insurer or any agent of the Trustee shall not be affected by
notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) The Private Certificates have not been registered under the
Securities Act or any state securities law. The Registrar shall not register
the transfer of any Private Certificates unless such resale or transfer is
pursuant to an effective registration statement under the Securities Act or is
to the Depositor or unless it shall have received (i) a representation letter
substantially in one of the appropriate forms set forth on Exhibit J hereto or
(ii) such other representations (or an Opinion of Counsel) satisfactory to the
Trustee, the Depositor and the Insurer, to the effect that such resale or
transfer is made (A) in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities laws, or
(B) to a person who the transferor of the Private Certificates reasonably
believes is a qualified institutional buyer (within the meaning of Rule 144A
under the Securities Act) that is aware that such resale or other transfer is
being made in reliance upon Rule 144A. Until the earlier of (i) such time as
the Private Certificates shall be registered pursuant to a registration
statement filed under the Securities Act and (ii) the date two years from the
later of the date of the original authentication and delivery of the Private
Certificates and the date any Private Certificate was
59
acquired from the Depositor or any affiliate of the Depositor, the Private
Certificates shall bear a legend substantially to the effect set forth in the
preceding two sentences. Neither the Depositor, the Sellers, the Servicer, the
Trust, the Trustee nor any other Person is obligated to register the Private
Certificates under the Securities Act or to take any other action not
otherwise required under this Agreement to permit the transfer of Private
Certificates without registration.
(b) Notwithstanding anything to the contrary herein, the Registrar
shall not register the transfer of a Class B or Class R Certificate unless it
shall have received a representation letter from the transferee in the form set
forth on Exhibit K to the effect that either (a) such transferee is not an
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) that is
subject to Title I of ERISA or a "plan" (within the meaning of Section
4975(e)(1) of ERISA) that is subject to Section 4975 of the Code (each of the
foregoing, a "Plan"), and is not acting on behalf of or investing the assets of
a Plan, or (b) with respect to any transfer of a Class B Certificate, such
transferee is investing the assets of an "insurance company general account"
(within the meaning of Section V(e) of Prohibited Transaction Class Exemption
account" (within the meaning of Section V(e)) of Prohibited Transaction Class
Exemption 95-60 ("PTE 95-60")) and, as of the date of purchase, such transferee
satisfies all of the applicable requirements for the exemptive relief provided
by Sections I and IV of PTE 95-60.
(c) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be
of no legal force or effect whatsoever and such transferee shall not be deemed
to be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit
I. Each holder of a Class R Certificate by his acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of this Section
5.08(a). The Class R Certificates are not transferable except that the Owner
of the Tax Matters Person Residual Interest in the REMIC may assign its
interest to another Person who accepts such assignment and the designation as
Tax Matters Person pursuant to Section 11.18 hereof.
(d) The preparation and delivery of any investment letter delivered
hereunder shall not be an expense of the Trustee, the Trust Estate, the
Certificate Insurer or either of the Sellers. The Owner of a Private
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Certificate Insurer and each of the
Sellers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(e) [Reserved].
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(f) [Reserved].
(g) No transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of
such Class R Certificate, acceptable to and in form and substance satisfactory
to the Trustee to the effect that such transferee is not an employee benefit
plan subject to Section 406 of ERISA nor a plan or other arrangement subject
to Section 406 of ERISA nor a plan or other arrangement subject to Section
4975 of the Code (collectively, a "Plan"), nor is acting on behalf of any Plan
nor using the assets of any Plan to effect such transfer. By its acceptance or
acquisition of a Class R Certificate, the transferee shall be deemed to have
represented that it either (i) is not a Plan and is not acquiring its interest
in such Class R Certificate with assets of a Plan or (ii) is an insurance
company acquiring its interest as permitted in accordance with Prohibited
Transaction Exemption 95-60. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate to or on behalf of any Plan
without the delivery to the Trustee a representation letter as described above
shall be null and void and of no effect.
(h) No sale or other transfer of any Class A or Class B Certificate
may be made to the Depositor, the Sellers or the Servicer. No sale or other
transfer of any Class A or Class B Certificate may be made to an affiliate of
either Seller unless the Trustee and the Certificate Insurer shall have been
furnished with an opinion of counsel acceptable to the Trustee and the
Certificate Insurer experienced in federal bankruptcy matters to the effect
that such sale or transfer would not adversely affect the character of the
conveyance of the Home Equity Loans to the Trust as a sale. No sale or other
transfer of the Class R Certificate issued to ContiFunding Corporation on the
Startup Day may be transferred or sold to any Person, except to a person who
accepts the appointment of Tax Matters Person pursuant to Section 11.18
hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part
of its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
ARTICLE VI
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COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date
or (ii) if requested by any Owner of (A) a Class A or a Class B Certificate
having an original principal balance of not less than $1,000,000, or (B) Class
R Certificate having a Percentage Interest of not less than 10% in writing not
later than one Business Day prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment
Date, in each case to each Owner of record on the immediately preceding Record
Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account, shall be made by and on behalf of the Trustee, and no amounts so
withdrawn from the Certificate Account, for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts
then becoming due (to the extent funds are then available for such purpose in
the Certificate Account for the Class to which such amounts are due) such sum
to be held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to
the Trustee all sums held in trust by such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which the sums were held by
such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Class A or Class B
Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of
62
the State of New York after such amount has become due and payable shall be
discharged from such trust and be paid to the Owners of the Class R
Certificates; and the Owner of such Class A or Class B Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the
amounts so paid to the Owners of the Class R Certificates) and all liability
of the Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying Agent
before being required to make any such payment, may, at the expense of the
Trust, cause to be published once, in the eastern edition of The Wall Street
Journal, notice that such money remains unclaimed and that, after a date
specified therein, which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid
to the Owners of the Class R Certificates. The Trustee shall, at the direction
of the Depositor, also adopt and employ, at the expense of the Trust, any
other reasonable means of notification of such payment (including, but not
limited to, mailing notice of such payment to Owners whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Registrar, the Trustee or any Paying Agent, at the last address
of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit
of the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this
Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce
the obligations and rights of the other parties to this Agreement and the
obligations of the Certificate Insurer under each Certificate Insurance
Policy; in addition, the Certificate Insurer or the Owners, by action, suit or
proceeding at law or equity and shall also have the power to enjoin, by action
or suit in equity, and acts or occurrences which may be unlawful or in
violation of the rights of the Certificate Insurer and/or the Owners as such
rights are set forth in this Agreement; provided,
63
however, that nothing in this Section shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory
to it and (ii) when required by this Agreement, have been requested by the
Certificate Insurer or Owners of a majority of the Percentage Interests
represented by the Class A and Class B Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A and
Class B Certificates then outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates; provided, further, however,
that if there is a dispute with respect to payments under a Certificate
Insurance Policy, the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to
this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties, or adversely affect its rights and
immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person
from any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in
performing its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Owner by reason of the
payment of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from
any covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien, charge, adverse claim,
security interest,
64
mortgage or other encumbrance to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Agreement, the Insurance Agreement, the
Indemnification Agreement or the Certificate Insurance Policies or for the
appointment of a receiver or trustee of the Trust, or for any other remedy
with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates and Class B
Certificates then Outstanding or, if there are no Class A or
Class B Certificates then Outstanding, by such percentage of
the Percentage Interests represented by the Class R
Certificates, shall have made written request to the Trustee
to institute such proceeding in its own name as Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amount remains unpaid, the Certificate Insurer
consented in writing thereto (unless the Certificate Insurer
is the party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Class A and Class B Certificates or, if there are no Class A
or Class B Certificates then Outstanding, by such majority
of the Percentage Interests represented by the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Owner of the same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce any right
65
under this Agreement, except in the manner herein provided and for the equal
and ratable benefit of all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing
less than a majority of the applicable Class of Certificates and each
conforming to paragraphs (1)-(5) of this Section 6.07, the Certificate Insurer
in its sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provision of this Agreement (unless the Certificate
Insurer is the party against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect
to such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or the
Owners is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. Except as otherwise provided
herein, the assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect
to any event described in Section 8.20(a) or (b) shall impair any such right
or remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer or
the Owners, as the case may be.
Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A and Class B then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A or
Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates then Outstanding may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to the Certificates or exercising any
trust or power conferred on the Trustee with respect to the Certificates or
the Trust Estate, including, but not limited to, those powers set forth in
Section 6.03 and Section 8.20 hereof, provided that:
66
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that neither of the
Sellers nor the Trustee, as the case may be, need take any
action which it determines might involve it in liability or
may be unjustly prejudicial to the Owners not so directing.
Section 6.12 Indemnification.
The Depositor agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Owner harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the
failure of the Depositor to perform its duties in compliance with the terms of
this Agreement. The Depositor shall immediately notify the Trustee, the
Certificate Insurer and each Owner if such a claim is made by a third party
with respect to this Agreement, and the Depositor shall assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, either of the Sellers, the Trustee, the Certificate Insurer and/or
any Owner in respect of such claim. The Trustee may, if necessary, reimburse
the Depositor from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence, except when
the claim relates directly to the failure of the Depositor to perform its
duties in compliance with the terms of this Agreement. In addition to the
foregoing, ContiMortgage agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Owner harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the breach
by ContiMortgage of its representations and warranties set forth in Section
3.04(b)(xiii) or (xv) hereof with respect to a Home Equity Loan if such Home
Equity Loan qualifies as a "high cost mortgage" pursuant to Section 226.32 of
the Truth-in-Lending Act, as amended. The provisions of this Section 6.12
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 6.13 Access to Names and Addresses of Owners of Certificates.
(a) If any Owner (for purposes of this Section 6.13, an "Applicant")
applies in writing to the Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their
rights under this Agreement or under the Certificates and is accompanied by a
copy of the communication which such Applicant proposes to transmit, then the
Trustee shall, at the expense of such Applicant, within ten (10) Business Days
after the receipt of such application, furnish or cause to be furnished to
such Applicant a list of the names and addresses of the Owners of record as of
the most recent Payment Date.
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(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
ARTICLE VII
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ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall
demand payment or delivery of all money and other property payable to or
receivable by the Trustee pursuant to this Agreement or the Certificate
Insurance Policy, including all payments due on the Home Equity Loans in
accordance with the respective terms and conditions of such Home Equity Loans
and required to be paid over to the Trustee by the Servicer or by any
Sub-Servicer. The Trustee shall hold all such money and property received by
it, other than pursuant to or as contemplated by Section 6.02(e) hereof, as
part of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office the Certificate
Account, which is to be held by the Trustee on behalf of the Owners of the
Certificates, the Certificate Insurer and the Trustee.
Section 7.03 Flow of Funds.
(a) The Trustee shall deposit to the Certificate Account, without
duplication, upon receipt, any Insured Payments, the proceeds of any
liquidation of the assets of the Trust, all remittances made to the Trustee
pursuant to Section 8.08(d)(ii) and the Monthly Remittance Amount remitted by
the Servicer.
(b) On each Payment Date, the Monthly Remittance Amount which is then
on deposit in the Certificate Account (such amount, the "Available Funds")
will be applied in the following order of priority:
(i) First, for the payment of certain fees, concurrently, to
the Trustee, the Trustee Fee and to the Certificate Insurer, the
Premium Amount;
(ii) Second, for the payment of the Class A Certificate
interest, to the extent of the Available Funds then remaining in the
Certificate Account, plus the interest component of any related
Insured Payment, (such amount, the "Interest Amount Available"), to
the Owners of the Class A Certificates, the related Current Interest
plus the Interest Carry Forward Amount with respect to the Class A
Certificates without any priority among such Class A Certificates;
(iii) Third, for the payment of the Class B Certificate
interest, to the extent of the Available Funds then remaining in the
Certificate Account, to the Owners of the Class B Certificates an
amount equal to the Current Interest for such Class B Certificates
without any priority among such Class B Certificates;
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(iv) Fourth, for the payment of the Reimbursement Amount, if
any, then due to the Certificate Insurer, to the extent of the
Available Funds then remaining in the Certificate Account the lesser
of (x) the Reimbursement Amount then owed to the Certificate Insurer
and (y) the Maximum Certificate Insurer Current Reimbursement Amount
with respect to such Payment Date;
(v) Fifth, for the payment of the Class A Certificate
principal, to the extent of the Available Funds then remaining in the
Certificate Account, to the Owners of the Class A Certificates, an
amount necessary to reduce the Class A Certificate Principal Balance
to the Class A Optimal Balance for such Payment Date;
(vi) Sixth, for the payment of Class B Certificate
principal, to the extent of the Available Funds then remaining in the
Certificate Account to the Owners of the Class B Certificates, an
amount necessary to reduce the Class B Certificate Principal Balance
of the Class B Certificates to the Class B Optimal Balance for such
Payment Date;
(vii) Seventh, to fund the Interest Carry Forward Amount, if
any, with respect to the Class B Certificates, to the extent of the
Available Funds then remaining in the Certificate Account, to the
Owners of the Class B Certificates an amount equal to the Interest
Carry Forward Amount for such Class B Certificates;
(viii) Eighth, to fund the Class B Realized Loss
Amortization Amount, if any, for such Payment Date, for the Class B
Certificates for such Payment Date; to the extent of the Available
Funds then remaining in the Certificate Account, to the Owners of the
Class B Certificates an amount equal to the Class B Realized Loss
Amortization Amount for such Class B Certificates;
(ix) Ninth, the remaining amount, if any, on deposit in the
Certificate Account is the "Monthly Excess Cashflow Amount", which
shall be applied in the following order of priority:
(a) to the Servicer to the extent of any
unreimbursed Delinquency Advances or Servicing Advances and
any other costs and expenses incurred by the Trust; and
(b) to fund a distribution to Owners of the Class R
Certificates.
(c) [Reserved].
(d) [Reserved].
(e) [Reserved].
(f) [Reserved].
(g) [Reserved].
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(h) [Reserved].
(i) On each Payment Date, if the Class B Certificate Principal
Balance has not been reduced to zero, the Trustee shall allocate the excess of
the Aggregate Certificate Principal Balance over the Pool Balance to reduce
such Class B Certificate Principal Balance, but not below zero.
(j) [Reserved].
(k) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
shall not exceed the original Certificate Principal Balance of the related
Certificates.
(l) On any Payment Date during the continuance of any Certificate
Insurer Default any amounts otherwise payable to the Certificate Insurer as
Premium Amounts shall be retained in the Certificate Account.
(m) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Class A Certificates, the Trustee shall deposit
such Insured Payments in the Certificate Account and shall distribute such
Insured Payments, or the proceeds thereof as provided in paragraph (b) above.
(n) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which
is made with monies received pursuant to the terms of the Certificate
Insurance Policy shall not be considered payment of such Certificates from the
Trust and shall not result in the payment of or the provision for the payment
of the principal of or interest on such Certificates within the meaning of
Section 7.03. The Depositor, the Servicer and the Trustee acknowledge, and
each Owner by its acceptance of a Certificate agrees, that without the need
for any further action on the part of the Certificate Insurer, the Depositor,
the Servicer, the Trustee or the Registrar (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such Owners to
receive such principal and interest together with any interest thereon of the
applicable Pass-Through Rate for such Class from the Trust and (b) the
Certificate Insurer shall be paid such principal and interest only from the
sources and in the manner provided herein for the payment of such principal
and interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it unless on such Payment Date the Owners
of the Class A Certificates shall also have received the full amount of the
Class A Current Interest and or, Class A Overcollateralization Deficit for
such Payment Date.
The Trustee or Paying Agent shall (i) receive as attorney-in-fact of
each Owner of Class A Certificates any Insured Payment from the Certificate
Insurer and (ii) disburse the same to the Owners of the related Class A
Certificates as set forth in this Section 7.03. Insured
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Payments disbursed by the Trustee or Paying Agent from proceeds of a
Certificate Insurance Policy shall not be considered payment by the Trust, nor
shall such payments discharge the obligation of the Trust with respect to such
Class A Certificates and the Certificate Insurer shall be entitled to receive
the related Reimbursement Amount pursuant to Section 7.03(b)(v) hereof.
The rights of the Owners to receive distributions from the proceeds
of the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class R Certificates to receive distributions in
respect of Class R Certificates, and all ownership interests of the Owners of
the Class R Certificates in and to such distributions, shall be subject and
subordinate to the preferential rights of the holders of the Class A and Class
B Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class R Certificates
in amounts deposited in the Accounts from time to time shall not vest unless
and until such amounts are distributed in respect of the Class R Certificates
in accordance with the terms of this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, the Owners of the Class R
Certificates shall not be required to refund any amount properly distributed
on the Class R Certificates pursuant to this Section 7.03.
Section 7.04 [Reserved].
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Trustee in the
name of the Trustee for the benefit of the Owners and the Certificate Insurer,
as directed in writing by the Depositor, in one or more Eligible Investments
bearing interest or sold at a discount (provided, that the proceeds of the
Certificate Insurance Policy shall not be so invested). The bank serving as
Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next
Payment Date.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Account. No investments
will be liquidated prior to maturity unless the proceeds thereof are needed
for disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor
thereon).
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(d) The Trustee shall invest and reinvest funds in the Accounts held
by the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments
bearing interest or sold at a discount.
If the Depositor shall have failed to give investment directions to
the Trustee then the Trustee shall invest in money market funds described in
Section 7.07(h); to be redeemable without penalty no later than the Business
Day immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Trustee shall be for the account of the Owners of the Class R Certificates
and distributed to the Owners of the Class R Certificates immediately prior to
any distribution under Section 7.03 hereof on any Payment Date, and any loss
resulting from such investments shall be for the account of the Servicer and
promptly upon the realization of such loss the Servicer shall contribute funds
in an amount equal to such loss to such Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on ContiMortgage to pay the amount
of the expenses of the Trust (other than payments of premiums to the
Certificate Insurer) (including Trustee's fees and expenses not covered by
Section 7.03(b)(i)) and ContiMortgage shall promptly pay such expenses
directly to the Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption; and consolidated senior debt obligations
of any Federal Home Loan Banks; provided, that any such investment shall be
rated (or have an implied rating) in one of the two highest ratings categories
by each Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated as
follows by at least Moody's and Standard & Poor's: A-1 or better by Standard &
Poor's and P-1 by Moody's and F-1 or better, if rated by Fitch;
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(d) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is rated as follows by at least Moody's and
Standard & Poor's: Baa3 or better by Moody's and A by each of Standard &
Poor's and by Fitch, if rated by Fitch), which has combined capital, surplus
and undivided profits of at least $50,000,000 which deposits are insured by
the FDIC and held up to the limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
(i) The agreement is with a bank or insurance company which
has unsecured, uninsured and unguaranteed senior debt obligations
rated as follows by at least Moody's and Standard & Poor's: Aa2 or
better by Moody's and AA or better by Standard & Poor's and by Fitch,
if rated by Fitch, and
(ii) Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
(iii) The agreement is not subordinated to any other
obligations of such insurance company or bank, and
(iv) The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
(v) The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or
bank;
(f) Repurchase agreements collateralized by securities described in
(a) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable
limits therein promulgated by Securities Investors Protection Corporation or
any commercial bank, if such broker/dealer or bank has an uninsured, unsecured
and unguaranteed short-term or long-term obligation rated, as follows by at
least Moody's and Standard & Poor's: P-1 or Aa2, respectively, or better by
Moody's, A-1 or AA, respectively or better by Standard & Poor's and F-1 or AA,
respectively, or better by Fitch, if rated by Fitch, provided:
(i) A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
(ii) The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent
for the Trustee, and such third party is (a) a Federal
Reserve Bank or (b) a bank which is a member of the FDIC and
which has combined capital, surplus and undivided profits of
not less than $125 million, or (c) a bank approved in
writing for such purpose by the Certificate Insurer and the
Trustee shall have received written confirmation from such
third party that it holds such securities, free and clear of
any lien, as agent for the Trustee, and
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(iii) A perfected first security interest under the
Uniform Commercial Code, or book entry procedures
prescribed at 31 CFR 306.1 et seq. or 31 CFR 350.0
et seq., in such securities is created for the
benefit of the Trustee, and
(iv) The repurchase agreement has a term of thirty days
or less and the Trustee will value the collateral
securities no less frequently than weekly and will
liquidate the collateral securities if any
deficiency in the required collateral percentage is
not restored within two business days of such
valuation, and
(v) The fair market value of the collateral securities
in relation to the amount of the repurchase
obligation, including principal and interest, is
equal to at least 104% and such collateral
securities must be valued weekly and
market-to-market at current market price plus
accrued interest.
(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each of Moody's and
Standard & Poor's and Fitch, if rated by Fitch; and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the
Securities Act and rated as follows by at least Moody's and Standard & Poor's:
AAAm or AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if rated by
Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provided a yield to maturity at par greater
than 120% of the yield to maturity at par of the underlying obligations; and
provided, further, that all instruments described hereunder shall mature at
par on or prior to the next succeeding Payment Date unless otherwise provided
in this Agreement and that no instrument described hereunder may be purchased
at a price greater than par if such instrument may be prepaid or called at a
price less than its purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) Trustee shall determine whether an Insured Payment will be
required to be made by the Certificate Insurer on the following Payment Date
and if so then no later than 12:00 noon on the second Business Day immediately
preceding the related Payment Date the Trustee shall furnish the Certificate
Insurer and the Depositor with a completed Notice in the form set forth as
Exhibit A to the Certificate Insurance Policy Agreement. The Notice shall
specify the amount of the Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and
the Trustee), the
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Trustee shall notify (subject to the terms of Section 10.03(j) hereof, based
solely on information provided to the Trustee by the Servicer) the Depositor,
each of the Sellers, the Certificate Insurer and each Owner of the following
information with respect to the next Payment Date (which notification may be
given by facsimile or by telephone promptly confirmed in writing):
(i) The aggregate amount then on deposit in the Certificate
Account;
(ii) The Class A Distribution Amount and the related Class B
Distribution Amount;
(iii) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(iv) The application of the amounts described in clause (i)
preceding to the allocation and distribution of the Class A
Distribution Amount, and the Class B Distribution Amount, on
such Payment Date in accordance with Section 7.03 hereof;
(v) The Certificate Principal Balance of each Class of the Class
A and Class B Certificates, the aggregate amount of the
principal of each Class of Certificates to be paid on such
Payment Date and the remaining Certificate Principal Balance
of each Class of Certificates following any such payment;
(vi) The amount, if any, of any Realized Losses for the related
Remittance Period and the amount of Cumulative Realized
Losses as of the last day of the related Remittance Period;
and
(vii) The amount of 60+ Day Delinquent Loans and the Three-Month
Rolling Average 60+ Day Delinquency Rate.
Section 7.09 Reports by Trustee to Owners and the Certificate
Insurer.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Certificate Insurer, the Underwriters and the
Rating Agencies:
(i) the amount of the distribution with respect to the each
Class of Certificates (based on a Certificate in the original
principal amount of $1,000);
(ii) the amount of such distribution allocable to principal
on the Home Equity Loans, separately identifying the aggregate amount
of any Prepayments, Loan Purchase Price amounts or other recoveries
of principal included therein and any Extra Principal Distribution
Amount;
(iii) the amount of such distribution allocable to interest
on the Home Equity Loans (based on a Certificate in the original
principal amount of $1,000);
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(iv) the Interest Carry Forward Amount for each Class;
(v) the principal amount and the Planned Principal Balance,
if any, of each Class of Certificates (based on a Certificate in the
original principal amount of $1,000) which will be outstanding after
giving effect to any payment of principal on such Payment Date;
(vi) the aggregate Pool Balance of all Home Equity Loans as
of the last day of the related Remittance Period;
(vii) based upon information furnished by the Seller such
information as may be required by Section 6049(d)(7)(C) of the Code
and the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(viii) the total of any Substitution Amounts or Loan
Purchase Price amounts included in such distribution;
(ix) the weighted average Coupon Rate of the Home Equity
Loans;
(x) the weighted average Coupon Rate;
(xi) the weighted average remaining term;
(xii) whether a Delinquency Trigger Event, Cumulative
Realized Loss Trigger Event and/or the Cumulative Realized Loss
Termination Trigger Event has occurred;
(xiii) the Targeted Overcollateralization Amount, Class A
Enhancement Percentage, Overcollateralization Amount, Class A Optimal
Balance and Class B Optimal Balance;
(xiv) the amount of any Class B Applied Realized Loss
Amount, Class B Realized Loss Amortization Amount and Class B Unpaid
Realized Loss Amount for the Class B Certificates as of the close of
such Payment Date;
(xv) the Class B Available Funds Cap for such Payment Date,
if any applies;
(xvi) the amount of any Insured Payment included in the
distribution to Owners of Class A Certificates;
(xvii) any Reimbursement Amount paid on such Payment Date
and any Reimbursement Amount remaining unpaid;
(xviii) such other information as the Certificate Insurer
may reasonably request with respect to Home Equity Loans that are
Delinquent; and
(xix) the largest Home Equity Loan Balance outstanding.
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The Servicer shall provide to the Trustee the information described
in Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to
perform its reporting obligations under this Section, and such obligations of
the Trustee under this Section are conditioned upon such information being
received and the information provided in clauses (ii), (vii), (viii), (ix),
(xi), (xii), (xiii) and (xiv) shall be based solely upon information contained
in the monthly servicing report provided by the Servicer to the Trustee
pursuant to Section 8.01 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, the Certificate Insurer, each Owner, the Underwriters and the
Rating Agencies, together with the information described in Subsection (a)
preceding, the following information with respect to the Home Equity Loans
which is hereby required to be prepared by the Servicer and furnished to the
Trustee for such purpose on or prior to the related Monthly Remittance Date:
(i) the number and aggregate principal balances of all Home
Equity Loans that are: (i) 30-59 days delinquent, (ii) 60-89 days
delinquent and (iii) 90 or more days delinquent, as of the close of
business on the last business day of the calendar month next
preceding the Payment Date and the aggregate number and aggregate
Loan Balance of such Loans;
(ii) the status and the number and dollar amounts of all
Home Equity Loans that are in foreclosure proceedings as of the close
of business on the last business day of the calendar month next
preceding such Payment Date;
(iii) the number of Mortgagors and the Loan Balances of the
related Mortgages for all Home Equity Loans involved in bankruptcy
proceedings as of the close of business on the last business day of
the calendar month next preceding such Payment Date;
(iv) the existence and status of any Properties for all Home
Equity Loans, as to which title has been taken in the name of, or on
behalf of the Trustee, as of the close of business of the last
business day of the month next preceding the Payment Date;
(v) the book value of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure for all Home
Equity Loans as of the close of business on the last business day of
the calendar month next preceding the Payment Date;
(vi) the amount of cumulative Realized Losses for all Home
Equity Loans;
(vii) the aggregate Loan Balance of 60+ Day Delinquent Loans
for all Home Equity Loans;
(viii) the Three-Month Rolling Average 60+ Day Delinquency
Rate for all Home Equity Loans and whether a Delinquency Trigger
Event or a Cumulative Realized Loss Trigger Event is in effect; and
(ix) the aggregate Loan Balance of Optional Buyout Loans.
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(c) In addition, on each Payment Date the Trustee will distribute to
the Depositor, together with the information described in Subsection (a) and
(b) preceding, the following information with respect to all the Home Equity
Loans by each product type: Fixed Rate Loans, Balloon Loans, which information
is hereby required to be prepared by the Servicer and furnished to the trustee
on or prior to the related Monthly Remittance Date:
(i) the number and aggregate principal balances of all Home
Equity Loans with respect to each product type as of the close of
business on the last business day of the calendar month next
preceding the Payment Date;
(ii) the amount received from scheduled principal payments
with respect to each product type as of the close of business on the
last business day of the calendar month next preceding the Payment
Date;
(iii) the amount of Prepayments received from all Home
Equity Loans separately identifying the aggregate amount received
from:
a. Curtailments (or partial prepayments)
b. Voluntary Payoffs
c. Involuntary Payoffs (the amount of Net
Liquidation Proceeds applicable to the
unpaid principal balance from the loan)
d. loans purchased from the Trust
with respect to each product type as of the close of business on the last
business day of the calendar month next preceding the Payment Date;
(iv) the number and principal balance with respect to each
product type of all Home Equity Loans that are a. 30 - 59 days
delinquent, b. 60-89 days delinquent, c. 90 or more days delinquent
as of the close of business on the last business day of the calendar
month next preceding the Payment Date;
(v) the number and principal balance with respect to each
product type of all Home Equity Loans that are in foreclosure
proceedings as of the close of business on the last business day of
the calendar month next preceding the Payment Date;
(vi) the number and principal balance with respect to each
product type of all Home Equity Loans that are in bankruptcy
proceedings as of the close of business on the last business day of
the calendar month next preceding the Payment Date;
(vii) the number and principal balance with respect to each
product type of all Home Equity Loans that were acquired through
foreclosure or grant of a deed in lieu of foreclosure as of the close
of business on the last business day of the calendar month next
preceding the Payment Date;
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(viii) the number and principal balance with respect to each
product type of all Home Equity Loans that are in bankruptcy
proceedings as of the close of business on the last business day of
the calendar month next preceding the Payment Date;
(ix) the number and principal balance with respect to each
product type of all Home Equity Loans that are subject to loss
mitigation as of the close of business on the last business day of
the calendar month next preceding the Payment Date;
(x) the amount of current and cumulative realized losses
(separately identifying principal and interest losses) from following
resolution types:
a. REO Property sold
b. Short Sale
c. Deed in Lieu
d. No equity second mortgages
e. Other
as of the close of business on the last business day of the calendar month
next preceding the Payment Date;
(xi) the number and principal amount with respect to each
product type of all Home Equity Loans of Chapter 13 Loans separately
identifying:
a. those Chapter 13 Loans that are currently
meeting their payment plan;
b. those Chapter 13 Loans that are 1 to 2 payments
behind their payment plan;
c. those Chapter 13 Loans that are 2 to 3 payments
behind their payment plan;
d. and, those Chapter 13 Loans that are greater
than 3 payments behind their payment plan;
(xii) the weighted average remaining term to maturity with
respect to each product type of all Home Equity Loans as of the close
of business on the last Business Day of the calendar month next
preceding the Payment Date;
(xiii) the weighted average Coupon Rate with respect to each
product type of all Home Equity Loans as of the close of business on
the last Business Day of the calendar month next preceding the
Payment Date;
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(d) The Servicer shall furnish to the Trustee, to any initial Owner
of a Class B Certificate, (for so long as it is an Owner) and to the
Certificate Insurer during the term of this Agreement, such periodic, special,
or other reports or information not specifically provided for herein, as may
be necessary, reasonable, or appropriate with respect to the Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee or the Certificate Insurer may reasonably require; provided, that the
Servicer shall be entitled to be reimbursed by the requesting party for the
fees and actual expenses associated with providing such reports, if such
reports are not generally produced in the ordinary course of business.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, each of the Sellers,
the Underwriters, the Certificate Insurer and each Owner, with respect to the
amount on deposit in the Certificate Account and the identity of the
investments included therein, as the Depositor, the Certificate Insurer or the
Seller may from time to time request. Without limiting the generality of the
foregoing, the Trustee shall, at the request of the Depositor, the Certificate
Insurer or either of the Sellers transmit promptly to the Depositor, the
Certificate Insurer and each of the Sellers copies of all accounting of
receipts in respect of the Home Equity Loans furnished to it by the Servicer
and shall notify the Certificate Insurer and each of the Sellers if any
Monthly Remittance Amount has not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each
Owner with respect to any written notices it may from time to time receive
which provide an Authorized Officer with actual knowledge that any of the
statements set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 Preference Payments.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by
the Fiscal Agent of (i) a certified copy of the order requiring the return of
such Preference Amount, (ii) an opinion of counsel satisfactory to the
Certificate Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the Certificate
Insurer, irrevocably assigning to the Certificate Insurer all rights and
claims of the Owners relating to or arising under the Class A Certificates
against the debtor which made such preference payment or otherwise with
respect to such preference payment and (iv) appropriate instruments to effect
the appointment of the Certificate Insurer as agent for such Owner in any
legal proceeding related to such preference payment, such instruments being in
a form satisfactory to the Certificate Insurer, provided that if such
documents are received after 12:00 noon New York City time on such Business
Day, they will be deemed to be received on the following Business Day. Such
payment shall be disbursed to the receiver or trustee in bankruptcy named in
the final court order of the court exercising jurisdiction on behalf of the
Owner and not to any Owner directly unless such Owner has returned principal
or interest paid on the Class A Certificates to such receiver or trustee in
bankruptcy in which case payment will be disbursed to the Owner.
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Each Owner of a Class A Certificate, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer may at any time during the continuation of any proceeding relating to
a preference claim direct all matters relating to such preference claim,
including, without limitation, the direction of any appeal of any order
relating to such preference claim and the posting of any surety or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Certificate Insurer shall be subrogated to the rights of the
Servicer, the Trustee and the Owner of each Class A Certificate in the conduct
of any such preference claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such preference claim.
END OF ARTICLE VII
ARTICLE VIII
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SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans
in accordance with this Agreement and the servicing standards set forth in the
FannieMae Guide and shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. It is the intent of
the parties hereto that the Servicer shall have all of the servicing
obligations hereunder which a lender would have under the FannieMae Guide (as
such provisions relate to second lien mortgages); provided, however, that to
the extent that such standards, such obligations or the FannieMae Guide are
amended by FannieMae after the date hereof and the effect of such amendment
would be to impose upon the Servicer any material additional costs or other
burdens relating to such servicing obligations, the Servicer may, at its
option, determine not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to
all or certain of the Home Equity Loans through a Sub-Servicer as it may from
time to time designate, but no such designation of a Sub-Servicer shall serve
to release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and
with respect to the Properties, (ii) to institute foreclosure proceedings or
obtain a deed in lieu of foreclosure so as to effect ownership of any Property
in the name of the Servicer on behalf of the Trustee, and (iii) to hold title
to any Property upon such foreclosure or deed in lieu of foreclosure on behalf
of the Trustee; provided, however, that to the extent any instrument described
in clause (i) preceding would be delivered by the Servicer outside of its
usual procedures for mortgage loans held in its own portfolio the Servicer
shall, prior to executing and delivering such instrument, obtain the prior
written consent of the Certificate Insurer; and provided, further, however,
that Section 8.14(a) shall constitute an authorization from the Trustee to the
Servicer to execute an instrument of satisfaction (or assignment of mortgage
without recourse) with respect to any Home Equity Loan paid in full (or with
respect to which payment in full has been escrowed). The Trustee shall execute
any documentation furnished to it by the Servicer for recordation by the
Servicer in the appropriate jurisdictions as shall be necessary to effectuate
the foregoing. Subject to Sections 8.13 and 8.14,
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the Trustee shall execute any authorizations and other documents as the
Servicer or such Sub-Servicer shall reasonably request that are furnished to
the Trustee to enable the Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any
penalties in connection with the payment of any taxes and assessments or other
charges) on any Property shall be recoverable by the Servicer or such
Sub-Servicer to the extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described
in the FannieMae Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the
prepayment of a Home Equity Loan or any other fee or charge which the Servicer
would be entitled to retain hereunder as servicing compensation. In the event
the Servicer shall consent to the deferment of the due dates for payments due
on a Note, the Servicer shall nonetheless make payment of any required
Delinquency Advance with respect to the payments so extended to the same
extent as if such installment were due, owing and Delinquent and had not been
deferred, and shall be entitled to reimbursement therefor in accordance with
Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements.
(a) The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Home Equity Loans with any institution that is
acceptable to the Certificate Insurer and that is in compliance with the laws
of each state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement and (x) has (i) been designated an approved
seller-servicer by FHLMC or FannieMae for second mortgage loans and (ii) has
equity of at least $5,000,000, as determined in accordance with generally
accepted accounting principles or (y) is a Servicer Affiliate. The Servicer
shall give notice to the Trustee, the Certificate Insurer and the Rating
Agencies of the appointment of any Sub-Servicer. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Home
Equity Loans when any Sub-Servicer has received such payments. Each
Sub-Servicer shall be required to service the Home Equity Loans in accordance
with this Agreement and any such Sub-Servicing Agreement shall be consistent
with and not violate the provisions of this Agreement. Each Sub-Servicing
Agreement shall provide that a successor Servicer shall have the option to
terminate such agreement without payment of any fees if the original Servicer
is terminated or resigns.
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(b) The Servicer and the Trust shall execute, by joinder with the
prior written consent of the Certificate Insurer, the Sub-Servicing Agreement
dated as of November 1, 1998 among the Servicer, the Trustee, Continental
Grain Company and the other trusts listed therein (such Sub-Servicing
Agreement, the "Liquidity Agreement").
Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement and to either itself directly service the related Home Equity Loans
or enter into a Sub-Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall
be deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if
it is required to succeed the Servicer hereunder) agrees to indemnify and hold
the Trustee, the Certificate Insurer and each Owner harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the
failure of the Servicer to perform its duties and service the Home Equity
Loans in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Trustee, the Certificate Insurer and each Owner if a
claim is made by a third party with respect to this Agreement, and the
Servicer shall assume (with the consent of the Trustee and the Certificate
Insurer) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Trustee, the Certificate Insurer and/or Owner in respect of such claim. The
Trustee may, if necessary, reimburse the Servicer from amounts otherwise
distributable on the Class R Certificates for all amounts advanced by it
pursuant to the preceding sentence except when the claim relates directly to
the failure of the Servicer to service and administer the Home Equity Loans in
compliance with the terms of this Agreement. The provisions of this Section
8.05 shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
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Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to
be between the Sub-Servicer and the Servicer alone and the Trustee, the
Certificate Insurer and the Owners shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect
to any Sub-Servicer except as set forth in Section 8.07.
Notwithstanding the foregoing, the Trust and the Trustee shall be
parties to, and have the rights set forth in, the Liquidity Agreement, as set
forth therein.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder
by the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously
by the Trustee without act or deed on the part of the Trustee; provided,
however, that the successor Servicer may terminate the Sub-Servicer as
provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but
at the expense of the Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Sub-Servicing Agreements to
the assuming party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account to be
held as a trust account. Each Principal and Interest Account shall be
identified on the records of the Designated Depository Institution as follows:
"Manufacturers and Traders Trust Company, as Trustee under the Pooling and
Servicing Agreement dated as of December 1, 1998." If the institution at any
time holding the Principal and Interest Account ceases to be eligible as a
Designated Depository Institution hereunder, then the Servicer shall, within
30 days, be required to name a successor institution meeting the requirements
for a Designated Depository Institution hereunder. If the Servicer fails to
name such a successor institution, then the Principal and Interest Account
shall thenceforth be held as a trust account with a qualifying Designated
Depository Institution. The Servicer shall notify the Trustee, the Certificate
Insurer and the Owners if there is a change in the name, account number or
institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
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(b) All funds in the Principal and Interest Account shall be held (i)
uninvested (up to the limits insured by the FDIC) or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately
succeeding Monthly Remittance Date. The Principal and Interest Account shall
be held in trust in the name of the Trustee for the benefit of the Owners and
the Certificate Insurer. Any investment earnings on funds held in the
Principal and Interest Account shall be for the account of the Servicer and
may only be withdrawn from the Principal and Interest Account by the Servicer
immediately following the remittance of the Monthly Remittance Amount (and the
Monthly Excess Interest Amount included therein) by the Servicer. Any
investment losses on funds held in the Principal and Interest Account shall be
for the account of the Servicer and promptly upon the realization of such loss
shall be contributed by the Servicer to the Principal and Interest Account.
Any references herein to amounts on deposit in the Principal and Interest
Account shall refer to amounts net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account
on the Business Day after receipt all principal collections on the Home Equity
Loans received, and interest collections on the Home Equity Loans accrued
after the Cut-Off Date including any Prepayments and Net Liquidation Proceeds,
other recoveries or amounts related to the Home Equity Loans received by the
Servicer and any income from REO Properties, but net of (i) the Servicing Fee
with respect to each Home Equity Loan and other servicing compensation to the
Servicer as permitted by Section 8.15 hereof, (ii) principal collected and
interest accrued on any Home Equity Loan on or prior to the Cut-Off Date,
(iii) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds
exceed the sum of (I) the Loan Balance of the related Home Equity Loan
immediately prior to liquidation, (II) accrued and unpaid interest on such
Home Equity Loan (net of the Servicing Fee) to the date of such liquidation,
and (III) any Realized Losses incurred during the related Remittance Period,
(iv) reimbursements for Delinquency Advances and (v) reimbursements for
amounts deposited in the Principal and Interest Account representing payments
of principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid (all such net amount herein
referred to as "Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from
the amounts on deposit in the Principal and Interest Account, with respect to
the Home Equity Loans, only in the following priority and for the following
purposes:
(A) to withdraw interest paid with respect to any Home Equity
Loans that had accrued for periods prior to the Cut-Off
Date;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
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(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article
IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in
the Certificate Account by wire transfer, or otherwise make
funds available in immediately available funds, without
duplication, the Daily Collections allocable to a Remittance
Period not later than the related Monthly Remittance Date
and Loan Purchase Prices and Substitution Amounts two
Business Days following the related purchase or
substitution, and (b) on each Monthly Remittance Date,
deliver to the Trustee and the Certificate Insurer a monthly
servicing report, with respect to the Home Equity Loans,
containing the following information: principal and interest
collected, scheduled interest, Liquidated Loans, summary and
detailed delinquency reports, Liquidation Proceeds and other
similar information concerning the servicing of the Home
Equity Loans. In addition, the Servicer shall inform the
Trustee and the Certificate Insurer on each Monthly
Remittance Date with respect to the Home Equity Loans of the
amounts of any Loan Purchase Prices or Substitution Amounts
so remitted during the related Remittance Period.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(c)
to enable the Trustee to perform its reporting requirements
under Section 7.09 and the Trustee shall forward such
information to the Underwriters within five Business Days of
receipt thereof.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) If the amount on deposit in the Certificate Account as of any
Monthly Remittance Date is less than the sum of (I) the Interest Remittance
Amount on such Monthly Remittance Date and (II) the Principal Remittance
Amount on such Monthly Remittance Date, the Servicer shall remit to the
Trustee for deposit into the Certificate Account a sufficient amount of its
own funds to make the total amount remitted to the Trustee equal to such sum.
Such amounts of the Servicer's own funds so deposited are "Delinquency
Advances," including but not limited to any amount advanced due to the
invocation by a Mortgagor of the relief provisions provided by the Soldiers'
and Sailors' Civil Relief Act of 1940.
The Servicer shall be permitted to fund its payment of Delinquency
Advances on any Business Day and to reimburse itself for any Delinquency
Advances paid from the Servicer's own funds from collections on any Home
Equity Loan deposited to the Principal and Interest Account subsequent to the
related Remittance Period and shall deposit into the Principal and Interest
Account with respect thereto (i) collections from the Mortgagor whose
Delinquency gave rise to the shortfall which resulted in such Delinquency
Advance and (ii) Net Liquidation Proceeds recovered on account of the related
Mortgage Loan to the extent of the amount of aggregate Delinquency Advances
related thereto. If not recovered from the related Mortgagor or the related
Net Liquidation Proceeds, the Servicer shall recover Delinquency Advances
pursuant to Section 7.03(e)(iii).
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Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
aggregate remaining Scheduled Payments due on the Home Equity Loans, the
Servicer shall not be required to make any future Delinquency Advances, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided above. The Servicer shall give written notice of such
determination to the Trustee and the Certificate Insurer; and the Trustee
shall promptly furnish a copy of such notice to the Owners of the Class R
Certificates; provided, that the Servicer shall be entitled to recover any
unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds
prior to the payment of the Liquidation Proceeds to any other party to this
Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a
"Servicing Advance". The Servicer may recover Servicing Advances (x) from the
Mortgagors to the extent permitted by the Home Equity Loans or, if not
recovered from the Mortgagor on whose behalf such Servicing Advance was made,
from Liquidation Proceeds realized upon the liquidation of the related Home
Equity Loan and (y) as provided in Section 7.03(e)(iii). The Servicer shall be
entitled to recover the Servicing Advances from the aforesaid Liquidation
Proceeds prior to the payment of the Liquidation Proceeds to any other party
to this Agreement. Except as provided in the previous sentence, in no case may
the Servicer recover Servicing Advances from the principal and interest
payments on any Home Equity Loan or from any amounts relating to any other
Home Equity Loan except as provided in Section 7.03(e)(iii).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) Prepayment of a Home Equity Loan occurs during any calendar month
or if the amount received with respect to a date-of-payment or simple interest
Home Equity Loan represents less than a full month's interest, any difference
between the interest collected from the Mortgagor and the full month's
interest at the Coupon Rate less the Servicing Fee ("Compensating Interest")
that is due shall be deposited by the Servicer (but not in excess of the
aggregate Servicing Fee for the related Remittance Period) to the Principal
and Interest Account on the next succeeding Monthly Remittance Date and shall
be included in the Monthly Remittance to be made available to the Trustee on
such Monthly Remittance Date. The Servicer shall not be entitled to
reimbursement for amounts paid as Compensating Interest.
(b) The Servicer, and in the absence of exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, for administrative convenience, to purchase for its own account
any Home Equity Loan which becomes Delinquent, in whole or in part, as to four
consecutive monthly installments or any Home Equity Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.13; provided, however, that the Servicer or the Certificate Insurer, as the
case may be, may not purchase any such Home Equity Loan unless the Servicer or
the Certificate Insurer, as the case
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may be, has delivered to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Trustee and the Certificate
Insurer to the effect that such a purchase would not constitute a Prohibited
Transaction for the Trust or otherwise subject the Trust to tax and would not
jeopardize the status any REMIC therein as a REMIC. Any such Loan so purchased
shall be purchased by the Servicer or the Certificate Insurer, as the case may
be, on a Monthly Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to
the Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage, and which provides for a
recovery by the Trust of insurance proceeds relating to such Home Equity Loan
in an amount not less than the least of (i) the outstanding principal balance
of the Home Equity Loan (plus the related senior lien loan, if any), (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the
mortgagee, its successors and assigns, as loss payee. The policies shall
require the insurer to provide the mortgagee with 30 days' notice prior to any
cancellation or as otherwise required by law. The Servicer may also maintain a
blanket hazard insurance policy or policies if the insurer or insurers of such
policies are rated investment grade by each Rating Agency. Upon the request of
the Trustee or the Certificate Insurer, the Servicer will cause to be
delivered to such requesting Person a certified true copy of such blanket
policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Servicer will
cause to be maintained with respect thereto a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Trust of insurance proceeds
relating to such Home Equity Loan of not less than the least of (i) the
outstanding principal balance of the Home Equity Loan (plus the related senior
lien loan, if any), (ii) the minimum amount required to compensate for damage
or loss on a replacement cost basis and (iii) the maximum amount of insurance
that is available under the Flood Disaster Protection Act of 1973. The
Servicer shall indemnify the Trust out of the Servicer's own funds for any
loss to the Trust resulting from the Servicer's failure to maintain premiums
for such insurance required by this Section when so permitted by the terms of
the Mortgage as to which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance,
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exercise its rights to accelerate the maturity of the related Home Equity Loan
under any "due-on-sale" clause contained in the related Mortgage or Note;
provided, however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. An opinion of counsel to the foregoing
effect shall conclusively establish the reasonableness of such belief. In such
event, the Servicer shall enter into an assumption and modification agreement
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Note and, unless
prohibited by applicable law or the Mortgage Documents, the Mortgagor remains
liable thereon. If the foregoing is not permitted under applicable law, the
Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such agreement, obtain the prior written
consent of the Certificate Insurer. The Home Equity Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this Agreement. The Servicer shall notify the Trustee that any such assumption
or substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement (indicating the
File to which it relates) which copy shall be added by the Trustee to the
related File and which shall, for all purposes, be considered a part of such
File to the same extent as all other documents and instruments constituting a
part thereof. The Servicer shall be responsible for recording any such
assumption or substitution agreements. In connection with any such assumption
or substitution agreement, the required monthly payment on the related Home
Equity Loan shall not be changed but shall remain as in effect immediately
prior to the assumption or substitution, the stated maturity or outstanding
principal amount of such Home Equity Loan shall not be changed nor shall any
required monthly payments of principal or interest be deferred or forgiven.
Any fee collected by the Servicer or the Sub-Servicer for consenting to any
such conveyance or entering into an assumption or substitution agreement shall
be retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Home Equity Loan by operation of law or any assumption which the Servicer
may be restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans;
Modification.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory
arrangements can be made for collection of Delinquent payments and which the
Servicer has not purchased pursuant to Section 8.10(b). In connection with
such foreclosure or other conversion, the Servicer shall exercise such of the
rights and powers vested in it hereunder, and use the same degree of care and
skill in their exercise or use, as prudent mortgage lenders would exercise or
use under the circumstances in the conduct of their own affairs and consistent
with the servicing standards set forth in the
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FannieMae Guide, including, but not limited to, advancing funds for the
payment of taxes, amounts due with respect to Senior Liens, and insurance
premiums. Any amounts so advanced shall constitute "Servicing Advances" within
the meaning of Section 8.09(b) hereof. The Servicer shall sell any REO
Property before the start of the 12th month of the 3rd taxable year following
the taxable year in which the Trust acquired such property, at such price as
the Servicer deems necessary to comply with this covenant unless the Seller
which delivered the related Home Equity Loan obtains for the Trustee, the
Certificate Insurer and the Servicer an opinion of counsel experienced in
federal income tax matters acceptable to the Trustee and the Certificate
Insurer, addressed to the Trustee, the Certificate Insurer, and the Servicer,
to the effect that the holding by the Trust of such REO Property for any
greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust or any REMIC therein as defined in Section 860F of
the Code or cause any REMIC therein to fail to qualify as a REMIC under the
REMIC Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by any
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of
the interests of the Owners, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Owners for the period prior
to the sale of such REO Property. The Servicer shall take into account the
existence of any hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on a
Property in determining whether to foreclose upon or otherwise comparably
convert the ownership of such Property. The Servicer shall not take any such
action with respect to any Property known by the Servicer to contain such
wastes or substances, without the prior written consent of the Certificate
Insurer. With respect to any Home Equity Loan secured by a mixed use Property,
the Servicer shall, prior to foreclosing upon or otherwise comparably
effecting the ownership in the name of the Servicer on behalf of the Trust,
either (x) perform a "phase one environmental study" of such Property or (y)
repurchase such Property at the Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the FannieMae
Guide, when it has recovered, whether through trustee's sale, foreclosure sale
or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan." After a Home Equity Loan has become a Liquidated Loan, the
Servicer shall promptly prepare and forward to the Depositor, the Certificate
Insurer and the Trustee a report detailing the Liquidation Proceeds received
from the Liquidated Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
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(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity
Loan or in the event that a payment default with respect to such Home Equity
Loan is reasonably foreseeable by the Servicer; provided, however, that no
such modification, waiver or amendment shall extend the maturity date of such
Home Equity Loan beyond the Remittance Period related to the Final Scheduled
Payment Date of the latest Class of Certificates remaining in the Trust.
Notwithstanding anything set out in this Section 8.13(c) or elsewhere in this
Agreement to the contrary, the Servicer shall be permitted to modify, waive or
amend any provision of a Home Equity Loan if required by statute or a court of
competent jurisdiction to do so.
(d) The Servicer shall deliver to the Trustee for deposit in the
related File, an original counterpart of any agreement relating to such
modification, waiver or amendment, promptly following the execution thereof.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Servicer shall deliver
to the Trustee the FannieMae "Request for Release of Documents" (FannieMae
Form 2009). Upon receipt of such Request for Release of Documents, the Trustee
shall promptly release the related File, in trust, in its reasonable
discretion to (i) the Servicer, (ii) an escrow agent or (iii) any employee,
agent or attorney of the Trustee. Upon any such payment in full, or the
receipt of such notification that such funds have been placed in escrow, the
Servicer is authorized to give, as attorney-in-fact for the Trustee and the
mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the
Property relating to such Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of payment in full, it being
understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any
such satisfaction or assignment, as the case may be, the Servicer may prepare
and submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File
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is released to an escrow agent or an employee, agent or attorney of the
Trustee), upon request of the Servicer and delivery to the Trustee of a
receipt signed by an Authorized Officer of the Servicer, release the related
File to the Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Servicer; provided
that there shall not be released and unreturned at any one time more than 10%
of the entire number of Files. Such receipt shall obligate the Servicer to
return the File to the Trustee when the need therefor by the Servicer no
longer exists unless the Home Equity Loan shall be liquidated, in which case,
upon receipt of the FannieMae "Liquidation Schedule" relating to such
liquidation, the receipt shall be released by the Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages.
No application for approval shall be considered by the Servicer unless: (x)
the provisions of the related Note and Mortgage have been complied with; (y)
the Loan-to-Value Ratio after any release does not exceed the Loan-to-Value
Ratio of such Home Equity Loan as of the date of origination thereof and any
increase in the Loan-to-Value Ratio shall not exceed 15% unless approved in
writing by the Certificate Insurer; and (z) the lien priority of the related
Mortgage is not affected. Upon receipt by the Trustee of an Officer's
Certificate executed on behalf of the Servicer setting forth the action
proposed to be taken in respect of a particular Home Equity Loan and
certifying that the criteria set forth in the immediately preceding sentence
have been satisfied, the Trustee shall execute and deliver to the Servicer the
consent or partial release so requested by the Servicer. A proposed form of
consent or partial release, as the case may be, shall accompany any Officer's
Certificate delivered by the Servicer pursuant to this paragraph. The Servicer
shall notify the Certificate Insurer and the Rating Agencies if an application
is approved under clause (y) above without approval in writing by the
Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment
charges, prepayment penalties, or any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Principal and
Interest Account pursuant to Section 8.08(c)(ii) and similar items may, to the
extent collected from Mortgagors, be retained by the Servicer.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Certificate Insurer any initial Owner of a Class B Certificate
(for so long as it is an Owner) and the Rating Agencies, on or before March 31
of each year, commencing in 2000, an Officer's Certificate stating, as to each
signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such
default
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known to such officers and the nature and status thereof including the steps
being taken by the Servicer to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants'
Reports.
On or before June 30 of any year, commencing in 2000, the Servicer,
at its own expense (or if the Trustee is then acting as Servicer, at the
expense of the Depositor, which in no event shall exceed $1,000 per annum),
shall cause to be delivered to the Trustee, the Certificate Insurer any
initial Owner of a Class B Certificate (for so long as it is an Owner) and the
Rating Agencies a letter or letters of a firm of independent, nationally
recognized certified public accountants reasonably acceptable to the
Certificate Insurer, dated as of the date of the Servicer's fiscal audit for
subsequent letters, stating that such firm has examined the Servicer's overall
servicing operations in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans.
The Servicer shall provide to the Trustee, the Certificate Insurer,
any initial Owner of a Class B Certificate (for so long as it is an Owner) the
FDIC and the supervisory agents and examiners of each of the foregoing (which,
in the case of supervisory agents and examiners, may be required by applicable
state and federal regulations) access to the documentation regarding the Home
Equity Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
Section 8.19 Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of
the Trustee and the Certificate Insurer, which consent shall not be
unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.20(i) hereof for a successor
servicer.
Section 8.20 Removal of Servicer; Resignation of Servicer.
(a) The Certificate Insurer (or Trustee with the consent of the
Certificate Insurer and acting upon the request of a majority of the
Percentage Interests of Class A and Class B Certificates then Outstanding),
may remove the Servicer upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a
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petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate action for the purpose
of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition
or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or
similar entity with respect to the Servicer or of all or any
substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending
and unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of
its obligations hereunder and shall continue in default thereof for a
period of thirty (30) days (one (1) Business Day in the case of a
delay in making a required payment to the Trustee under Section
8.08(d)(ii)(a)) after the earlier of (a) actual knowledge of an
officer of the Servicer or (b) receipt of notice from the Trustee or
the Certificate Insurer of said failure; provided, however, that if
the Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of
its representations and warranties set forth in Section 3.02 which
materially and adversely affects the interests of the Owners or the
Certificate Insurer for a period of sixty (60) days after the earlier
of the Servicer's discovery or receipt of notice thereof; provided
however, that if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with
the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the Servicer is
the surviving entity of such combination or (2) the surviving entity
is a corporation or a state-chartered or national bank acceptable to
the Certificate Insurer (acceptable to the Owners of the Class R
Certificates as provided below but if such Owners and the Certificate
Insurer cannot agree, the Certificate Insurer shall control)
organized and doing business under the laws of any state or the
United States; or
(vi) The occurrence of a Cumulative Realized Loss
Termination Trigger.
(b) The Certificate Insurer may remove the Servicer upon the
occurrence of any of the following events, if the Certificate Insurer has
delivered written notice to the Servicer and the Trustee so removing the
Servicer:
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(i) an Insured Payment is made by the Certificate Insurer;
provided, however, that in the event that the Trustee shall become
the Servicer hereunder, if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate Insurer that such event
was due to circumstances beyond the control of the Servicer, the
right of removal hereunder shall not be considered a default by the
Servicer;
(ii) the failure by the Servicer to make any required
Servicing Advance when due;
(iii) Continental Grain Company fails to maintain ownership
of at least 35% of the equity of ContiFinancial Corporation and
ContiMortgage Corporation;
(iv) ContiFinancial Corporation fails to maintain committed
warehouse credit facilities in an aggregate amount equal to at least
$1.5 billion;
(v) ContiFinancial Corporation fails to have a shareholder
equity, calculated in accordance with GAAP, in excess of $400 million
plus 50% of all cumulative after tax net income since 9/30/98 as
reported on a quarterly basis in ContiFinancial Corporations form
10-Q or form 10-K, without taking into account any reduction for net
losses during such period;
(vi) ContiFinancial Corporation's (including affiliates and
subsidiaries) debt to equity ratio does not exceed 3.6:1, without
taking into account any warehouse financing;
(vii) ContiFinancial Corporation breaches covenants under or
defaults in the payment of any of its long term or short term credit
facilities in excess of $10 million, which allows the acceleration
thereof; or
(All of the triggers in Section 8.20(b)(iii) - (b)(vii) will
be measured quarterly).
(viii) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating Interest when due;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate
Insurer and by registered or certified mail, notice of the occurrence of one
or more of the events set forth in clause (iii) above and the Servicer shall
not have remedied, or shall not have taken actions satisfactory to the
Certificate Insurer to remedy, such event or events within 60 days after the
Servicer's receipt of such notice and (y) upon the Trustee's determination
that a required Delinquency Advance or payment of Compensating Interest has
not been made by the Servicer, the Trustee shall so notify an Authorized
Officer of the Servicer, the Owners, if any, and the Certificate Insurer as
soon as is reasonably practical.
(c) If any event described in subsection (a)(vi) above occurs and is
continuing, during the thirty (30) day period following receipt of notice, the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
shall cooperate with each other to determine if the
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occurrence of such event is more likely than not the result of the acts or
omissions of the Servicer or more likely than not the result of events beyond
the control of the Servicer. If the Trustee, the Owners of the Class R
Certificates and the Certificate Insurer conclude that the event is the result
of the latter, the Servicer may not be terminated, unless and until some other
event set forth in subsection (a) or (b) has occurred and is continuing. If
the Trustee, the Owners of the Class R Certificates and the Certificate
Insurer conclude that the event is the result of the former, or if the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
cannot agree, and the basis for such disagreement is not arbitrary or
unreasonable, as to the cause of the event, the Certificate Insurer may
terminate the Servicer in accordance with this Section and the Trustee shall
act as successor Servicer; provided that the Trustee shall have until the 30th
day following the date of receipt of notice of the event to become the
successor Servicer or to appoint a successor Servicer pursuant to this
Section.
The Certificate Insurer agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Servicer's
servicing activities that comes to the attention of the Certificate Insurer
from time to time.
(d) If any event described in sections (a) and (b) above (other than
(b)(iii) for which Section 8.20(c) controls) occurs and is continuing, the
Certificate Insurer shall notify the Owners of the Class R Certificates in
writing if the Certificate Insurer intends to terminate the Servicer in its
capacity as Servicer under this Agreement. During the 30 day period following
receipt of such notice by the Owners of the Class R Certificates, such Owners
and the Certificate Insurer shall cooperate with each other to determine if
the occurrence of such event is more likely than not the result of the acts or
omissions of the Servicer or more likely than not the result of events beyond
the control of the Servicer. If the Owners of the Class R Certificates and the
Certificate Insurer conclude that the event is the result of the latter, the
Servicer may not be terminated. If the Owners of the Class R Certificates and
the Certificate Insurer conclude that the event is the result of the former,
or if the Owners of the Class R Certificates and the Certificate Insurer
cannot agree as to the cause of the event, the Certificate Insurer may
terminate the Servicer in accordance with this Section and the Trustee shall
act as successor Servicer; provided that the Trustee shall have until the 30th
day following the date of receipt of notice of the event to become the
successor Servicer or to appoint a successor Servicer pursuant to this
Section.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are
no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of the Servicer so causing such a conflict being of a type and
nature carried on by the Servicer at the date of this Agreement. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an opinion of counsel to such effect which shall be delivered to the Trustee
and the Certificate Insurer, which opinion shall be at the Servicer's expense.
(f) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
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(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a
successor servicer or the Trustee all the books and records (including,
without limitation, records kept in electronic form) that the Servicer has
maintained for the Home Equity Loans, including all tax bills, assessment
notices, insurance premium notices and all other documents as well as all
original documents then in the Servicer's possession.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(i) Upon removal or resignation of the Servicer, the Trustee (x) may
solicit bids for a successor servicer as described below, and (y) pending the
appointment of a successor servicer as a result of soliciting such bids, shall
serve as Servicer. The Trustee shall, if it is unable to obtain a qualifying
bid and is prevented by law from acting as Servicer, appoint, or petition a
court of competent jurisdiction to appoint, any housing and home finance
institution, bank or mortgage servicing institution which has been designated
as an approved seller-servicer by FannieMae or Xxxxxxx Mac for first and
second mortgage loans and having equity of not less than $10,000,000 (or such
lower level as may be acceptable to the Certificate Insurer), as determined in
accordance with generally accepted accounting principles and acceptable to the
Certificate Insurer and the Owners of the Class R Certificates (provided that
if the Certificate Insurer and such Owners cannot agree as to the
acceptability of such successor Servicer, the decision of the Certificate
Insurer shall control) as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. The compensation of any successor Servicer
(including, without limitation, the Trustee) so appointed shall be the
aggregate Servicing Fee, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15; provided, however, that if the Trustee acts as
successor Servicer then ContiMortgage agrees to pay to the Trustee at such
time that the Trustee becomes such successor Servicer a set-up fee of
twenty-five dollars ($25.00) for each Home Equity Loan then included in the
Trust Estate. The Trustee shall be obligated to serve as successor Servicer
whether or not the fee described in the preceding sentence is paid by
ContiMortgage, but shall in any event be entitled to receive, and to enforce
payment of, such fee from ContiMortgage.
(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that
the successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such
public announcement, the Trustee shall negotiate and effect the sale, transfer
and assignment of the servicing rights and
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responsibilities hereunder to the qualified party submitting the highest
satisfactory bid as to the price they will pay to obtain servicing. The
Trustee shall deduct from any sum received by the Trustee from the successor
Servicer in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment
of the servicing rights and responsibilities hereunder. After such deductions,
the remainder of such sum less any amounts due the Trustee or the Trust from
the Servicer shall be paid by the Trustee to the Servicer at the time of such
sale, transfer and assignment to the successor Servicer.
(k) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it
to enable it to assume the Servicer's functions hereunder and shall promptly
also transfer to the Trustee or such successor Servicer, as applicable, all
amounts which then have been or should have been deposited in the Principal
and Interest Account by the Servicer or which are thereafter received with
respect to the Home Equity Loans. Neither the Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer. If the Servicer resigns or is
replaced hereunder, the Seller agrees to reimburse the Trust, the Certificate
Insurer and the Owners for the costs and expenses associated with the transfer
of servicing to the replacement Servicer, but subject to a maximum
reimbursement to all such parties in the amount of twenty-five dollars
($25.00) for each Home Equity Loan then included in the Trust Estate.
(l) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately make all Delinquency Advances
and deposit them to the Principal and Interest Account which the Servicer has
theretofore failed to remit with respect to the Home Equity Loans; provided,
however, that if the Trustee is acting as successor Servicer, the Trustee
shall only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (l)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the Home Equity Loans.
(m) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, the Certificate Insurer and the Rating Agencies of
the transfer of the servicing to the successor Servicer.
The Trustee shall give notice to the Owners, the Trustee, the Seller,
the Certificate Insurer and the Rating Agencies of the occurrence of any event
described in paragraphs (a) or (b) above of which the Trustee is aware.
Section 8.21 Inspections; Errors and Omissions Insurance.
At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, any, initial Owner of a Class B
Certificate (for so long as it is an Owner) or any agents thereof may inspect
the Servicer's servicing operations and discuss the servicing operations of
the Servicer during the Servicer's normal business hours with any of its
officers or directors; provided, however, that the costs and expenses incurred
by the Servicer or its agents or
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representatives in connection with any such examinations or discussions shall
be paid by the Servicer;
The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I
of the FannieMae Guide or any successor provision thereof; provided, however,
that if the Trustee shall become the Servicer, any customary insurance
coverage that the Trustee maintains shall be deemed sufficient hereunder;
provided, further, that in the event that the fidelity bond or the errors and
omissions coverage is no longer in effect, the Trustee shall promptly give
such notice to the Certificate Insurer and the Owners. Upon the request of the
Trustee or the Certificate Insurer, the Servicer shall cause to be delivered
to such requesting Person a certified true copy of such fidelity bond or
errors and omission policy.
END OF ARTICLE VIII
ARTICLE IX
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TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance
Policy, of all amounts held by the Trustee and required to be paid to such
Owners pursuant to this Agreement upon the latest to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Home Equity Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate, (c)
at any time when a Qualified Liquidation of the Home Equity Loans included
within the Trust is effected as described below and (d) the final payment to
the Certificate Insurer of all amounts then owing to it. To effect a
termination of this Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation as contemplated by
Section 860F(a)(4) of the Code and (ii) provide to the Trustee an opinion of
counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the
Home Equity Loans and distribute the proceeds of the liquidation of the Trust
Estate, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration of twenty-one (21) years from the
death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
Ambassador of the United States to the Court of Saint Xxxxx, living on the
date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R
Certificates.
On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the Class
R Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted
from the Principal and Interest Account to the Certificate Account
representing collections of principal on the Home Equity Loans during the
current Remittance Period, plus one month's interest on such amount computed
at the Termination Date Pass-Through Rate, plus all accrued and unpaid
Servicing
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Fees plus the aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and any Delinquency Advances which the Servicer has
theretofore failed to remit plus any amounts due and owing to the Certificate
Insurer under the Insurance Agreement, provided that any such purchase price
pursuant to clause (i) or (ii) shall be sufficient to pay the Outstanding
Certificate Principal Balance of and accrued and unpaid interest on the
outstanding Class A and Class B Certificates, plus the Class B Unpaid Realized
Loss Amount plus any amounts due and owing the Certificate Insurer under the
Insurance Agreement. In connection with such purchase, the Servicer shall
remit to the Trustee all amounts then on deposit in the Principal and Interest
Account for deposit to the Certificate Account, which deposit shall be deemed
to have occurred immediately preceding such purchase.
In connection with any such purchase, such Owners of the Class R
Certificates shall unanimously direct the Trustee to adopt and the Trustee
shall adopt, as to REMIC, a plan of complete liquidation of all Home Equity
Loan as contemplated by Section 860F(a)(4) of the Code and shall provide to
the Trustee and the Certificate Insurer an opinion of counsel experienced in
federal income tax matters acceptable to the Trustee and the Certificate
Insurer to the effect that such purchase and liquidation constitutes, as to
the REMIC, a Qualified Liquidation. In addition, such Owners of the Class R
Certificates shall provide to the Trustee and the Certificate Insurer an
opinion of counsel acceptable to the Trustee and the Certificate Insurer to
the effect that such purchase and liquidation does not constitute a preference
payment pursuant to the United States Bankruptcy Code.
The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R Certificates may be exercised
by the Certificate Insurer if (i) not exercised by such owners and (ii) the
Servicer as of the Closing Date is no longer the Servicer hereunder.
Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or
the Certificate Insurers, as the case may be, or otherwise upon their order,
in a manner similar to that described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
Following a final determination by the Internal Revenue Service or by
a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal or, if any appeal is taken,
following a final determination of such appeal from which no further appeal
can be taken, to the effect that the REMIC does not and will no longer qualify
as a REMIC pursuant to Section 860D of the Code (the "Final Determination"),
at any time on or after the date which is 30 calendar days following such
Final Determination (i) the Certificate Insurer or the Owners of a majority in
Percentage Interests represented by the Class A and Class B Certificates then
Outstanding may direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code and
(ii) the Certificate Insurer may notify the Trustee of the Certificate
Insurer's determination to purchase from the Trust all (but not fewer than
all) Home Equity Loans and all property theretofore acquired by foreclosure,
deed in lieu of foreclosure, or otherwise then remaining in the Trust
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Estate at a price equal to the sum of (x) the greater of (1) 100% of the
aggregate Loan Balances of the Home Equity Loans as of the day of purchase
minus amounts remitted from the Principal and Interest Account representing
collections of principal on the Home Equity Loans during the current
Remittance Period, and (2) the fair market value of such Home Equity Loans
(disregarding accrued interest), as reasonably determined by the Servicer
based upon at least three market quotes (or such fewer number of quotes as are
reasonably obtainable), (y) one month's interest on such amount computed at
the Termination Date Pass-Through Rate and (z) the aggregate amount of any
unreimbursed Delinquency Advances and Servicing Advances and any Delinquency
Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election
to liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase
price equal to the aggregate Loan Balances of all Home Equity Loans as of the
date of such purchase, plus (a) one month's interest on such amount at the
Termination Date Pass-Through Rate, (b) the aggregate amount of any
unreimbursed Delinquency Advances and Servicing Advances and (c) any
Delinquency Advances which the Servicer has theretofore failed to remit. If,
during the Purchase Option Period, the Owners of the Class R Certificates have
not exercised the option described in the immediately preceding sentence, then
upon the expiration of the Purchase Option Period in the event that the
Certificate Insurer or the Owners of the Class A and Class B Certificates with
the consent of the Certificate Insurer have given the Trustee the direction
described in clause (i) above, the Trustee shall sell the Home Equity Loans
and distribute the proceeds of the liquidation of the Trust Estate, each in
accordance with the plan of complete liquidation, such that, if so directed,
the liquidation of the Trust Estate, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the
close of the 60th day, or such later day as the Certificate Insurer or the
Owners of the Class A and Class B Certificates with the consent of the
Certificate Insurer shall permit or direct in writing, after the expiration of
the Purchase Option Period and (ii) in the event that the Certificate Insurer
has given the Trustee notice of the Certificate Insurer's determination to
purchase the Trust Estate described in clause (ii) above the Certificate
Insurer shall, within 60 days, purchase all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure or otherwise then remaining in the Trust Estate. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to
the Certificate Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.
Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an opinion of
counsel experienced in federal income tax matters acceptable to the
Certificate Insurer selected by the Owners of the Class R Certificates, which
opinion shall be reasonably satisfactory in form and substance to the
Certificate Insurer, to the effect that the effect of the Final Determination
is to increase substantially the probability that the
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gross income of the Trust will be subject to federal taxation, purchase from
the Trust all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
then remaining in the Trust Estate at a purchase price equal to the aggregate
Loan Balances of all Home Equity Loans as of the date of such purchase, plus
(a) one month's interest on such amount computed at the Termination Date
Pass-Through Rate, (b) the aggregate amount of unreimbursed Delinquency
Advances and (c) any Delinquency Advances which the Servicer has theretofore
failed to remit. In connection with such purchase, the Servicer shall remit to
the Trustee all amounts then on deposit in the Principal and Interest Account
for deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase. The foregoing opinion shall be
deemed satisfactory unless the Certificate Insurer gives the Owners of a
majority of the Percentage Interests of the Class R Certificates notice that
such opinion is not satisfactory within thirty days after receipt of such
opinion. In connection with any such purchase, such Owners shall direct the
Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer
from the proceeds of the Trust Estate, and the amount of any, Class B Unpaid
Realized Loss Amount shall be paid to the Owners of the Class B Certificates.
END OF ARTICLE IX
ARTICLE X
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THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) the banking institution that is the Trustee shall serve as the Trustee
at all times under this Agreement, and (ii) in the absence of bad faith on its
part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished pursuant to and conforming to the requirements of this Agreement;
but in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to
any termination of the Servicer, the Servicer and, thereafter, the Trustee or
any other successor servicer shall perform such duties. Specifically, and not
in limitation of the foregoing, the Trustee shall upon termination or
resignation of the Servicer, and pending the appointment of any other Person
as successor Servicer, have the power and duty during its performance as
successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and
to pay Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
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(ii) the Trustee shall not be personally liable for any
error of judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Certificate Insurer or the Owners of a
majority in Percentage Interest of the Certificates of the affected
Class or Classes and the Certificate Insurer relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. None of the provisions contained in this
Agreement shall in any event require the Trustee to perform, or be responsible
for the manner of performance of, any of the obligations of the Servicer under
this Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit,
or to take any remedial proceeding under this Agreement, or to take any steps
in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(i) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for
distribution in accordance with the terms hereof; (provided, however,
that any such failure which is due to circumstances beyond the
control of the Trustee shall not be a cause for removal hereunder);
or
(ii) the Trustee shall fail in the performance of, or
breach, any covenant or agreement of the Trustee in this Agreement,
or if any representation or warranty of the Trustee made in this
Agreement or in any certificate or other writing delivered pursuant
hereto or in connection herewith shall prove to be incorrect in any
material respect as of the time when the same shall have been made,
and such failure or breach shall continue or not be cured for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Trustee by the Sellers, the Certificate
Insurer or by the Owners of at least 25% of the aggregate Percentage
Interests in the Trust Estate represented by the Class A and Class B
Certificates then Outstanding, or, if there are no Class A and Class
B Certificates then Outstanding, by such Percentage Interests
represented by the Class R Certificates, a written notice specifying
such failure or breach and requiring it to be remedied; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator 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 Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(iv) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Trustee or
relating to all or substantially all of its property; or
(v) the Trustee shall become insolvent (however insolvency
is evidenced), generally fail to pay its debts as they come due, file
or consent to the filing of a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give notice to the Certificate Insurer and the Rating
Agencies of the occurrence of any such event of which the Depositor is aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage
Interests represented by the Class A and Class B Certificates or if there are
no Class A and Class B Certificates then outstanding by such majority of the
Percentage Interests represented by the Class R Certificates, may, whether or
not the Trustee resigns pursuant to Section 10.09(b) hereof, immediately,
concurrently with the giving of notice to the Trustee, and
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without delaying the 30 days required for notice therein, appoint a successor
Trustee pursuant to the terms of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Depositor, either of the Sellers,
the Certificate Insurer or the Owners of any Class of Certificates mentioned
herein shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or
other paper or document, but the Trustee in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys or custodians;
(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person
109
or within its rights or powers under this Agreement other than as to validity
and sufficiency of its authentication of the Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and to make
various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good
faith on any such information and calculations in the performance of its
duties hereunder, (i) unless and until an Authorized Officer of the Trustee
has actual knowledge, or is advised by any Owner of a Certificate (either in
writing or orally with prompt written or telecopies confirmation), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than
as to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor, either of the Sellers
or the Servicer in respect of the Home Equity Loans or deposited into or
withdrawn from the Principal and Interest Account or the Certificate Account
by the Depositor, the Servicer or either of the Sellers, and shall have no
responsibility for filing any financing or continuation statement in any
public office at any time or otherwise to perfect or maintain the perfection
of any security interest or lien or to prepare or file any tax returns or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized Officer of the
Trustee shall have received written notice thereof or an Authorized Officer
has actual knowledge thereof. In the absence of receipt of such notice, the
Trustee may conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
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Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by
law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Seller and except
to the extent of income or other gain on investments which are deposits in or
certificates of deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(b)(i) and Section 7.06 hereof.
The Trustee shall have no lien on the Trust Estate for the payment of such
fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 subject to supervision or examination by the United States
of America, acceptable to the Certificate Insurer and having a deposit rating
of at least A2 by Moody's (or such lower rating as may be acceptable to
Moody's), and deposit rating of A (and a short-term rating of A-1 or better)
by Standard & Poor's (or such lower rating as may be acceptable to Standard &
Poor's) and, if rated by Fitch, having a rating of at least A from Fitch (or
such lower rating as may be acceptable to Fitch). If such Trustee publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of ContiMortgage with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) or of
the Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Certificate Insurer and the Owners at their addresses appearing on the
Register; provided, that the Trustee cannot resign solely for the failure to
receive the Trustee Fee. A copy of such notice shall be sent by the resigning
Trustee to the Rating Agencies. Upon receiving notice of resignation, the
Depositor shall promptly appoint a
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successor trustee or trustees acceptable to the Certificate Insurer (or, if no
Class A Certificates are then outstanding, to the Owners of a majority in
Percentage Interest of the Class B Certificates then Outstanding) by written
instrument, in duplicate, executed on behalf of the Trust by an Authorized
Officer of ContiMortgage, one copy of which instrument shall be delivered to
the Trustee so resigning and one copy to the successor trustee or trustees. If
no successor trustee shall have been appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee, or any Owner may, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor
by the Depositor or the Certificate Insurer, the Certificate Insurer or the
Depositor with the consent of the Certificate Insurer may remove the Trustee
and appoint a successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented
by the Class A Certificates with the consent of the Certificate Insurer or, if
there are no Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class B Certificates, may at any time
remove the Trustee and appoint a successor trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed, to the
successor trustee so appointed, to the Depositor, to the Certificate Insurer
and to the Servicer copies of the record of the act taken by the Owners, as
provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so
removed and one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any
cause, ContiMortgage shall promptly appoint a successor trustee acceptable to
the Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, or, if there are no Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class B the successor trustee so appointed shall forthwith
upon its acceptance of such appointment become the successor trustee and
supersede the successor trustee appointed by the Depositor. If no successor
trustee shall have been so appointed by the Depositor or the Owners and shall
have accepted appointment in the manner
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hereinafter provided, any Owner may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust and to its
predecessor Trustee an instrument accepting such appointment hereunder and
stating its eligibility to serve as Trustee hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, duties and obligations of
its predecessor hereunder; but, on request of the Depositor or the successor
Trustee, such predecessor Trustee shall, upon payment of its charges then
unpaid, execute and deliver an instrument transferring to such successor
trustee all of the rights, powers and trusts of the Trustee so ceasing to act,
and shall duly assign, transfer and deliver to such successor trustee all
property and money held by such Trustee so ceasing to act hereunder. Upon
request of any such successor trustee, the Depositor on behalf of the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating
Agencies. If the Depositor fails to mail such notice within ten days after
acceptance of appointment by the successor Trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time
of such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation or association succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation or association shall be otherwise
qualified and eligible under this Article X. In case any
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Certificates have been executed, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such Trustee
may adopt such execution and deliver the Certificates so executed with the
same effect as if such successor Trustee had itself executed such
Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if
any, applicable to distributions to the Owners, including but not limited to
backup withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the
Trustee shall timely file all reports prepared by the Depositor and required
to be filed by the Trust with any federal, state or local governmental
authority having jurisdiction over the Trust, including other reports that
must be filed with the Owners, such as the Internal Revenue Service's Form
1066 and Schedule Q and the form required under Section 6050K of the Code, if
applicable to REMICs. Furthermore, the Trustee shall report to Owners, if
required, with respect to the allocation of expenses pursuant to Section 212
of the Code in accordance with the specific instructions to the Trustee by the
Depositor with respect to such allocation of expenses. The Trustee shall, upon
request of the Depositor, collect any forms or reports from the Owners
determined by the Depositor to be required under applicable federal, state and
local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its
obligations under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall
be to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Depositor, either of the Sellers, the Servicer, the
Certificate Insurer or any Owner for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect
the Trustee, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act or willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Subject to the foregoing sentence, the
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Trustee shall not be liable for losses on investments of amounts in the
Certificate Account (except for any losses on obligations on which the bank
serving as Trustee is the obligor). In addition, the Depositor, each of the
Sellers and Servicer covenant and agree to indemnify the Trustee, and when the
Trustee is acting as Servicer, the Servicer, from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses
(including legal fees and expenses) of whatsoever kind arising out of or in
connection with the performance of its duties hereunder other than those
resulting from the negligence or bad faith of the Trustee, and the Depositor
shall pay all amounts not otherwise paid pursuant to Sections 2.05 and 7.06
hereof. The Trustee and any director, officer, employee or agent of the
Trustee may rely and shall be protected in acting or refraining from acting in
good faith on any certificate, notice or other document of any kind prima
facie properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof,
and, subject to the other provisions of this Section 10.14, such powers,
duties, obligations, rights and trusts as the Servicer and the Trustee may
consider necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or
in the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Estate
or any portion thereof in any such jurisdiction) shall be
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exercised and performed singly by such separate Trustee or
co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder;
and
(iii) The Servicer, the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove
any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this Agreement
and the conditions of this Section 10.14. Each separate Trustee and
co-Trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision
of this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
END OF ARTICLE X
ARTICLE XI
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MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, either of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Agreement (including one furnished pursuant to specific requirements
of this Agreement relating to a particular application or request) shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such Authorized Officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
of an Authorized Officer of the Trustee or any opinion of counsel may be
based, insofar as it relates to factual matters upon a certificate or opinion
of, or representations by, one or more Authorized Officers of the Depositor,
either of the Sellers or the Servicer, stating that the information with
respect to
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such factual matters is in the possession of the Depositor, such Seller or the
Servicer, unless such Authorized Officer or counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Trustee, stating that the information with respect to such factual matter is
in the possession of the Trustee, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to one
or both of the Sellers. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "act" of the Owners signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and conclusive in favor
of the Trustee and the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether
or not notation of such action is made upon such Certificates.
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Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent,
waiver or act of the Owners or other documents provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with the Trustee by
any Owner, the Depositor, the Certificate Insurer or either of the Sellers
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Trustee at the Corporate Trust
Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or
the mailing of any report to Owners, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Owner affected by such event or to whom
such report is required to be mailed, at the address of such Owner as it
appears on the Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice or the mailing of
such report. In any case where a notice or report to Owners is mailed in the
manner provided above, neither the failure to mail such notice or report nor
any defect in any notice or report so mailed to any particular Owner shall
affect the sufficiency of such notice or report with respect to other Owners,
and any notice or report which is mailed in the manner herein provided shall
be conclusively presumed to have been duly given or provided. Notwithstanding
the foregoing, if the Servicer is removed or resigns or the Trust is
terminated, notice of any such events shall be made by overnight courier,
registered mail or telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
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Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any
Payment Date, any other date on which any distribution to any Owner is
proposed to be paid, or any date on which a notice is required to be sent to
any Person pursuant to the terms of this Agreement shall not be a Business
Day, then (notwithstanding any other provision of the Certificates or this
Agreement) payment or mailing need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
or mailed on the nominal date of any such Monthly Remittance Date, such
Payment Date, or such other date for the payment of any distribution to any
Owner or the mailing of such notice, as the case may be, and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with
certainty that this Agreement will be governed by and construed and
interpreted in accordance with the law of a state having a well-developed body
of commercial and financial law relevant to transactions of the type
contemplated herein, this Agreement and each Certificate shall be construed in
accordance with and governed by the laws of the State of New York applicable
to agreements made and to be performed therein, without giving effect to the
conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New York,
and any appellate court from any thereof, in any action, suit or proceeding
brought against it or in connection with this Agreement or any of the related
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally
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agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, the parties hereto hereby
waive and agree not to assert by way of motion, as a defense or otherwise in
any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the subject
matter thereof may not be litigated in or by such courts.
(c) Each of the Depositor, the Sellers and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process
with respect to any action, suit or proceeding set forth in paragraph (b)
hereof. Each of the Sellers and the Servicer agrees that service of such
process upon the Trustee shall constitute personal service of such process
upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, the Seller, the Certificate Insurer or the Servicer or
any third-party beneficiary hereunder, as the case may be, to serve process in
any other manner permitted by law or to start legal proceedings relating to
any of the Home Equity Loans against any Mortgagor in the courts of any
jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed
the maximum nonusurious rate of interest allowed by the applicable laws of the
State of New York or any applicable law of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the "Highest
Lawful Rate"). In the event any payment of interest on any Certificate exceeds
the Highest Lawful Rate, the Trust stipulates that such excess amount will be
deemed to have been paid to the Owner of such Certificate as a result of an
error on the part of the Trustee acting on behalf of the Trust and the Owner
receiving such excess payment shall promptly, upon discovery of such error or
upon notice thereof from the Trustee on behalf of the Trust, refund the amount
of such excess or, at the option of such Owner, apply the excess to the
payment of principal of such Certificate, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Trustee for the benefit of
Owners of Certificates for the use, forbearance or detention of money shall,
to the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such Certificates.
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Section 11.14 Amendment.
(a) The Trustee, the Depositor, either of the Sellers and the
Servicer may, at any time and from time to time, and without notice to or the
consent of the Owners but with the consent of the Certificate Insurer amend
this Agreement, subject to the provisions of Section 11.16 and 11.17 and the
Trustee shall consent to such amendment, for the purpose of (i) curing any
ambiguity, correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof, or adding provisions hereto
which are not inconsistent with the provisions hereof; (ii) upon receipt of an
opinion of counsel experienced in federal income tax matters to the effect
that no entity-level tax will be imposed on the Trust or upon the transferor
of a Class R Certificate as a result of the ownership of any Class R
Certificate by a Disqualified Organization, removing the restriction on
transfer set forth in Section 5.08(b) hereof or (iii) complying with the
requirements of the Code and the regulations proposed or promulgated
thereunder including any amendments necessary to maintain REMIC status or (iv)
for any other purpose, provided that in the case of this clause (iv) such
amendment shall not adversely affect in any material respect any Owner. Any
such amendment shall be deemed not to adversely affect in any material respect
any Owner if there is delivered to the Trustee written notification from each
Rating Agency that such amendment will not cause such Rating Agency to reduce
its then current rating assigned to (a) the Class A Certificates, without
regard to the Certificate Insurance Policies or (b) to the Class B
Certificates. Notwithstanding anything to the contrary herein, no such
amendment shall (a) change in any manner the amount of, or change the timing
of, payments which are required to be distributed to any Owner without the
consent of the Owner of such Certificate, or (b) which affects in any manner
the terms or provisions of the Certificate Insurance Policy.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to the
Certificate Insurer and each Owner in the manner set forth in Section 11.05,
and to the Rating Agencies; provided, that any initial Owner of a Class B
Certificate, for so long as it is an Owner, shall receive a full copy of any
such amendment, together with all opinions delivered in connection therewith.
(c) The Rating Agencies shall be provided with copies of any
amendments to this Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
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Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of Section 6.02, that such Paying
Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to such Owners or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days' written notice to the Trustee. Any such Paying Agent
may be removed at any time by an instrument filed with such Paying Agent and
signed by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no
successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Trust shall constitute, and
that the affairs of the Trust shall be conducted so as to qualify it as a
REMIC in accordance with the REMIC Provisions. In furtherance of such
intention, ContiFunding Corporation or such other person designated pursuant
to Section 11.18 hereof shall act as agent for the Trust and as "tax matters
person" (as defined in the REMIC Provisions) for the Trust and in such
capacity it shall: (i) prepare or cause to be prepared and filed, in a timely
manner, annual tax returns and any other tax return required to be filed by
the REMIC established hereunder using a calendar year as the taxable year for
the REMIC established hereunder; (ii) in the related first such tax return,
make (or cause to be made) an election satisfying the requirements of the
REMIC Provisions, on behalf of the REMIC, for it to be treated as a REMIC;
(iii) prepare and forward, or cause to be prepared and forwarded, to the
Owners all information, reports or tax returns required with respect to the
REMIC as, when and in the form required to be provided to the Owners, and to
the Internal Revenue Service and any other relevant governmental taxing
authority in accordance with the REMIC Provisions and any other applicable
federal, state or local laws, including without limitation information reports
relating to "original issue discount" as defined in the Code based upon the
prepayment assumption and calculated by using the "issue price" (within the
meaning of Section 1273 of the Code) of the Certificates of the related Class;
(iv) not take any action or omit to take any action that would cause the
termination of the REMIC status of a REMIC, except as
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provided under this Agreement; (v) represent the Trust or a REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
a taxable year of the Trust or a REMIC, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust or a REMIC, and otherwise act on behalf of the Trust
or a REMIC therein in relation to any tax matter involving the Trust or the
REMIC therein; (vi) comply with all statutory or regulatory requirements with
regard to its conduct of activities pursuant to the foregoing clauses of this
Section 11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the Code and the
Treasury Regulations thereunder; (vii) make available information necessary
for the computation of any tax imposed (A) on transferors of residual
interests to certain Disqualified Organizations or (B) on pass-through
entities, any interest in which is held by or treated as held by a
Disqualified Organization; and (viii) acquire and hold the Tax Matters Person
Residual Interest. The obligations of ContiFunding Corporation or such other
designated Tax Matters Person pursuant to this Section 11.16 shall survive the
termination or discharge of this Agreement.
(b) Each of the Sellers, the Depositor, the Trustee and the Servicer
covenant and agree for the benefit of the Owners and the Certificate Insurer
(i) to take no action which would result in the termination of "REMIC" status
for a REMIC, (ii) not to engage in any "prohibited transaction," as such term
is defined in Section 860F(a)(2) of the Code, (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes
under the Code and (iv) to cause the Servicer not to take or engage in any
such action, to the extent the Sellers are aware of any such proposed action
by the Servicer.
(c) The REMIC shall, for federal income tax purposes, maintain books
on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to
a plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee
shall enter into any arrangement by which the Trustee will receive a fee or
other compensation for services rendered pursuant to this Agreement, other
than as expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither the
Trustee nor either of the Sellers may engage in any of the transactions
prohibited by such clauses, unless the Trustee shall have received an opinion
of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that such transaction does
not result in a tax imposed on the Trustee or cause a termination of REMIC
status for a REMIC; provided, however, that such transaction is otherwise
permitted under this Agreement.
(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or a REMIC as a result of their negligence.
124
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that such transaction does not result in a tax imposed on the Trust or
a REMIC or cause a termination of REMIC status for a REMIC, (i) sell any
assets in the Trust Estate, (ii) accept any contribution of assets after the
Startup Day or (iii) agree to any modification of this Agreement. To the
extent that sufficient amounts cannot be so retained to pay or provide for the
payment of such tax, the Trustee is hereby authorized to and shall segregate,
into a separate non-interest bearing account, the net income from any such
Prohibited Transactions of a REMIC and use such income, to the extent
necessary, to pay such tax; provided that, to the extent that any such income
is paid to the Internal Revenue Service, the Trustee shall retain an equal
amount from future amounts otherwise distributable to the Owners of Class R
Certificates and shall distribute such retained amounts to the Owners of Class
A and Class B Certificates to the extent they are fully reimbursed and then to
the Owners of the Class R Certificates. If any tax, including interest
penalties or assessments, additional amounts or additions to tax, is imposed
on the Trust, such tax shall be charged against amounts otherwise
distributable to the owners of the Class R Certificates on a pro rata basis.
The Trustee is hereby authorized to and shall retain from amounts otherwise
distributable to the Owners of the Class R Certificates sufficient funds to
pay or provide for the payment of, and to actually pay, such tax as is legally
owed by the Trust (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the REMIC for all purposes
of the Code and such Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code.
The Tax Matters Person for the REMIC shall be ContiFunding Corporation as long
as it owns a Class R Certificate. If ContiFunding Corporation does not own a
Class R Certificate, as the case may be, the Tax Matters Person may be any
other entity that owns such a Class R Certificate and accepts a designation
hereunder as Tax Matters person by delivering an affidavit in the form of
Exhibit I. ContiFunding Corporation shall notify the Trustee in writing of the
name and address of another person who accepts a designation as Tax Matters
Person hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in
which the Certificate Insurer is in default in its payment obligations under
the Certificate Insurance Policies. At such time as the Class A Certificates
and any Reimbursement Amounts are no longer Outstanding hereunder, the
Certificate Insurer's rights hereunder shall terminate.
125
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, each of the Sellers, the Depositor and the Owners agree
that the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed below:
The Trustee: Manufacturers and Traders Trust Company
Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Corporate Trust Administration
The Depositor: ContiSecurities Asset Funding Corp.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
The Sellers: ContiMortgage Corporation
One Xxxxx Park
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: President and Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
ContiWest Corporation
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
126
The Servicer: ContiMortgage Corporation
One Xxxxx Park
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Senior Vice President and
Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
The Certificate Insurer: MBIA Insurance Corporation
000 Xxxx Xx.
Xxxxxx, XX 00000
Attention: Insured Portfolio
Management - SF (ContiMortgage Home Equity
Loan Trust 1998-4)
Tel: (000) 000-0000
Fax: (000) 000-0000
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Home Equity Monitoring
Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Fitch: Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Standard & Poor's: Standard & Poor's
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Residential Mortgage Surveillance
Group
Underwriters: Credit Suisse First Boston
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Finance
Tel: (000) 000-0000
Fax: (000) 000-0000
127
ContiFinancial Services Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel, Chief Financial
Officer and Chief Operating
Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
Owners: As set forth in the Register.
Others: Any notice to the Depositor, either Seller or the Servicer
shall also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
END OF ARTICLE XI
128
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed
by their respective officers thereunto duly authorized, all as of the day and
year first above written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ Xxxx Xxxx
------------------------------------------
Name: Xxxx Xxxx
Title: Authorized Signatory
By: /s/ Xxxx Xxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION,
as Seller and Servicer
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Senior Vice President
CONTIWEST CORPORATION, as Seller
By: /s/ Xxx X. Xxxxxxx
------------------------------------------
Name: Xxx X. Xxxxxxx
Title: Vice President
By: /s/ Xxxx Xxxx
------------------------------------------
Name: Xxxx Xxxx
Title: Assistant Secretary
129
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: /s/ Xxxx Xxxxxx
------------------------------------------
Name: Xxxx Xxxxxx
Title: Assistant Vice President
000
XXXXX XX XXX XXXX )
): ss.:
COUNTY OF NEW YORK )
On the 16th day of December 1998, before me personally came Xxxx Xxxx
and Xxxx Xxxxxxxx, to me known, who, being by me duly sworn, did depose and say
that he/she resides at 00 Xxxxxxxx Xxxx, Xxxxxx, XX and 000 Xxxxxxx Xxxx Xxxx,
Xxx Xxxx, XX, 00000, respectively; that he/she is an Authorized Signatory and an
Authorized Signatory, respectively, of ContiSecurities Asset Funding Corp., a
Delaware Corporation; and that he/she signed his/her name thereto by order of
the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx
Notary Public, State of New York
No. 00-0000000
Qualified in New York County
Commission Expires 6-22-99
131
STATE OF PENNSYLVANIA )
): ss
COUNTY OF XXXXXXXXXX )
On the 17th day of December 1998, before me personally came
Xxxxx Xxxxxxx, to me known, who, being by me duly sworn, did depose and say that
he/she resides at Xxxxxxxxxx County; that he/she is a Senior Vice President of
ContiMortgage Corporation, a Delaware Corporation; and that he signed his name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxxx X. Xxxxxx
Notarial Seal
Xxxxxx X. Xxxxxx, Notary Public
Hatboro Boro, Xxxxxxxxxx County
My Commission Expires March 15, 2001
Member, Pennsylvania Association of Notaries
000
XXXXX XX XXXXXXXXXXXX )
): ss
COUNTY OF XXXXXXXXXX )
On the 17th day of December 1998, before me personally came
Xxxxxxxx X. Xxxxx, to me known, who, being by me duly sworn, did depose and say
that he/she resides at Xxxxxxxxxx County; that he/she is a Senior Vice President
of ContiMortgage Corporation, a Delaware corporation; and that he signed his
name thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxxx X. Xxxxxx
Notarial Seal
Xxxxxx X. Xxxxxx, Notary Public
Hatboro Boro, Xxxxxxxxxx County
My Commission Expires March 15, 2001
Member, Pennsylvania Association of Notaries
133
STATE OF NEVADA )
): ss.:
COUNTY OF XXXXX )
On the 17th day of December 1998, before me personally came
Xxx X. Xxxxxxx and Xxxx Xxxx, to me known, who, being by me duly sworn, did
depose and say that he resides at 0000 Xxxxxx Xx, Xxx Xxxxx, XX 00000 and 0000
X. Xxxxxxxxxx #000, Xxx Xxxxx, XX 00000, respectively; that he is a Vice
President and Assistant Secretary, respectively, of ContiWest Corporation, a
Nevada corporation; and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ T.V. Xxxxxxx
T.V. Xxxxxxx
Notary Public, State of Nevada
Appointment No. 00-0000-0
My appt. Expires Feb. 3, 0000
000
XXXXX XX XXX XXXX )
): ss.:
COUNTY OF NEW YORK )
On the 17th day of December 1998, before me personally came Xxxx X.
Xxxxxx, to me known, who, being by me duly sworn did depose and say that he
resides at Clarence, New York; that he is an Assistant Vice President of
Manufacturers and Traders Trust Company, the New York banking corporation
described in and that executed the above instrument as Trustee; and that he
signed his name thereto by order of the Board of Directors of said New York
banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Notary Public, State of New York
No. 00-0000000
Qualified in Kings County
Commission Expires July 31, 2002
135
SCHEDULE I
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
I-1
SCHEDULE II
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
II-1
SCHEDULE III
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
III-1
SCHEDULE IV
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
IV-1
EXHIBIT A
FORM OF CLASS A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST ____
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation of, nor
are the underlying Home Equity Loans insured or guaranteed by ContiSecurities
Asset Funding Corp., ContiWest Corporation or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity
Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Issuer ("ContiMortgage Home Equity Loan Trust 1998-4") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No: A-1
---------------
CUSIP
$--------------- ----------------- ---------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
-----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans listed
in Schedule I to the Pooling and Servicing Agreement which each Seller has
caused to be delivered to the Depositor and the Depositor has caused to be
delivered to the Trustee (and all substitutions therefor as provided by
Section 3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Home Equity Loan documents and each Sellers' interest in any
Property which secured a Home Equity Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts as may be held by the Trustee in the Certificate Account together
with investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise
1
provided herein), whether in the form of cash, instruments, securities or
other properties (including any Eligible Investments held by the Servicer);
and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such
original Certificate Principal Balance over the period from the date of
initial issuance of the Certificates to the final Payment Date for the Class A
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to January 15, 1999 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner
hereof is required to send this Certificate to the Trustee. The Pooling and
Servicing Agreement (as defined below) provides that, in any event, upon the
making of the final distribution due on this Certificate, this Certificate
shall be deemed cancelled for all purposes under the Pooling and Servicing
Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY
LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 15, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1998-4, Home
Equity Loan Pass-Through Certificates, Class A (the "Class A Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of December, 1, 1998 (the
"Pooling and Servicing Agreement") by and among ContiMortgage Corporation, in
its capacity as a Seller (a "Seller") and as the Servicer (the "Servicer"),
ContiWest Corporation, in its capacity as a Seller (a "Seller"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home
Equity Loan Trust 1998-4 Home Equity Loan Pass-Through Certificates, Class B
(the "Class B Certificates") and Class R (the "Class R Certificates and
collectively, with the Class A and Class B Certificates, the "Certificates").
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing January 15, 1999, the Owners of the Class A
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made
in immediately available funds to Owners of Certificates having an aggregate
original Class A Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the
2
account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Owner of record of a Class A Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on
such Payment Date to the Owners of the Class A Certificates. The Percentage
Interest of each Class A Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate
Principal Balance of such Class A Certificate on the Startup Day by the
aggregate Class A Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance
with the terms hereof and the Pooling and Servicing Agreement. Amounts
properly withheld under the Code by any Person from a distribution to any
Owner shall be considered as having been paid by the Trustee to such Owner for
all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the
servicing and administration of certain Home Equity Loans. No appointment of
any Sub-Servicer shall release the Servicer from any of its obligations under
the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp., ContiWest
Corporation or ContiMortgage Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement).
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under
the Pooling and Servicing Agreement except in compliance with the terms
thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which
is absolute and unconditional to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the latest to occur of (a) the
final payment or other liquidation (or any advance made with respect thereto)
of the last Home Equity Loan in the Trust Estate or (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall unanimously direct the Trustee on behalf
of the Trust to adopt a plan of complete liquidation as contemplated by
Section 860F(a)(4) of the Code, and the Trustee shall either sell the Home
Equity Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to
the remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the distribution
of any proceeds of the liquidation and the termination of the Pooling and
Servicing Agreement occur no later than the close of the 90th day after the
date of adoption of the plan of liquidation and such liquidation qualifies as
a Qualified Liquidation.
3
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their option, purchase
from the Trust all remaining Home Equity Loans and other property then
constituting the Trust Estate, and thereby effect early retirement of the
Certificates, on any Monthly Remittance Date after the Clean-Up Call Date and
(ii) under certain circumstances relating to the qualification of any REMIC
established by the Trust as a REMIC under the Code the Home Equity Loans may
be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth and referred to on the face
hereof, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the office
designated as the location of the Register duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Registrar duly
executed by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Sellers and the Servicer at any time and from time to time, and
without the consent of the Owners; provided, that in certain circumstances
provided for in the Pooling and Servicing Agreement, such consent of the
Owners will be required prior to amendments. Any such consent by the Owner at
the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of
any Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on
each Payment Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A Certificates are exchangeable
for new Class A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the
Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee or any such agent shall be affected by
notice to the contrary, except as may otherwise be specifically provided in
the Pooling and Servicing Agreement.
4
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
------------------------------------
Name:
Title:
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name:
Title:
Date of Authentication:
5
EXHIBIT B
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF THIS
SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST _____
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS B
(_____% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by
ContiSecurities Asset Funding Corp., ContiWest Corporation or ContiMortgage
Corporation. This Certificate represents a fractional ownership interest in
the Home Equity Loans and certain other property held by the Trust.)
---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No:
PPN
$
Original Certificate Date Final Scheduled
Principal Balance Payment Date
The Prudential Insurance
Company of America
------------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner
of a fractional interest in (a) the Home Equity Loans listed in Schedule I to
the Pooling and Servicing Agreement which each Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and each Sellers' interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu
of foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account together with investment earnings on
such amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings
thereon (except as otherwise provided herein), whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer); and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class B
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to January 15, 1999 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 15, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
BY ITS ACCEPTANCE OR ACQUISITION OF A CLASS B CERTIFICATE, THE OWNER
SHALL BE DEEMED TO HAVE REPRESENTED THAT IT EITHER (I) IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OF ERISA NOR A PLAN OR OTHER ARRANGEMENT
SUBJECT TO SECTION 406 OF ERISA NOR A PLAN OR OTHER ARRANGEMENT SUBJECT TO
SECTION 4975 OF THE CODE (COLLECTIVELY, A "PLAN") NOR IS ACTING ON BEHALF OF
ANY PLAN NOR USING THE ASSETS OF ANY PLAN TO EFFECT SUCH TRANSFER OR (II) IS
AN INSURANCE COMPANY ACQUIRING ITS INTEREST AS PERMITTED IN ACCORDANCE WITH
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1998-4, Home Equity Loan
Pass-Through Certificates, Class B (the "Class B Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of December 1, 1998 (the "Pooling and
Servicing Agreement") by and among ContiMortgage Corporation, in its capacity
as a Seller (a "Seller") and as the Servicer (the "Servicer"), ContiWest
Corporation, in its capacity as a Seller (a "Seller"), ContiSecurities Asset
Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation, in
its capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan Trust
1998-4 Home Equity Loan Pass-Through Certificates, Class A (the "Class A
Certificates"), and Class R (the "Class R Certificates). The Class A
Certificates and the Class R Certificates are together referred to herein as
the "Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 15, 1999, the Owners of the Class B Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class B Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class B
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as
it appears on the Register.
Each Owner of record of a Class B Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment
Date to the Owners of the Class B Certificates. The Percentage Interest of
each Class B Certificate as of any date of determination will be equal to the
percentage obtained by dividing the
original Certificate Principal Balance of such Class B Certificate on the
Startup Day by the aggregate Class B Certificate Principal Balance on the
Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance
with the terms hereof and the Pooling and Servicing Agreement. Amounts
properly withheld under the Code by any Person from a distribution to any
Owner shall be considered as having been paid by the Trustee to such Owner for
all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to
the Pooling and Servicing Agreement. The Pooling and Servicing Agreement
permits the Servicer to enter into Sub-Servicing Agreements with certain
institutions eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiSecurities Asset Funding Corp., ContiWest Corporation or
ContiMortgage Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and
the Principal and Interest Account (except as otherwise provided in the
Pooling and Servicing Agreement).
No Owner shall have any right to institute any proceeding, judicial
or otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the latest to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Home Equity Loan in the Trust Estate or (b) the disposition of all
property acquired in respect of any Home Equity Loan remaining in the Trust
Estate or (c) at any time when a Qualified Liquidation of the Trust Estate is
effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall unanimously direct the Trustee on behalf
of the Trust to adopt a plan of complete liquidation as contemplated by
Section 860F(a)(4) of the Code, and the Trustee shall either sell the Home
Equity Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to
the remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the distribution
of any proceeds of the liquidation and the termination of the Pooling and
Servicing Agreement occur no later than the close of the 90th day after the
date of adoption of the plan of liquidation and such liquidation qualifies as
a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i)
the Owners of the Class R Certificates may, at their option, purchase from the
Trust all remaining Home Equity Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of any REMIC established by the
Trust as a REMIC under the Code the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of the majority of the Percentage Interests represented by
the Offered Certificates have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage
Interest will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicer at any time and from time to time, and without the
consent of the Owners; provided, that in certain circumstances provided for in
the Pooling and Servicing Agreement, such consent of the Owners will be
required prior to amendments. Any such consent by the Owner at the time of the
giving thereof, of this Certificate shall be conclusive and binding upon such
Owner and upon all future Owners of the Certificate and of any Certificate
issued upon the registration of Transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon
this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class B Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B Certificates are exchangeable for new
Class B Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by
notice to the contrary, except as may otherwise be specifically provided in
the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS
TRUST COMPANY, as Trustee
By:
-----------------------------------
Name:
Title:
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
---------------------------------
Name:
Title:
Date of Authentication:
EXHIBIT R
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN
THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE
MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM
INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A XXXXXX'X COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME.
NO TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE
TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT
ACTING FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R
CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A
RECORD OWNER IN ANY TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH
SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH
RESPECT TO THE PORTION OF THIS CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH
ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL
TAX RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING SENTENCE, THE TERM
"PASS-THROUGH" ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE
INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS, ESTATES,
COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE APPLIES AND, EXCEPT
AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
CONTIMORTGAGE HOME EQUITY LOAN TRUST ______
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by
ContiSecurities Asset Funding Corp., ContiWest Corporation or ContiMortgage
Corporation. This Certificate represents a fractional residual ownership
interest in the Trust Estate.) No: R-2
Percentage Interest:
% Date Final Scheduled
Distribution Date
Registered Owner
The registered Owner named above is the registered beneficial Owner
of a fractional interest in (a) the Home Equity Loans listed in Schedule I to
the Pooling and Servicing Agreement which each Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and each Sellers' interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu
of foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, together with investment earnings on
such amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings
thereon (except as otherwise provided herein), whether in the form of cash,
instruments, securities or other properties (including any Eligible
Investments held by the Servicer); and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1998-4, Home
Equity Loan Pass-Through Certificates, Class R (the "Class R Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of December 1, 1998 (the
"Pooling and Servicing Agreement") by and among ContiMortgage Corporation, in
its capacity as a Seller (a "Seller") and as the Servicer (the "Servicer"),
ContiWest Corporation, in its capacity as a Seller (a "Seller"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home
Equity Loan Trust 1998-4 Home Equity Loan Pass-Through Certificates, Class A
(the "Class A Certificates"), Class B (the "Class B Certificates" and
collectively with the Class A and Class R Certificates, the Certificates").
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to
the Pooling and Servicing Agreement. The Pooling and Servicing Agreement
permits the Servicer to enter into Sub-Servicing Agreements with certain
institutions eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiSecurities Asset Funding Corp., ContiWest Corporation or
ContiMortgage Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans, all as more specifically set forth hereinabove and in
the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial
or otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the latest to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Home Equity Loan or (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (c) at any
time when a Qualified Liquidation of the Trust Estate is effected as described
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (c) above, the Owners of all Certificates then Outstanding shall
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code, and
the Trustee shall either sell the Home Equity Loans and distribute the
proceeds of the liquidation of the Trust, or shall distribute equitably in
kind all of the assets of the Trust Estate to the remaining Owners of the
Certificates, each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of the Pooling and Servicing Agreement occur
no later than the close of the 90th day after the date of adoption of the plan
of liquidation and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i)
the Owners of the Class R Certificates may at their option, purchase from the
Trust all remaining Home Equity Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of any REMIC established by the
Trust as a REMIC under the Code, the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
The Owners of a majority of the Percentage Interests represented by
the Offered Certificates, or if there are no longer any Offered Certificates
then outstanding, the Owners of a majority of the Percentage Interests
represented by the Class R Certificates then outstanding, have the right to
exercise any trust or power set forth in Section 6.11 of the Pooling and
Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the REMIC will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicer at any time and from time to time, and without the
Consent of the Owners; provided that in certain other circumstances provided
for in the Pooling and Servicing Agreement, such consent of the Owners will be
required prior to amendments. Any such consent by the Owner at the time of the
giving thereof, of this Certificate shall be conclusive and binding upon such
Owner and upon all future Owners of the Certificate and of any Certificate
issued upon the registration of Transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon
this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class R Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject
to certain limitations
therein set forth, these Class R Certificates are exchangeable for new Class R
Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by
notice to the contrary, except as may otherwise be specifically provided in
the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS
TRUST COMPANY, as Trustee
By:
-----------------------------
Name:
Title:
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------
Name:
Title:
Date of Authentication:
EXHIBIT D
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of ContiMortgage
Corporation ("ContiMortgage"), hereby certify that between the "Cut-Off Date"
(as defined in the Pooling and Servicing Agreement dated as of December 1,
1998 among ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage,
as a Seller and the Servicer, ContiWest Corporation, as a Seller, and
Manufacturers and Traders Trust Company, as Trustee) and the "Startup Day",
each of the Home Equity Loans listed on the attached schedule of Home Equity
Loans have been prepaid in full.
Account Original Current
Number Name Amount Balance Date Paid Off Pool
------- ---- -------- -------- ------------- ----
Dated: December __, 1998
CONTIMORTGAGE
CORPORATION
By:
----------------------------
Title:
--------------------------
D-1
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as trustee (the "Trustee") under that certain
Pooling and Servicing Agreement dated as of December 1, 1998 (the "Pooling and
Servicing Agreement") among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, a Delaware corporation, as a seller and the
servicer ("ContiMortgage"), ContiWest Corporation ("ContiWest"), as a seller,
and Manufacturers and Traders Trust Company, as trustee (the "Trustee"),
hereby acknowledges receipt (subject to review as required by Section 3.06(a)
of the Pooling and Servicing Agreement) of the items delivered to it by
ContiMortgage and ContiWest with respect to the Home Equity Loans pursuant to
Section 3.05(b)(i) of the Pooling and Servicing Agreement.
The Trustee hereby additionally acknowledges that it shall review
such items as required by Section 3.06(a) of the Pooling and Servicing
Agreement and shall otherwise comply with Section 3.06(b) of the Pooling and
Servicing Agreement as required thereby.
MANUFACTURERS AND TRADERS
TRUST COMPANY, AS TRUSTEE
By:
------------------------------
Title:
---------------------------
Dated: December __, 1998
E-1
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Manufacturers
and Traders Trust Company, a New York banking corporation, acting in its
capacity as trustee (the "Trustee") of a certain pool of mortgage loans (the
"Pool") heretofore conveyed in trust to the Trustee, pursuant to that certain
Pooling and Servicing Agreement dated as of December 1, 1998 (the "Pooling and
Servicing Agreement") among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as a Seller and the Servicer, ContiWest
Corporation, as a Seller, and Manufacturers and Traders Trust Company, as
Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Mortgage Files relating to the
Pool within a specified period following the Startup Day and to notify the
related Seller promptly of any defects with respect to the Pool, and such
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement
requires the Trustee to deliver this Pool Certification upon the satisfaction
of certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has determined
that all required documents (or certified copies of documents listed in
Section 3.05 of the Pooling and Servicing Agreement) have been executed or
received, and that such documents relate to the Home Equity Loans identified
in the Schedule of Home Equity Loans pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement or, in the event that such documents have not
been executed and received or do not so relate to such Home Equity Loans, any
remedial action by the Sellers pursuant to Section 3.06(b) of the Pooling and
Servicing Agreement has been completed. The Trustee makes no certification
hereby, however, with respect to any intervening assignments or assumption and
modification agreements.
MANUFACTURERS AND TRADERS
TRUST COMPANY, AS TRUSTEE
By:
-------------------------------
Title:
----------------------------
Dated: December __, 1998
F-1
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Manufacturers and Traders Trust Company, as Trustee
Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement,
dated as of December 1, 1998 (the "Pooling and Servicing Agreement") among
ContiSecurities Asset Funding Corp. ("ContiSecurities"), as Depositor,
ContiMortgage Corporation, as a seller and the servicer, ContiWest
Corporation, as a seller, and Manufacturers and Traders Trust Company, as
Trustee (the "Trustee"), ContiSecurities hereby certifies that all conditions
precedent to the issuance of the ContiMortgage Home Equity Loan Trust 1998-4,
Home Equity Loan Pass-Through Certificates, Class A, Class B and Class R (the
"Certificates"), have been satisfied, and hereby requests you to authenticate
and deliver said Certificates, and to release said Certificates to the owners
thereof, or otherwise upon their order.
Very truly yours,
CONTISECURITIES ASSET FUNDING
CORP.
By:
-----------------------------
Title:
--------------------------
Dated: December __, 1998
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EXHIBIT H
[RESERVED]
H-1
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _____________] [the United States], on behalf
of which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and
will not be a "disqualified organization" as of [date of transfer] (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other
than certain taxable instrumentalities), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas, or any organization (other than a farmers' cooperative) that is exempt
from federal income tax unless such organization is subject to the tax on
unrelated business income.); (ii) it is not acquiring the Class R Certificates
for the account of a disqualified organization; (iii) it consents to any
amendment of the Pooling and Servicing Agreement that shall be deemed
necessary by the Trustee (upon advice of counsel) to constitute a reasonable
arrangement to ensure that none of the Class R Certificates will be owned
directly or indirectly by a disqualified organization; and (iv) it will not
transfer such Class R Certificate unless (a) it has received from the
transferee an affidavit in substantially the same form as this affidavit
containing these same four representations and (b) as of the time of the
transfer, it does not have actual knowledge that such affidavit is false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached,
attested by its [Assistant] Secretary, this day of
________________________________, _________.
[NAME OF INVESTOR]
By:
----------------------------------
[Name of Officer]
[Title of Officer]
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[Corporate Seal]
Attest:
----------------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer],
known or proved to be the same person who executed the foregoing instrument
and to be the [Title of Officer] of the Investor, and acknowledged to me that
he executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____ day of ____________, ____.
_____________________________
NOTARY PUBLIC
COUNTY OF ___________________
STATE OF ____________________
My commission expires the _____ day of ______________, _____.
I-2
EXHIBIT J
[FORM OF RULE 144A REPRESENTATION LETTER]
[date]
ContiSecurities Asset Funding Corp.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
ContiMortgage Corporation
One ContiPark
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
and
Manufacturers and Traders Trust Company
Xxx X&X Xxxxx
Xxxxxxx, XX 00000-0000
Ladies and Gentlemen:
In connection with the purchase by ___________ (the "Purchaser") of
$___________ of ____% ContiMortgage Home Equity Loan Pass-Through
Certificates, Series 1998-4, Class [B/R] Certificates (the "Certificates"),
issued by ContiMortgage Home Equity Loan Trust 1998-4 (the "Trust") pursuant
to a Pooling and Servicing Agreement (the "Agreement"), dated as of December
1, 1998, among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Seller and Servicer, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as trustee (the
"Trustee"), we hereby represent and warrant to, and covenant with, you that:
1. The Purchaser understands that the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"1933 Act"), or the securities laws of any state, and therefore cannot be
resold unless they are registered or qualified thereunder or unless an
exemption from registration or qualification is available.
2. The Purchaser's intention is to acquire the Certificates (a) for
investment for the Purchaser's own account (or for the account of one or more
other institutional investors for which it is acting as duly authorized
fiduciary or agent, including, without limitation, an insurance company
separate account), or (b) for resale to "qualified institutional buyers" in
transactions under Rule 144A promulgated under the 1933 Act ("Rule 144A") and
not in any event with the view to, or for resale in connection with, any
distribution thereof. It understands that the Certificates have not been
registered
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under the 1933 Act, by reason of a specified exemption from the registration
provisions of the 1933 Act which depends upon, among other things, the bona
fide nature of the Purchaser's investment intent (or intent to resell only in
Rule 144A transactions) as expressed herein.
3. The Purchaser will not sell or otherwise transfer any Certificate,
except in compliance with the provision of Section 5.8 of the Agreement.
4. The Purchaser is a "qualified institutional buyer" within the
meaning of Rule 144A.
5. The Purchaser (i) understands that the seller of the Certificates
to the Purchaser may have relied or be relying upon the exemption from the
provisions of Section 5 of the 1933 Act provided by Rule 144A and (ii) will
take reasonable steps to insure that any purchaser of the Certificates from
the Purchaser is aware that the Purchaser may rely on such exemption in
connection with any such resale.
6. The Purchaser agrees that in the event that at some future time it
wishes to dispose of or exchange its Certificate or Certificates, it will not
transfer or exchange its Certificate or Certificates unless such Certificate
or Certificates are sold in a transaction that does not require registration
under the 1933 Act or registration by the Issuer under any applicable State
securities laws.
7. [Version I: The chief financial officer, a person fulfilling an
equivalent function, or another executive officer has specified in a
certificate substantially in the form attached as Appendix A hereto, the
amount of securities owned and invested on a discretionary basis by the
Purchaser as of [a specific date on or since the close of the Purchaser's most
recent fiscal year]].
[OR]
[Version II: The Purchaser is a member of a family of investment
companies for purposes of Rule 144A, and an executive officer of the
investment adviser has specified in a certificate substantially in the form
attached as Appendix A hereto the amount of securities owned by the family of
investment companies as of [a specific date on or since the close of the
Purchaser's most recent fiscal year]].
8. The Purchaser acknowledges either (a) that it has not requested
from any person the information required to be received by the Purchaser, upon
request, pursuant to Rule 144A(d)(4)(i) (the "Required Information"), or (b)
that it has requested and received the Required Information from the Seller or
the Trustee.
9. The Purchaser understands that the Certificates bear a legend to
substantially the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE
HOLDER HEREOF, BY PURCHASING THIS CLASS
2-2
[B/R] CERTIFICATE, AGREES THAT THIS CLASS [B/R] CERTIFICATE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS CLASS [B/R
CERTIFICATE] IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE 1933 ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE OF A CERTIFICATION
OF THE TRANSFEREE AND AN OPINION OF COUNSEL (SATISFACTORY TO THE TRUSTEE AND
THE ISSUER) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE 1933
ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES.
Very truly yours,
[PURCHASER]
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
APPENDIX A - VERSION I
OFFICER'S CERTIFICATE OF PURCHASER
FOR PURPOSES OF RULE 144A
The undersigned, ___________________________, an officer of
____________________________ (the "Purchaser"), hereby certifies that the
amount of securities owned and invested on a discretionary basis by the
Purchaser or by the entity or entities that own all of its equity securities,
acting for its own account or the accounts of other "qualified institutional
buyers" as defined in Rule 144A promulgated under the Securities Act of 1933,
as amended, as of [insert a specific date on or since the close of the
Purchaser's most recent fiscal year], including securities owned and invested
in by consolidated subsidiaries thereof (to the extent permitted by Rule
144A(a)(4)), was not less than $100,000,000. I understand that this
Certificate is provided to ContiSecurities Asset Funding Corp., ContiMortgage
Corporation and Manufacturers and Traders Trust Company for the purpose of
establishing that the purchaser is a "qualified institutional buyer," and that
ContiSecurities Asset Funding Corp., ContiMortgage Corporation and
Manufacturers and Traders Trust Company intend to rely on this Certificate in
connection therewith.
IN WITNESS WHEREOF, I have hereto signed my name as of _______ day of
_____________________, ______.
By:
-----------------------------------------
Name:
Title:
APPENDIX A - VERSION II
OFFICER'S CERTIFICATE OF PURCHASER
FOR PURPOSES OF RULE 144A
The undersigned, _________________________, hereby certifies that he
is an executive officer of ___________________, the investment advisor to
____________________ (the "Purchaser") for purposes of Rule 144A ("Rule 144A")
promulgated under the Securities Act of 1933, as amended, and the amount of
securities owned by the Purchaser was not less than $100,000,000 as of [insert
a specific date on or since the close of the Purchaser's most recent fiscal
year]. I understand that this Certificate is provided to ContiSecurities Asset
Funding Corp., ContiMortgage Corporation and Manufacturers and Traders Trust
Company as trustee for the purpose of establishing that the Purchaser is a
"qualified institutional buyer" for purposes of Rule 144A and that
ContiSecurities Asset Funding Corp., ContiMortgage Corporation and
Manufacturers and Traders Trust Company intend to rely on this Certificate in
connection therewith.
IN WITNESS WHEREOF, I have hereto signed my name as of the ______ day
of ______________, _____.
By:
-----------------------------------------
Name:
Title:
EXHIBIT K
[FORM OF INVESTMENT LETTER (ERISA)]
[Date of Purchase]
ContiSecurities Asset Funding Corp.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
ContiMortgage Corporation
One ContiPark
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
and
Manufacturers and Traders Trust Company
Xxx X&X Xxxxx
Xxxxxxx, XX 00000-0000
Ladies and Gentlemen:
________________________________________ (the "Purchaser") has today
purchased in a private sale from ____________ $__________ of ____%
ContiMortgage Home Equity Loan Pass-Through Certificates, Series 1998-4, Class
[B/R] (the "Certificates"), issued by ContiMortgage Home Equity Loan Trust
1998-4 (the "Trust") pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of December 1, 1998, among ContiSecurities Asset
Funding Corp., as Depositor, ContiMortgage Corporation, as Seller and
Servicer, ContiWest Corporation, as Seller and Manufacturers and Traders Trust
Company, as trustee (the "Trustee"). Capitalized terms used but not defined
herein shall have the meanings set forth in the Agreement. The undersigned
hereby certifies and agrees on behalf of the Purchaser:
1. The Purchaser represents that, with respect to the source of funds
to be used by the Purchaser to purchase the Certificates (the "Source")
either:
(a) The Purchaser is an insurance company and the Source is an
"insurance company general account," as such term is defined in Department of
Labor Prohibited Transaction Class Exemption ("PTCE") 95-60, and as of the
date of purchase, the Purchaser satisfies all of the applicable requirements
for the exemptive relief under Section I and Section IV of PTCE 95-60; or
I-1
(b) The Purchaser is an entity other than an insurance company using
as the Source an "insurance company general account," as such term is defined
above, and either (i) the Source is not an "employee benefit plan" (within the
meaning of Section 3(3) of ERISA), a "plan" (within the meaning of Section
4975(e)(1) of the Code) or an entity whose underlying assets include plan
assets by reason of the investment in the entity by such an "employee benefit
plan" or "plan" and the application of the DOL's "plan assets" regulation, 29
C.F.R. Section 2510.3-101 (Nov. 13, 1986); (ii) the Source is a "governmental
plan" (within the meaning of Section 3(32) of ERISA); or (iii) the Purchaser's
acquisition and continued holding of the Certificates will be exempt under a
PTCE.
2. If the Purchaser sells any of the Certificates, the Purchaser will
obtain from any subsequent purchaser one of the alternative representations
contained in the foregoing paragraph 1.
Very truly yours,
-----------------------------------
[Name of Purchaser]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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