Certificates for Home Improvement and Home Equity Loans
Series 1997-A
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
Seller and Servicer
and
FIRST TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
of
HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1997-A
Dated as of March 1, 1997
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS...................................................... 1-1
SECTION 1.01. General.................................................. 1-1
SECTION 1.02. Specific Terms........................................... 1-1
ARTICLE II - ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS................... 2-1
SECTION 2.01. Closing.................................................. 2-1
SECTION 2.02. Conditions to the Closing................................ 2-2
SECTION 2.03. Acceptance by Trustee.................................... 2-3
SECTION 2.04. REMIC Provisions......................................... 2-3
ARTICLE III - REPRESENTATIONS AND WARRANTIES................................. 3-1
SECTION 3.01. Representations and Warranties Regarding the
Company.................................................. 3-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract................................................. 3-2
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate............................... 3-5
SECTION 3.04. Representations and Warranties Regarding the
Contract Files........................................... 3-7
SECTION 3.05. Repurchases of Contracts for Breach of
Representations and Warranties........................... 3-7
SECTION 3.06. No Repurchase Under Certain Circumstances................ 3-9
ARTICLE IV - PERFECTION OF TRANSFER AND PROTECTION OF
SECURITY INTERESTS.............................................. 4-1
SECTION 4.01. Transfer of Contracts.................................... 4-1
SECTION 4.02. Costs and Expenses....................................... 4-2
ARTICLE V - SERVICING OF CONTRACTS........................................... 5-1
SECTION 5.01. Responsibility for Contract Administration............... 5-1
SECTION 5.02. Standard of Care......................................... 5-1
SECTION 5.03. Records.................................................. 5-1
SECTION 5.04. Inspection............................................... 5-1
SECTION 5.05. Certificate Account...................................... 5-2
SECTION 5.06. Enforcement.............................................. 5-4
SECTION 5.07. Trustee to Cooperate..................................... 5-6
SECTION 5.08. Costs and Expenses....................................... 5-7
SECTION 5.09. Maintenance of Insurance................................. 5-8
SECTION 5.10. Merger or Consolidation of Servicer...................... 5-8
1
ARTICLE VI - REPORTS AND TAX MATTERS........................................ 6-1
SECTION 6.01. Monthly Reports......................................... 6-1
SECTION 6.02. Officer's Certificate................................... 6-2
SECTION 6.03. Other Data.............................................. 6-2
SECTION 6.04. Annual Report of Accountants............................ 6-2
SECTION 6.05. Statements to Certificateholders and the Class C
Certificateholder....................................... 6-3
SECTION 6.06. Payment of Taxes........................................ 6-19
ARTICLE VII - SERVICE TRANSFER.............................................. 7-1
SECTION 7.01. Events of Termination................................... 7-1
SECTION 7.02. Transfer................................................ 7-2
SECTION 7.03. Trustee to Act; Appointment of Successor................ 7-2
SECTION 7.04. Notification to Certificateholders and the Class C
Certificateholder....................................... 7-3
SECTION 7.05. Effect of Transfer...................................... 7-3
SECTION 7.06. Transfer of Certificate Account......................... 7-4
ARTICLE VIII - PAYMENTS..................................................... 8-1
SECTION 8.01. Monthly Payments........................................ 8-1
SECTION 8.02. Advances................................................ 8-2
SECTION 8.03. Limited Guaranties...................................... 8-3
SECTION 8.04. Permitted Withdrawals from the Certificate Account;
Payments................................................ 8-4
SECTION 8.05. Reassignment of Repurchased and Replaced Contracts...... 8-15
SECTION 8.06. Servicer's Purchase Option.............................. 8-16
ARTICLE IX - THE CERTIFICATES AND THE CLASS C CERTIFICATE................... 9-1
SECTION 9.01. The Certificates and Class C Certificate................ 9-1
SECTION 9.02. Registration of Transfer and Exchange of Certificates
and the Class C Certificate............................. 9-2
SECTION 9.03. No Charge; Disposition of Void Certificates or Class C
Certificate............................................. 9-6
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or
Class C Certificate..................................... 9-6
SECTION 9.05. Persons Deemed Owners................................... 9-7
SECTION 9.06. Access to List of Certificateholders' and Class C
Certificateholder's Names and Addresses................. 9-7
SECTION 9.07. Authenticating Agents................................... 9-8
ARTICLE X - INDEMNITIES..................................................... 10-1
SECTION 10.01. Real Estate............................................. 10-1
2
SECTION 10.02. Liabilities to Obligors................................ 10-1
SECTION 10.03. Tax Indemnification.................................... 10-1
SECTION 10.04. Servicer's Indemnities................................. 10-2
SECTION 10.05. Operation of Indemnities............................... 10-2
SECTION 10.06. REMIC Tax Matters...................................... 10-2
ARTICLE XI - THE TRUSTEE..................................................... 11-1
SECTION 11.01. Duties of Trustee...................................... 11-1
SECTION 11.02. Certain Matters Affecting the Trustee.................. 11-2
SECTION 11.03. Trustee Not Liable for Certificates, the Class C
Certificate or Contracts............................... 11-3
SECTION 11.04. Trustee May Own Certificates........................... 11-4
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to
Waive Events of Termination............................ 11-4
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses........ 11-4
SECTION 11.07. Eligibility Requirements for Trustee................... 11-5
SECTION 11.08. Resignation or Removal of Trustee...................... 11-6
SECTION 11.09. Successor Trustee...................................... 11-6
SECTION 11.10. Merger or Consolidation of Trustee..................... 11-7
SECTION 11.11. Tax Returns............................................ 11-7
SECTION 11.12. Obligor Claims......................................... 11-7
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.......... 11-9
SECTION 11.14. Certain Matters Relating to FHA Insurance.............. 11-10
SECTION 11.15. Trustee and First Bank System, Inc..................... 11-10
SECTION 11.16. Trustee Advances....................................... 11-10
ARTICLE XII - MISCELLANEOUS.................................................. 12-1
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties. 12-1
SECTION 12.02. Company Not to Engage in Certain Transactions with
Respect to the Trust................................... 12-1
SECTION 12.03. Maintenance of Office or Agency........................ 12-1
SECTION 12.04. Termination............................................ 12-2
SECTION 12.05. Acts of Certificateholders and the Class C
Certificateholder...................................... 12-4
SECTION 12.06. Calculations........................................... 12-5
SECTION 12.07. Assignment or Delegation by Company.................... 12-5
SECTION 12.08. Amendment.............................................. 12-6
SECTION 12.09. Notices................................................ 12-8
SECTION 12.10. Merger and Integration................................. 12-9
SECTION 12.11. Headings............................................... 12-9
SECTION 12.12. Governing Law.......................................... 12-9
3
Exhibit A - Form of Class HI: A Certificate......................................... A-1
Exhibit B - Form of Class HI: M Certificate......................................... B-1
Exhibit C - Form of Class HI: B Certificate......................................... C-1
Exhibit D-1 - Form of Class HE: A[1][2][3][4][5][6] Certificate................... D-1-1
Exhibit D-2 - Form of Class HE: A-1ARM Certificate................................ D-2-1
Exhibit E - Form of Class HE: M Certificate......................................... E-1
Exhibit F - Form of Class HE: B Certificate......................................... F-1
Exhibit G - Form of Assignment...................................................... G-1
Exhibit H - Form of Certificate of Officer.......................................... H-1
Exhibit I - Form of Opinion of Counsel for the Company.............................. I-1
Exhibit J - Form of Trustee's Acknowledgment........................................ J-1
Exhibit K - Form of Certificate of Servicing Officer................................ K-1
Exhibit L - Form of Class C Certificate............................................. L-1
Exhibit M-1 - Form of Certificate Regarding Repurchased Contracts................. M-1-1
Exhibit M-2 - Form of Certificate Regarding Substituted Contracts................. M-2-1
Exhibit N - Form of Representation Letter........................................... N-1
Exhibit O-1 - List of Home Improvement Contracts.................................. O-1-1
Exhibit O-2 - List of Home Equity Contracts....................................... O-2-1
Exhibit O-3 - List of Adjustable Rate Contracts................................... O-3-1
Exhibit P - List of FHA-Insured Contracts........................................... P-1
Exhibit Q - Form of Monthly Report.................................................. Q-1
4
AGREEMENT, dated as of March 1, 1997, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Delaware, as Seller and Servicer (the "Company"), and First Trust National
Association, a national banking association organized and existing under the
laws of the United States, not in its individual capacity but solely as Trustee
(the "Trustee") of Home Improvement and Home Equity Loan Trust 1997-A (the
"Trust").
WHEREAS, in the regular course of its business, the Company purchases,
originates and services home improvement contracts and promissory notes, which
contracts and notes provide for installment payments by or on behalf of the
purchaser of the home improvements and grant mortgages, deeds of trust or
security deeds on the real estate that is the subject of a home improvement;
WHEREAS, in the regular course of its business, the Company purchases,
originates and services home equity loans, which loans provide for installment
payments by or on behalf of the borrower and grant mortgages, deeds of trust or
security deeds on certain real estate securing such loans;
WHEREAS, the Company and the Trustee have agreed to establish the Trust;
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions pursuant to which the Trust, on behalf of the "Certificateholders"
and the "Class C Certificateholder," as hereinafter defined, will acquire the
"Contracts," as hereinafter defined, and the Company will manage and service the
Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Company and the Trustee agree as provided herein:
ARTICLE I
DEFINITIONS
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SECTION 1.01. General.
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For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Article
include the plural as well as the singular, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular article, section or other subdivision, and Section
references refer to Sections of the Agreement.
SECTION 1.02. Specific Terms.
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"Advance" means, with respect to any Payment Date, the amounts, if any,
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deposited by the Servicer or the Trustee, as applicable, in the Certificate
Account for such Payment Date pursuant to Section 8.02.
"Advance Payment" means any payment by an Obligor in advance of the Due
---------------
Period in which it would be due under such Contract and which payment is not a
Principal Prepayment.
"Adjustable Rate Contracts" means the home equity loans described in the
-------------------------
List of Contracts attached hereto as Exhibit O-3 and constituting part of the
corpus of the Trust, which Adjustable Rate Contracts are to be assigned and
conveyed by the Company to the Trust, and includes, without limitation, all
related mortgages, deeds of trust and security deeds and any and all rights to
receive payments which are received pursuant thereto on or after the Cut-off
Date, but excluding any rights to receive payments which are received pursuant
thereto prior to the Cut-off Date.
"Affiliate" of any specified Person means any other Person controlling or
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controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificate Principal Balance" means the sum of the Sub-Pool HI
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Certificate Principal Balance and the Sub-Pool HE Certificate Principal Balance.
"Agreement" means this Pooling and Servicing Agreement.
---------
1-1
"Amount Held for Future Distribution" means, as to any Payment Date, (1)
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with respect to the Home Improvement Contracts, the total of the amounts held in
the Certificate Account in respect of the Home Improvement Contracts on the last
day of the preceding Due Period on account of Advance Payments on the Home
Improvement Contracts in respect of such Due Period and (2) with respect to the
Home Equity Contracts, the total of the amounts held in the Certificate Account
in respect of the Home Equity Contracts on the last day of the preceding Due
Period on account of Advance Payments on the Home Equity Contracts in respect of
such Due Period.
"Applicants" has the meaning assigned in Section 9.06.
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"Authenticating Agent" means any authenticating agent appointed pursuant to
--------------------
Section 9.07.
"Available Funds Pass-Through Rate" means, for any Payment Date, a rate per
---------------------------------
annum equal to the weighted average of the Expense Adjusted Contract Rates on
the then outstanding Adjustable Rate Contracts.
"Balloon Loan" means a Home Equity Contract that provides for the payment
------------
of the unamortized principal balance of such Contract in a single payment at the
maturity of such Contract that is greater than the preceding monthly payment.
"Book-Entry Certificate" means any Certificate registered in the name of
----------------------
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday, or (b)
------------
another day on which banking institutions in the city in which the Person taking
action hereunder are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Calculation Agent" means the Person who establishes LIBOR with respect to
-----------------
each Interest Reset Period. The Calculation Agent shall be the Trustee unless
the Trustee is unable or unwilling so to act, in which case the Calculation
Agent shall be a financial institution appointed by the Seller.
"Certificate" means a Sub-Pool HI Certificate or a Sub-Pool HE Certificate.
-----------
"Certificate Account" means a separate trust account created and maintained
-------------------
pursuant to Section 5.05 in the name of the Trust in an Eligible Institution.
1-2
"Certificate Owner" means the person who is the beneficial owner of a Book-
-----------------
Entry Certificate or, if Definitive Certificates have been issued,
Certificateholders.
"Certificate Register" means the register maintained pursuant to Section
--------------------
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
--------------------- ---------
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
----------------- ------
Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Company or any
Affiliate shall be deemed not to be outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite Percentage Interest necessary to effect any such consent, request,
waiver or demand has been obtained; provided, however, that, solely for the
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purpose of determining whether the Trustee is entitled to rely upon any such
consent, waiver, request or demand, only Certificates which the Trustee knows to
be so owned shall be so disregarded.
"Class," "Class HI: A," "Class HI: M," "Class HI: B," "Class HE: A," "Class
--------------------------------------------------------------------------
HE: M," "Class HE: B," or "Class C" means pertaining to Class HI: A
----------------------------------
Certificates, Class HI: M Certificates, Class HI: B Certificates, Class HE: A
Certificates, Class HE: M Certificates, Class HE: B Certificates, and/or the
Class C Certificate, as the case may be.
"Class C Certificate" means a certificate for Home Improvement and Home
-------------------
Equity Loans, Series 1997-A, bearing the designation Class C, executed and
delivered by the Trustee substantially in the form of Exhibit L, and evidencing
an interest designated as a "residual interest" in the Trust for purposes of the
REMIC Provisions.
"Class C Certificateholder" means the person in whose name a Class C
-------------------------
Certificate is registered on the Certificate Register.
"Class C Distribution Amount" means, as to any Payment Date, the amounts,
---------------------------
if any, distributable in respect of the Class C Certificate pursuant to Sections
8.04(b) and (d).
"Class HE: A Certificates" means the Class HE:A-1ARM, Class HE: A-1, Class
------------------------
HE: A-2, Class HE: A-3, Class HE: A-4, Class HE: A-5 and Class HE: A-6
Certificates, collectively.
"Class HE: A Distribution Amount" means, as to any Payment Date, the lesser
-------------------------------
of (a) the Sub-Pool HE Amount Available and (b) the Class HE: A Formula
Distribution
1-3
Amount; provided that, after the Sixth Cross-over date, the Class HE: A
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Distribution Amount shall be zero.
"Class HE: A Formula Distribution Amount" means, as to any Payment Date, an
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amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding April 15,
1997) at (1) the Class HE: A-1ARM Pass-Through Rate on the Class HE: A-1ARM
Principal Balance, (2) the Class HE: A-1 Pass-Through Rate on the Class HE: A-1
Principal Balance, (3) the Class HE: A-2 Pass-Through Rate on the Class HE: A-2
Principal Balance, (4) the Class HE: A-3 Pass-Through Rate on the Class HE: A-3
Principal Balance, (5) the Class HE: A-4 Pass-Through Rate on the Class HE: A-4
Principal Balance, (6) the Class HE: A-5 Pass-Through Rate on the Class HE: A-5
Principal Balance, and (7) the Class HE: A-6 Pass-Through Rate on the Class HE:
A-6 Principal Balance, in each case other than with respect to the Class HE: A-
1ARM Pass-Through Rate to be calculated immediately prior to such Payment Date
on the basis of a 360-day year of twelve thirty-day months, and in the case of
the Class HE: A-1ARM Pass-Through Rate, to be calculated immediately prior to
such Payment Date on the basis of actual days elapsed and a 360 day year, (b)
the aggregate of the Unpaid Class HE: A Interest Shortfalls, if any, with
respect to each Class of Class HE: A Certificates, and (c)(i) if there is no
Class HE: A Liquidation Loss Principal Amount as to such Payment Date, the Class
HE: A Formula Principal Distribution Amount, or (ii) if there is a Class HE: A
Liquidation Loss Principal Amount as to such Payment Date, the amount determined
in accordance with Section 8.04(d)(3)(i); provided, however, that the aggregate
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of all amounts distributed for all Payment Dates pursuant to clause (c) shall
not exceed the sum of the Original Class HE: A-1ARM Principal Balance, the
Original Class HE: A-l Principal Balance, the Original Class HE: A-2 Principal
Balance, the Original Class HE: A-3 Principal Balance, the Original Class HE: A-
4 Principal Balance, the Original Class HE: A-5 Principal Balance and the
Original Class HE: A-6 Principal Balance.
"Class HE: A Formula Interest Distribution Amount" means, as to each Class
------------------------------------------------
of Class HE: A Certificates and any Payment Date, the sum of (a) the amount
specified in clause (a)(1), (2), (3), (4), (5), (6) or (7) as appropriate, of
the definition of the term "Class HE: A Formula Distribution Amount" and (2) the
Unpaid Class HE: A Interest Shortfall, if any, with respect to such Class.
"Class HE: A Formula Principal Distribution Amount" means, as to any
-------------------------------------------------
Payment Date the sum of the Class HE: A-1ARM Formula Principal Distribution
Amount and the Sub-Pool HE Senior Percentage of the Sub-Pool HE Formula
Principal Distribution Amount.
"Class HE: A Interest Shortfall" means, as to each Class of Class HE: A
------------------------------
Certificates and any Payment Date, the amount, if any, by which the Class HE: A
1-4
Formula Interest Distribution Amount for such Class exceeds the amount
distributed to Holders of such Class on such Payment Date pursuant to Section
8.04(d)(2).
"Class HE: A Liquidation Loss Principal Amount" means, as to any Payment
---------------------------------------------
Date, the amount, if any, by which the Pool Scheduled Principal Balance of Sub-
Pool HE is less than the Class HE: A Principal Balance.
"Class HE: A Principal Balance" means, as to any Payment Date, the sum of
-----------------------------
the Class HE: A- 1ARM Principal Balance, the Class HE: A-1 Principal Balance,
the Class HE: A-2 Principal Balance, the Class HE: A-3 Principal Balance, the
Class HE: A-4 Principal Balance, the Class HE: A-5 Principal Balance, and the
Class HE: A-6 Principal Balance.
"Class HE: A-1ARM Certificate" means any one of the Class HE: A-1ARM
----------------------------
Certificates executed and delivered by the Trustee and authenticated by the
Certificate Registrar substantially in the form set forth in Exhibit D-2 and
evidencing an interest designated as a "regular interest" in the Trust for
purposes of the REMIC Provisions.
"Class HE: A-1ARM Distribution Amount" means, as to any Payment Date, that
------------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-1ARM Certificateholders pursuant to Section 8.04(d) on such Payment Date.
"Class HE: A-1ARM Formula Principal Distribution Amount" means zero as to
------------------------------------------------------
any Payment Date after the Class HE: A-1ARM Principal Balance has been reduced
to zero, and as to any Payment Date on or before the Payment Date on which the
Class HE:A-1ARM Principal Balance has been reduced to zero, the lesser of (A)
the Class HE:A-1ARM Principal Balance, or (B) the sum of the following amounts
with respect to the related Due Period, in each case computed in accordance with
the method specified in the relevant Adjustable Rate Contract:
(i) all scheduled payments of principal due on each outstanding
Adjustable Rate Contract during the prior Due Period as specified
in the amortization schedule at the time applicable thereto
(after adjustments for previous Partial Principal Prepayments but
before any adjustment to such amortization schedule by reason of
any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior Due Period in
respect of the Adjustable Rate Contracts; plus
1-5
(iii) the aggregate Scheduled Principal Balance of all Adjustable
Rate Contracts that became Liquidated Contracts during the prior
Due Period; plus
(iv) the aggregate Scheduled Principal Balance of all Adjustable Rate
Contracts repurchased, and all amounts deposited in lieu of the
repurchase of any Adjustable Rate Contract, during the prior Due
Period pursuant to Section 3.05(a) or, in the event of a
Substitution of an Adjustable Rate Contract in accordance with
Section 3.05(b), any amount required to be deposited by the
Company in the Certificate Account during the prior Due Period
pursuant to Section 3.05(b)(vi); plus
(v) with respect to any Payment Date which is on or after the
Payment Date on which the Class HE: A-1, A-2, A-3, A-4, A-5 and
A-6 Certificates have been paid in full, (a) the Sub-Pool HE
Senior Percentage of (A) the sum of the amounts described in
clauses (i) through (v) of the definition of Sub-Pool HE Formula
Principal Distribution Amount less (B) the sum of the amounts
described in clauses (i) through (iv) of the definition of the
Class HE: A-1ARM Formula Principal Distribution Amount less (b)
the amount, if any, distributed in payment of principal on the
Class HE: A-1, A-2, A-3, A-4, A-5 and A-6 Certificates on such
Payment Date; plus
(vi) with respect to the Payment Date in March, 2027, the Scheduled
Principal Balance of the Adjustable Rate Contracts.
"Class HE: A-1ARM Pass-Through Rate" means a floating rate equal to the
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lesser of (a) LIBOR plus the Pass-Through Margin, or (b) the Available Funds
Pass-Through Rate, but in no case more than 14%, computed on the basis of actual
days elapsed in a year of 360 days.
"Class HE: A-1ARM Principal Balance" means, as to any Payment Date, the
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Original Class HE: A-1ARM Principal Balance less all amounts previously
distributed to Holders of Class HE: A-1ARM Certificates in respect of principal.
"Class HE: A-1 Certificate" means any one of the Class HE: A-1 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit D-1 and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
1-6
"Class HE: A-1 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-1 Certificateholders pursuant to Section 8.04(d) on such Payment Date.
"Class HE: A-1 Pass-Through Rate" means 5.99% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: A-1 Principal Balance" means, as to any Payment Date, the
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Original Class HE: A-1 Principal Balance less all amounts previously distributed
to Holders of Class HE: A-1 Certificates in respect of principal.
"Class HE: A-2 Certificate" means any one of the Class HE: A-2 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit D-1 and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: A-2 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-2 Certificateholders pursuant to Section 8.04(d) on such Payment Date.
"Class HE: A-2 Pass-Through Rate" means 6.32% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: A-2 Principal Balance" means, as to any Payment Date, the
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Original Class HE: A-2 Principal Balance less all amounts previously distributed
to Holders of Class HE: A-2 Certificates in respect of principal.
"Class HE: A-3 Certificate" means any one of the Class HE: A-3 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit D-1 and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: A-3 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-3 Certificateholders pursuant to Section 8.04(d) on such Payment Date.
"Class HE: A-3 Pass-Through Rate" means 6.62% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: A-3 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HE: A-3 Principal Balance less all amounts previously distributed
to Holders of Class HE: A-3 Certificates in respect of principal.
1-7
"Class HE: A-4 Certificate" means any one of the Class HE: A-4 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit D-1 and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: A-4 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-4 Certificateholders pursuant to Section 8.04(d) on such Payment Date.
"Class HE: A-4 Pass-Through Rate" means 6.85% per annum, computed on the
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basis of a 360-day year of twelve 30-day months.
"Class HE: A-4 Principal Balance" means, as to any Payment Date, the
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Original Class HE: A-4 Principal Balance less all amounts previously distributed
to Holders of Class HE: A-4 Certificates in respect of principal.
"Class HE: A-5 Certificate" means any one of the Class HE: A-5 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit D-1 and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: A-5 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-5 Certificateholders pursuant to Section 8.04(d) on such Payment Date.
"Class HE: A-5 Pass-Through Rate" means 7.21% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: A-5 Principal Balance" means, as to any Payment Date, the
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Original Class HE: A-5 Principal Balance less all amounts previously distributed
to Holders of Class HE: A-5 Certificates in respect of principal.
"Class HE: A-6 Certificate" means any one of the Class HE: A-6 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit D-1 and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: A-6 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HE: A Distribution Amount to be distributed to the Class
HE: A-6 Certificateholders pursuant to Section 8.04(d) on such Payment Date.
1-8
"Class HE: A-6 Lockout Percentage" means, as to any Payment Date
--------------------------------
occurring during the periods set forth below, the percentage designated as
such as follows:
Period (dates inclusive) Class HE: A-6 Lockout Percentage
------------------------ --------------------------------
April 1997 through March 2000 0%
April 2000 through March 2002 20%
April 2002 through March 2003 80%
April 2003 through March 2004 100%
April 2004 and thereafter 300%
"Class HE: A-6 Lockout Remittance Amount" means, as to any Payment
---------------------------------------
Date, an amount equal to the lesser of:
(a) the product of (1) the Class HE: A-6 Lockout Percentage, and
(2) the product of (A) a fraction, the numerator of which is the Class
HE: A-6 Principal Balance immediately preceding such Payment Date and
the denominator of which is the Class HE: A Principal Balance less the
Class HE: A-1ARM Principal Balance, immediately preceding such Payment
Date, and (B) the Sub-Pool HE Senior Percentage of the Sub-Pool HE
Formula Principal Distribution Amount for such Payment Date, and
(b) the Class HE: A-6 Principal Balance immediately preceding
such Payment Date.
"Class HE: A-6 Pass-Through Rate" means 7.16% per annum, computed on
-------------------------------
the basis of a 360-day year of twelve 30-day months.
"Class HE: A-6 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HE: A-6 Principal Balance less all amounts previously
distributed to Holders of Class HE: A-6 Certificates in respect of
principal.
"Class HE: B Certificates" means the Class HE: B-1 and Class HE: B-2
------------------------
Certificates, collectively.
"Class HE: B Cross-over date" means the earlier of:
---------------------------
(a) the Eighth Cross-over date, and
(b) the first Payment Date on or after the Payment Date
occurring in April 2000 on which the fraction, expressed as a
percentage, the numerator of which is the Class HE: B Principal
Balance as of such Payment Date and the
1-9
denominator of which is the Pool Scheduled Principal Balance of Sub-Pool HE
as of the immediately preceding Payment Date, is equal to or greater than
10.0%.
"Class HE: B Percentage" means 100% minus the Sub-Pool HE Senior
----------------------
Percentage.
"Class HE: B Principal Balance" means, as to any Payment Date, the sum of
-----------------------------
the Class HE: B-1 Principal Balance and the Class HE: B-2 Principal Balance.
"Class HE: B Principal Balance Test" means, to be considered "satisfied"
----------------------------------
for any Payment Date, that the fraction, expressed as a percentage, the
numerator of which is the Class HE: B Principal Balance as of such Payment Date
and the denominator of which is the Pool Scheduled Principal Balance of Sub-Pool
HE as of the immediately preceding Payment Date, is equal to or greater than
10.0%.
"Class HE: B Principal Distribution Test" means, as to any Payment Date,
---------------------------------------
each of the Sub-Pool HE Average Sixty-Day Delinquency Ratio Test, the Sub-Pool
HE Average Thirty-Day Delinquency Ratio Test, the Sub-Pool HE Cumulative
Realized Losses Test, the Class HE: B Principal Balance Test and the Sub-Pool HE
Current Realized Losses Test.
"Class HE: B-1 Certificate" means any one of the Class HE: B-1 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit F and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: B-1 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Sub-Pool HE Amount Available less the sum of the Class HE: A
Distribution Amount, the Class HE: M-1 Distribution Amount and the Class HE: M-2
Distribution Amount, and (b) the Class HE: B-1 Formula Distribution Amount;
provided that after the Ninth Cross-over date the Class HE: B-1 Distribution
--------
Amount shall be zero.
"Class HE: B-1 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HE: B-1 Pass-Through Rate on the excess of the
Class HE: B-1 Principal Balance over the Class HE: B-1 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HE: B-1
Interest Shortfall, and (c) if such Payment Date is on or prior to the Ninth
Cross-over date, the Class HE: B Percentage of the Sub-Pool HE Formula Principal
Distribution Amount; provided, however, that on the Eighth Cross-over date, the
-------- -------
balance of any amounts that would have been distributable on such
1-10
date pursuant to clause (c) of the definition of the term "Class HE: M-2 Formula
Distribution Amount" (assuming a sufficient Sub-Pool HE Amount Available) but
for the operation of the second proviso in such definition shall instead be
included in clause (c) of this definition; and provided, further, that the
-------- -------
aggregate of all amounts distributed pursuant to clause (c) of this definition
shall not exceed the Original Class HE: B-1 Principal Balance.
"Class HE: B-1 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HE: B-1 Formula Distribution Amount" and (b) the
Unpaid Class HE: B-1 Interest Shortfall, if any.
"Class HE: B-1 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HE: B-1 Pass-Through Rate on the Class
HE: B-1 Liquidation Loss Principal Amount, to be calculated immediately prior to
such Payment Date on the basis of a 360-day year of twelve 30-day months, and
(b) the Unpaid Class HE: B-1 Liquidation Loss Interest Shortfall, if any.
"Class HE: B-1 Interest Deficiency Amount" means, as to any Payment Date,
----------------------------------------
the amount, if any, by which (a) the Class HE: B-1 Formula Interest Distribution
Amount exceeds (b) the amount available for distribution to the Class HE: B-1
Certificateholders pursuant to Sections 8.04(d)(6)(i) and (ii) on such Payment
Date.
"Class HE: B-1 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HE: B-1 Formula Interest Distribution
Amount exceeds (b) the sum of (1) the amount distributed to Class HE: B-1
Certificateholders on such Payment Date pursuant to Sections 8.04(d)(6)(i) and
(ii), and (2) the amount distributed to Class HE: B-1 Certificateholders on such
Payment Date pursuant to Section 8.04(e).
"Class HE: B-1 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which (a) the Class HE: B-1 Formula
Liquidation Loss Interest Distribution Amount exceeds (b) the amount distributed
to Class HE: B-1 Certificateholders on such Payment Date pursuant to Section
8.04(d)(8)(iii).
"Class HE: B-1 Liquidation Loss Principal Amount" means, as to any Payment
-----------------------------------------------
Date, the lesser of (a) the excess, if any, of the Sub-Pool HE Aggregate
Liquidation Loss Principal Amount over the Class HE: B-2 Principal Balance, and
(b) the Class HE: B-1 Principal Balance.
1-11
"Class HE: B-1 Pass-Through Rate" means 7.87% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: B-1 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HE: B-1 Principal Balance less all amounts previously distributed
to Holders of Class HE: B-1 Certificates in respect of principal.
"Class HE: B-2 Certificate" means any one of the Class HE: B-2 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit F and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: B-2 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Class HE: B-2 Remaining Sub-Pool HE Amount Available, and (b)
the Class HE: B-2 Formula Distribution Amount.
"Class HE: B-2 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HE: B-2 Pass-Through Rate on the excess of the
Class HE: B-2 Principal Balance over the Class HE: B-2 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HE: B-2
Interest Shortfall, and (c) if such Payment Date is after the Ninth Cross-over
date, the Class HE: B Percentage of the Sub-Pool HE Formula Principal
Distribution Amount; provided, however, that on the Ninth Cross-over date, the
-------- -------
balance of any amounts that would have been distributable on such date pursuant
to clause (c) of the definition of the term "Class HE: B-1 Formula Distribution
Amount" (assuming a sufficient Sub-Pool HE Amount Available) but for the
operation of the second proviso in such definition shall instead be included in
clause (c) of this definition; and provided, further, that the aggregate of all
-------- -------
amounts distributed pursuant to clause (c) of this definition shall not exceed
the Original Class HE: B-2 Principal Balance.
"Class HE: B-2 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HE: B-2 Formula Distribution Amount" and (b) the
Unpaid Class HE: B-2 Interest Shortfall, if any.
"Class HE: B-2 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HE: B-2 Pass-Through Rate on the Class
HE: B-2 Liquidation Loss Principal
1-12
Amount, to be calculated immediately prior to such Payment Date on the basis of
a 360-day year of twelve 30-day months, and (b) the Unpaid Class HE: B-2
Liquidation Loss Interest Shortfall, if any.
"Class HE: B-2 Guarantee Fee" means, as of any Payment Date, the lesser of
---------------------------
(a) one-twelfth of the product of 3.00% and the Pool Scheduled Principal Balance
for Sub-Pool HE for the immediately preceding Payment Date, or (b) the Sub-Pool
HE Amount Available less the amounts payable under Sections 8.04(d)(1)-(13).
"Class HE: B-2 Guaranty Payment" means, as to any Payment Date, the
------------------------------
amount, if any, by which (a) the sum of the Class HE: B-2 Total Formula
Distribution Amount and the Class HE: B-2 Liquidation Loss Principal Amount
exceeds (b) the Class HE: B-2 Total Distribution Amount.
"Class HE: B-2 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HE: B-2 Formula Interest Distribution
Amount exceeds (b) the sum of the amount distributed to Class HE: B-2
Certificateholders on such Payment Date pursuant to Sections 8.04(d)(7)(i) and
(ii) and any Class HE: B-2 Guaranty Payment.
"Class HE: B-2 Limited Guaranty" means the limited guaranty of the Company
------------------------------
provided pursuant to Section 8.03(b).
"Class HE: B-2 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which the Class HE: B-2 Formula Liquidation
Loss Interest Distribution Amount exceeds (a) the sum of (1) the Class HE: B-2
Total Formula Distribution Amount and (2) the Class HE: B-2 Liquidation Loss
Principal Amount less (b) the sum of (1) the Class HE: B-2 Total Distribution
Amount, (2) any Class HE: B-2 Guaranty Payment and (3) any Class HE: B-2
Interest Shortfall.
"Class HE: B-2 Liquidation Loss Principal Amount" means, as to any Payment
-----------------------------------------------
Date, the lesser of the Sub-Pool HE Aggregate Liquidation Loss Principal Amount
and the Class HE: B-2 Principal Balance.
"Class HE: B-2 Pass-Through Rate" means 8.08% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: B-2 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HE: B-2 Principal Balance less all amounts previously distributed
to Holders of Class HE: B-2 Certificates in respect of principal.
1-13
"Class HE: B-2 Total Formula Distribution Amount" means, as to any Payment
-----------------------------------------------
Date, the sum of the Class HE: B-2 Formula Distribution Amount and the Class HE:
B-2 Formula Liquidation Loss Interest Distribution Amount.
"Class HE: B-2 Total Distribution Amount" means, as to any Payment Date,
---------------------------------------
the sum of the Class HE: B-2 Distribution Amount and amounts distributed on such
Payment Date pursuant to Section 8.04(d)(8)(iv).
"Class HE: M Certificates" means the Class HE: M-1 and Class HE: M-2
------------------------
Certificates, collectively.
"Class HE: M Principal Balance" means, as to any Payment Date, the sum of
-----------------------------
the Class HE: M-1 Principal Balance and the Class HE: M-2 Principal Balance.
"Class HE: M-1 Certificate" means any one of the Class HE: M-1 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit E and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: M-1 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Sub-Pool HE Amount Available less the Class HE: A Distribution
Amount and (b) the Class HE: M-1 Formula Distribution Amount; provided that
--------
after the Seventh Cross-over date the Class HE: M-1 Distribution Amount shall be
zero.
"Class HE: M-1 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HE: M-1 Pass-Through Rate on the excess of the
Class HE: M-1 Principal Balance over the Class HE: M-1 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HE: M-1
Interest Shortfall and (c) if such Payment Date is after the Sixth Cross-over
date, but on or prior to the Seventh Cross-over date, the Sub-Pool HE Senior
Percentage of the Sub-Pool HE Formula Principal Distribution Amount; provided,
--------
however, that on the Sixth Cross-over date, the balance of any amounts that
-------
would have been distributable on such date pursuant to clause (c) of the
definition of the term "Class HE: A Formula Distribution Amount" (assuming a
sufficient Sub-Pool HE Amount Available) but for the operation of the proviso in
such definition shall instead be included in clause (c) of this definition; and
provided, further, that the aggregate of all amounts distributed for all Payment
-------- -------
Dates pursuant to clause (c) of this definition shall not exceed the Original
Class HE: M-1 Principal Balance.
1-14
"Class HE: M-1 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HE: M-1 Formula Distribution Amount" and (b) the
Unpaid Class HE: M-1 Interest Shortfall, if any.
"Class HE: M-1 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HE: M-1 Pass-Through Rate on the Class
HE: M-1 Liquidation Loss Principal Amount, to be calculated immediately prior to
such Payment Date on the basis of a 360-day year of twelve 30-day months, and
(b) the Unpaid Class HE: M-1 Liquidation Loss Interest Shortfall, if any.
"Class HE: M-1 Interest Deficiency Amount" means, as to any Payment Date,
----------------------------------------
the amount, if any, by which (a) the Class HE: M-1 Formula Interest Distribution
Amount exceeds (b) the amount available for distribution to the Class HE: M-1
Certificateholders pursuant to Sections 8.04(d)(4)(i) and (ii) on such Payment
Date.
"Class HE: M-1 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HE: M-1 Formula Interest Distribution
Amount exceeds (b) the sum of (1) the amount distributed to Class HE: M-1
Certificateholders on such Payment Date pursuant to Sections 8.04(d)(4)(i) and
(ii), and (2) the amount distributed to Class HE: M-1 Certificateholders on such
Payment Date pursuant to Section 8.04(e).
"Class HE: M-1 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which (a) the Class HE: M-1 Formula
Liquidation Loss Interest Distribution Amount exceeds (b) any amount distributed
to Class HE: M-1 Certificateholders on such Payment Date pursuant to Section
8.04(d)(8)(i).
"Class HE: M-1 Liquidation Loss Principal Amount" means, as of any Payment
-----------------------------------------------
Date, the lesser of (a) the excess, if any, of the Sub-Pool HE Aggregate
Liquidation Loss Principal Amount over the aggregate of the Class HE: M-2
Principal Balance and the Class HE: B Principal Balance, and (b) the Class HE:
M-1 Principal Balance.
"Class HE: M-1 Pass-Through Rate" means 7.71% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: M-1 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HE: M-1 Principal Balance less all amounts previously distributed
to Holders of Class HE: M-1 Certificates in respect of principal.
1-15
"Class HE: M-2 Certificate" means any one of the Class HE: M-2 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit E and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HE: M-2 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Sub-Pool HE Amount Available less the Class HE: A Distribution
Amount and the Class HE: M-1 Distribution Amount and (b) the Class HE: M-2
Formula Distribution Amount; provided that after the Eighth Cross-over date the
--------
Class HE: M-2 Distribution Amount shall be zero.
"Class HE: M-2 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HE: M-2 Pass-Through Rate on the excess of the
Class HE: M-2 Principal Balance over the Class HE: M-2 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HE: M-2
Interest Shortfall and (c) if such Payment Date is after the Seventh Cross-over
date, but on or prior to the Eighth Cross-over date, the Sub-Pool HE Senior
Percentage of the Sub-Pool HE Formula Principal Distribution Amount; provided,
--------
however, that on the Seventh Cross-over date, the balance of any amounts that
-------
would have been distributable on such date pursuant to clause (c) of the
definition of the term "Class HE: M-1 Formula Distribution Amount" (assuming a
sufficient Sub-Pool HE Amount Available) but for the operation of the proviso in
such definition shall instead be included in clause (c) of this definition; and
provided, further, that the aggregate of all amounts distributed for all Payment
-------- -------
Dates pursuant to clause (c) of this definition shall not exceed the Original
Class HE: M-2 Principal Balance.
"Class HE: M-2 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HE: M-2 Formula Distribution Amount" and (b) the
Unpaid Class HE: M-2 Interest Shortfall, if any.
"Class HE: M-2 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HE: M-2 Pass-Through Rate on the Class
HE: M-2 Liquidation Loss Principal Amount, to be calculated immediately prior to
such Payment Date on the basis of a 360-day year of twelve 30-day months, and
(b) the Unpaid Class HE: M-2 Liquidation Loss Interest Shortfall, if any.
1-16
"Class HE: M-2 Interest Deficiency Amount" means, as to any Payment Date,
----------------------------------------
the amount, if any, by which (a) the Class HE: M-2 Formula Interest Distribution
Amount exceeds (b) the amount available for distribution to the Class HE: M-2
Certificateholders pursuant to Sections 8.04(d)(5)(i) and (ii) on such Payment
Date.
"Class HE: M-2 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HE: M-2 Formula Interest Distribution
Amount, exceeds (b) the sum of (1) the amount distributed to Class HE: M-2
Certificateholders on such Payment Date pursuant to Sections 8.04(d)(5)(i) and
(ii), and (2) the amount distributed to Class HE: M-2 Certificateholders on such
Payment Date pursuant to Section 8.04(e).
"Class HE: M-2 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which the Class HE: M-2 Formula Liquidation
Loss Interest Distribution Amount exceeds any amount distributed to Class HE: M-
2 Certificateholders on such Payment Date pursuant to Section 8.04(d)(8)(iv).
"Class HE: M-2 Liquidation Loss Principal Amount" means the lesser of (a)
-----------------------------------------------
the excess, if any, of the Sub-Pool HE Aggregate Liquidation Loss Principal
Amount over the Class HE: B Principal Balance, and (b) the Class HE: M-2
Principal Balance.
"Class HE: M-2 Pass-Through Rate" means 7.90% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HE: M-2 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HE: M-2 Principal Balance less all amounts previously distributed
to Holders of Class HE: M-2 Certificates in respect of principal.
"Class HI: A Certificates" means the Class HI: A-1, Class HI: A-2, and
------------------------
Class HI: A-3 Certificates, collectively.
"Class HI: A Distribution Amount" means, as to any Payment Date, the lesser
-------------------------------
of (a) the Sub-Pool HI Amount Available and (b) the Class HI: A Formula
Distribution Amount; provided that, after the Third Cross-over date, the Class
--------
HI: A Distribution Amount shall be zero.
"Class HI: A Formula Distribution Amount" means, as to any Payment Date, an
---------------------------------------
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding April 15,
1997) at (1) the Class HI: A-1 Pass-Through Rate on the Class HI: A-1 Principal
Balance, (2) the Class HI: A-2 Pass-Through Rate on the Class HI: A-2 Principal
Balance, and (3) the Class HI: A-3 Pass-Through Rate on the Class HI: A-3
Principal Balance, in each case to be calculated immediately prior to such
Payment Date on the basis of a 360-day year of
1-17
twelve thirty-day months, (b) the aggregate of the Unpaid Class HI: A Interest
Shortfalls, if any, with respect to each Class of Class HI: A Certificates, and
(c)(i) if there is no Class HI: A Liquidation Loss Principal Amount as to such
Payment Date, the Sub-Pool HI Senior Percentage of the Sub-Pool HI Formula
Principal Distribution Amount, or (ii) if there is a Class HI: A Liquidation
Loss Principal Amount as to such Payment Date, the amount determined in
accordance with Section 8.04(b)(3)(i); provided, however, that the aggregate of
-------- -------
all amounts distributed for all Payment Dates pursuant to clause (c) shall not
exceed the sum of the Original Class HI: A-l Principal Balance, the Original
Class HI: A-2 Principal Balance and the Original Class HI: A-3 Principal
Balance.
"Class HI: A Formula Interest Distribution Amount" means, as to each Class
------------------------------------------------
of Class HI: A Certificates and any Payment Date, the sum of (a) the amount
specified in clause (a)(1), (2) or (3), as appropriate, of the definition of the
term "Class HI: A Formula Distribution Amount" and (2) the Unpaid Class HI: A
Interest Shortfall, if any, with respect to such Class.
"Class HI: A Interest Shortfall" means, as to each Class of Class HI: A
------------------------------
Certificates and any Payment Date, the amount, if any, by which the Class HI: A
Formula Interest Distribution Amount for such Class exceeds the amount
distributed to Holders of such Class on such Payment Date pursuant to Section
8.04(b)(2).
"Class HI: A Liquidation Loss Principal Amount" means, as to any Payment
---------------------------------------------
Date, the amount, if any, by which the Pool Scheduled Principal Balance of Sub-
Pool HI is less than the Class HI: A Principal Balance.
"Class HI: A Principal Balance" means, as to any Payment Date, the sum of
-----------------------------
the Class HI: A-1 Principal Balance, the Class HI: A-2 Principal Balance and the
Class HI: A-3 Principal Balance.
"Class HI: A-1 Certificate" means any one of the Class HI: A-1 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: A-1 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HI: A Distribution Amount to be distributed to the Class
HI: A-1 Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class HI: A-1 Pass-Through Rate" means 6.30% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
1-18
"Class HI: A-1 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: A-1 Principal Balance less all amounts previously distributed
to Holders of Class HI: A-1 Certificates in respect of principal.
"Class HI: A-2 Certificate" means any one of the Class HI: A-2 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: A-2 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HI: A Distribution Amount to be distributed to the Class
HI: A-2 Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class HI: A-2 Pass-Through Rate" means 6.75% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HI: A-2 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: A-2 Principal Balance less all amounts previously distributed
to Holders of Class HI: A-2 Certificates in respect of principal.
"Class HI: A-3 Certificate" means any one of the Class HI: A-3 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: A-3 Distribution Amount" means, as to any Payment Date, that
---------------------------------
portion of the Class HI: A Distribution Amount to be distributed to the Class
HI: A-3 Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class HI: A-3 Pass-Through Rate" means 7.05% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HI: A-3 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: A-3 Principal Balance less all amounts previously distributed
to Holders of Class HI: A-3 Certificates in respect of principal.
"Class HI: B Certificates" means the Class HI: B-1 and Class HI: B-2
------------------------
Certificates, collectively.
"Class HI: B Cross-over date" means the earlier of:
---------------------------
(a) the Fifth Cross-over date, and
1-19
(b) the first Payment Date on or after the Payment Date occurring in April
2000 on which the fraction, expressed as a percentage, the numerator of which is
the Class HI: B Principal Balance as of such Payment Date and the denominator of
which is the Pool Scheduled Principal Balance of Sub-Pool HI as of the
immediately preceding Payment Date, is equal to or greater than 14.0%.
"Class HI: B Percentage" means 100% minus the Sub-Pool HI Senior
----------------------
Percentage.
"Class HI: B Principal Balance" means, as to any Payment Date, the sum of
-----------------------------
the Class HI: B-1 Principal Balance and the Class HI: B-2 Principal Balance.
"Class HI: B Principal Balance Test" means, to be considered "satisfied"
----------------------------------
for any Payment Date, that the fraction, expressed as a percentage, the
numerator of which is the Class HI: B Principal Balance as of such Payment Date
and the denominator of which is the Pool Scheduled Principal Balance of Sub-Pool
HI as of the immediately preceding Payment Date, is equal to or greater than
14.0%.
"Class HI: B Principal Distribution Test" means, as to any Payment Date,
---------------------------------------
each of the Sub-Pool HI Average Sixty-Day Delinquency Ratio Test, the Sub-Pool
HI Average Thirty-Day Delinquency Ratio Test, the Sub-Pool HI Cumulative
Realized Losses Test, the Class HI: B Principal Balance Test and the Sub-Pool HI
Current Realized Losses Test.
"Class HI: B-1 Certificate" means any one of the Class HI: B-1 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: B-1 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Sub-Pool HI Amount Available less the sum of the Class HI: A
Distribution Amount, the Class HI: M-1 Distribution Amount and the Class HI: M-2
Distribution Amount, and (b) the Class HI: B-1 Formula Distribution Amount;
provided that after the Sixth Cross-over date the Class HI: B-1 Distribution
--------
Amount shall be zero.
"Class HI: B-1 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HI: B-1 Pass-Through Rate on the excess of the
Class HI: B-1 Principal Balance over the Class HI: B-1 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HI: B-1
Interest Shortfall, and (c) if such Payment Date is on or prior to the Sixth
Cross-over date, the Class HI: B Percentage of the Sub-Pool HI Formula
1-20
Principal Distribution Amount; provided, however, that on the Fifth Cross-over
-------- -------
date, the balance of any amounts that would have been distributable on such date
pursuant to clause (c) of the definition of the term "Class HI: M-2 Formula
Distribution Amount" (assuming a sufficient Sub-Pool HI Amount Available) but
for the operation of the second proviso in such definition shall instead be
included in clause (c) of this definition; and provided, further, that the
-------- -------
aggregate of all amounts distributed pursuant to clause (c) of this definition
shall not exceed the Original Class HI: B-1 Principal Balance.
"Class HI: B-1 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HI: B-1 Formula Distribution Amount" and (b) the
Unpaid Class HI: B-1 Interest Shortfall, if any.
"Class HI: B-1 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HI: B-1 Pass-Through Rate on the Class
HI: B-1 Liquidation Loss Principal Amount, to be calculated immediately prior to
such Payment Date on the basis of a 360-day year of twelve 30-day months, and
(b) the Unpaid Class HI: B-1 Liquidation Loss Interest Shortfall, if any.
"Class HI: B-1 Interest Deficiency Amount" means, as to any Payment Date,
----------------------------------------
the amount, if any, by which (a) the Class HI: B-1 Formula Interest Distribution
Amount exceeds (b) the amount available for distribution to the Class HI: B-1
Certificateholders pursuant to Sections 8.04(b)(6)(i) and (ii) on such Payment
Date.
"Class HI: B-1 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HI: B-1 Formula Interest Distribution
Amount exceeds (b) the sum of (1) the amount distributed to Class HI: B-1
Certificateholders on such Payment Date pursuant to Sections 8.04(b)(6)(i) and
(ii), and (2) the amount distributed to Class HI: B-1 Certificateholders on such
Payment Date pursuant to Section 8.04(c).
"Class HI: B-1 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which (a) the Class HI: B-1 Formula
Liquidation Loss Interest Distribution Amount exceeds (b) the amount distributed
to Class HI: B-1 Certificateholders on such Payment Date pursuant to Section
8.04(b)(8)(iii).
"Class HI: B-1 Liquidation Loss Principal Amount" means, as to any Payment
-----------------------------------------------
Date, the lesser of (a) the excess, if any, of the Sub-Pool HI Aggregate
Liquidation Loss Principal Amount over the Class HI: B-2 Principal Balance, and
(b) the Class HI: B-1 Principal Balance.
1-21
"Class HI: B-1 Pass-Through Rate" means 7.58% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HI: B-1 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: B-1 Principal Balance less all amounts previously distributed
to Holders of Class HI: B-1 Certificates in respect of principal.
"Class HI: B-2 Certificate" means any one of the Class HI: B-2 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: B-2 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Class HI: B-2 Remaining Sub-Pool HI Amount Available, and (b)
the Class HI: B-2 Formula Distribution Amount.
"Class HI: B-2 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HI: B-2 Pass-Through Rate on the excess of the
Class HI: B-2 Principal Balance over the Class HI: B-2 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HI: B-2
Interest Shortfall, and (c) if such Payment Date is after the Sixth Cross-over
date, the Class HI: B Percentage of the Sub-Pool HI Formula Principal
Distribution Amount; provided, however, that on the Sixth Cross-over date, the
-------- -------
balance of any amounts that would have been distributable on such date pursuant
to clause (c) of the definition of the term "Class HI: B-1 Formula Distribution
Amount" (assuming a sufficient Sub-Pool HI Amount Available) but for the
operation of the second proviso in such definition shall instead be included in
clause (c) of this definition; and provided, further, that the aggregate of all
-------- -------
amounts distributed pursuant to clause (c) of this definition shall not exceed
the Original Class HI: B-2 Principal Balance.
"Class HI: B-2 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HI: B-2 Formula Distribution Amount" and (b) the
Unpaid Class HI: B-2 Interest Shortfall, if any.
"Class HI: B-2 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HI: B-2 Pass-Through Rate on the Class
HI: B-2 Liquidation Loss Principal Amount, to be calculated immediately prior to
such Payment Date on the basis of a
1-22
360-day year of twelve 30-day months, and (b) the Unpaid Class HI: B-2
Liquidation Loss Interest Shortfall, if any.
"Class HI: B-2 Guarantee Fee" means, as of any Payment Date, the lesser of
---------------------------
(a) one-twelfth of the product of 3.00% and the Pool Scheduled Principal Balance
for Sub-Pool HI Contracts for the immediately preceding Payment Date, or (b) the
Sub-Pool HI Amount Available less the amounts payable under Sections 8.04(b)(1)-
(14).
"Class HI: B-2 Guaranty Payment" means, as to any Payment Date, the amount,
------------------------------
if any, by which (a) the sum of the Class HI: B-2 Total Formula Distribution
Amount and the Class HI: B-2 Liquidation Loss Principal Amount exceeds (b) the
Class HI: B-2 Total Distribution Amount.
"Class HI: B-2 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HI: B-2 Formula Interest Distribution
Amount exceeds (b) the sum of the amount distributed to Class HI: B-2
Certificateholders on such Payment Date pursuant to Sections 8.04(b)(7)(i) and
(ii) and any Class HI: B-2 Guaranty Payment.
"Class HI: B-2 Limited Guaranty" means the limited guaranty of the Company
------------------------------
provided pursuant to Section 8.03(a).
"Class HI: B-2 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which the Class HI: B-2 Formula Liquidation
Loss Interest Distribution Amount exceeds (a) the sum of (1) the Class HI: B-2
Total Formula Distribution Amount and (2) the Class HI: B-2 Liquidation Loss
Principal Amount less (b) the sum of (1) the Class HI: B-2 Total Distribution
Amount, (2) any Class HI: B-2 Guaranty Payment and (3) any Class HI: B-2
Interest Shortfall.
"Class HI: B-2 Liquidation Loss Principal Amount" means, as to any Payment
-----------------------------------------------
Date, the lesser of the Sub-Pool HI Aggregate Liquidation Loss Principal Amount
and the Class HI: B-2 Principal Balance.
"Class HI: B-2 Pass-Through Rate" means 7.90% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HI: B-2 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: B-2 Principal Balance less all amounts previously distributed
to Holders of Class HI: B-2 Certificates in respect of principal.
"Class HI: B-2 Total Formula Distribution Amount" means, as to any Payment
-----------------------------------------------
Date, the sum of the Class HI: B-2 Formula Distribution Amount and the Class HI:
B-2 Formula Liquidation Loss Interest Distribution Amount.
1-23
"Class HI: B-2 Total Distribution Amount" means, as to any Payment Date,
---------------------------------------
the sum of the Class HI: B-2 Distribution Amount and amounts distributed on such
Payment Date pursuant to Section 8.04(b)(8)(iv).
"Class HI: M Certificates" means the Class HI: M-1 and Class HI: M-2
------------------------
Certificates, collectively.
"Class HI: M Principal Balance" means, as to any Payment Date, the sum of
-----------------------------
the Class HI: M-1 Principal Balance and the Class HI: M-2 Principal Balance.
"Class HI: M-1 Certificate" means any one of the Class HI: M-1 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: M-1 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Sub-Pool HI Amount Available less the Class HI: A Distribution
Amount and (b) the Class HI: M-1 Formula Distribution Amount; provided that
--------
after the Fourth Cross-over date the Class HI: M-1 Distribution Amount shall be
zero.
"Class HI: M-1 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HI: M-1 Pass-Through Rate on the excess of the
Class HI: M-1 Principal Balance over the Class HI: M-1 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HI: M-1
Interest Shortfall and (c) if such Payment Date is after the Third Cross-over
date, but on or prior to the Fourth Cross-over date, the Sub-Pool HI Senior
Percentage of the Sub-Pool HI Formula Principal Distribution Amount; provided,
--------
however, that on the Third Cross-over date, the balance of any amounts that
-------
would have been distributable on such date pursuant to clause (c) of the
definition of the term "Class HI: A Formula Distribution Amount" (assuming a
sufficient Sub-Pool HI Amount Available) but for the operation of the proviso in
such definition shall instead be included in clause (c) of this definition; and
provided, further, that the aggregate of all amounts distributed for all Payment
-------- -------
Dates pursuant to clause (c) of this definition shall not exceed the Original
Class HI: M-1 Principal Balance.
"Class HI: M-1 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HI: M-1 Formula Distribution Amount" and (b) the
Unpaid Class HI: M-1 Interest Shortfall, if any.
"Class HI: M-1 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at
1-24
the Class HI: M-1 Pass-Through Rate on the Class HI: M-1 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, and (b) the Unpaid Class HI: M-
1 Liquidation Loss Interest Shortfall, if any.
"Class HI: M-1 Interest Deficiency Amount" means, as to any Payment Date,
----------------------------------------
the amount, if any, by which (a) the Class HI: M-1 Formula Interest Distribution
Amount exceeds (b) the amount available for distribution to the Class HI: M-1
Certificateholders pursuant to Sections 8.04(b)(4)(i) and (ii) on such Payment
Date.
"Class HI: M-1 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HI: M-1 Formula Interest Distribution
Amount exceeds (b) the sum of (1) the amount distributed to Class HI: M-1
Certificateholders on such Payment Date pursuant to Sections 8.04(b)(4)(i) and
(ii), and (2) the amount distributed to Class HI: M-1 Certificateholders on such
Payment Date pursuant to Section 8.04(c).
"Class HI: M-1 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which (a) the Class HI: M-1 Formula
Liquidation Loss Interest Distribution Amount exceeds (b) any amount distributed
to Class HI: M-1 Certificateholders on such Payment Date pursuant to Section
8.04(b)(8)(i).
"Class HI: M-1 Liquidation Loss Principal Amount" means, as of any Payment
-----------------------------------------------
Date, the lesser of (a) the excess, if any, of the Sub-Pool HI Aggregate
Liquidation Loss Principal Amount over the aggregate of the Class HI: M-2
Principal Balance and the Class HI: B Principal Balance, and (b) the Class HI:
M-1 Principal Balance.
"Class HI: M-1 Pass-Through Rate" means 7.47% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HI: M-1 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: M-1 Principal Balance less all amounts previously distributed
to Holders of Class HI: M-1 Certificates in respect of principal.
"Class HI: M-2 Certificate" means any one of the Class HI: M-2 Certificates
-------------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class HI: M-2 Distribution Amount" means, as to any Payment Date, the
---------------------------------
lesser of (a) the Sub-Pool HI Amount Available less the Class HI: A Distribution
Amount and the Class HI: M-1 Distribution Amount and (b) the Class HI: M-2
Formula Distribution Amount; provided that after the Fifth Cross-over date the
--------
Class HI: M-2 Distribution Amount shall be zero.
1-25
"Class HI: M-2 Formula Distribution Amount" means, as to any Payment Date,
-----------------------------------------
an amount equal to the sum of (a) one month's interest (or, as to the first
Payment Date, interest from and including the Closing Date to but excluding
April 15, 1997) at the Class HI: M-2 Pass-Through Rate on the excess of the
Class HI: M-2 Principal Balance over the Class HI: M-2 Liquidation Loss
Principal Amount, to be calculated immediately prior to such Payment Date on the
basis of a 360-day year of twelve 30-day months, (b) any Unpaid Class HI: M-2
Interest Shortfall and (c) if such Payment Date is after the Fourth Cross-over
date, but on or prior to the Fifth Cross-over date, the Sub-Pool HI Senior
Percentage of the Sub-Pool HI Formula Principal Distribution Amount; provided,
--------
however, that on the Fourth Cross-over date, the balance of any amounts that
-------
would have been distributable on such date pursuant to clause (c) of the
definition of the term "Class HI: M-1 Formula Distribution Amount" (assuming a
sufficient Sub-Pool HI Amount Available) but for the operation of the proviso in
such definition shall instead be included in clause (c) of this definition; and
provided, further, that the aggregate of all amounts distributed for all Payment
-------- -------
Dates pursuant to clause (c) of this definition shall not exceed the Original
Class HI: M-2 Principal Balance.
"Class HI: M-2 Formula Interest Distribution Amount" means, as to any
--------------------------------------------------
Payment Date, the sum of (a) the amount specified in clause (a) of the
definition of the term "Class HI: M-2 Formula Distribution Amount" and (b) the
Unpaid Class HI: M-2 Interest Shortfall, if any.
"Class HI: M-2 Formula Liquidation Loss Interest Distribution Amount"
-------------------------------------------------------------------
means, as to any Payment Date, the sum of (a) one month's interest (or, as to
the first Payment Date, interest from and including the Closing Date to but
excluding April 15, 1997) at the Class HI: M-2 Pass-Through Rate on the Class
HI: M-2 Liquidation Loss Principal Amount, to be calculated immediately prior to
such Payment Date on the basis of a 360-day year of twelve 30-day months, and
(b) the Unpaid Class HI: M-2 Liquidation Loss Interest Shortfall, if any.
"Class HI: M-2 Interest Deficiency Amount" means, as to any Payment Date,
----------------------------------------
the amount, if any, by which (a) the Class HI: M-2 Formula Interest Distribution
Amount exceeds (b) the amount available for distribution to the Class HI: M-2
Certificateholders pursuant to Sections 8.04(b)(5)(i) and (ii) on such Payment
Date.
"Class HI: M-2 Interest Shortfall" means, as to any Payment Date, the
--------------------------------
amount, if any, by which (a) the Class HI: M-2 Formula Interest Distribution
Amount, exceeds (b) the sum of (1) the amount distributed to Class HI: M-2
Certificateholders on such Payment Date pursuant to Sections 8.04(b)(5)(i) and
(ii), and (2) the amount distributed to Class HI: M-2 Certificateholders on such
Payment Date pursuant to Section 8.04(c).
"Class HI: M-2 Liquidation Loss Interest Shortfall" means, as to any
-------------------------------------------------
Payment Date, the amount, if any, by which the Class HI: M-2 Formula Liquidation
Loss Interest Distribution Amount exceeds any amount distributed to Class HI: M-
2 Certificateholders on such Payment Date pursuant to Section 8.04(b)(8)(iv).
1-26
"Class HI: M-2 Liquidation Loss Principal Amount" means the lesser of (a)
-----------------------------------------------
the excess, if any, of the Sub-Pool HI Aggregate Liquidation Loss Principal
Amount over the Class HI: B Principal Balance, and (b) the Class HI: M-2
Principal Balance.
"Class HI: M-2 Pass-Through Rate" means 7.76% per annum, computed on the
-------------------------------
basis of a 360-day year of twelve 30-day months.
"Class HI: M-2 Principal Balance" means, as to any Payment Date, the
-------------------------------
Original Class HI: M-2 Principal Balance less all amounts previously distributed
to Holders of Class HI: M-2 Certificates in respect of principal.
"Class Principal Balance" means any of the Class HI: A-1, Class HI: A-2,
-----------------------
Class HI: A-3, Class HI: M-1, Class HI: M-2, Class HI: B-1, Class HI: B-2, Class
HE: A-1ARM, Class HE: A-1, Class HE: A-2, Class HE: A-3, Class HE: A-4, Class
HE: A-6, Class HE: M-1, Class HE: M-2, Class HE: B-1 or Class HE: B-2 Principal
Balances.
"Closing Date" means March 27, 1997.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Computer Tape" means the computer tape generated by the Company which
-------------
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contract File" means, as to each Contract, (a) the original copy of the
-------------
Contract which is comprised of the related contract and/or promissory note, (b)
the original or a copy of the mortgage, deed of trust or security deed or
similar evidence of a lien on the related improved property and evidence of due
recording of such mortgage, deed of trust or security deed, if available, (c) if
such Contract was originated by a contractor rather than the Company, the
original or a copy of an assignment of the mortgage, deed of trust or security
deed by the contractor to the Company and (d) a sale control document.
"Contract Interest Rate" means, as to any Contract, the annual rate of
----------------------
interest specified in the Contract.
"Contracts" means, collectively, the Home Improvement Contracts and the
---------
Home Equity Contracts.
"Corporate Trust Office" means the office of the Trustee at which at any
----------------------
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"Counsel for the Company" means Xxxxxx and Xxxxxx, Professional
-----------------------
Association, or other legal counsel for the Company.
1-27
"Custodian" means at any time an Eligible Institution, or a financial
---------
institution organized under the laws of the United States or any State, which is
not an Affiliate of the Company, which is subject to supervision and examination
by Federal or State authorities and whose commercial paper or unsecured long-
term debt (or, in the case of a member of a bank holding company system, the
commercial paper or unsecured long-term debt of such bank holding company) has
been rated A-1 by S&P and F-1 by Fitch in the case of commercial paper, or BBB+
or higher by both S&P and Fitch in the case of unsecured long-term debt, as is
acting at such time as Custodian of the Contract Files pursuant to Section 4.01.
"Cut-off Date" means February 28, 1997 (or the date of origination of the
------------
Contract, if later).
"Cut-off Date Pool Principal Balance" means, with respect to all Contracts
-----------------------------------
or the Contracts comprising a given Sub-Pool, the aggregate of the Cut-off Date
Principal Balances of all Contracts or the Contracts comprising such Sub-Pool,
as the case may be.
"Cut-off Date Principal Balance" means, (i) as to any Home Improvement
------------------------------
Contract, the unpaid principal balance thereof at the Cut-off Date after giving
effect to all installments of principal due prior thereto, and (ii) as to any
Home Equity Contract, the unpaid principal balance thereof after giving effect
to all installments of principal received prior thereto.
"Defaulted Contract" means a Contract with respect to which the Servicer
------------------
commenced foreclosure proceedings, made a sale of such Contract to a third party
for foreclosure or enforcement, or, in the case of an FHA-Insured Contract,
submitted a claim to FHA, or as to which there was a Delinquent Payment 180 or
more days past due.
"Definitive Certificates" has the meaning assigned in Section 9.02(e).
-----------------------
"Delinquent Payment" means, as to any Contract, with respect to any Due
------------------
Period, any payment or portion of a payment that was originally scheduled to be
made during such Due Period under such Contract (after giving effect to any
reduction in the principal amount deemed owed on such Contract by the Obligor,
as described in Section 6.01(a)(ii)) and was not received or applied during such
Due Period and deposited in the Certificate Account, whether or not any payment
extension has been granted by the Servicer; provided, however, that with respect
-----------------
to any Liquidated Contract, the payment scheduled to be made in the Due Period
in which such Contract became a Liquidated Contract shall not be deemed a
Delinquent Payment.
"Depository" means the initial Depository, The Depository Trust Company,
----------
the nominee of which is Cede & Co., as the registered Holder of (i) one Class
HI: A-1 Certificate evidencing $29,200,00 in Original Class HI: A-1 Principal
Balance, (ii)one Class HI: A-2 Certificate evidencing $18,000,000 in Original
Class HI: A-2 Principal
1-28
Balance, (iii) one Class HI: A-3 Certificate evidencing $21,018,000 in Original
Class HI: A-3 Principal Balance, (iv) one Class HI: M-1 Certificate evidencing
$6,821,000 Original Class HI: M-1 Principal Balance, (v) one Class HI: M-2
Certificate evidencing $4,264,000 in Original Class HI: M-2 Principal Balance,
(vi) one Class HI: B-1 Certificate evidencing $4,051,000 in Original Class HI:
B-1 Principal Balance, (vii) one Class HI: B-2 Certificate evidencing $1,919,230
in Original Class HI: B-2 Principal Balance, (viii) one Class HE: A-1ARM
Certificate evidencing $69,822,000 in Original Class HE: A-1ARM Principal
Balance, (ix) one Class HE: A-1 Certificate evidencing $41,500,000 in Original
Class HE: A-1 Principal Balance, (x) one Class HE: A-2 Certificate evidencing
$29,000,000 in Original Class HE: A-2 Principal Balance, (xi) one Class HE: A-3
Certificate evidencing $94,500,000 in Original Class HE: A-3 Principal Balance,
(xii) one Class HE: A-4 Certificate evidencing $25,000,000 in Original Class HE:
A-4 Principal Balance, (xiii) one Class HE: A-5 Certificate evidencing
$62,522,000 in Original Class HE: A-5 Principal Balance; (xiv) one Class HE: A-6
Certificate evidencing $51,000,000 in Original Class HE: A-6 Principal Balance,
(xv) one Class HE: M-1 Certificate evidencing $23,877,000 Original Class HE: M-1
Principal Balance, (xvi) one Class HE: M-2 Certificate evidencing $15,194,000 in
Original Class HE: M-2 Principal Balance, (xvii) one Class HE: B-1 Certificate
evidencing $15,194,000 in Original Class HE: B-1 Principal Balance, and (xviii)
one Class HE: B-2 Certificate evidencing $6,512,008 in Original Class HE: B-2
Principal Balance and any permitted successor depository. The Depository shall
at all times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the second Business Day preceding each Payment
------------------
Date during the term of this Agreement.
"Due Period" means a calendar month during the term of this Agreement.
----------
"Eighth Cross-over date" means with respect to the Sub-Pool HE
----------------------
Certificates, the Payment Date on which the Class HE: M-2 Principal Balance
(after giving effect to the distributions of principal on the Class HE: B-1
Certificates on such Payment Date) is reduced to zero.
"Electronic Ledger" means the electronic master record of conditional sales
-----------------
contracts and promissory notes of the Company.
"Eligible Account" means, at any time, an account which is any of the
----------------
following: (i) an account maintained with an Eligible Institution; (ii) an
account or accounts the deposits in which are fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a
trust account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal
1-29
or state chartered depository institution or trust company with trust powers and
acting in its fiduciary capacity for the benefit of the Trustee hereunder, which
depository institution or trust company shall have capital and surplus of not
less than $50,000,000; or (iv) an account that will not cause S&P or Fitch to
downgrade or withdraw its then-current rating assigned to the Certificates, as
evidenced in writing by S&P and Fitch.
"Eligible Institution" means any depository institution (which may be the
--------------------
Trustee or an Affiliate of the Trustee) organized under the laws of the United
States or any State, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or State authorities and whose short-
term deposits have been rated A-1 by S&P and F-1 by Fitch (if rated by Fitch) or
whose unsecured long-term debt has been rated in one of the two highest rating
categories by both S&P and Fitch (if rated by Fitch).
"Eligible Investments" has the meaning assigned in Section 5.05(b).
--------------------
"Eligible Servicer" means the Trustee or a Person qualified to act as
-----------------
servicer of the Contracts under applicable Federal and State laws and
regulations, which is a Title I approved lender under FHA regulations and which
services not less than an aggregate of $100,000,000 in outstanding principal
amount of FHA-insured home improvement contracts and promissory notes,
manufactured housing conditional sales contracts and installment loan agreements
and home equity loans.
"Eligible Substitute Contract" means, as to any Replaced Contract for which
----------------------------
such Eligible Substitute Contract is being substituted pursuant to Section
3.05(b), a Contract that (a) as of the date of its substitution, satisfies all
of the representations and warranties (which, except when expressly stated to be
as of origination, shall be deemed to be determined as of the date of its
substitution rather than as of the Cut-off Date or the Closing Date) in Section
3.02 and does not cause any of the representations and warranties in Section
3.03, after giving effect to such substitution, to be incorrect, (b) after
giving effect to the scheduled payment due in the month of such substitution,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of such Replaced Contract, (c) has a Contract Interest Rate
that is at least equal to the Contract Interest Rate of such Replaced Contract
(d) has a remaining term to scheduled maturity that is not greater than the
remaining term to scheduled maturity of the Replaced Contract, and (e) if an
Adjustable Rate Contract, bears interest at a Contract Interest Rate that (i) is
subject to adjustment based on the same index as the Replaced Contract, (ii) is
calculated by adding a specified percentage amount (the "gross margin") to the
index that is no less than the gross margin on the Replaced Contract, and (iii)
is subject to a minimum rate of interest no less than the minimum rate of
interest on the Replaced Contract and a maximum rate of interest no more than
1.0% greater than the rate of interest on the Replaced Contract.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
1-30
"Errors and Omissions Protection Policy" means the employee errors and
--------------------------------------
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
--------------------
"Expense Adjusted Mortgage Rate" means, with respect to any Adjustable Rate
------------------------------
Contract, the then applicable mortgage rate thereon, minus the Expense Fee Rate.
"Expense Fee Rate" means 0.75%.
----------------
"FHA" means the Federal Housing Administration, or any successor thereto.
---
"FHA Insurance" means the credit insurance provided by FHA pursuant to
-------------
Title I of the National Housing Act, as evidenced by the Company's Contract of
Insurance.
"FHA-Insured Contracts" means those Home Improvement Contracts that have
---------------------
been or are being reported to FHA as eligible for FHA Insurance, a list of which
is attached to this Agreement as Exhibit P.
"FHA Regulations" means the regulations promulgated by HUD relating to
---------------
Title I home improvement loans, currently found at 24 C.F.R. (S)201.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
-------------
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Contracts comprising a portion of the corpus of the Trust.
"Fifth Cross-over date" means (1) with respect to the Sub-Pool HI
---------------------
Certificates, the Payment Date on which the Class HI: M-2 Principal Balance
(after giving effect to the distributions of principal on the Class HI: M-2
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the Payment Date on which the Class HE: A-5
Principal Balance (after giving effect to the distributions of principal on the
Class HE: A-5 Certificates on such Payment Date) is reduced to zero.
"Final Payment Date" means the Payment Date on which the final distribution
------------------
in respect of Certificates will be made pursuant to Section 12.04.
"First Cross-over date" means (1) with respect to the Sub-Pool HI
---------------------
Certificates, the Payment Date on which the Class HI: A-1 Principal Balance
(after giving effect to the distributions of principal on the Class HI: A-1
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the Payment Date on which the Class HE: A-1
Principal Balance (after giving effect to the distributions of principal on the
Class HE: A-1 Certificates on such Payment Date) is reduced to zero.
1-31
"Fitch" means Fitch Investors Service, L.P., or any successor thereto;
-----
provided that, if Fitch no longer has a rating outstanding on any Class of the
--------
Certificates, then references herein to "Fitch" shall be deemed to refer to the
NRSRO then rating any Class of the Certificates (or, if more than one such NRSRO
is then rating any Class of the Certificates, to such NRSRO as may be designated
by the Servicer), and references herein to ratings by or requirements of Fitch
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Fourth Cross-over date" means (1) with respect to the Sub-Pool HI
----------------------
Certificates, the Payment Date on which the Class HI: M-1 Principal Balance
(after giving effect to the distributions of principal on the Class HI: M-1
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the Payment Date on which the Class HE: A-4
Principal Balance (after giving effect to the distributions of principal on the
Class HE: A-4 Certificates on such Payment Date) is reduced to zero.
"GNMA" means the Government National Mortgage Association, or any successor
----
thereto.
"Home Equity Contracts" means the home equity loans described in the List
---------------------
of Contracts attached hereto as Exhibit O-2 and the Adjustable Rate Contracts
described in the List of Contracts attached hereto as Exhibit O-3 and
constituting part of the corpus of the Trust, which Home Equity Contracts are to
be assigned and conveyed by the Company to the Trust, and includes, without
limitation, all related mortgages, deeds of trust and security deeds and any and
all rights to receive payments which are received pursuant thereto on or after
the Cut-off Date, but excluding any rights to receive payments which are
received pursuant thereto prior to the Cut-off Date.
"Home Improvement Contracts" means the home improvement contracts and
--------------------------
promissory notes described in the List of Contracts attached hereto as Exhibit
O-1 and constituting part of the corpus of the Trust, which Home Improvement
Contracts are to be assigned and conveyed by the Company to the Trust, and
includes, without limitation, all related mortgages, deeds of trust and security
deeds and any and all rights to receive payments which are due pursuant thereto
on or after the Cut-off Date, but excluding any rights to receive payments which
are received pursuant thereto prior to the Cut-off Date.
"HUD" means the United States Department of Housing and Urban Development,
---
or any successor thereto.
"Independent" means, when used with respect to any specified Person, any
-----------
Person who (i) is in fact independent of the Company and the Servicer, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Company or the Servicer or in an Affiliate of either, and (iii)
is not connected with the Company or the Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is provided herein that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such
1-32
opinion or certificate shall state that the signatory has read this definition
and is Independent within the meaning set forth herein.
"Interest Reset Period" means, with respect to any Payment Date, the period
---------------------
from and including the prior Payment Date (or, with respect to the first Payment
Date, from and including the Closing Date) to but excluding such Payment Date.
"LIBOR" means, with respect to any Interest Reset Period, the offered rate,
-----
as established by the Calculation Agent, for United States dollar deposits for
one month that appears on Telerate Page 3750 as of 11:00 A.M., London time, on
the LIBOR Determination Date for such Interest Reset Period. If on any LIBOR
Determination Date the offered rate does not appear on Telerate Page 3750, the
Calculation Agent will request each of the reference banks (which shall be major
banks that are engaged in transactions in the London interbank market selected
by the Calculation Agent) to provide the Trustee with its offered quotation for
United States dollar deposits for one month to prime banks in the London
interbank market as of 11:00 A.M., London time, on such date. If at least two
reference banks provide the Calculation Agent with such offered quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward, of all such quotations. If on such date fewer
than two of the reference banks provide the Calculation Agent with such offered
quotations, LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward, of the offered per annum rates that one or
more leading banks in The City of New York selected by the Calculation Agent are
quoting as of 11:00 A.M., New York City time, on such date to leading European
banks for United States dollar deposits for one month; provided, however, that
if such banks are not quoting as described above, LIBOR for such date will be
LIBOR applicable to the Interest Reset Period immediately preceding such
Interest Reset Period; and provided further, that if the result of the foregoing
----------------
would be for three consecutive Payment Dates to base LIBOR on the rate
applicable in the immediately preceding Interest Reset Period, for such third
consecutive Payment Date the Calculation Agent shall instead select an
alternative comparable index (over which the Calculation Agent has no control)
used for determining one-month Eurodollar lending rates that is calculated and
published (or otherwise made available) by an independent third party.
"LIBOR Business Day" as used herein means a day that is both a Business Day
------------------
and a day on which banking institutions in the City of London, England are not
required or authorized by law to be closed.
"LIBOR Determination Date" means the second LIBOR Business Day prior to the
------------------------
first day of the related Interest Reset Period.
"Liquidated Contract" means with respect to any Due Period, either
-------------------
1-33
(1) a Defaulted Contract as to which (a) the Servicer has received
from the Obligor, or a third party purchaser of the Contract, all amounts
which the Servicer reasonably and in good faith expects to recover from or
on account of such Contract, or (b) in the case of an FHA-Insured Contract,
either (i) FHA has paid the claim or (ii) the Servicer has determined in
good faith that FHA will not pay the claim, or
(2) a Contract (a) upon which all or a portion of the first payment
of interest due by the Obligor was added to principal, and (b) on which the
Obligor failed to pay the full amount of principal due on the Contract, as
computed by the Servicer;
provided, however, that any Contract which the Company is obligated to
-----------------
repurchase pursuant to Section 3.05, and did so repurchase or substitute
therefor an Eligible Substitute Contract in accordance with Section 3.05, shall
be deemed not to be a Liquidated Contract; and provided further, that with
----------------
respect to Due Periods beginning on or after December 1, 2021 (in the case of a
Home Improvement Contract) or December 1, 2021 (in the case of a Home Equity
Contract), a Liquidated Contract also means any Contract as to which the
Servicer has commenced foreclosure proceedings, made a sale of the Contract to a
third party for foreclosure or enforcement, or, in the case of an FHA-Insured
Contract, submitted a claim to FHA.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
--------------------
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any defaulted Contract, including, without limitation, legal fees
and expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including insurance proceeds) received
--------------------
in connection with the liquidation of defaulted Contracts, whether through
repossession, foreclosure sale or otherwise.
"List of Contracts" means the list identifying each Contract constituting
-----------------
part of the corpus of the Trust, which list (a) identifies each Contract and (b)
sets forth as to each Contract (i) the Cut-off Date Principal Balance, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract Interest
Rate and (iv) the maturity date, and which is attached to this Agreement as
Exhibit O-1, in the case of the Home Improvement Contracts, Exhibit O-2, in the
case of the Home Equity Contracts other than the Adjustable Rate Contracts, or
Exhibit O-3, in the case of the Adjustable Rate Contracts.
"Monthly Report" has the meaning assigned in Section 6.01.
--------------
"Monthly Servicing Fee" means, as of any Payment Date, (1) with respect to
---------------------
the Home Improvement Contracts, one-twelfth of the product of .75% and the Pool
Scheduled Principal Balance of Sub-Pool HI with respect to the preceding Payment
Date,
1-34
and (2) with respect to the Home Equity Contracts, one-twelfth of the product of
.75% and the Pool Scheduled Principal Balance of Sub-Pool HE with respect to the
preceding Payment Date.
"Net Liquidation Loss" means, as to a Liquidated Contract, the difference
--------------------
between (a) the Repurchase Price of such Contract, and (b) the Net Liquidation
Proceeds with respect to such Liquidated Contract, where such difference is a
positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, the proceeds
------------------------
received, or, for Contracts which become Liquidated Contracts pursuant to the
last proviso in the definition of "Liquidated Contract," the estimated proceeds
to be received, as of the last day of the Due Period in which such Contract
became a Liquidated Contract, from the Obligor, from a third party purchaser of
the Contract, under FHA Insurance, under insurance other than FHA insurance, or
otherwise, net of Liquidation Expenses.
"Ninth Cross-over date" means with respect to the Sub-Pool HE Certificates,
---------------------
the Payment Date on which the Class HE: B-1 Principal Balance (after giving
effect to the distributions of principal on the Class HE: B-1 Certificates on
such Payment Date) is reduced to zero.
"NRSRO" means any nationally recognized statistical rating organization.
-----
"Obligor" means the person who owes payments under a Contract.
-------
"Officer's Certificate" means a certificate signed by the Chairman of the
---------------------
Board, President or any Vice President of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may, except as
------------------
expressly provided herein, be salaried counsel for the Company or the Servicer,
as applicable, acceptable to the Trustee and the Company.
"Original Class HE: A-1ARM Principal Balance" means $69,822,000.
-------------------------------------------
"Original Class HE: A-1 Principal Balance" means $41,500,000.
----------------------------------------
"Original Class HE: A-2 Principal Balance" means $29,000,000.
----------------------------------------
"Original Class HE: A-3 Principal Balance" means $94,500,000.
----------------------------------------
"Original Class HE: A-4 Principal Balance" means $25,000,000.
----------------------------------------
"Original Class HE: A-5 Principal Balance" means $62,522,000.
----------------------------------------
1-35
"Original Class HE: A-6 Principal Balance" means $51,000,000.
----------------------------------------
"Original Class HE: B-1 Principal Balance" means $15,194,000.
----------------------------------------
"Original Class HE: B-2 Principal Balance" means $6,512,008.
----------------------------------------
"Original Class HE: M-1 Principal Balance" means $23,877,000.
----------------------------------------
"Original Class HE: M-2 Principal Balance" means $15,194,000.
----------------------------------------
"Original Class HI: A-1 Principal Balance" means $29,200,000.
----------------------------------------
"Original Class HI: A-2 Principal Balance" means $18,000,000.
----------------------------------------
"Original Class HI: A-3 Principal Balance" means $21,018,000.
----------------------------------------
"Original Class HI: B-1 Principal Balance" means $4,051,000.
----------------------------------------
"Original Class HI: B-2 Principal Balance" means $1,919,230.
----------------------------------------
"Original Class HI: M-1 Principal Balance" means $6,821,000.
----------------------------------------
"Original Class HI: M-2 Principal Balance" means $4,264,000.
----------------------------------------
"Original Series 1997-A Certificate Principal Balance" means $519,394,238.
----------------------------------------------------
"Original Sub-Pool HE Certificate Principal Balance" means $434,121,008.
--------------------------------------------------
"Original Sub-Pool HI Certificate Principal Balance" means $85,273,230.
--------------------------------------------------
"Partial Principal Prepayment" means (a) any Principal Prepayment other
----------------------------
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the proviso in Section 3.05(a) or pursuant to
Section 3.05(b).
"Pass-Through Margin" means 0.19% per annum on each Payment Date on which
-------------------
the Pool Scheduled Principal Balance of all Contracts is 10% or more of the Cut-
off Date Pool Principal Balance of all Contracts, and 0.38% per annum on each
Payment Date on which the Pool Scheduled Principal Balance of all Contracts is
less than 10% of the Cut-off Date Pool Principal Balance of all Contracts.
"Paying Agent" has the meaning assigned in Section 8.01(c).
------------
"Payment Date" means the fifteenth day of each calendar month during the
------------
term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing April 15, 1997.
1-36
"Percentage Interest" means, as to any Certificate or the Class C
-------------------
Certificate, the percentage interest evidenced thereby in distributions made on
the related Class, such percentage interest being equal to: (i) as to any
Certificate, the percentage (carried to eight places) obtained from dividing the
denomination of such Certificate by (a) in the case of a Class HI: A-1
Certificate, the Original Class HI: A-1 Principal Balance, (b) in the case of a
Class HI: A-2 Certificate, the Original Class HI: A-2 Principal Balance, (c) in
the case of a Class HI: A-3 Certificate, the Original Class HI: A-3 Principal
Balance, (d) in the case of a Class HI: M-1 Certificate, the Original Class HI:
M-1 Principal Balance, (e) in the case of a Class HI: M-2 Certificate, the
Original Class HI: M-2 Principal Balance, (f) in the case of a Class HI: B-1
Certificate, the Original Class HI: B-1 Principal Balance, (g) in the case of a
Class HI: B-2 Certificate, the Original Class HI: B-2 Principal Balance, (h) in
the case of a Class HE: A-1ARM Certificate, the Original Class HE: A-1ARM
Principal Balance, (i) in the case of a Class HE: A-1 Certificate, the Original
Class HE: A-1 Principal Balance, (j) in the case of a Class HE: A-2 Certificate,
the Original Class HE: A-2 Principal Balance, (k) in the case of a Class HE: A-3
Certificate, the Original Class HE: A-3 Principal Balance, (l) in the case of a
Class HE: A-4 Certificate, the Original Class HE: A-4 Principal Balance, (m) in
the case of a Class HE: A-5 Certificate, the Original Class HE: A-5 Principal
Balance, (n) in the case of a Class HE: A-6 Certificate, the Original Class HE:
A-6 Principal Balance, (o) in the case of a Class HE: M-1 Certificate, the
Original Class HE: M-1 Principal Balance, (p) in the case of a Class HE: M-2
Certificate, the Original Class HE: M-2 Principal Balance, (q) in the case of a
Class HE: B-1 Certificate, the Original Class HE: B-1 Principal Balance, and (r)
in the case of a Class HE: B-2 Certificate, the Original Class HE: B-2 Principal
Balance; and (ii) as to any Class C Certificate, the percentage specified on the
face of such Certificate. The aggregate Percentage Interests for each Class of
Certificates and the Class C Certificate shall equal 100%.
"Permitted Transferee" means, in the case of a transfer of the Class C
--------------------
Certificate, a Person that is not a Plan or a Disqualified Organization, except
as permitted by Sections 9.02(b)(2) and (3), respectively.
"Person" means any individual, corporation, partnership, joint venture,
------
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
----
"Pool Scheduled Principal Balance" means, with respect to all Contracts or
--------------------------------
the Contracts comprising a given Sub-Pool, as of any Payment Date, the aggregate
Scheduled Principal Balance of all Contracts or the Contracts comprising such
Sub-Pool, as the case may be, that were outstanding during the immediately
preceding Due Period.
"Principal Prepayment" means a payment or other recovery of principal on a
--------------------
Contract (exclusive of Liquidation Proceeds) which is received in advance of its
scheduled due date and applied upon receipt (or, in the case of a partial
prepayment, upon the
1-37
next scheduled payment date on such Contract) to reduce the outstanding
principal amount due on such Contract prior to the date or dates on which such
principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the entire
----------------------------
principal balance of a Contract.
"Record Date" means, with respect to any Payment Date, the Business Day
-----------
immediately preceding such Payment Date.
"REMIC" means a "real estate mortgage investment conduit" as defined in
-----
Section 860D of the Code.
"REMIC Provisions" means the provisions of the federal income tax law
----------------
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"Replaced Contract" has the meaning assigned in Section 3.05(b).
-----------------
"Repurchase Price" means, with respect to a Contract to be repurchased
----------------
pursuant to Section 3.05 or which becomes a Liquidated Contract, an amount equal
to (a) the remaining principal amount outstanding on such Contract (without
giving effect to any Advances paid by the Servicer or the Trustee, as
applicable, with respect to such Contract pursuant to Section 8.02), plus (b)
interest at the Weighted Average Pass-Through Rate on such Contract from the end
of the Due Period with respect to which the Obligor last made a scheduled
payment (without giving effect to any Advances paid by the Servicer or the
Trustee, as applicable, with respect to such Contract pursuant to Section 8.02)
through the date of such repurchase or liquidation.
"Responsible Officer" means, with respect to the Trustee, the chairman and
-------------------
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
---
Inc., or any successor thereto; provided that, if S&P no longer has a rating
--------
outstanding
1-38
on any Class of the Certificates, then references herein to "S&P" shall be
deemed to refer to the NRSRO then rating any Class of the Certificates (or, if
more than one such NRSRO is then rating any Class of the Certificates, to such
NRSRO as may be designated by the Servicer), and references herein to ratings by
or requirements of S&P shall be deemed to have the equivalent meanings with
respect to ratings by or requirements of such NRSRO.
"Scheduled Principal Balance" means, with respect to any Contract and any
---------------------------
Payment Date or the Cut-off Date, the principal balance of such Contract as of
the due date in the Due Period immediately preceding such Payment Date or as of
the due date immediately preceding the Cut-off Date (or as of the Cut-off Date
if the Cut-off Date is the date of origination of such Contract), as the case
may be, as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
of an Obligor or similar proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous partial Principal Prepayments and to
the payment of principal due on such due date and irrespective of any
delinquency in payment by, or extension granted to, the related Obligor;
provided that the Scheduled Principal Balance of any Home Equity Contract as of
the Cut-off Date shall give effect to payments of principal received prior to
the Cut-off Date.
"Second Cross-over date" means (1) with respect to the Sub-Pool HI
----------------------
Certificates, the Payment Date on which the Class HI: A-2 Principal Balance
(after giving effect to the distributions of principal on the Class HI: A-2
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the Payment Date on which the Class HE: A-2
Principal Balance (after giving effect to the distributions of principal on the
Class HE: A-2 Certificates on such Payment Date) is reduced to zero.
"Service Transfer" has the meaning assigned in Section 7.02.
----------------
"Servicer" means the Company until any Service Transfer hereunder and
--------
thereafter means the new servicer appointed pursuant to Article VII.
"Servicing Officer" means any officer of the Servicer involved in, or
-----------------
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Company, as the same may be amended from time to
time.
"Seventh Cross-over date" means (1) with respect to the Sub-Pool HI
-----------------------
Certificates, the Payment Date on which the Class HI: B-2 Principal Balance
(after giving effect to the distributions of principal on the Class HI: B-2
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the Payment Date
1-39
on which the Class HE: M-1 Principal Balance (after giving effect to the
distributions of principal on the Class HE: M-1 Certificates on such Payment
Date) is reduced to zero.
"Sixth Cross-over date" means (1) with respect to the Sub-Pool HI
---------------------
Certificates, the Payment Date on which the Class HI: B-1 Principal Balance
(after giving effect to the distributions of principal on the Class HI: B-1
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the latest to occur of (a) the Fifth Cross-over
date or (b) the Payment Date on which the Class HE: A-6 Principal Balance (after
giving effect to the distributions of principal on the Class HE: A-6
Certificates on such Payment Date) is reduced to zero or (c) the Payment Date on
which the Class HE: A-1ARM Principal Balance (after giving effect to the
distributions of principal on the Class HE: A-1ARM Certificates on such Payment
Date) is reduced to zero.
"Sub-Pool" means Sub-Pool HI or Sub-Pool HE.
--------
"Sub-Pool HE" means the sub-pool comprised of the Home Equity Contracts.
-----------
"Sub-Pool HE Aggregate Liquidation Loss Principal Amount" means, as of any
-------------------------------------------------------
Payment Date, the excess, if any, of (a) the Sub-Pool HE Certificate Principal
Balance as of the preceding Payment Date (after giving effect to distributions
of principal thereon) over (b) the Pool Scheduled Principal Balance of Sub-Pool
HE for such preceding Payment Date.
"Sub-Pool HE Amount Available" means, as to any Payment Date, an amount
----------------------------
equal to: (a) the sum of (1) the amount on deposit in the Certificate Account in
respect of the Home Equity Contracts as of the close of business on the last day
of the preceding Due Period, and (2) that portion of the Sub-Pool HI Amount
Available (determined without regard to clause (a)(2) of the definition thereof)
remaining after payment of the amounts provided for in clauses (1) through (8)
of Section 8.04(b); reduced by (b) the sum as of the close of business on the
Business Day preceding such Payment Date of (1) the Amount Held for Future
Distribution in respect of the Home Equity Contracts, (2) amounts permitted to
be withdrawn by the Trustee from the Certificate Account in respect of the Home
Equity Contracts pursuant to clauses (ii) through (v) of Section 8.04(a), and
(3) the amount, if any, withdrawn by the Trustee from the Certificate Account
pursuant to Section 8.04(e) with respect to the immediately preceding Payment
Date.
"Sub-Pool HE Average Sixty-Day Delinquency Ratio Test" means, to be
----------------------------------------------------
considered "satisfied" for any Payment Date, that the arithmetic average of the
Sub-Pool HE Sixty-Day Delinquency Ratios for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 2.5%.
1-40
"Sub-Pool HE Average Thirty-Day Delinquency Ratio Test" means, to be
-----------------------------------------------------
considered "satisfied" for any Payment Date, that the arithmetic average of the
Sub-Pool HE Thirty-Day Delinquency Ratios for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 5%.
"Sub-Pool HE Certificate" means a Certificate for Home Improvement and Home
-----------------------
Equity Loans, Series 1997-A, Class HE: A-1ARM, Class HE: A-1, Class HE: A-2,
Class HE: A-3, Class HE: A-4, Class HE: A-6, Class HE: M-1, Class HE: M-2, Class
HE: B-1 or Class HE: B-2, executed and delivered by the Trustee substantially in
the form of Exhibit A, B, or C, as applicable, but does not include the Class C
Certificate.
"Sub-Pool HE Certificate Principal Balance" means the sum of the Class HE:
-----------------------------------------
A-1ARM, Class HE: A-1, Class HE: A-2, Class HE: A-3, Class HE: A-4, Class HE: A-
6, Class HE: M-1, Class HE: M-2, Class HE: B-1 and Class HE: B-2 Principal
Balances.
"Sub-Pool HE Cumulative Realized Loss Ratio" means, for any Payment Date, a
------------------------------------------
fraction, expressed as a percentage, the numerator of which is the Sub-Pool HE
Cumulative Realized Losses for that Payment Date, and the denominator of which
is the Cut-Off Date Pool Principal Balance of Sub-Pool HE.
"Sub-Pool HE Cumulative Realized Losses" means, as to any Payment Date, the
--------------------------------------
sum of the Sub-Pool HE Realized Losses for that Payment Date and each preceding
Payment Date since the Cut-off Date.
"Sub-Pool HE Cumulative Realized Losses Test" means, to be considered
-------------------------------------------
"satisfied" for any Payment Date, that the Sub-Pool HE Cumulative Realized Loss
Ratio as of such Payment Date is less than or equal to 7.5%.
"Sub-Pool HE Current Realized Loss Ratio" means, as to any Payment Date, a
---------------------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate
Sub-Pool HE Realized Losses for such Payment Date and each of the two
immediately preceding Payment Dates, multiplied by four, and the denominator of
which is the arithmetic average of the Pool Scheduled Principal Balance of Sub-
Pool HE as of the third preceding Payment Date and the Pool Scheduled Principal
Balance of Sub-Pool HE as of such Payment Date.
"Sub-Pool HE Current Realized Losses Test" means, to be considered
----------------------------------------
"satisfied" for any Payment Date, that the Sub-Pool HE Current Realized Loss
Ratio for such Payment Date is less than or equal to 2%.
1-41
"Sub-Pool HE Formula Principal Distribution Amount" means, as to any Payment
-------------------------------------------------
Date, the sum of:
(i) all scheduled payments of principal due on each outstanding
Home Equity Contract during the prior Due Period as specified in the
amortization schedule at the time applicable thereto (after adjustments for
previous Partial Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy of an Obligor or similar
proceeding or any moratorium or similar waiver or grace period); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior Due Period with respect to the
Home Equity Contracts; plus
(iii) the aggregate Scheduled Principal Balance of all Home Equity
Contracts that became Liquidated Contracts during the prior Due Period; plus
(iv) the aggregate Scheduled Principal Balance of all Home Equity
Contracts repurchased, and all amounts deposited in lieu of the repurchase
of any Home Equity Contract, during the prior Due Period pursuant to Section
3.05(a) or, in the event of a substitution of a Home Equity Contract in
accordance with Section 3.05(b), any amount required to be deposited by the
Company in the Certificate Account during the prior Due Period pursuant to
Section 3.05(b)(vi); plus
(v) any amount described in clauses (i) through (iv) above that was
not previously distributed because of an insufficient amount of funds
available in the Certificate Account if (1) the Payment Date occurs on or
after the Payment Date on which the Class HE: B-2 Principal Balance has been
reduced to zero, or (2) such amount was not covered by a Class HE: B-2
Guaranty Payment and corresponding reduction in the Class HE: B-2 Principal
Balance; minus
(vi) the Class HE: A-1ARM Formula Principal Distribution Amount.
"Sub-Pool HE Pool Factor" means, at any time, the percentage derived from a
-----------------------
fraction, the numerator of which is the Sub-Pool HE Certificate Principal
Balance at such time and the denominator of which is the Original Sub-Pool HE
Certificate Principal Balance.
1-42
"Sub-Pool HE Realized Losses" means, as to any Payment Date, the aggregate
---------------------------
Net Liquidation Losses for all Home Equity Contracts that became Liquidated
Contracts during the immediately preceding Due Period.
"Sub-Pool HE Senior Percentage" means, with respect to the Sub-Pool HE
-----------------------------
Certificates:
(a) as to any Payment Date prior to the Class HE: B Cross-over date,
100%;
(b) as to any Payment Date on or after the Class HE: B Cross-over date
but on or prior to the Eighth Cross-over date, and on which any Class HE: B
Principal Distribution Test is not satisfied, 100%;
(c) as to any Payment Date on or after the Class HE: B Cross-over date
but on or prior to the Eighth Cross-over date, and on which each Class HE:
B Principal Distribution Test is satisfied, a fraction, expressed as a
percentage, the numerator of which is the sum of the Class HE: A Principal
Balance, (excluding the Class HE: A-1ARM Principal Balance) and the Class
HE: M Principal Balance as of such Payment Date, and the denominator of
which is the Pool Scheduled Principal Balance of Sub-Pool HE as of the
immediately preceding Payment Date less the Scheduled Principal Balance of
the Adjustable Rate Contracts as of the immediately preceding Payment Date;
and
(d) as to any Payment Date after the Eighth Cross-over date, 0%.
"Sub-Pool HE Sixty-Day Delinquency Ratio" means, as to any Payment Date, a
---------------------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Home Equity Contracts that were delinquent 60
days or more as of the end of the prior Due Period (including Home Equity
Contracts in respect of which the related real estate has been foreclosed upon
but is still in inventory), and the denominator of which is the Pool Scheduled
Principal Balance of Sub-Pool HE as of such Payment Date.
"Sub-Pool HE Thirty-Day Delinquency Ratio" means, as to any Payment Date, a
----------------------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Home Equity Contracts that were delinquent 30
days or more as of the end of the prior Due Period (including Home Equity
Contracts in respect of which the related real estate has been foreclosed upon
but is still in inventory), and the denominator of which is the Pool Scheduled
Principal Balance of Sub-Pool HE as of such Payment Date.
1-43
"Sub-Pool HI" means the sub-pool comprised of the Home Improvement
-----------
Contracts.
"Sub-Pool HI Aggregate Liquidation Loss Principal Amount" means, as of any
-------------------------------------------------------
Payment Date, the excess, if any, of (a) the Sub-Pool HI Certificate Principal
Balance as of the preceding Payment Date (after giving effect to distributions
of principal thereon) over (b) the Pool Scheduled Principal Balance of Sub-Pool
HI for such preceding Payment Date.
"Sub-Pool HI Amount Available" means, as to any Payment Date, an amount
----------------------------
equal to: (a) the sum of (1) the amount on deposit in the Certificate Account in
respect of the Home Improvement Contracts as of the close of business on the
last day of the preceding Due Period, (2) that portion of the Sub-Pool HE Amount
Available (determined without regard to clause (a)(2) of the definition thereof)
remaining after payment of the amounts provided for in clauses (1) through (8)
of Section 8.04(d), and (3) as to the Payment Date occurring in April 1997, that
portion, if any, of the balance on deposit in the Excess Proceeds Account
attributable to Excess Proceeds with respect to the Sub-Pool HI Certificates and
any investment earnings allocable thereto in accordance with Section 8.07;
reduced by (b) the sum as of the close of business on the Business Day preceding
such Payment Date of (1) the Amount Held for Future Distribution in respect of
the Home Improvement Contracts, (2) amounts permitted to be withdrawn by the
Trustee from the Certificate Account in respect of the Home Improvement
Contracts pursuant to clauses (ii) through (v) of Section 8.04(a), and (3) the
amount, if any, withdrawn by the Trustee from the Certificate Account pursuant
to Section 8.04(c) with respect to the immediately preceding Payment Date.
"Sub-Pool HI Average Sixty-Day Delinquency Ratio Test" means, to be
----------------------------------------------------
considered "satisfied" for any Payment Date, that the arithmetic average of the
Sub-Pool HI Sixty-Day Delinquency Ratios for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 2.5%.
"Sub-Pool HI Average Thirty-Day Delinquency Ratio Test" means, to be
-----------------------------------------------------
considered "satisfied" for any Payment Date, that the arithmetic average of the
Sub-Pool HI Thirty-Day Delinquency Ratios for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 5%.
"Sub-Pool HI Certificate" means a Certificate for Home Improvement and Home
-----------------------
Equity Loans, Series 1997-A, Class HI: A-1, Class HI: A-2, Class HI: A-3, Class
HI: M-1, Class HI: M-2, Class HI: B-1 or Class HI: B-2, executed and delivered
by the Trustee substantially in the form of Exhibit A, B, or C, as applicable,
but does not include the Class C Certificate.
1-44
"Sub-Pool HI Certificate Principal Balance" means the sum of the Class HI:
-----------------------------------------
A-1, Class HI: A-2, Class HI: A-3, Class HI: M-1, Class HI: M-2, Class HI: B-1
and Class HI: B-2 Principal Balances.
"Sub-Pool HI Cumulative Realized Loss Ratio" means, for any Payment Date, a
------------------------------------------
fraction, expressed as a percentage, the numerator of which is the Sub-Pool HI
Cumulative Realized Losses for that Payment Date, and the denominator of which
is the Cut-Off Date Pool Principal Balance of Sub-Pool HI.
"Sub-Pool HI Cumulative Realized Losses" means, as to any Payment Date, the
--------------------------------------
sum of the Sub-Pool HI Realized Losses for that Payment Date and each preceding
Payment Date since the Cut-off Date.
"Sub-Pool HI Cumulative Realized Losses Test" means, to be considered
-------------------------------------------
"satisfied" for any Payment Date, that the Sub-Pool HI Cumulative Realized Loss
Ratio as of such Payment Date is less than or equal to 10%.
"Sub-Pool HI Current Realized Loss Ratio" means, as to any Payment Date, a
---------------------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate
Sub-Pool HI Realized Losses for such Payment Date and each of the two
immediately preceding Payment Dates, multiplied by four, and the denominator of
which is the arithmetic average of the Pool Scheduled Principal Balance of Sub-
Pool HI as of the third preceding Payment Date and the Pool Scheduled Principal
Balance of Sub-Pool HI as of such Payment Date.
"Sub-Pool HI Current Realized Losses Test" means, to be considered
----------------------------------------
"satisfied" for any Payment Date, that the Sub-Pool HI Current Realized Loss
Ratio for such Payment Date is less than or equal to 2.5%.
"Sub-Pool HI Formula Principal Distribution Amount" means, as to any Payment
-------------------------------------------------
Date, the sum of:
(a) all scheduled payments of principal due on each outstanding Home
Improvement Contract during the prior Due Period as specified in the
amortization schedule at the time applicable thereto (after adjustments for
previous Partial Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy of an Obligor or similar
proceeding or any moratorium or similar waiver or grace period); plus
(b) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior Due Period with respect to
the Home Improvement Contracts; plus
1-45
(c) the aggregate Scheduled Principal Balance of all Home Improvement
Contracts that became Liquidated Contracts during the prior Due Period;
plus
(d) the aggregate Scheduled Principal Balance of all Home Improvement
Contracts repurchased, and all amounts deposited in lieu of the repurchase
of any Home Improvement Contract, during the prior Due Period pursuant to
Section 3.05(a) or, in the event of a substitution of a Home Improvement
Contract in accordance with Section 3.05(b), any amount required to be
deposited by the Company in the Certificate Account during the prior Due
Period pursuant to Section 3.05(b)(vi);
(e) any amount described in clauses (a) through (d) above that was not
previously distributed (including from amounts described in clause (f)
below) because of an insufficient amount of funds available in the
Certificate Account if (1) the Payment Date occurs on or after the Payment
Date on which the Class HI: B-2 Principal Balance has been reduced to zero,
or (2) such amount was not covered by a Class HI: B-2 Guaranty Payment and
corresponding reduction in the Class HI: B-2 Principal Balance; plus
(f) with respect to the Payment Date in January 1997, an amount equal
to that portion of the balance of the Excess Proceeds Account attributable
to Excess Proceeds with respect to the Sub-Pool HI Certificates and any
investment earnings allocable thereto in accordance with Section 8.07.
"Sub-Pool HI Pool Factor" means, at any time, the percentage derived from a
-----------------------
fraction, the numerator of which is the Sub-Pool HI Certificate Principal
Balance at such time and the denominator of which is the Original Sub-Pool HI
Certificate Principal Balance.
"Sub-Pool HI Realized Losses" means, as to any Payment Date, the aggregate
---------------------------
Net Liquidation Losses for all Home Improvement Contracts that became Liquidated
Contracts during the immediately preceding Due Period.
"Sub-Pool HI Senior Percentage" means, with respect to the Sub-Pool HI
-----------------------------
Certificates:
(a) as to any Payment Date prior to the Class HI: B Cross-over date,
100%;
1-46
(b) as to any Payment Date on or after the Class HI: B Cross-over date
but on or prior to the Fifth Cross-over date, and on which any Class HI: B
Principal Distribution Test is not satisfied, 100%;
(c) as to any Payment Date on or after the Class HI: B Cross-over date
but on or prior to the Fifth Cross-over date, and on which each Class HI: B
Principal Distribution Test is satisfied, a fraction, expressed as a
percentage, the numerator of which is the sum of the Class HI: A Principal
Balance and the Class HI: M Principal Balance as of such Payment Date, and
the denominator of which is the Pool Scheduled Principal Balance of Sub-
Pool HI as of the immediately preceding Payment Date; and
(d) as to any Payment Date after the Fifth Cross-over date, 0%.
"Sub-Pool HI Sixty-Day Delinquency Ratio" means, as to any Payment Date, a
---------------------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Home Improvement Contracts that were delinquent
60 days or more as of the end of the prior Due Period (including Home
Improvement Contracts in respect of which the related real estate has been
foreclosed upon but is still in inventory), and the denominator of which is the
Pool Scheduled Principal Balance of Sub-Pool HI as of such Payment Date.
"Sub-Pool HI Thirty-Day Delinquency Ratio" means, as to any Payment Date, a
----------------------------------------
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Home Improvement Contracts that were delinquent
30 days or more as of the end of the prior Due Period (including Home
Improvement Contracts in respect of which the related real estate has been
foreclosed upon but is still in inventory), and the denominator of which is the
Pool Scheduled Principal Balance of Sub-Pool HI as of such Payment Date.
"Telerate Page 3750" means the display page so designated on the Dow Xxxxx
------------------
Telerate Service (or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor by the
Calculation Agent, for the purpose of displaying London interbank offered rates
of major banks).
"Third Cross-over date" means (1) with respect to the Sub-Pool HI
---------------------
Certificates, the Payment Date on which the Class HI: A-3 Principal Balance
(after giving effect to the distributions of principal on the Class HI: A-3
Certificates on such Payment Date) is reduced to zero, and (2) with respect to
the Sub-Pool HE Certificates, the Payment Date on which the Class HE: A-3
Principal Balance (after giving effect to the distributions of principal on the
Class HE: A-3 Certificates on such Payment Date) is reduced to zero.
1-47
"Trust" means the trust created by this Agreement, the corpus of which
-----
consists of (i) all the rights, benefits and obligations arising from and in
connection with the Contracts, including all interest and principal received on
or with respect to the Contracts (other than principal and interest due on the
Home Improvement Contracts before the Cut-off Date, and other than principal and
interest received on the Home Equity Contracts before the Cut-off Date), (ii)
all rights under FHA Insurance in respect of each FHA-Insured Contract, (iii)
all rights under any hazard, flood or other individual insurance policy on the
real estate securing a Contract for the benefit of the creditor of such
Contract, (iv) all rights under the Errors and Omissions Protection Policy and
the Fidelity Bond as such policy and bond relate to the Contracts, (v) all
documents contained in the Contract Files, (vi) all proceeds and products of the
foregoing, (vii) the Class HI: B-2 Limited Guaranty and the Class HE: B-2
Limited Guaranty, (viii) the remittances, deposits and payments made into the
Certificate Account and amounts in the Certificate Account (including all
proceeds of investments thereof), and (ix) the Excess Proceeds Account.
"Trustee Advance" has the meaning assigned in Section 11.16.
---------------
"Underwriters" means Xxxxxxx, Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated,
------------
Salomon Brothers Inc and Bear, Xxxxxxx & Co. Inc.
"Unpaid Class HE: A Interest Shortfall" means, as to each Class of Class
-------------------------------------
HE: A Certificates and any Payment Date, the amount, if any, of the Class HE: A
Interest Shortfall applicable to such Class for the prior Payment Date, plus one
month's interest thereon (to the extent payment thereof is legally permissible)
at the related Pass-Through Rate, computed on the basis of a 360-day year of
twelve 30-day months, except with respect to the Class HE: A-1ARM Certificates,
as to which interest is computed on the basis of actual days elapsed in a year
of 360 days.
"Unpaid Class HE: B-1 Interest Shortfall" means, with respect to the Class
---------------------------------------
HE: B-1 Certificates and any Payment Date, the amount, if any, of the Class HE:
B-1 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HE:
B-1 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HE: B-1 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HE: B-1 Certificates and any Payment Date, the amount, if
any, of the Class HE: B-1 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HE: B-1 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
1-48
"Unpaid Class HE: B-2 Interest Shortfall" means, with respect to the Class
---------------------------------------
HE: B-2 Certificates and any Payment Date, the amount, if any, of the Class HE:
B-2 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HE:
B-2 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HE: B-2 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HE: B-2 Certificates and any Payment Date, the amount, if
any, of the Class HE: B-2 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HE: B-2 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
"Unpaid Class HE: M-1 Interest Shortfall" means, with respect to the Class
---------------------------------------
HE: M-1 Certificates and any Payment Date, the amount, if any, of the Class HE:
M-1 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HE:
M-1 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HE: M-1 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HE: M-1 Certificates and any Payment Date, the amount, if
any, of the Class HE: M-1 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HE: M-1 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
"Unpaid Class HE: M-2 Interest Shortfall" means, with respect to the Class
---------------------------------------
HE: M-2 Certificates and any Payment Date, the amount, if any, of the Class HE:
M-2 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HE:
M-2 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HE: M-2 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HE: M-2 Certificates and any Payment Date, the amount, if
any, of the Class HE: M-2 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HE: M-2 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
"Unpaid Class HI: A Interest Shortfall" means, as to each Class of Class
-------------------------------------
HI: A Certificates and any Payment Date, the amount, if any, of the Class HI: A
Interest Shortfall applicable to such Class for the prior Payment Date, plus one
month's interest
"Unpaid Class HI: B-1 Interest Shortfall" means, with respect to the Class
---------------------------------------
HI: B-1 Certificates and any Payment Date, the amount, if any, of the Class HI:
B-1 Interest Shortfall for the prior Payment Date, plus one month's interest
1-49
thereon (to the extent payment thereof is legally permissible) at the related
Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HI: B-1 Interest Shortfall" means, with respect to the Class
---------------------------------------
HI: B-1 Certificates and any Payment Date, the amount, if any, of the Class HI:
B-1 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HI:
B-1 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HI: B-1 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HI: B-1 Certificates and any Payment Date, the amount, if
any, of the Class HI: B-1 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HI: B-1 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
"Unpaid Class HI: B-2 Interest Shortfall" means, with respect to the Class
---------------------------------------
HI: B-2 Certificates and any Payment Date, the amount, if any, of the Class HI:
B-2 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HI:
B-2 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HI: B-2 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HI: B-2 Certificates and any Payment Date, the amount, if
any, of the Class HI: B-2 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HI: B-2 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
"Unpaid Class HI: M-1 Interest Shortfall" means, with respect to the Class
---------------------------------------
HI: M-1 Certificates and any Payment Date, the amount, if any, of the Class HI:
M-1 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HI:
M-1 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HI: M-1 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HI: M-1 Certificates and any Payment Date, the amount, if
any, of the Class HI: M-1 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HI: M-1 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
1-50
"Unpaid Class HI: M-2 Interest Shortfall" means, with respect to the Class
---------------------------------------
HI: M-2 Certificates and any Payment Date, the amount, if any, of the Class HI:
M-2 Interest Shortfall for the prior Payment Date, plus one month's interest
thereon (to the extent payment thereof is legally permissible) at the Class HI:
M-2 Pass-Through Rate, computed on the basis of a 360-day year of twelve 30-day
months.
"Unpaid Class HI: M-2 Liquidation Loss Interest Shortfall" means, with
--------------------------------------------------------
respect to the Class HI: M-2 Certificates and any Payment Date, the amount, if
any, of the Class HI: M-2 Liquidation Loss Interest Shortfall for the prior
Payment Date, plus one month's interest thereon (to the extent payment thereof
is legally permissible) at the Class HI: M-2 Pass-Through Rate, computed on the
basis of a 360-day year of twelve 30-day months.
"Weighted Average Pass-Through Rate" means, as to any Payment Date,
----------------------------------
(a) with respect to any Home Improvement Contract, the weighted average
(expressed as a percentage and rounded to four decimal places) of the Class HI:
A-1, A-2, A-3, M-1, M-2, B-1 and B-2 Pass-Through Rates, weighted on the basis
of the respective Class HI: A-1, A-2, A-3, M-1, M-2, B-1 and B-2 Principal
Balance immediately prior to such Payment Date, and (b) with respect to any Home
Equity Contract, the weighted average (expressed as a percentage and rounded to
four decimal places) of the Class HE: A-1ARM, A-1, A-2, A-3, A-4, A-5, A-6, M-1,
M-2, B-1 and B-2 Pass-Through Rates, weighted on the basis of the respective
Class HE: A-1ARM, A-1, A-2, A-3, A-4, A-5, A-6, M-1, M-2, B-1 and B-2 Principal
Balance immediately prior to such Payment Date.
1-51
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
---------------------------------------------
SECTION 2.01. Closing.
-------
a. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Home Improvement and Home Equity Loan Trust 1997-A. By
the execution and delivery of this Agreement, the Company has agreed that it
will elect or will cause an election to be made to treat the pool of assets
comprising the Trust, excluding the Excess Proceeds Account, as a REMIC. The
Trust shall be administered pursuant to the provisions of this Agreement for the
benefit of the Certificateholders and the Class C Certificateholder.
b. The Company hereby transfers, assigns, sets over and otherwise conveys
to the Trustee on behalf of the Trust, by execution of an assignment
substantially in the form of Exhibit G hereto, (i) all the right, title and
interest of the Company in and to the Contracts, including all rights to receive
payments on or with respect to the Contracts (other than payments due on the
Home Improvement Contracts before the Cut-off Date, and other than payments
received on the Home Equity Contracts before the Cut-off Date), (ii) all rights
the Company may have against the originating contractor or lender with respect
to Contracts originated by a contractor or lender other than the Company, (iii)
all rights under FHA Insurance as such insurance relates to the FHA-Insured
Contracts, (iv) all rights under hazard insurance, if applicable, on the
properties described in the Contracts and, as to FHA-Insured Contracts secured
by properties located in special flood areas designated by HUD, all rights under
flood insurance policies as such insurance relates to the Contracts, (v) all
rights under the Errors and Omissions Protection Policy and the Fidelity Bond as
such policy and bond relate to the Contracts, (vi) all documents contained in
the Contract Files, (vii) all rights under any title insurance policies, if
applicable, on any of the properties securing Contracts and (viii) all proceeds
and products of the foregoing.
c. Although the parties intend that the conveyance of the Company's
right, title and interest in and to the Contracts pursuant to this Agreement
shall constitute a purchase and sale and not a loan, if such conveyances are
deemed to be a loan, the parties intend that the rights and obligations of the
parties to such loan shall be established pursuant to the terms of this
Agreement. If the conveyance is deemed to be a loan, the parties further intend
and agree that the Company shall be deemed to have granted to the Trustee, and
the Company does hereby grant to the Trustee, a perfected first-priority
security interest in the items designated in Section 2.01(b)(i) through
2.01(b)(viii) above, and that this Agreement shall constitute a security
agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction
2-1
of the claims of any Person under any Certificate, or the Class C Certificate,
the security interest created hereby shall continue in full force and effect and
the Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
SECTION 2.02. Conditions to the Closing.
-------------------------
On or before the Closing Date, the Company shall deliver or cause to be
delivered the following documents to the Trustee:
a. The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the Company.
b. A certificate of an officer of the Company substantially in the
form of Exhibit H hereto.
c. An Opinion of Counsel for the Company substantially in the form
of Exhibit I hereto.
d. A letter from KPMG Peat Marwick LLP or another nationally
recognized accounting firm, stating that such firm has reviewed the
Contracts on a statistical sampling basis and, based on such sampling,
concluding that the Contracts conform in all material respects to the List
of Contracts, to a confidence level of 97.5%, with an error rate not in
excess of 1.8%, specifying those Contracts which do not so conform.
e. Copies of resolutions of the board of directors of the Company or
of the executive committee of the board of directors of the Company
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereunder, certified in each case by the
secretary or an assistant secretary of the Company.
f. Officially certified recent evidence of due incorporation and
good standing of the Company under the laws of the State of Delaware.
g. An Officer's Certificate listing the Servicer's Servicing
Officers.
h. Evidence of continued coverage of the Company under the Errors
and Omissions Protection Policy.
i. Evidence of deposit in the Certificate Account of all funds
received with respect to the Contracts from the Cut-off Date to the Closing
Date, other
2-2
than amounts due before the Cut-off Date, together with an Officer's
Certificate to the effect that such amount is correct.
j. An Officer's Certificate confirming that the Company's internal
audit department has reviewed the original or a copy of each Contract and
each Contract File, that each Contract and Contract File conforms in all
material respects with the List of Contracts and that each Contract File is
complete.
k. Assignments in recordable form to the Trustee of the mortgages,
deeds of trust and security deeds relating to the Contracts.
SECTION 2.03. Acceptance by Trustee.
---------------------
a. On the Closing Date, if the conditions set forth in Section 2.02 have
been satisfied, the Trustee shall deliver a certificate to the Company
substantially in the form of Exhibit J hereto acknowledging conveyance of the
Contracts and Contract Files to the Trustee and declaring that the Trustee,
directly or through a Custodian, will hold all Contracts that have been
delivered in trust, upon the trusts herein set forth, for the use and benefit of
all Certificateholders and the Class C Certificateholder, and shall issue, to or
upon the order of the Company, the Certificates and the Class C Certificate
representing, in the aggregate, ownership of the entire beneficial interest in
the Trust.
b. The Trustee or a Custodian shall review each Contract File, as
described in Exhibit J, within 60 days of the Closing Date or the receipt by it
of the Contract File, whichever is later. If, in its review of the Contract
Files as described in Exhibit J, the Trustee or a Custodian discovers a breach
of the representations or warranties set forth in Sections 3.02, 3.03 or 3.04 of
this Agreement, or in the Officer's Certificate delivered pursuant to Section
2.02(j) of this Agreement, the Trustee or Custodian, as the case may be, shall
notify the Company and the Company shall cure such breach or repurchase or
replace such Contract pursuant to Section 3.05.
SECTION 2.04. REMIC Provisions.
----------------
a. The Company, as Servicer, and the Class C Certificateholder, by
acceptance thereof, each agrees that, in accordance with the requirements of
Section 860D(b)(1) of the Code, the federal tax return of the Trust for its
first taxable year shall provide that the Trust elects to be treated as a REMIC
for such taxable year and all subsequent taxable years, and the Trustee shall
sign such return. In furtherance of the foregoing, the Trustee (at the direction
of the Company or the Servicer), the Company and the Servicer shall take, or
refrain from taking, all such action as is necessary to maintain the status of
the Trust as a REMIC under the REMIC Provisions
2-3
of the Code, including, but not limited to, the taking of such action as is
necessary to cure any inadvertent termination of REMIC status.
b. The Certificates are being issued in eighteen classes and are hereby
designated by the Company as constituting the "regular interests" in the Trust
for purposes of Section 860G(a)(1) of the Code. The following terms of the
Certificates are irrevocably established as of the Closing Date: the Class HI:
A-1 Pass-Through Rate is 6.30% per annum, the Class HI: A-2 Pass-Through Rate is
6.75% per annum, the Class HI: A-3 Pass-Through Rate is 7.05% per annum, the
Class HI: M-1 Pass-Through Rate is 7.47% per annum, the Class HI: M-2 Pass-
Through Rate is 7.76% per annum, the Class HI: B-1 Pass-Through Rate is 7.58%
per annum, the Class HI: B-2 Pass-Through Rate is 7.90% per annum, the Class HE:
A-1ARM Pass-Through Rate is a floating rate not to exceed 14% per annum, the
Class HE: A-1 Pass-Through Rate is 5.99% per annum, the Class HE: A-2 Pass-
Through Rate is 6.32% per annum, the Class HE: A-3 Pass-Through Rate is 6.62%
per annum, the Class HE: A-4 Pass-Through Rate is 6.85% per annum, the Class HE:
A-5 Pass-Through Rate is 7.21% per annum, the Class HE: A-6 Pass-Through Rate is
7.16% per annum, the Class HE: M-1 Pass-Through Rate is 7.71% per annum, the
Class HE: M-2 Pass-Through Rate is 7.90% per annum, the Class HE: B-1 Pass-
Through Rate is 7.87% per annum, the Class HE: B-2 Pass-Through Rate is 8.08%
per annum; the initial aggregate principal balance of the Class HI: A-1
Certificates is $29,200,000, the initial aggregate principal balance of the
Class HI: A-2 Certificates is $18,000,000, the initial aggregate principal
balance of the Class HI: A-3 Certificates is $21,018,000, the initial aggregate
principal balance of the Class HI: M-1 Certificates is $6,821,000, the initial
aggregate principal balance of the Class HI: M-2 Certificates is $4,264,000, the
initial aggregate principal balance of the Class HI: B-1 Certificates is
$4,051,000, the initial aggregate principal balance of the Class HI: B-2
Certificates is $1,919,230, the initial aggregate principal balance of the Class
HE: A-1ARM Certificate is $69,822,000, the initial aggregate principal balance
of the Class HE: A-1 Certificates is $41,500,000, the initial aggregate
principal balance of the Class HE: A-2 Certificates is $29,000,000, the initial
aggregate principal balance of the Class HE: A-3 Certificates is $94,500,500,
the initial aggregate principal balance of the Class HE: A-4 Certificates is
$25,000,000, the initial aggregate principal balance of the Class A-5
Certificates is $62,522,000, the initial aggregate principal balance of the
Class HE: A-6 Certificates is $51,000,000, the initial aggregate principal
balance of the Class HE: M-1 Certificates is $23,877,000, the initial aggregate
principal balance of the Class HE: M-2 Certificates is $15,194,000, the initial
aggregate principal balance of the Class HE: B-1 Certificates is $15,194,000,
the initial aggregate principal balance of the Class HE: B-2 Certificates is
$6,512,008, and the latest possible maturity date with respect to the Sub-Pool
HI Certificates is in August, 2023, with respect to the HE: A-1ARM Certificates
is in March, 2027, and with respect to the Sub-Pool HE Certificates, other than
the Class HE: A-1ARM Certificates, is in March, 2028 (calculated using a
prepayment assumption of 0% and assuming no defaults or delinquencies on the
2-4
Contracts). The Class C Certificate is being issued in a single class and is
hereby designated by the Company as constituting the sole class of "residual
interests" in the Trust for purposes of Section 860G(a)(2) of the Code.
c. The Closing Date, which is the day on which the Trust will issue all
of its regular and residual interests, is hereby designated as the "startup day"
of the REMIC constituted by the Trust within the meaning of Section 860G(a)(9)
of the Code.
d. After the Closing Date, neither the Trustee, the Company nor any
Servicer shall (i) accept any contribution of assets to the Trust, (ii) dispose
of any portion of the Trust other than as provided in Sections 3.05, 3.06 and
8.06, (iii) engage in any "prohibited transaction," as defined in Sections
860F(a)(2) and (5) of the Code, (iv) accept any contribution after the Closing
Date that is subject to the tax imposed by Section 860G(d) of the Code or (v)
engage in any activity or enter into any agreement that would result in the
receipt by the Trust of any "net income from foreclosure property" as defined in
Section 860G(c)(2) of the Code, unless, prior to any such action set forth in
clauses (i), (ii), (iii), (iv) or (v), the Trustee shall have received an
unqualified Opinion of Counsel, which opinion shall not be an expense of the
Trust, stating that such action will not, directly or indirectly, (A) adversely
affect the status of the Trust as a REMIC or the status of the Certificates as
"regular interests" therein or of the Class C Certificate as the sole class of
"residual interests" therein, (B) affect the distributions payable hereunder to
the Certificateholders or the Class C Certificateholder or (C) result in the
imposition of any lien, charge or encumbrance upon the Trust.
e. Upon the acquisition of any real property (including interests in real
property), or any personal property incident thereto, in connection with the
default of a Contract, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, unless the Servicer and the
Trustee receive an Opinion of Counsel to the effect that the holding by the
Trust of such property subsequent to the period then permitted by the Code will
not result in the imposition of any taxes on "prohibited transactions" of the
Trust, as defined in Section 860F of the Code, or cause the Trust to fail to
qualify as a REMIC at any time that the Certificates or Class C Certificate are
outstanding. The Servicer shall manage, conserve, protect and operate such real
property, or any personal property incident thereto, so that such property will
not fail to qualify as "foreclosure property," as defined in Section 860G(a)(8)
of the Code, and that the management, conservation, protection and operation of
such property will not result in the receipt by the Trust of any "income from
nonpermitted assets," within the meaning of Section 860F(a)(2)(B) of the Code.
2-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company makes the following representations and warranties, effective
as of the Closing Date, on which the Trustee will rely in accepting the
Contracts in trust and issuing the Certificates and the Class C Certificate on
behalf of the Trust. The repurchase or substitution and indemnification
obligations of the Company set forth in Section 3.05 constitute the sole
remedies available to the Trust, the Certificateholders or the Class C
Certificateholder for a breach of a representation or warranty of the Company
set forth in Section 3.02, 3.03 or 3.04 of this Agreement or in the Officer's
Certificate delivered pursuant to Section 2.02(j) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company.
----------------------------------------------------
The Company represents and warrants to the Certificateholders and the Class
C Certificateholder that:
a. Organization and Good Standing. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or other) of the Company.
b. Authorization; Binding Obligations. The Company has the power
----------------------------------
and authority to make, execute, deliver and perform this Agreement and all
of the transactions contemplated under this Agreement, and to create the
Trust and cause it to make, execute, deliver and perform its obligations
under this Agreement and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and to
cause the Trust to be created. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
c. No Consent Required. The Company is not required to obtain the
-------------------
consent of any other party or any consent, license, approval or
authorization from,
3-1
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
d. No Violations. The execution, delivery and performance of this
-------------
Agreement by the Company will not violate any provision of any existing law
or regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Company, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Company
is a party or by which the Company may be bound.
e. Litigation. No litigation or administrative proceeding of or
----------
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Company threatened, against the Company or any of its
properties or with respect to this Agreement, the Certificates or the Class
C Certificate which, if adversely determined, would in the opinion of the
Company have a material adverse effect on the transactions contemplated by
this Agreement.
f. Licensing. The Company is duly licensed in each state in which
---------
Contracts were originated to the extent the Company is required to be
licensed by applicable law in connection with the origination and servicing
of the Contracts.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
------------------------------------------------------
The Company represents and warrants to the Certificateholders and the Class
C Certificateholder as to each Contract:
a. List of Contracts. The information set forth in the List of
-----------------
Contracts is true and correct as of its date.
b. Payments. As of the Cut-off Date, the most recent scheduled
--------
payment due under the Contract was made by or on behalf of the Obligor or
was not delinquent for more than 59 days. If the Company deferred the first
payment on the Contract, the deferment has expired.
c. Costs Paid and No Waivers. The terms of the Contract have not
-------------------------
been waived, altered or modified in any respect, except by instruments or
documents identified in the Contract File. All costs, fees and expenses
incurred in making, closing and perfecting the lien of the Contract have
been paid. The subject real property has not been released from the lien of
such Contract.
3-2
d. Binding Obligation. The Contract is the legal, valid and binding
------------------
obligation of the Obligor thereunder and is enforceable in accordance with
its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally.
e. No Defenses. The Contract is not subject to any right of
-----------
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of the Contract or the
exercise of any right thereunder will not render the Contract unenforceable
in whole or in part or subject to any right of rescission, setoff,
counterclaim or defense, including the defense of usury, and no such right
of rescission, setoff, counterclaim or defense has been asserted with
respect thereto.
f. Insurance Coverage. The Company has been named as an additional
------------------
insured party under any hazard insurance on the property described in the
Contract, to the extent required by the Company's underwriting guidelines.
If the property described in the Contract is located in a special flood
area designated by HUD, the property is covered by a flood insurance policy
of the nature and, if such Contract is an FHA-Insured Contract, in the
amount required by the FHA Regulations.
g. FHA Insurance. If the Contract is an FHA-Insured Contract, such
-------------
Contract was originated in compliance with FHA Regulations and is insured,
without setoff, surcharge or defense, by FHA Insurance. Following the
assignment of such FHA-Insured Contract to the Trustee, the Trustee on
behalf of the Trust will be entitled to the full benefits of the FHA
Insurance.
h. Lawful Assignment. The Contract was not originated in and is not
-----------------
subject to the laws of any jurisdiction whose laws would make the transfer
of the Contract under this Agreement or pursuant to transfers of the
Certificates or Class C Certificate unlawful or render the Contract
unenforceable. The Company has duly executed a valid blanket assignment of
the Contracts transferred to the Trust, and has transferred all its right,
title and interest in such Contracts, including all rights the Company may
have against the originating contractor or lender with respect to Contracts
originated by a contractor or lender rather than the Company, to the Trust.
The blanket assignment, any and all documents executed by the Company
pursuant to Section 2.01(b) hereof, and this Agreement each constitute the
legal, valid and binding obligation of the Company enforceable in
accordance with their respective terms.
i. Compliance with Law. At the date of origination of the
-------------------
requirements of any federal and state laws, rules and regulations
applicable to the
3-3
Contract, including, without limitation, usury and truth in lending laws
and (if such Contract is an FHA-Insured Contract) the FHA Regulations have
been complied with, and the Company shall for at least the period of this
Agreement, maintain in its possession, available for the Trustee's
inspection, and shall deliver to the Trustee upon demand, evidence of
compliance with all such requirements.
j. Contract in Force. The Contract has not been satisfied or
-----------------
subordinated in whole or in part or rescinded, and the real estate securing
such Contract has not been released from the lien of such Contract in whole
or in part.
k. Valid Lien. The Contract has been duly executed and delivered
----------
by the Obligor, and the lien created thereby has been duly recorded, or has
been delivered to the appropriate governmental authority for recording and
will be duly recorded within 180 days, and constitutes a valid and
perfected first, second, third or fourth priority lien on the real estate
described in such Contract.
l. Capacity of Parties. The signature(s) of the Obligor(s) on the
-------------------
Contract are genuine and all parties to the Contract had full legal
capacity to execute the Contract.
m. Good Title. The Company is the sole owner of the Contract and,
----------
if such Contract is an FHA-Insured Contract, because the Trustee is a
lender approved by HUD to originate and purchase Title I loans under a
valid Title I contract of insurance, has the authority to sell, transfer
and assign such Contract to the Trust under the terms of this Agreement.
There has been no assignment, sale or hypothecation of the Contract by the
Company except the usual past hypothecation of the Contract in connection
with the Company's normal banking transactions in the conduct of its
business, which hypothecation terminates upon sale of the Contract to the
Trust. The Company has good and marketable title to the Contract, free and
clear of any encumbrance, equity, loan, pledge, charge, claim, lien or
encumbrance of any type and has full right to transfer the Contract to the
Trust.
n. No Defaults. As of the Cut-off Date, there was no default,
-----------
breach, violation or event permitting acceleration existing under the
Contract and no event which, with notice and the expiration of any grace or
cure period, would constitute such a default, breach, violation or event
permitting acceleration under such Contract (except payment delinquencies
permitted by clause (b) above). The Company has not waived any such
default, breach, violation or event permitting acceleration except payment
delinquencies permitted by clause (b) above.
3-4
o. Equal Installments. The Contract, unless it is an Adjustable
------------------
Rate Contract, has a fixed Contract Interest Rate and provides for monthly
payments (except, in the case of a Balloon Loan, for the final monthly
payment of such loan) which fully amortize the loan over its term.
p. Enforceability. Each Contract contains customary and enforceable
--------------
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
lien provided thereby.
q. One Original. There is only one original executed Contract,
------------
which Contract has been delivered to the Trustee or its Custodian on or
before the Closing Date.
r. Genuine Documents. All documents submitted are genuine, and all
-----------------
other representations as to each Contract, including the List of Contracts
delivered to the Trustee, are true and correct. Any copies of documents
provided by the Company are accurate and complete (except that, with
respect to each Contract that was originated by a contractor or lender
rather than the Company, the Company makes such representation and warranty
only to the best of the Company's knowledge).
s. Origination. Each Home Improvement Contract was originated by
-----------
a home improvement contractor in the ordinary course of such contractor's
business or was originated by the Company directly. Each Home Equity
Contract was originated by a home equity lender in the ordinary course of
such lender's business or was originated by the Company directly.
t. Underwriting Guidelines. Each Contract was originated or
-----------------------
purchased in accordance with the Company's then-current underwriting
guidelines.
u. Good Repair. The property described in the Contract is, to the
-----------
best of the Company's knowledge, free of damage and in good repair.
v. Qualified Mortgage. The Contract represents a "qualified
------------------
mortgage" within the meaning of Section 860G(a)(3) of the Code. The Company
represents and warrants that, either as of the date or origination (or, in
the case of a non-default modification, the modification date) or the
Closing Date, the fair market value of the property securing each Contract
was not less than 80% of the "adjusted issue price" (within the meaning of
the REMIC Provisions) of such Contract.
3-5
SECTION 3.03. Representations and Warranties Regarding the Contracts in
---------------------------------------------------------
the Aggregate.
-------------
The Company represents and warrants to the Certificateholders and the Class
C Certificateholder that:
a. Amounts. The Cut-off Date Pool Principal Balance of Sub-Pool HI
-------
equals at least the Sub-Pool HI Certificate Principal Balance and the Cut-
off Date Pool Principal Balance of Sub-Pool HE equals at least the Sub-Pool
HE Certificate Principal Balance.
b. Characteristics. The Home Improvement Contracts have the
---------------
following characteristics: (i) 100% of the Home Improvement Contracts are
secured by a mortgage, deed of trust or security deed on the related real
estate; (ii) no Home Improvement Contract has a remaining maturity of more
than 305 months; (iii) the final scheduled payment date on the Home
Improvement Contract with the latest maturity is in August, 2022; (iv) no
HI Contract was originated before 1995; and (v) no HI Contract has a
Contract Interest Rate less than 7.99%.
The Home Equity Contracts have the following characteristics: (i) 100%
of the Home Equity Contracts are secured by a mortgage, deed of trust or
security deed on the related real estate; (ii) no Home Equity Contract has
a remaining maturity of more than 360 months; (iii) the final scheduled
payment date on the Home Equity Contract with the latest maturity is in
March, 2027; (iv) no Home Equity Contract was originated before 1993; and
(v) no Home Equity Contract (excluding the Adjustable Rate Contracts) has a
Contract Interest Rate less than 6.63%. Of the Home Equity Contracts that
are Adjustable Rate Contracts, (i) none was originated before 1996; (ii)
the Contract Interest Rate on each is subject to annual or semiannual
adjustment, after an initial six-month or twenty-four month period, to
equal the sum of (A) the per annum rate equal to the average of interbank
offered rates for six-month U.S. dollar-denominated deposits in the London
market based on quotations of major banks, as published in The Wall Street
Journal, plus (B) a fixed percentage amount specified in the Adjustable
Rate Contract (the "gross margin"); and (iii) the gross margin on no more
than one Adjustable Rate Contract is less than 4.250% and the gross margin
on no more than one Adjustable Rate Contract exceeds 8.49%.
c. Geographic Concentrations. By Cut-off Date Principal Balance,
-------------------------
15.82% of the Home Improvement Contracts are secured by property located in
California, 5.40% in Florida, 5.36% in Michigan, 7.74% in New Jersey, 6.85%
in New York and 6.37% in Pennsylvania. No other state represents more than
5%
3-6
of the Cut-off Date Pool Principal Balance of Sub-Pool HI. No more than 1%
of the Home Improvement Contracts by Cut-off Date Principal Balance are
secured by property located in an area with the same five-digit zip code.
By Cut-off Date Principal Balance, 5.03% of the Home Equity Contracts
other than the Adjustable Rate Contracts are secured by property located in
Alabama, 8.25% in Florida, 8.69% in Georgia, 6.16% in Illinois, 6.15% in
Maryland, 5.10% in Michigan, 9.19% in North Carolina 5.95% in Ohio, 5.36%
in Pennsylvania, 5.40% in South Carolina, and 5.09% in Virginia. No other
state represents more than 5% of the Cut-off Date Pool Principal Balance of
Sub-Pool HE.
By Cut-off Date Principal Balance, 5.18% of the Adjustable Rate
Contracts are secured by property located in Alabama, 5.18% in Arizona,
14.61% in California, 5.66% in Georgia, 5.35% in Michigan and 5.47% in
Virginia. No other state represents more than 5% of the Cut-off Date Pool
Principal Balance of Sub-Pool HE.
No more than 2% of the Home Equity Contracts by Cut-off Date Principal
Balance are secured by property located in an area with the same five-digit
zip code.
d. Marking Records. By the Closing Date, the Company has caused the
---------------
portions of the Electronic Ledger relating to the Contracts to be clearly
and unambiguously marked to indicate that such Contracts constitute part of
the Trust and are owned by the Trust in accordance with the terms of the
Trust created hereunder.
e. No Adverse Selection. No adverse selection procedures have been
--------------------
employed in selecting the Contracts.
f. Contractor/Lender Concentration. No more than 5% of the Home
-------------------------------
Improvement Contracts and no more than 8% of the Home Equity Contracts, by
Cut-off Date Principal Balance, were originated by any one contractor or
lender (other than the Company).
SECTION 3.04. Representations and Warranties Regarding the Contract Files.
-----------------------------------------------------------
The Company represents and warrants to the Certificateholders and the Class
C Certificateholder that:
3-7
a. Possession. Immediately prior to the Closing Date, the Company
----------
will have possession of each original Contract and the related Contract
File, and there are and there will be no custodial agreements or servicing
contracts in effect materially and adversely affecting the rights of the
Company to make, or cause to be made, any delivery required hereunder.
b. Bulk Transfer Laws. The transfer, assignment and conveyance of
------------------
the Contracts and the Contract Files by the Company pursuant to this
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
SECTION 3.05. Repurchases of Contracts for Breach of Representations and
----------------------------------------------------------
Warranties.
----------
a. Subject to Section 3.06, the Company shall repurchase a Contract, at
its Repurchase Price, not later than 90 days after the day on which the Company,
the Servicer or the Trustee first discovers or should have discovered a breach
of a representation or warranty of the Company set forth in Sections 3.02, 3.03
or 3.04 of this Agreement or in the Officer's Certificate delivered pursuant to
Section 2.02(j) of this Agreement that materially adversely affects the Trust's,
the Certificateholders' or the Class C Certificateholder's interest in such
Contract and which breach has not been cured; provided, however, that (i) in the
-------- -------
event that a party other than the Company first becomes aware of such breach,
such discovering party shall notify the Company in writing within 5 Business
Days of the date of such discovery and (ii) with respect to any Contract
incorrectly described on the List of Contracts with respect to Cut-off Date
Principal Balance, which the Company would otherwise be required to repurchase
pursuant to this Section, the Company may, in lieu of repurchasing such
Contract, deposit in the Certificate Account within 90 days from the date of
such discovery cash in an amount sufficient to cure such deficiency or
discrepancy. Any such cash so deposited shall be distributed to
Certificateholders and the Class C Certificateholder on the immediately
following Payment Date as a collection of principal or interest on such
Contract, according to the nature of the deficiency or discrepancy.
Notwithstanding any other provision of this Agreement, the obligation of the
Company under this Section shall not terminate upon a Service Transfer pursuant
to Article VII.
b. On or prior to the date that is the second anniversary of the Closing
Date, the Company may, at its election, substitute an Eligible Substitute
Contract for a Contract that it is obligated to repurchase pursuant to Section
3.05(a) (such Contract being referred to as the "Replaced Contract") upon
satisfaction of the following conditions:
3-8
(i) the Company shall have conveyed to the Trustee the Contract to
be substituted for the Replaced Contract and the Contract File related to
such Contract and the Company shall have marked the Electronic Ledger
indicating that such Contract constitutes part of the Trust;
(ii) the Contract to be substituted is an Eligible Substitute
Contract and the Company delivers an Officers' Certificate, substantially
in the form of Exhibit M-2 hereto, to the Trustee certifying that such
Contract is an Eligible Substitute Contract;
(iii) the Company shall have delivered to the Trustee evidence of
filing of a UCC-1 financing statement executed by the Company as debtor,
naming the Trustee as secured party and filed in Minnesota, listing such
Contract to be substituted as collateral;
(iv) the Company shall have delivered to the Trustee an executed
assignment to the Trustee on behalf of the Trust in recordable form for the
mortgage securing such Contract to be substituted;
(v) the Company shall have delivered to the Trustee an Opinion of
Counsel (a) to the effect that the substitution of such Contract for such
Replaced Contract will not cause the Trust to fail to qualify as a REMIC at
any time under then applicable REMIC Provisions or cause any "prohibited
transaction" that will result in the imposition of a tax under such REMIC
Provisions and (b) to the effect of paragraph 9 of Exhibit I hereto; and
(vi) if the Scheduled Principal Balance of such Replaced Contract is
greater than the Scheduled Principal Balance of the Contract to be
substituted, the Company shall have deposited in the Certificate Account
the amount of such excess and shall have included in the Officers'
Certificate required by clause (ii) above a certification that such deposit
has been made.
Upon satisfaction of such conditions, the Trustee shall add such Contract
to be substituted to, and delete such Replaced Contract from, the List of
Contracts. Such substitution shall be effected prior to the first Determination
Date that occurs more than 90 days after the Company becomes aware, or should
have become aware, or receives written notice from the Trustee, of the breach
referred to in Section 3.05(a). Promptly after any such substitution of a
Contract, the Company shall give written notice of such substitution to S&P and
Fitch.
c. If the Company is required to repurchase a Contract under Section
3.05(a) or has elected to substitute an Eligible Substitute Contract for a
Contract under Section
3-9
3.05(b), and if the reason for such repurchase or substitution is that the
Company has failed to deliver to the Trustee the Contract File for the Contract
to be repurchased or substituted for (except in the case of a failure to deliver
evidence of the lien on the related improved property and evidence of due
recording of such mortgage, deed of trust or security deed, if available), then,
notwithstanding the time periods set out in Sections 3.05(a) and 3.05(b), the
Company shall either (i) repurchase such Contract, at its respective Repurchase
Price, within 30 days of the Closing Date, or (ii) substitute an Eligible
Substitute Contract for the Contract within 90 days of the Closing Date.
d. The Company shall defend and indemnify the Trustee, the
Certificateholders, and the Class C Certificateholder against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of any third-party action arising out of any breach of any such
representation and warranty.
SECTION 3.06. No Repurchase Under Certain Circumstances.
-----------------------------------------
Notwithstanding any provision of this Agreement to the contrary, no
repurchase or substitution pursuant to Section 3.05 shall be made unless the
Company (at its own expense) obtains for the Trustee an Opinion of Counsel
addressed to the Trustee that any such repurchase or substitution would not,
under the REMIC Provisions, (i) cause the Trust to fail to qualify as a REMIC
while any regular interest in the REMIC is outstanding, (ii) result in a tax on
prohibited transactions within the meaning of Section 860F(a)(2) of the Code or
(iii) constitute a contribution after the startup day subject to tax under
Section 860G(d) of the Code. The Company diligently shall attempt to obtain
such Opinion of Counsel. In the case of a repurchase or deposit pursuant to
Section 3.05(a) or 3.05(b), notwithstanding the absence of such opinion as to
the imposition of any tax as the result of such purchase or deposit, the Company
shall repurchase such Contract or make such deposit and shall guarantee the
payment of such tax by paying to the Trustee the amount of such tax not later
than five Business Days before such tax shall be due and payable to the extent
that amounts previously paid over to and then held by the Trustee pursuant to
Section 6.06 hereof are insufficient to pay such tax and all other taxes
chargeable under Section 6.06. Pursuant to Section 6.06, the Servicer is hereby
directed to withhold, and shall withhold and pay over to the Trustee, an amount
sufficient to pay such tax and any other taxes imposed on "prohibited
transactions" under Section 860F(a)(i) of the Code or imposed on "contributions
after startup date" under Section 860G(d) of the Code from amounts otherwise
distributable to the Class C Certificateholder. The Servicer shall give notice
to the Trustee at the time of such repurchase of the amounts due from the
Company pursuant to the guarantee of the Company described above and give notice
as to who should receive such payment.
3-10
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by the Company or from moneys
held in the funds and accounts created under this Agreement. The Trustee shall
be deemed conclusively to have complied with this Section if it follows the
directions of the Company.
In the event any tax that is guaranteed by the Company pursuant to this
Section 3.06 is refunded to the Trust or otherwise is determined not to be
payable, the Company shall be repaid the amount of such refund or that portion
of any guarantee payment made by the Company that is not applied to the payment
of such tax.
3-11
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
-----------------------------------------------------------
SECTION 4.01. Transfer of Contracts.
---------------------
a. On or prior to the Closing Date, the Company shall deliver the
Contract Files to the Trustee. The Trustee shall maintain the Contract Files at
its office or with a duly appointed Xxxxxxxxx, who shall act as the agent of the
Trustee on behalf of the Certificateholders. The Trustee may release a Contract
File to the Servicer pursuant to Section 5.07. The Company has filed a form
UCC-1 financing statement regarding the sale of the Contracts to the Trustee,
and shall file continuation statements in respect of such UCC-1 financing
statement as if such financing statement were necessary to perfect such sale.
The Company shall take any other actions necessary to maintain the perfection of
the sale of the Contracts to the Trustee.
b. If at any time during the term of this Agreement the Company does not
have a long-term senior debt rating of BBB+ or higher from both S&P and Fitch
(if rated by Fitch), (i) the Company shall within 30 days execute and deliver to
the Trustee (if it has not previously done so) endorsements of each Home
Improvement Contract and assignments in recordable form of each mortgage, deed
of trust or security deed securing a Home Improvement Contract, and (ii) the
Trustee, at the Company's expense, shall within 60 days file in the appropriate
recording offices the assignments to the Trustee on behalf of the Trust of each
mortgage, deed of trust or security deed securing a Home Improvement Contract.
c. If at any time during the term of this Agreement the Company does not
have a long-term senior debt rating of A- or higher from both S&P and Fitch (if
rated by Fitch), (i) the Company shall within 30 days execute and deliver to the
Trustee (if it has not previously done so) endorsements of each Home Equity
Contract and assignments in recordable form of each mortgage, deed of trust or
security deed securing a Home Equity Contract, and (ii) the Trustee, at the
Company's expense, shall within 60 days file in the appropriate recording
offices the assignments to the Trustee on behalf of the Trust of each mortgage,
deed of trust or security deed securing a Home Equity Contract; provided,
--------
however, that such execution and filing of the assignments with respect to the
-------
Home Equity Contracts shall not be required if the Trustee receives written
confirmation from both S&P and Fitch that the ratings of the Certificates would
not be reduced or withdrawn by the failure to execute and file such assignments.
4-1
SECTION 4.02. Costs and Expenses.
------------------
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the vesting (including the perfection and the maintenance of
perfection, as against all third parties) in the Trust of all right, title and
interest in and to the Contracts (including, without limitation, the mortgage or
deed of trust on the related real estate granted thereby).
4-2
ARTICLE V
SERVICING OF CONTRACTS
----------------------
SECTION 5.01. Responsibility for Contract Administration.
------------------------------------------
The Servicer will have the sole obligation to manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Company, if it is the Servicer, may delegate some or all of its
servicing duties to a wholly owned subsidiary of the Company, for so long as
such subsidiary remains, directly or indirectly, a wholly owned subsidiary of
the Company. Notwithstanding any such delegation the Company shall retain all of
the rights and obligations of the Servicer hereunder. The Trustee, at the
request of a Servicing Officer, shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. The Company is
hereby appointed the Servicer until such time as any Service Transfer shall be
effected under Article VII.
SECTION 5.02. Standard of Care.
----------------
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care required by FHA (in the case of FHA-Insured Contracts) and
otherwise consistent with the highest degree of skill and care that the Servicer
exercises with respect to similar contracts (including manufactured housing
contracts) serviced by the Servicer; provided, however, that such degree of
-------- -------
skill and care shall be at least as favorable as the degree of skill and care
generally applied by prudent servicers of home improvement contracts and home
equity loans for prudent institutional investors.
SECTION 5.03. Records.
-------
The Servicer shall, during the period it is servicer hereunder, maintain
such books of account and other records as will enable the Trustee to determine
the status of each Contract.
SECTION 5.04. Inspection.
----------
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Contracts, which have not previously
been provided to the Trust, and will cause its personnel to assist in any
examination of such records by the Trustee. The examination referred to in this
Section will be conducted in a manner
5-1
which does not unreasonably interfere with the Servicer's normal operations or
customer or employee relations. Without otherwise limiting the scope of the
examination the Trustee may make, the Trustee may, using generally accepted
audit procedures, verify the status of each Contract and review the Electronic
Ledger and records relating thereto for conformity to Monthly Reports prepared
pursuant to Article VI and compliance with the standards represented to exist as
to each Contract in this Agreement.
b. At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Certificateholders.
c. A Certificateholder holding Certificates representing in the aggregate
at least 5% of the Aggregate Certificate Principal Balance shall have the rights
of inspection afforded to the Trustee pursuant to this Section 5.04.
SECTION 5.05. Certificate Account.
-------------------
a. On or before the Closing Date, the Company shall establish the
Certificate Account on behalf of the Trust, which shall be an Eligible Account.
The Servicer shall pay into the Certificate Account, as promptly as practicable
(not later than the next Business Day) following receipt thereof, all amounts
received with respect to the Contracts, including all proceeds of FHA Insurance
claims received by the Servicer, other than extension fees and assumption fees,
which fees shall be retained by the Servicer as compensation for servicing the
Contracts, and other than Liquidation Expenses permitted by Section 5.08. The
Trustee shall pay into the Certificate Account as promptly as practicable all
proceeds of FHA Insurance claims with respect to FHA-Insured Contracts received
by the Trustee. All amounts paid into the Certificate Account under this
Agreement shall be held in trust for the Trustee, the Certificateholders and the
Class C Certificateholder until payment of any such amounts is authorized under
this Agreement. Only the Trustee may withdraw funds from the Certificate
Account.
b. If the Servicer so directs, the institution maintaining the
Certificate Account shall, in the name of the Trustee in its capacity as such,
invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Payment
Date. Any investment of funds in the Certificate Account shall be made in
Eligible Investments held by a financial institution in accordance with the
following requirements: (1) all Eligible Investments shall be held in an
account with such financial institution in the name of the Trustee, and the
agreement governing such account shall be governed by the laws of the State of
Minnesota, (2) with respect to securities held in such account, such securities
shall be (i) certificated securities (as such term is used in N.Y. U.C.C. (S)
8-313(d)(i)), securities deemed to be
5-2
certificated securities under applicable regulations of the United States
government, or uncertificated securities issued by an issuer organized under the
laws of the State of New York or the State of Delaware, (ii) either (A) in the
possession of such institution, (B) in the possession of a clearing corporation
(as such term is used in Minn. Stat. (S) 336.8-313(g)) in the State of New York,
registered in the name of such clearing corporation or its nominee, not endorsed
for collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the Trustee's
security interest therein, and held by such clearing corporation in an account
of such institution, (C) held in an account of such institution with the Federal
Reserve Bank of New York or the Federal Reserve Bank of Minneapolis, or (D) in
the case of uncertificated securities, issued in the name of such institution,
and (iii) identified, by book entry or otherwise, as held for the account of, or
pledged to, the Trustee on the records of such institution, and such institution
shall have sent the Trustee a confirmation thereof, and (3) with respect to
repurchase obligations held in such account, such repurchase obligations shall
be identified by such institution, by book entry or otherwise, as held for the
account of, or pledged to, the Trustee on the records of such institution, and
the related securities shall be held in accordance with the requirements of
clause (2) above. Once such funds are invested, such institution shall not
change the investment of such funds. All income and gain from such investments
shall be added to the Certificate Account and distributed on such Payment Date
pursuant to Sections 8.04(b) and (d). Losses, if any, realized on amounts in the
Certificate Account invested pursuant to this paragraph shall first be credited
against undistributed investment earnings on amounts in the Certificate Account
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Certificate Account and otherwise available for
distribution to Certificateholders and the Class C Certificateholder pursuant to
Section 8.01. The Company, the Servicer and the Trustee shall in no way be
liable for losses on amounts invested in accordance with the provisions hereof.
Funds in the Certificate Account not so invested must be insured to the extent
permitted by law by the Federal Deposit Insurance Corporation. "Eligible
--------
Investments" are any of the following:
-----------
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any Affiliate of the
Trustee, acting in its commercial capacity) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual
5-3
commitment providing for such investment, the commercial paper or other
short-term debt obligations of such depository institution or trust company
are rated at least at least A-1 by S&P and F-1 by Fitch (if rated by Fitch)
and (B) any other demand or time deposit or certificate of deposit which is
fully insured by the Federal Deposit Insurance Corporation;
(iii) shares of an investment company registered under the Investment
Company Act of 1940, whose shares are registered under the Securities Act
of 1933 and have a rating of AAA by both S&P and Fitch, and whose only
investments are in securities described in clauses (i) and (ii) above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of America,
in either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a credit rating of at least AA from both S&P
and Fitch (if rated by Fitch) at the time of such investment; provided,
--------
however, that securities issued by any particular corporation will not be
-------
Eligible Investments to the extent that investment therein will cause the
then outstanding principal amount of securities issued by such corporation
and held as part of the corpus of the Trust to exceed 10% of amounts held
in the Certificate Account; and
(vi) commercial paper having a rating of at least A-1+ from S&P and
at least F-1+ from Fitch (if rated by Fitch) at the time of such
investment.
The Trustee may trade with itself or an Affiliate in the purchase or sale
of such Eligible Investments.
c. If at any time the Trustee receives notice (from S&P, Fitch, the
Servicer or otherwise) that the Certificate Account has ceased to be an Eligible
Account, the Trustee shall, as soon as practicable but in no event later than
five Business Days of the Trustee's receipt of such notice, transfer the
Certificate Account and all funds and Eligible Investments therein to an
Eligible Account. Following any such transfer, the Trustee shall notify S&P,
Fitch and the Servicer of the location of the Certificate Account.
SECTION 5.06. Enforcement.
-----------
5-4
a. The Servicer shall, consistent with customary servicing procedures,
act with respect to the Contracts in such manner as will maximize the receipt of
principal and interest on such Contracts and Liquidation Proceeds with respect
to Liquidated Contracts. The Company shall pay all FHA Insurance premiums
required by FHA Regulations in respect of FHA-Insured Contracts; if the Company
is no longer the Servicer and fails to pay such FHA Insurance premiums, the
successor Servicer shall pay such premiums and shall be entitled to
reimbursement therefor in accordance with Section 8.04. The Servicer shall
comply with FHA Regulations in servicing FHA-Insured Contracts so that the
related FHA Insurance remains in full force and effect, except for good-faith
disputes relating to FHA Regulations or such FHA Insurance.
b. In accordance with the standard of care specified in Paragraph 5.02,
the Servicer may, in its own name, if possible, or as agent for the Trust,
commence proceedings for the foreclosure of any subject real estate, and may
(with respect to an FHA-Insured Contract) submit a claim to FHA in lieu of
commencing foreclosure proceedings, or may take such other steps that in the
Servicer's reasonable judgment will maximize Liquidation Proceeds with respect
to the Contract, including, for example, the sale of the Contract to a third
party for foreclosure or enforcement and, in the case of any default on a
related prior mortgage loan, the advancing of funds to correct such default and
the advancing of funds to pay off a related prior mortgage loan, which advances
are Liquidation Expenses that will be reimbursed to the Servicer out of related
Liquidation Proceeds before the related Net Liquidation Proceeds are paid to
Certificateholders and the Class C Certificateholder. The Servicer shall also
deposit in the Certificate Account any Net Liquidation Proceeds received in
connection with any Contract which became a Liquidated Contract in a prior Due
Period.
c. The Servicer may sue to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems necessary to enforce the Contract,
including bringing suit in its name or the names of the Certificateholders and
the Class C Certificateholder.
d. The Servicer may grant to the Obligor on any Contract any rebate,
refund or adjustment out of the Certificate Account that the Servicer in good
faith believes is required because of prepayment in full of the Contract. The
Servicer will not permit any rescission or cancellation of any Contract.
5-5
e. The Servicer shall enforce any due-on-sale clause in a Contract if
such enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related property the Servicer shall use its best efforts
to obtain an assumption agreement in connection therewith.
f. If, following the termination of the Trust pursuant to Section 12.04,
HUD demands reimbursement of an FHA Insurance claim paid on an FHA-Insured
Contract prior to the termination of the Trust, the Servicer agrees that it will
not seek to recover any such amount from the Trustee or the Certificateholders.
g. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract at a time when such Contract is not in default or such default is not
reasonably foreseeable, if such modification or waiver would both (i) be treated
as a taxable exchange under Section 1001 of the Code or any temporary or final
Treasury Regulations promulgated thereunder and (ii) cause the Trust to fail to
qualify as a REMIC or cause the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions.
SECTION 5.07. Trustee to Cooperate.
--------------------
a. Upon payment in full on any Contract, the Servicer will notify the
Trustee and the Company (if the Company is not the Servicer) on the next
succeeding Payment Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Certificate Account pursuant to Section 5.05 have been so deposited) and shall
request delivery of the Contract and Contract File to the Servicer. Upon
receipt of such delivery and request, the Trustee shall promptly release or
cause to be released such Contract and Contract File to the Servicer. Upon
receipt of such Contract and Contract File, each of the Company (if different
from the Servicer) and the Servicer is authorized to execute an instrument in
satisfaction of such Contract and to do such other acts and execute such other
documents as the Servicer deems necessary to discharge the Obligor thereunder
and eliminate any lien on the related real estate. The Servicer shall determine
when a Contract has been paid in full; provided that, to the extent that
--------
insufficient payments are received on a Contract credited by the Servicer as
prepaid or paid in full and satisfied, the shortfall shall be paid by the
Servicer out of its own funds, without any right of reimbursement therefor
(except from additional amounts recovered from the related Obligor or otherwise
in respect of such Contract), and deposited in the Certificate Account.
5-6
b. If the Servicer elects to submit a claim to FHA under the FHA
Insurance in respect of an FHA-Insured Contract and payment is received from
FHA, the Servicer shall notify the Trustee and the Company (if the Company is
not the Servicer) on the next succeeding Payment Date by certification of a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payments which are required to
be deposited in the Certificate Account pursuant to Section 5.05 have been so
deposited) and shall request delivery of the Contract and Contract File to the
Servicer. Upon receipt of such delivery and request, the Trustee shall promptly
release or cause to be released such Contract and Contract File to the Servicer.
c. From time to time as appropriate for servicing, foreclosing, and
making a claim for FHA Insurance coverage in connection with an FHA-Insured
Contract, the Trustee shall, upon written request of a Servicing Officer and
delivery to the Trustee of a receipt signed by such Servicing Officer, cause the
original Contract and the related Contract File to be released to the Servicer
and shall execute such documents as the Servicer shall deem necessary to the
prosecution of any such proceedings. Upon request of a Servicing Officer, the
Trustee shall perform such other acts as reasonably requested by the Servicer
and otherwise cooperate with the Servicer in enforcement of the
Certificateholders' rights and remedies with respect to Contracts.
d. The Servicer's receipt of a Contract and/or Contract File shall
obligate the Servicer to return the original Contract and the related Contract
File to the Trustee when its need by the Servicer has ceased unless the Contract
shall be liquidated or repurchased or replaced as described in Section 3.05 or
8.06.
SECTION 5.08. Costs and Expenses.
------------------
Except as provided in Sections 8.04(b) and (d) for the reimbursement of
Advances, all costs and expenses incurred by the Servicer in carrying out its
duties hereunder (including payment of FHA Insurance premiums, payment of the
Trustee's fees pursuant to Section 11.06, fees and expenses of accountants and
payments of all fees and expenses incurred in connection with the enforcement of
Contracts (including enforcement of Contracts and foreclosures upon real estate
securing any such Contracts) and all other fees and expenses not expressly
stated hereunder to be for the account of the Trust) shall be paid by the
Servicer and the Servicer shall not (except as otherwise provided in Section
8.04(b)(10) or Section 8.04(d)(10), as applicable) be entitled to reimbursement
hereunder, except that the Servicer shall be reimbursed out of the Liquidation
Proceeds of a Liquidated Contract (including FHA Insurance proceeds) for
customary out-of-pocket Liquidation Expenses incurred by it. The Servicer shall
not incur such Liquidation Expenses unless it determines in its good faith
business judgment that incurring such expenses will increase the Net Liquidation
Proceeds on the related
5-7
Contract. The Servicer's out-of-pocket Liquidation
Expenses in connection with the submission of a claim to FHA currently do not
exceed $100 per Contract.
SECTION 5.09. Maintenance of Insurance.
------------------------
The Servicer shall at all times keep in force a policy or policies of
insurance covering errors and omissions for failure to maintain insurance as
required by this Agreement, and a fidelity bond. Such policy or policies and
such fidelity bond shall be in such form and amount as is generally customary
among persons who service a portfolio of home improvement contracts and home
equity loans having an aggregate principal amount of $10,000,000 or more, and
which are generally regarded as servicers acceptable to institutional investors.
The Servicer shall cause to be maintained with respect to any real property
securing an FHA-Insured Contract such hazard insurance and flood insurance as
may be required by the FHA Regulations, it being understood that at the Closing
Date hazard insurance was not required to be maintained under the FHA
Regulations. The Servicer shall cause to be maintained with respect to the real
property securing a conventional Contract hazard insurance (excluding flood
insurance coverage) if such conventional Contract is secured by a first priority
mortgage, deed of trust or security deed or the initial principal balance of
such conventional Contract exceeds $30,000.
SECTION 5.10. Merger or Consolidation of Servicer.
-----------------------------------
Any Person into which the Servicer may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party shall be the successor of
the Servicer hereunder, provided such Person shall be an Eligible Servicer,
--------
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Servicer shall promptly notify S&P and Fitch in the event it is a party to any
merger, conversion or consolidation.
5-8
ARTICLE VI
REPORTS AND TAX MATTERS
-----------------------
SECTION 6.01. Monthly Reports.
---------------
a. No later than one Business Day following each Determination Date, the
Servicer shall deliver to the Trustee, S&P and Fitch a Monthly Report,
--------------
substantially in the form of Exhibit Q hereto.
b. If the applicable Monthly Report indicates that there is a Class HI:
M-1 Interest Deficiency Amount, a Class HI: M-2 Interest Deficiency Amount
and/or a Class HI: B-1 Interest Deficiency Amount, the Servicer shall promptly
notify the Trustee, by telephone, of the aggregate amount of such Class HI: M-1
Interest Deficiency Amount, Class HI: M-2 Interest Deficiency Amount and Class
HI: B-1 Interest Deficiency Amount. The Trustee must promptly determine the
total amount of funds in the Certificate Account in respect of the Home
Improvement Contracts on the Determination Date (or the most recent date
practicable), and promptly notify the Servicer, by telephone, of such amount.
If the Servicer determines that the total amount of funds in the Certificate
Account so reported by the Trustee (after giving effect to the withdrawal of the
Sub-Pool HI Amount Available and any Class HI: B-2 Guaranty Payment for the
related Payment Date) will be sufficient to pay in full any Class HI: M-1
Interest Deficiency Amount, Class HI: M-2 Interest Deficiency Amount and Class
HI: B-1 Interest Deficiency Amount, the Servicer shall so indicate on the
Monthly Report. If the Servicer determines that the total amount of funds in
the Certificate Account so reported by the Trustee (after giving effect to the
withdrawal of the Sub-Pool HI Amount Available and any Class HI: B-2 Guaranty
Payment for the related Payment Date) will not be sufficient to pay in full any
Class HI: M-1 Interest Deficiency Amount, Class HI: M-2 Interest Deficiency
Amount and Class HI: B-1 Interest Deficiency Amount, the Servicer shall promptly
notify the Trustee, by telephone, of the remaining deficiency. On the day two
Business Days prior to the related Payment Date, the Trustee shall determine the
total amount of funds in the Certificate Account available to pay such remaining
deficiency in accordance with Section 8.04(c) and shall promptly notify the
Servicer of such amount. If the total amount of funds in the Certificate
Account available in accordance with Section 8.04(c) is not sufficient to pay
the remaining deficiency, the Trustee shall promptly notify the Servicer, and
shall reflect such deficiency in the reports delivered to Certificateholders
pursuant to Section 6.05.
c. If the applicable Monthly Report indicates that there is a Class HE:
M-1 Interest Deficiency Amount, a Class HE: M-2 Interest Deficiency Amount
and/or a Class HE: B-1 Interest Deficiency Amount, the Servicer shall promptly
notify the Trustee, by telephone, of the aggregate amount of such Class HE: M-1
Interest Deficiency Amount,
6-1
Class HE: M-2 Interest Deficiency Amount and Class HE: B-1 Interest Deficiency
Amount. The Trustee must promptly determine the total amount of funds in the
Certificate Account in respect of the Home Equity Contracts on the Determination
Date (or the most recent date practicable), and promptly notify the Servicer, by
telephone, of such amount. If the Servicer determines that the total amount of
funds in the Certificate Account so reported by the Trustee (after giving effect
to the withdrawal of the Sub-Pool HE Amount Available and any Class HE: B-2
Guaranty Payment for the related Payment Date) will be sufficient to pay in full
any Class HE: M-1 Interest Deficiency Amount, Class HE: M-2 Interest Deficiency
Amount and Class HE: B-1 Interest Deficiency Amount, the Servicer shall so
indicate on the Monthly Report. If the Servicer determines that the total amount
of funds in the Certificate Account so reported by the Trustee (after giving
effect to the withdrawal of the Sub-Pool HE Amount Available and any Class HE:
B-2 Guaranty Payment for the related Payment Date) will not be sufficient to pay
in full any Class HE: M-1 Interest Deficiency Amount, Class HE: M-2 Interest
Deficiency Amount and Class HE: B-1 Interest Deficiency Amount, the Servicer
shall promptly notify the Trustee, by telephone, of the remaining deficiency. On
the day two Business Days prior to the related Payment Date, the Trustee shall
determine the total amount of funds in the Certificate Account available to pay
such remaining deficiency in accordance with Section 8.04(e) and shall promptly
notify the Servicer of such amount. If the total amount of funds in the
Certificate Account available in accordance with Section 8.04(e) is not
sufficient to pay the remaining deficiency, the Trustee shall promptly notify
the Servicer, and shall reflect such deficiency in the reports delivered to
Certificateholders pursuant to Section 6.05.
SECTION 6.02. Officer's Certificate.
---------------------
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit K,
certifying the accuracy of the Monthly Report and that no Event of Termination
or event that with notice or lapse of time or both would become an Event of
Termination has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 6.03. Other Data.
----------
In addition, the Company and (if different from the Company) the Servicer
shall, on request of the Trustee, S&P or Fitch, furnish the Trustee, S&P and/or
Fitch such underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants.
----------------------------
On or before May 1 of each year, commencing May 1, 1998, the Servicer at
its expense shall cause a firm of independent public accountants which is a
member of the
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American Institute of Certified Public Accountants to issue to the Servicer a
report that such firm has examined selected documents, records and management's
assertions relating to loans serviced by the Servicer and stating that, on the
basis of such examination, such servicing has been conducted in compliance with
the minimum servicing standards identified in the Mortgage Bankers Association
of America's Uniform Single Attestation Program for Mortgage Bankers, or any
successor uniform program, except for such significant exceptions or errors in
records that, in the opinion of such firm, generally accepted attestation
standards requires it to report.
SECTION 6.05. Statements to Certificateholders and the Class C
------------------------------------------------
Certificateholder.
-----------------
a. The Servicer shall prepare and furnish to the Trustee the statements
specified below relating to the Class HI: A Certificates, the Class HI: M
Certificates, the Class HI: B Certificates, the Class HE: A Certificates, the
Class HE: M Certificates and the Class HE: B Certificates on or before the third
Business Day next preceding each Payment Date.
b. Concurrently with each distribution to Certificateholders, the Trustee
shall, so long as it has received the Monthly Report from the Servicer, forward
or cause to be forwarded by mail to each Holder of a Class HI: A Certificate and
(if the Company is not the Servicer) the Company a statement setting forth the
following:
(i) the amount of such distribution to Holders of each Class of
Class HI: A Certificates allocable to interest, separately identifying any
Unpaid Class HI: A Interest Shortfall included in such distribution and any
remaining Unpaid Class HI: A Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of each Class of
Class HI: A Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HI: A Formula
Distribution Amount for such Payment Date exceeds the Class HI: A
Distribution Amount for such Payment Date;
(iv) the Class HI: A-1 Principal Balance, the Class HI: A-2
Principal Balance, and the Class HI: A-3 Principal Balance after giving
effect to the distribution of principal on such Payment Date;
(v) the Pool Scheduled Principal Balance of Sub-Pool HI for such
Payment Date;
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(vi) the Sub-Pool HI Senior Percentage for such Payment Date;
(vii) the Sub-Pool HI Pool Factor;
(viii) the number and aggregate principal balances of Home Improvement
Contracts delinquent (a) 31-59 days and (b) 60 or more days;
(ix) the Class HI: B Principal Balance Test (as set forth in Exhibit
Q hereto);
(x) the Class HI: B Principal Distribution Test (as set forth in
Exhibit Q hereto);
(xi) the Class HI: M-1 Interest Deficiency Amount, if any, for such
Payment Date;
(xii) the Class HI: M-2 Interest Deficiency Amount, if any, for such
Payment Date;
(xiii) the Class HI: B-1 Interest Deficiency Amount, if any, for such
Payment Date;
(xiv) the number of Liquidated Home Improvement Contracts,
identifying such Contracts and the Net Liquidation Loss on such Contracts;
(xv) the aggregate number and principal amount of FHA-Insured
Contracts on which either (i) the Servicer has submitted a claim for FHA
Insurance, HUD rejected such claim and the Servicer has determined not to
resubmit such claim, or (ii) the Servicer has determined not to submit a
claim for FHA Insurance because such claim would not be paid by HUD; and
(xvi) the amount in the Company's FHA Insurance reserve available to
pay FHA Insurance claims on the FHA-Insured Contracts.
The Trustee and the Servicer shall, if any Certificateholder, Class C
Certificateholder or Underwriter inquires by telephone, provide the information
contained in the most recent Monthly Report.
In the case of information furnished pursuant to clauses (i) through
(iv) above, the amounts shall be expressed as a dollar amount per Class HI: A
Certificate with a 1% Percentage Interest or per $1,000 denomination of Class
HI: A Certificate.
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Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HI: A Certificate a statement
containing the information with respect to interest accrued and principal paid
on its Class HI: A Certificates during such calendar year. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
c. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HI: M-1 Certificate a copy of the
monthly statement forwarded to the Holders of Class HI: A Certificates on such
Payment Date. The Servicer shall also furnish to the Trustee, which shall
forward such information to the Class HI: M-1 Certificateholders as part of
their monthly statement, the following information:
(i) the amount of such distribution to Holders of Class HI: M-1
Certificates allocable to interest, separately identifying any Unpaid Class
HI: M-1 Interest Shortfall included in such distribution and any remaining
Unpaid Class HI: M-1 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HI: M-1
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HI: M-1 Formula
Distribution Amount for such Payment Date exceeds the Sub-Pool HI Amount
Available less the Class HI: A Distribution Amount for such Payment Date;
(iv) the Class HI: M-1 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HI: M-1 Liquidation Loss Interest Shortfall
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(b)(8)(i);
(vi) the Sub-Pool HI Senior Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HI for such
Payment Date;
(viii) the Sub-Pool HI Pool Factor;
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(ix) the number and aggregate principal balances of Home Improvement
Contracts delinquent (a) 30-59 days and (b) 60 or more days;
(x) the Class HI: B Principal Balance Test (as set forth in Exhibit
Q hereto);
(xi) the Class HI: B Principal Distribution Test (as set forth in
Exhibit Q hereto);
(xii) the number of Liquidated Home Improvement Contracts,
identifying such Contracts and the Net Liquidation Loss on such Contracts;
(xiii) the aggregate number and principal amount of FHA-Insured
Contracts on which either (i) the Servicer has submitted a claim for FHA
Insurance, HUD rejected such claim and the Servicer has determined not to
resubmit such claim, or (ii) the Servicer has determined not to submit a
claim for FHA Insurance because such claim would not be paid by HUD; and
(xiv) the amount in the Company's FHA Insurance reserve available to
pay FHA Insurance claims on the FHA-Insured Contracts.
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class HI: M-1 Certificate with
a 1% Percentage Interest or per $1,000 denomination of Class HI: M-1
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HI: M-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HI: M-1 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
d. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HI: M-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class HI: A and Class HI: M-1
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class HI: M-2
Certificateholders as part of their monthly statement, the following
information:
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(i) the amount of such distribution to Holders of Class HI: M-2
Certificates allocable to interest, separately identifying any Unpaid Class
HI: M-2 Interest Shortfall included in such distribution and any remaining
Unpaid Class HI: M-2 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HI: M-2
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HI: M-2 Formula
Distribution Amount for such Payment Date exceeds the Sub-Pool HI Amount
Available less the sum of the Class HI: A Distribution Amount and the Class
HI: M-1 Distribution Amount for such Payment Date;
(iv) the Class HI: M-2 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HI: M-2 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(b)(8)(ii);
(vi) the Sub-Pool HI Senior Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HI for such
Payment Date;
(viii) the Sub-Pool HI Pool Factor;
(ix) the number and aggregate principal balances of Home Improvement
Contracts delinquent (a) 30-59 days and (b) 60 or more days;
(x) the Class HI: B Principal Balance Test (as set forth in Exhibit
Q hereto);
(xi) the Class HI: B Principal Distribution Test (as set forth in
Exhibit Q hereto);
(xii) the number of Liquidated Home Improvement Contracts,
identifying such Contracts and the Net Liquidation Loss on such Contracts;
(xiii) the aggregate number and principal amount of FHA-Insured
Contracts on which either (i) the Servicer has submitted a claim for FHA
6-7
Insurance, HUD rejected such claim and the Servicer has determined not to
resubmit such claim, or (ii) the Servicer has determined not to submit a
claim for FHA Insurance because such claim would not be paid by HUD; and
(xiv) the amount in the Company's FHA Insurance reserve available to
pay FHA Insurance claims on the FHA-Insured Contracts.
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class HI: M-2 Certificate with
a 1% Percentage Interest or per $1,000 denomination of Class HI: M-2
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HI: M-2 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HI: M-2 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
e. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HI: B-1 Certificate a copy of the
monthly statements forwarded to the Holders of Class HI: A and Class HI: M
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class HI: B-1
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class HI: B-1
Certificates allocable to interest, separately identifying any Unpaid Class
HI: B-1 Interest Shortfall included in such distribution and any remaining
Unpaid Class HI: B-1 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HI: B-1
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HI: B-1 Formula
Distribution Amount for such Payment Date exceeds the Sub-Pool HI Amount
Available less the sum of the Class HI: A Distribution Amount, the Class
HI: M-1 Distribution Amount and the Class HI: M-2 Distribution Amount for
such Payment Date;
6-8
(iv) the Class HI: B-1 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HI: B-1 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(b)(8)(iii);
(vi) the Class HI: B Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HI for such
Payment Date;
(viii) the Sub-Pool HI Pool Factor;
(ix) the number and aggregate principal balances of Home Improvement
Contracts delinquent (a) 30-59 days and (b) 60 or more days;
(x) the Class HI: B Principal Balance Test (as set forth in Exhibit
Q hereto);
(xi) the Class HI: B Principal Distribution Test (as set forth in
Exhibit Q hereto);
(xii) the number of Liquidated Home Improvement Contracts,
identifying such Contracts and the Net Liquidation Loss on such Contracts;
(xiii) the aggregate number and principal amount of FHA-Insured
Contracts on which either (i) the Servicer has submitted a claim for FHA
Insurance, HUD rejected such claim and the Servicer has determined not to
resubmit such claim, or (ii) the Servicer has determined not to submit a
claim for FHA Insurance because such claim would not be paid by HUD; and
(xiv) the amount in the Company's FHA Insurance reserve available to
pay FHA Insurance claims on the FHA-Insured Contracts.
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class HI: B-1 Certificate with
a 1% Percentage Interest or per $1,000 denomination of Class HI: B-1
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HI: B-1 Certificate a
statement containing the applicable
6-9
distribution information provided pursuant to this Section aggregated for such
calendar year or applicable portion thereof during which such Person was the
Holder of a Class HI: B-1 Certificate. Such obligation of the Certificate
Registrar shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
f. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HI: B-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class HI: A, Class HI: M and
Class HI: B-1 Certificates on such Payment Date. The Servicer shall also furnish
to the Trustee, which shall forward such information to the Class HI: B-2
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class HI: B-2
Certificates allocable to interest, separately identifying any Unpaid Class
HI: B-2 Interest Shortfall included in such distribution and any remaining
Unpaid Class HI: B-2 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HI: B-2
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the sum of the Class HI: B-2
Formula Distribution Amount and the Class HI: B-2 Liquidation Loss
Principal Amount, if any, for such Payment Date exceeds the Class HI: B-2
Distribution Amount for such Payment Date;
(iv) the Class HI: B-2 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HI: B-2 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(b)(8)(iv);
(vi) the Class HI: B Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HI for such
Payment Date;
(viii) the Sub-Pool HI Pool Factor;
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(ix) the Class HI: B-2 Liquidation Loss Principal Amount, if any,
for such Payment Date;
(x) the Class HI: B-2 Guaranty Payment, if any, for such Payment
Date;
(xi) the number and aggregate principal balances of Home Improvement
Contracts delinquent (a) 30-59 days and (b) 60 days or more;
(xii) the Class HI: B Principal Balance Test (as set forth in Exhibit
Q hereto);
(xiii) the Class HI: B Principal Distribution Tests (as set forth in
Exhibit Q hereto);
(xiv) the number of Liquidated Home Improvement Contracts,
identifying such Contracts and the Net Liquidation loss on such Contracts;
(xv) the aggregate number and principal amount of FHA-Insured
Contracts on which either (i) the Servicer has submitted a claim for FHA
Insurance, HUD rejected such claim and the Servicer has determined not to
resubmit such claim, or (ii) the Servicer has determined not to submit a
claim for FHA Insurance because such claim would not be paid by HUD; and
(xvi) the amount in the Company's FHA Insurance reserve available to
pay FHA Insurance claims on the FHA-Insured Contracts.
In the case of the information in clauses (i) through (iv) and (ix) above,
the amounts shall be expressed as a dollar amount per Class HI: B-2 Certificate
with a 1% Percentage Interest or per $1,000 denomination of Class HI: B-2
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HI: B-2 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HI: B-2 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
g. Concurrently with each distribution to Certificateholders, the Trustee
shall, so long as it has received the Monthly Report from the Servicer, forward
or cause to be
6-11
forwarded by mail to each Holder of a Class HE: A Certificate and (if the
Company is not the Servicer) the Company a statement setting forth the
following:
(i) the amount of such distribution to Holders of each Class of
Class HE: A Certificates allocable to interest, separately identifying any
Unpaid Class HE: A Interest Shortfall included in such distribution and any
remaining Unpaid Class HE: A Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of each Class of
Class HE: A Certificates allocable to principal, separately identifying (A)
the aggregate amount of any Principal Prepayments included therein, and (B)
that portion of any such distribution to Class HE: A-6 Certificateholders
constituting Class HE: A-6 Lockout Remittance Amount;
(iii) the amount, if any, by which the Class HE: A Formula
Distribution Amount for such Payment Date exceeds the Class HE: A
Distribution Amount for such Payment Date;
(iv) the Class HE: A-1ARM Principal Balance, Class HE: A-1 Principal
Balance, the Class HE: A-2 Principal Balance, the Class HE: A-3 Principal
Balance, the Class HE: A-4 Principal Balance and the Class HE: A-6
Principal Balance after giving effect to the distribution of principal on
such Payment Date;
(v) the Pool Scheduled Principal Balance of Sub-Pool HE, and of
that amount the aggregate Scheduled Principal Balance of the Adjustable
Rate Contracts, for such Payment Date;
(vi) the Sub-Pool HE Senior Percentage and the Class HE: A-6 Lockout
Percentage for such Payment Date;
(vii) the Sub-Pool HE Pool Factor;
(viii) the number and aggregate principal balances of Home Equity
Contracts, identifying separately the Adjustable Rate Contracts, delinquent
(a) 30-59 days and (b) 60 or more days;
(ix) the Class HE: B Principal Balance Test (as set forth in Exhibit
Q hereto)
(x) the Class HE: B Principal Distribution Test (as set forth in
Exhibit Q hereto);
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(xi) the Class HE: M-1 Interest Deficiency Amount, if any, for such
Payment Date;
(xii) the Class HE: M-2 Interest Deficiency Amount, if any, for such
Payment Date;
(xiii) the Class HE: B-1 Interest Deficiency Amount, if any, for such
Payment Date; and
(xiv) the number of Liquidated Home Equity Contracts, identifying
such Contracts (including those which are Adjustable Rate Contracts) and
the Net Liquidation Loss on such Contracts.
The Trustee and the Servicer shall, if any Certificateholder, Class C
Certificateholder or Underwriter inquires by telephone, provide the information
contained in the most recent Monthly Report.
In the case of information furnished pursuant to clauses (i) through (iv)
above, the amounts shall be expressed as a dollar amount per Class HE: A
Certificate with a 1% Percentage Interest or per $1,000 denomination of Class
HE: A Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HE: A Certificate a statement
containing the information with respect to interest accrued and principal paid
on its Class HE: A Certificates during such calendar year. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
h. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HE: M-1 Certificate a copy of the
monthly statement forwarded to the Holders of Class HE: A Certificates on such
Payment Date. The Servicer shall also furnish to the Trustee, which shall
forward such information to the Class HE: M-1 Certificateholders as part of
their monthly statement, the following information:
(i) the amount of such distribution to Holders of Class HE: M-1
Certificates allocable to interest, separately identifying any Unpaid Class
HE: M-1 Interest Shortfall included in such distribution and any remaining
Unpaid Class HE: M-1 Interest Shortfall after giving effect to such
distribution;
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(ii) the amount of such distribution to Holders of Class HE: M-1
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HE: M-1 Formula
Distribution Amount for such Payment Date exceeds the Sub-Pool HE Amount
Available less the Class HE: A Distribution Amount for such Payment Date;
(iv) the Class HE: M-1 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HE: M-1 Liquidation Loss Interest Shortfall
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(d)(8)(i);
(vi) the Sub-Pool HE Senior Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HE, and of
that amount the aggregate Scheduled Principal Balance of the Adjustable
Rate Contracts, for such Payment Date;
(viii) the Sub-Pool HE Pool Factor;
(ix) the number and aggregate principal balances of Home Equity
Contracts, identifying separately the Adjustable Rate Contracts delinquent
(a) 30-59 days and (b) 60 or more days;
(x) the Class HE: B Principal Balance Test (as set forth in Exhibit
Q hereto);
(xi) the Class HE: B Principal Distribution Test (as set forth in
Exhibit Q hereto); and
(xii) the number of Liquidated Home Equity Contracts, identifying
such Contracts (including those which are Adjustable Rate Contracts) and
the Net Liquidation Loss on such Contracts.
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class HE: M-1 Certificate with
a 1% Percentage Interest or per $1,000 denomination of Class HE: M-1
Certificate.
6-14
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HE: M-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HE: M-1 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
i. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HE: M-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class HE: A and Class HE: M-1
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class HE: M-2
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class HE: M-2
Certificates allocable to interest, separately identifying any Unpaid Class
HE: M-2 Interest Shortfall included in such distribution and any remaining
Unpaid Class HE: M-2 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HE: M-2
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HE: M-2 Formula
Distribution Amount for such Payment Date exceeds the Sub-Pool HE Amount
Available less the sum of the Class HE: A Distribution Amount and the Class
HE: M-1 Distribution Amount for such Payment Date;
(iv) the Class HE: M-2 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HE: M-2 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(d)(8)(ii);
(vi) the Sub-Pool HE Senior Percentage for such Payment Date;
6-15
(vii) the Pool Scheduled Principal Balance of Sub-Pool HE, and of
that amount the aggregate Scheduled Principal Balance of the Adjustable
Rate Contract, for such Payment Date;
(viii) the Sub-Pool HE Pool Factor;
(ix) the number and aggregate principal balances of Home Equity
Contracts, identifying separately the Adjustable Rate Contracts, delinquent
(a) 30-59 days and (b) 60 or more days;
(x) the Class HE: B Principal Balance Test (as set forth in
Exhibit Q hereto);
(xi) the Class HE: B Principal Distribution Test (as set forth in
Exhibit Q hereto); and
(xii) the number of Liquidated Home Equity Contracts, identifying
such Contracts (including those which are Adjustable Rate Contracts) and
the Net Liquidation Loss on such Contracts.
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class HE: M-2 Certificate with
a 1% Percentage Interest or per $1,000 denomination of Class HE: M-2
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HE: M-2 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HE: M-2 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
j. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HE: B-1 Certificate a copy of the
monthly statements forwarded to the Holders of Class HE: A and Class HE: M
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class HE: B-1
Certificateholders as part of their monthly statement, the following
information:
6-16
(i) the amount of such distribution to Holders of Class HE: B-1
Certificates allocable to interest, separately identifying any Unpaid Class
HE: B-1 Interest Shortfall included in such distribution and any remaining
Unpaid Class HE: B-1 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HE: B-1
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class HE: B-1 Formula
Distribution Amount for such Payment Date exceeds the Sub-Pool HE Amount
Available less the sum of the Class HE: A Distribution Amount, the Class
HE: M-1 Distribution Amount and the Class HE: M-2 Distribution Amount for
such Payment Date;
(iv) the Class HE: B-1 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HE: B-1 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(d)(8)(iii);
(vi) the Class HE: B Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HE, and of
that amount the aggregate Scheduled Principal Balance of the Adjustable
Rate Contracts, for such Payment Date;
(viii) the Sub-Pool HE Pool Factor;
(ix) the number and aggregate principal balances of Home Equity
Contracts, identifying separately the Adjustable Rate Contracts, delinquent
(a) 30-59 days and (b) 60 or more days;
(x) the Class HE: B Principal Balance Test (as set forth in
Exhibit Q hereto);
(xi) the Class HE: B Principal Distribution Test (as set forth in
Exhibit Q hereto); and
(xii) the number of Liquidated Home Equity Contracts, identifying
such Contracts (including those which are Adjustable Rate Contracts) and
the Net Liquidation Loss on such Contracts.
6-17
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class HE: B-1 Certificate with
a 1% Percentage Interest or per $1,000 denomination of Class HE: B-1
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HE: B-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HE: B-1 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
k. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class HE: B-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class HE: A, Class HE: M and
Class HE: B-1 Certificates on such Payment Date. The Servicer shall also
furnish to the Trustee, which shall forward such information to the Class HE: B-
2 Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class HE: B-2
Certificates allocable to interest, separately identifying any Unpaid Class
HE: B-2 Interest Shortfall included in such distribution and any remaining
Unpaid Class HE: B-2 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class HE: B-2
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the sum of the Class HE: B-2
Formula Distribution Amount and the Class HE: B-2 Liquidation Loss
Principal Amount, if any, for such Payment Date exceeds the Class HE: B-2
Distribution Amount for such Payment Date;
(iv) the Class HE: B-2 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class HE: B-2 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant to
Section 8.04(d)(8)(iv);
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(vi) the Class HE: B Percentage for such Payment Date;
(vii) the Pool Scheduled Principal Balance of Sub-Pool HE, and of
that amount the aggregate Scheduled Principal Balance of the Adjustable
Rate Contracts, for such Payment Date;
(viii) the Sub-Pool HE Pool Factor;
(ix) the Class HE: B-2 Liquidation Loss Principal Amount, if any,
for such Payment Date;
(x) the Class HE: B-2 Guaranty Payment, if any, for such Payment
Date;
(xi) the number and aggregate principal balances of Home Equity
Contracts, identifying separately the Adjustable Rate Contracts, delinquent
(a) 30-59 days and (b) 60 days or more;
(xii) the Class HE: B Principal Balance Test (as set forth in
Exhibit Q hereto);
(xiii) the Class HE: B Principal Distribution Tests (as set forth in
Exhibit Q hereto); and
(xiv) the number of Liquidated Home Equity Contracts, identifying
such Contracts (including those which are Adjustable Rate Contracts) and
the Net Liquidation Loss on such Contracts.
In the case of the information in clauses (i) through (iv) and (ix) above,
the amounts shall be expressed as a dollar amount per Class HE: B-2 Certificate
with a 1% Percentage Interest or per $1,000 denomination of Class HE: B-2
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class HE: B-2 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class HE: B-2 Certificate. Such
obligation of the Certificate Registrar shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Certificate Registrar pursuant to any requirements of the Code as from time to
time in force.
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l. Copies of all reports and statements provided to the Trustee for the
Certificateholders shall also be provided to S&P, Fitch and the Class C
Certificateholder.
SECTION 6.06. Payment of Taxes.
----------------
The Servicer shall be responsible for and agrees to prepare, make and
timely file all federal, state, local or other tax returns, information
statements and other returns and documents of every kind and nature whatsoever
required to be made or filed by or on behalf of the Trust pursuant to the Code
and other applicable tax laws and regulations. Each such return, statement and
document shall, to the extent required by the Code or other applicable law and
at the request of the Servicer, be signed on behalf of the Trust by the Trustee.
The Trustee shall have no responsibility whatsoever for the accuracy or
completeness of any such return, statement or document. The Servicer agrees to
indemnify the Trustee and hold it harmless for, from, against and in respect to
any and all liability, loss, damage and expense which may be incurred by the
Trustee based upon or as a result of the Trustee's execution of any and all such
tax returns, statements and documents. The Servicer, if and for so long as it is
a Class C Certificateholder, shall be designated the "tax matters person" on
behalf of the Trust in the same manner as a partnership may designate a "tax
matters partner," as such term is defined in Section 6231(a)(7) of the Code. To
the extent permitted by the REMIC Provisions, any subsequent holder of the Class
C Certificate, by acceptance thereof, irrevocably designates and appoints the
Servicer as its agent to perform the responsibilities of the "tax matters
person" on behalf of the Trust if, and during such time as, the Servicer is not
the holder of the Class C Certificate. The Servicer may, at its expense, retain
such outside assistance as it deems necessary in the performance of its
obligations under this paragraph. The Servicer shall provide to the Internal
Revenue Service the name, title, address and telephone number of the person who
will serve as the representative of the REMIC.
Each of the Holders of the Certificates or the Class C Certificate, by
acceptance thereof, agrees to file tax returns consistent with and in accordance
with any elections, decisions or other reports made or filed with regard to
federal, state or local taxes on behalf of the Trust. The Servicer, as tax
matters person or as agent for the tax matters person, shall represent the Trust
in connection with all examinations of the Trust's affairs by tax authorities,
including resulting administrative and judicial proceedings. Each of the
holders of the Certificates and Class C Certificate, by acceptance thereof,
agrees to cooperate with the Servicer in such matters and to do or refrain from
doing any or all things reasonably required by the Servicer to conduct such
proceedings, provided that no such action shall be required by the Servicer of
--------
any Certificateholder that would entail unnecessary or unreasonable expenses for
such Certificateholder in the performance of such action.
6-20
The Class C Certificateholder shall pay, on behalf of the Trust, any
foreign, federal, state or local income, property, excise, sales, receipts or
any other similar or related taxes or charges which may be imposed upon the
Trust as a REMIC or otherwise and shall, to the extent provided in Section
10.06, be entitled to be reimbursed out of the Certificate Account or, if such
tax or charge results from a failure by the Trustee, the Company or any Servicer
to comply with the provisions of Section 2.04 or 3.06, or a failure by any
Servicer to comply with the provisions of Section 6.06, the Trustee, the Company
or such Servicer, as the case may be, shall indemnify the Class C
Certificateholder for the payment of any such tax or charge. The Trustee shall
be entitled to withhold from amounts otherwise distributable to the Class C
Certificateholder any taxes or charges payable by the Class C Certificateholder
hereunder.
In the event the Class C Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Company shall provide to the Internal
Revenue Service and the persons specified in Sections 860(E)(e)(5) and (6) of
the Code all information necessary for the application of Section 860E(e) and
any other applicable provision of the Code with respect to the transfer of the
Class C Certificate to such a disqualified organization including, without
limitation, a computation showing the present value of the total anticipated
excess inclusions with respect to such Class C Certificate for periods after the
transfer as defined in the REMIC Provisions. In addition, to the extent
required by the REMIC Provisions, the Company shall, upon the written request of
persons designated in Section 860E(e)(5) of the Code, furnish to such requesting
party and the Internal Revenue Service information sufficient to compute the
present value of anticipated excess inclusions within 60 days of the receipt of
such written request.
6-21
ARTICLE VII
SERVICE TRANSFER
----------------
SECTION 7.01. Events of Termination.
---------------------
"Event of Termination" means the occurrence of any of the following:
-------------------
a. Any failure by the Servicer to make any payment or deposit
required to be made hereunder (including an Advance) and the continuance of
such failure for a period of four Business Days;
b. Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement (other than a
covenant or agreement which is elsewhere in this Section specifically dealt
with) which continues unremedied for 30 days;
c. Any assignment by the Servicer of its duties or rights hereunder
except as specifically permitted hereunder, or any attempt to make such an
assignment;
d. A court having jurisdiction in the premises shall have entered a
decree or order for relief in respect of the Servicer in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Servicer, as
the case may be, or for any substantial liquidation of its affairs;
e. The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian or sequestrator (or other similar official) of the
Servicer or for any substantial part of its property, or shall have made
any general assignment for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to, pay its debts as they
become due, or shall have taken any corporate action in furtherance of the
foregoing;
f. The failure of the Servicer to be an Eligible Servicer; or
g. If the Company is the Servicer, the Company's servicing rights
under its master seller-servicer agreement with GNMA are terminated by
GNMA.
7-1
SECTION 7.02. Transfer.
--------
a. If an Event of Termination has occurred and is continuing, either the
Trustee or Certificateholders, in the aggregate, representing 25% or more of the
Aggregate Certificate Principal Balance, by notice in writing to the Servicer
(and to the Trustee if given by the Certificateholders) may terminate all (but
not less than all) of the Servicer's management, administrative, servicing and
collection functions (such termination being herein called a "Service
-------
Transfer"). On receipt of such notice (or, if later, on a date designated
--------
therein), all authority and power of the Servicer under this Agreement, whether
with respect to the Contracts, the Contract Files or otherwise (except with
respect to the Certificate Account, the transfer of which shall be governed by
Section 7.06), shall pass to and be vested in the Trustee pursuant to and under
this Section 7.02; and, without limitation, the Trustee is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Trustee shall cause all assignments of mortgages, deeds of
trust or security deeds securing the Contracts to be duly recorded. If the
Servicer was the lender of record for purposes of the FHA Insurance relating to
FHA-Insured Contracts, the Trustee shall notify HUD of such termination and
shall request that HUD transfer the FHA Insurance reserves allocable to such
FHA-Insured Contracts to the successor Servicer; provided, however, that if the
-----------------
Trustee is the successor Servicer, the Trustee shall request such transfer of
reserves if and to the extent it is legally able to do so, and the Trustee shall
use its best efforts to obtain any approvals that may be required for the
Trustee to receive such transfer of reserves. Each of the Company and the
Servicer agrees to cooperate with the Trustee in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Trustee for administration by it of all cash
amounts which shall at the time be held by the Servicer for deposit, or have
been deposited by the Servicer, in the Certificate Account, or for its own
account in connection with its services hereafter or thereafter received with
respect to the Contracts, and the transfer of all rights under FHA Insurance
relating to FHA-Insured Contracts. The Servicer shall transfer to the new
servicer (i) the Servicer's records relating to the Contracts in such electronic
form as the new servicer may reasonably request and (ii) any Contract Files in
the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02, the Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, and the Servicer shall be
7-2
relieved of such responsibilities, duties and liabilities arising after such
Service Transfer; provided, however, that (i) the Trustee will not assume any
-------- -------
obligations of the Company pursuant to Section 3.05, and (ii) the Trustee shall
not be liable for any acts or omissions of the Servicer occurring prior to such
Service Transfer or for any breach by the Servicer of any of its obligations
contained herein or in any related document or agreement. As compensation
therefor, the Trustee shall be entitled to receive reasonable compensation out
of the Monthly Servicing Fee. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint, or petition a court of competent jurisdiction to appoint, an Eligible
Servicer 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. Pending appointment of a successor to the Servicer hereunder, unless
the Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Contracts as it and such successor shall agree;
provided, however, that no such monthly compensation shall, without the written
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consent of 100% of the Certificateholders, exceed the Monthly Servicing Fee. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders and the Class C
--------------------------------------------------
Certificateholder.
-----------------
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, to S&P, to Fitch, to
the Certificateholders and to the Class C Certificateholder at their respective
addresses appearing on the Certificate Register.
b. Within 10 days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to S&P, to Fitch and to Certificateholders and the Class
C Certificateholder at their respective addresses appearing on the Certificate
Register.
SECTION 7.05. Effect of Transfer.
------------------
a. After the Service Transfer, the Trustee or new Servicer shall notify
Obligors to make payments directly to the new Servicer that are due under the
Contracts after the effective date of the Service Transfer.
b. After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the
------
7-3
replaced Servicer will transmit or cause to be transmitted directly to the new
Servicer for its own account, promptly on receipt and in the same form in which
received, any amounts (properly endorsed where required for the new Servicer to
collect them) received as payments upon or otherwise in connection with the
Contracts.
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article X and Sections 3.05, 11.06 and 11.12(f))
other than those relating to the management, administration, servicing or
collection of the Contracts after the Service Transfer.
SECTION 7.06. Transfer of Certificate Account.
-------------------------------
Notwithstanding the provisions of Section 7.02, if the Certificate Account
shall be maintained with the Servicer and an Event of Termination shall occur
and be continuing, the Servicer shall, after five days' written notice from the
Trustee, or in any event within ten days after the occurrence of the Event of
Termination, establish a new account or accounts in trust for the
Certificateholders and the Class C Certificateholder conforming with the
requirements of this Agreement at the corporate trust department of the Trustee
or with an institution other than the Servicer and promptly cause the Trustee to
transfer all funds in the Certificate Account to such new account, which shall
thereafter be deemed the Certificate Account for the purposes hereof.
7-4
ARTICLE VIII
PAYMENTS
--------
SECTION 8.01. Monthly Payments.
----------------
a. Subject to the terms of this Article VIII, each holder of a
Certificate or Class C Certificate as of a Record Date shall be paid on the next
succeeding Payment Date by check mailed to such Certificateholder or Class C
Certificateholder at the address for such Certificateholder or Class C
Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates of a Class with an aggregate Percentage
Interest of at least 5% of such Class and so requests, by wire transfer pursuant
to instructions delivered to the Trustee at least 10 days prior to such Payment
Date), the sum equal to such Certificateholder's or Class C Certificateholder's
Percentage Interest of the Class HI: A-1 Distribution Amount, the Class HI: A-2
Distribution Amount, the Class HI: A-3 Distribution Amount, the Class HI: M-1
Distribution Amount plus any amounts distributable pursuant to Sections
8.04(b)(8)(i) and 8.04(c), the Class HI: M-2 Distribution Amount plus any
amounts distributable pursuant to Sections 8.04(b)(8)(ii) and 8.04(c), the Class
HI: B-1 Distribution Amount plus any amounts distributable pursuant to Sections
8.04(b)(8)(iii) and 8.04(c), the Class HI: B-2 Distribution Amount plus any
amounts distributable pursuant to Section 8.04(b)(8)(iv), any Class HI: B-2
Guaranty Payment, the Class HE: A-1ARM Distribution Amount, the Class HE: A-1
Distribution Amount, the Class HE: A-2 Distribution Amount, the Class HE: A-3
Distribution Amount, the Class HE: A-4 Distribution Amount, the Class HE: A-5
Distribution Amount, the Class HE: A-6 Distribution Amount, the Class HE: M-1
Distribution Amount plus any amounts distributable pursuant to Sections
8.04(d)(8)(i) and 8.04(e), the Class HE: M-2 Distribution Amount plus any
amounts distributable pursuant to Sections 8.04(d)(8)(ii) and 8.04(e), the Class
HE: B-1 Distribution Amount plus any amounts distributable pursuant to Sections
8.04(d)(8)(iii) and 8.04(e), the Class HE: B-2 Distribution Amount plus any
amounts distributable pursuant to Section 8.04(d)(8)(iv), any Class HE: B-2
Guaranty Payment or the Class C Distribution Amount, as applicable. Final
payment of any Certificate or the Class C Certificate shall be made only upon
presentation of such Certificate or the Class C Certificate at the office or
agency of the Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such
8-1
credits and disbursements with respect to a Book-Entry Certificate are to be
made by the Depository and the Depository Participants in accordance with the
provisions of the Book-Entry Certificates. Neither the Trustee, the Certificate
Registrar nor the Company shall have any responsibility therefor except as
otherwise provided by applicable law. To the extent applicable and not contrary
to the rules of the Depository, the Trustee shall comply with the provisions of
the form of the Certificates as set forth in Exhibits A through C hereto, and
the Class C Certificate as set forth in Exhibit L hereto.
c. The Trustee shall either act as the paying agent or appoint an
Eligible Institution to be the paying agent (in either such case, the "Paying
------
Agent") to make the payments to the Certificateholders and the Class C
-----
Certificateholder required hereunder. The Trustee's corporate trust operations
department, with an office at 000 Xxxx 0xx Xxxxxx, Xxxxx Xxxxx, Xx. Xxxx,
Xxxxxxxxx 00000, Attention: Xxxxx Xxxxxxxxxxxxx, shall initially act as Paying
Agent. The Trustee shall require the Paying Agent (if other than the Trustee)
to agree in writing that all amounts held by the Paying Agent for payment
hereunder will be held in trust for the benefit of the Certificateholders and
the Class C Certificateholder and that it will notify the Trustee of any failure
by the Servicer to make funds available to the Paying Agent for the payment of
amounts due on the Certificates and the Class C Certificate.
SECTION 8.02. Advances.
--------
a. Not later than one Business Day following the Determination Date, the
Servicer shall advance all Delinquent Payments for the immediately preceding Due
Period by depositing the aggregate amount of such Delinquent Payments in the
Certificate Account; provided, however, that the Servicer shall be obligated to
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advance Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such advances from funds subsequently
available therefor in the Certificate Account in accordance with Section 8.04(b)
or Section 8.04(d), as applicable. If the Servicer fails to advance all
Delinquent Payments required under this Section 8.02, the Trustee shall be
obligated to advance such Delinquent Payments pursuant to Section 11.16.
b. The Servicer shall be entitled to reimbursement of an Advance from
subsequent funds available therefor in the Certificate Account in accordance
with Section 8.04(b) or Section 8.04(d), as applicable.
c. No later than the third Business Day prior to the Payment Date in
March 2027, the Servicer, if other than the Company, will notify the Company of
the amount, if any, equal to the lesser of (a) the Scheduled Principal Balance
of the Adjustable Rate Contracts on that Payment Date or (b) the amount by which
the Class HE: A-1ARM Principal Balance on that Payment Date exceeds the sum of
the amounts described in
8-2
clauses (i) through (v) of the definition of the Class HE: A-1ARM Formula
Principal Distribution Amount on that Payment Date. The Company shall advance
such lesser amount by deposit to the Certificate Account not later than the
Business Day preceding the March 2027 Payment Date. The Company shall be
entitled to reimbursement of such advance from subsequent funds available
therefor in the Certificate Account in accordance with Section 8.04(d).
SECTION 8.03. Limited Guaranties.
------------------
a. Class HI: B-2 Limited Guaranty
------------------------------
1. No later than the third Business Day prior to each Payment Date,
the Servicer (if other than the Company) shall notify the Company of the amount
of the Class HI: B-2 Guaranty Payment (if any) for such Payment Date. Not later
than the Business Day preceding each Payment Date, the Company shall deposit the
Class HI: B-2 Guaranty Payment, if any, for such Payment Date into the
Certificate Account. Any Class HI: B-2 Guaranty Payment shall be distributable
to Class HI: B-2 Certificateholders pursuant to Section 8.01.
2. The obligations of the Company under this Section 8.03(a) shall
not terminate upon or otherwise be affected by a Service Transfer pursuant to
Article VII of this Agreement.
3. The obligation of the Company to provide the Class HI: B-2
Limited Guaranty under this Agreement shall terminate on the Final Payment Date.
4. The obligation of the Company to make the Class HI: B-2 Guaranty
Payments described in subsection (1) above shall be unconditional and
irrevocable. The Company acknowledges that its obligation to make the Class HI:
B-2 Guaranty Payments described in subsection (1) above shall be deemed a
guaranty by the Company of indebtedness of the Trust for money borrowed from the
Class HI: B-2 Certificateholders.
5. If the Company fails to make a Class HI: B-2 Guaranty Payment in
whole or in part, the Company shall promptly notify the Trustee, and the Trustee
shall promptly notify S&P and Fitch.
6. In consideration of providing the Class HI: B-2 Limited
Guaranty, the Company shall be entitled to the Class HI: B-2 Guarantee Fee
payable in accordance with Section 8.04(b)(15).
b. Class HE: B-2 Limited Guaranty
------------------------------
8-3
1. No later than the third Business Day prior to each Payment Date,
the Servicer (if other than the Company) shall notify the Company of the amount
of the Class HE: B-2 Guaranty Payment (if any) for such Payment Date. Not later
than the Business Day preceding each Payment Date, the Company shall deposit the
Class HE: B-2 Guaranty Payment, if any, for such Payment Date into the
Certificate Account. Any Class HE: B-2 Guaranty Payment shall be distributable
to Class HE: B-2 Certificateholders pursuant to Section 8.01.
2. The obligations of the Company under this Section 8.03(b) shall
not terminate upon or otherwise be affected by a Service Transfer pursuant to
Article VII of this Agreement.
3. The obligation of the Company to provide the Class HE: B-2
Limited Guaranty under this Agreement shall terminate on the Final Payment Date.
4. The obligation of the Company to make the Class HE: B-2 Guaranty
Payments described in subsection (1) above shall be unconditional and
irrevocable. The Company acknowledges that its obligation to make the Class HE:
B-2 Guaranty Payments described in subsection (1) above shall be deemed a
guaranty by the Company of indebtedness of the Trust for money borrowed from the
Class HE: B-2 Certificateholders.
5. If the Company fails to make a Class HE: B-2 Guaranty Payment in
whole or in part, the Company shall promptly notify the Trustee, and the Trustee
shall promptly notify S&P and Fitch.
6. In consideration of providing the Class HE: B-2 Limited
Guaranty, the Company shall be entitled to the Class HE: B-2 Guarantee Fee
payable in accordance with Section 8.04(d)(14).
SECTION 8.04. Permitted Withdrawals from the Certificate Account;
----------------------------------------------------
Payments.
--------
a. The Trustee shall, from time to time as provided herein, make
withdrawals from the Certificate Account for the following purposes:
(i) to make payments in the amounts and in the manner provided for
in Sections 8.04(b) and 8.04(d);
(ii) to pay to the Company with respect to each Contract or property
acquired in respect thereof that has been repurchased or replaced pursuant
to Section 3.05, all amounts received thereon and not required to be
distributed to
8-4
Certificateholders as of the date on which the related Scheduled Principal
Balance or Repurchase Price is determined;
(iii) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it and not otherwise reimbursed, to the
extent such reimbursement is permitted pursuant to Section 5.08;
(iv) to withdraw any amount deposited in the Certificate Account
that was not required to be deposited therein; or
(v) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (iii), the
Company's entitlement thereto is limited to collections or other recoveries on
the related Contract, the Servicer shall keep and maintain separate accounting,
on a Contract by Contract basis, for the purpose of justifying any withdrawal
from the Certificate Account pursuant to such clause.
b. On each Payment Date, the Trustee shall apply the Sub-Pool HI Amount
Available (as determined on the immediately preceding Determination Date) in the
Certificate Account to make payment in the following order of priority:
1. if neither the Company nor a wholly owned subsidiary of the
Company is the Servicer, to pay, with respect to the Home Improvement Contracts,
the Monthly Servicing Fee and any other compensation owed to the Servicer
pursuant to Section 7.03;
2. to pay the Class HI: A Formula Interest Distribution Amount as
follows (and in the following order of priority):
(i) the amount in clause (a)(1) of the definition of Class HI: A
Formula Distribution Amount to the Class HI: A-1 Certificateholders; the
amount in clause (a)(2) of the definition of Class HI: A Formula
Distribution Amount to the Class HI: A-2 Certificateholders; the amount in
clause (a)(3) of the definition of Class HI: A Formula Distribution Amount
to the Class HI: A-3 Certificateholders; or, if the Sub-Pool HI Amount
Available is less than the amount necessary to pay all Class HI: A Formula
Interest Distribution Amounts, pro rata to each Class of Class HI: A
Certificates in accordance with their respective entitlements to interest;
and
8-5
(ii) to each Class of Class HI: A Certificates the amount, if any,
of the Unpaid Class HI: A Interest Shortfall of such Class, or, if the
remaining Sub-Pool HI Amount Available is less than the amount necessary to
pay all Unpaid Class HI: A Interest Shortfalls, pro rata to each Class of
Class HI: A Certificates based on the Unpaid Class HI: A Interest Shortfall
of each such Class;
3. after payment of the amounts specified in clauses (1) and (2)
above, to pay principal in respect of the Class HI: A Certificates as follows:
(i) if there is a Class HI: A Liquidation Loss Principal Amount as
to such Payment Date, the remaining Sub-Pool HI Amount Available, pro rata
to each Class of Class HI: A Certificates based on the Class Principal
Balance of each Class (but in no event shall such amount exceed the Class
Principal Balance of any such Class); and
(ii) if there is no Class HI: A Liquidation Loss Principal Amount as
to such Payment Date:
(A) if such Payment Date is on or prior to the First Cross-over
date, the Sub-Pool HI Senior Percentage of the Sub-Pool HI Formula
Principal Distribution Amount to the Class HI: A-1
Certificateholders, but in no event more than is necessary to reduce
the Class HI: A-1 Principal Balance to zero;
(B) if such Payment Date is on or after the First Cross-over
date, but on or prior to the Second Cross-over date, the Sub-Pool HI
Senior Percentage of the Sub-Pool HI Formula Principal Distribution
Amount to the Class HI: A-2 Certificateholders (reduced, if such
Payment Date is on the First Cross-over date, by that portion of the
Sub-Pool HI Senior Percentage of the Sub-Pool HI Formula Principal
Distribution Amount to be distributed to the Class HI: A-1
Certificateholders on such date in accordance with clause (A) above),
but in no event more than is necessary to reduce the Class HI: A-2
Principal Balance to zero; and
(C) if such Payment Date is on or after the Second Cross-over
date, but on or prior to the Third Cross-over date, the Sub-Pool HI
Senior Percentage of the Sub-Pool HI Formula Principal Distribution
Amount to the Class HI: A-3 Certificateholders (reduced, if such
Payment Date is on the Second Cross-over date, by that portion of the
Sub-Pool HI Senior Percentage of the Sub-Pool HI Formula Principal
Distribution Amount to be distributed to the Class HI: A-2
Certificateholders on such date in
8-6
accordance with clause (B) above), but in no event more than is
necessary to reduce the Class HI: A-3 Principal Balance to zero.
4. after payment of the amounts specified in clauses (1) through
(3) above, to the Class HI: M-1 Certificateholders as follows (and in the
following order of priority):
(i) the amount in clause (a) of the definition of Class HI: M-1
Formula Distribution Amount;
(ii) any Unpaid Class HI: M-1 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HI: M-1
Formula Distribution Amount;
5. after payment of the amounts specified in clauses (1) through
(4) above, to the Class HI: M-2 Certificateholders as follows (and in the
following order of priority) :
(i) the amount in clause (a) of the definition of Class HI: M-2
Formula Distribution Amount;
(ii) any Unpaid Class HI: M-2 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HI: M-2
Formula Distribution Amount;
6. after payment of the amounts specified in clauses (1) through
(5) above, to the Class HI: B-1 Certificateholders as follows (and in the
following order of priority) :
(i) the amount in clause (a) of the definition of Class HI: B-1
Formula Distribution Amount;
(ii) any Unpaid Class HI: B-1 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HI: B-1
Formula Distribution Amount;
7. after payment of the amounts specified in clauses (1) through
(6) above, to the Class HI: B-2 Certificateholders as follows (and in the
following order of priority):
8-7
(i) the amount in clause (a) of the definition of Class HI: B-2
Formula Distribution Amount;
(ii) any Unpaid Class HI: B-2 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HI: B-2
Formula Distribution Amount;
8. after payment of the amounts specified in clauses (1) through
(7) above, to the Class HI: M and Class HI: B Certificateholders as follows (and
in the following order of priority):
(i) to the Class HI: M-1 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HI: M-1 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HI: M-1 Liquidation Loss Interest Shortfall;
(ii) to the Class HI: M-2 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HI: M-2 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HI: M-2 Liquidation Loss Interest Shortfall;
(iii) to the Class HI: B-1 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HI: B-1 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HI: B-1 Liquidation Loss Interest Shortfall; and
(iv) to the Class HI: B-2 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HI: B-2 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HI: B-2 Liquidation Loss Interest Shortfall.
9. if the Sub-Pool HE Amount Available for such Payment Date
(determined without regard to clause (a)(2) of the definition thereof) is less
than the amounts provided for in clauses (1) through (8) of Section 8.04(d), to
add the amount of such deficiency (or the remaining Sub-Pool HI Amount
Available, if less) to the Sub-Pool HE Amount Available.
10. if the Company or a wholly owned subsidiary of the Company is
the Servicer, to pay the Servicer the Monthly Servicing Fee with respect to the
Home Improvement Contracts;
8-8
11. to reimburse the Trustee or any successor Servicer for any
payments of FHA Insurance premiums in respect of FHA-Insured Contracts not paid
by the Company and for which the Trustee or such successor Servicer has not been
reimbursed by the Company;
12. to reimburse the Servicer or the Trustee, as applicable, for
any unreimbursed Advances made with respect to the Home Improvement Contracts in
respect of current or prior Payment Dates;
13. to reimburse the Class C Certificateholder for expenses
incurred by and reimbursable to it pursuant to Section 10.06;
14. to reimburse the Company for any prior unreimbursed Class HI:
B-2 Guaranty Payments;
15. to pay the Class HI: B-2 Guarantee Fee to the Company; and
16. to pay the remainder, if any, of the Sub-Pool HI Amount
Available to the Class C Certificateholder.
c. If the applicable Monthly Report indicates a Class HI: M-1 Interest
Deficiency Amount, a Class HI: M-2 Interest Deficiency Amount and/or a Class HI:
B-1 Interest Deficiency Amount for such Payment Date, the Trustee shall,
provided that there is no Class HI: A Interest Shortfall for such Payment Date,
withdraw from the Certificate Account (to the extent of funds on deposit therein
in respect of Home Improvement Contracts two Business Days prior to such Payment
Date, after taking into account the distribution of the Sub-Pool HI Amount
Available pursuant to Section 8.04(b) and any Class HI: B-2 Guaranty Payment to
be distributed on such Payment Date) an amount equal to the lesser of (i) the
excess of such funds, after giving effect to any payment required as of the next
succeeding Payment Date under Section 8.04(b)(1), over the amount payable to
Class HI: A Certificateholders on the next succeeding Payment Date under clauses
(a) and (b) of the definition of Class HI: A Formula Distribution Amount and
(ii) the sum of the Class HI: M-1 Interest Deficiency Amount, the Class HI: M-2
Interest Deficiency Amount and the Class HI: B-1 Interest Deficiency Amount, and
distribute such amount, first, to the Class HI: M-1 Certificateholders up to the
amount of any Class HI: M-1 Interest Deficiency Amount, then to the Class HI: M-
2 Certificateholders up to the amount of any Class HI: M-2 Interest Deficiency
Amount, and then to the Class HI: B-1 Certificateholders up to the amount of any
Class HI: B-1 Interest Deficiency Amount.
8-9
d. On each Payment Date, the Trustee shall apply the Sub-Pool HE Amount
Available (as determined on the immediately preceding Determination Date) in the
Certificate Account to make payment in the following order of priority:
1. if neither the Company nor a wholly owned subsidiary of the
Company is the Servicer, to pay, with respect to the Home Equity Contracts, the
Monthly Servicing Fee and any other compensation owed to the Servicer pursuant
to Section 7.03;
2. to pay the Class HE: A Formula Interest Distribution Amount as
follows (and in the following order of priority):
(i) the amount in clause (a)(1) of the definition of Class HE: A
Formula Distribution Amount to the Class HE: A-1ARM Certificateholders; the
amount in clause (a)(2) of the definition of Class HE: A Formula
Distribution Amount to the Class HE: A-1 Certificateholders; the amount in
clause (a)(3) of the definition of Class HE: A Formula Distribution Amount
to the Class HE: A-2 Certificateholders; the amount in clause (a)(4) of the
definition of Class HE: A Formula Distribution Amount to the Class HE: A-3
Certificateholders; the amount in clause (a)(5) of the definition of Class
HE: A Formula Distribution Amount to the Class HE: A-4 Certificateholders;
the amount in clause (a)(6) of the definition of Class HE: A Formula
Distribution Amount to the Class HE: A-5 Certificateholders; and the amount
in clause (a)(7) of the definition of Class HE: A Formula Distribution
Amount to the Class HE: A-6 Certificateholders; or, if the Sub-Pool HE
Amount Available is less than the amount necessary to pay all Class HE: A
Formula Interest Distribution Amounts, pro rata to each Class of Class HE:
A Certificates in accordance with their respective entitlements to
interest; and
(ii) to each Class of Class HE: A Certificates the amount, if any, of
the Unpaid Class HE: A Interest Shortfall of such Class or, if the
remaining Sub-Pool HE Amount Available is less than the amount necessary to
pay all Unpaid Class HE: A Interest Shortfalls, pro rata to each Class of
Class HE: A Certificates based on the Unpaid Class HE: A Interest Shortfall
of each such Class;
3. after payment of the amounts specified in clauses (1) and (2)
above, to pay principal in respect of the Class HE: A Certificates as follows:
(i) if there is a Class HE: A Liquidation Loss Principal Amount as
to such Payment Date, the remaining Sub-Pool HE Amount Available, pro rata
to each Class of Class HE: A Certificates based on the Class Principal
Balance of
8-10
each Class (but in no event shall such amount exceed the Class Principal
Balance of any such Class); and
(ii) if there is no Class HE: A Liquidation Loss Principal Amount as
to such Payment Date, and if such Payment Date is on or prior to the Fifth
Cross-over date, the remaining Sub-Pool HE Amount Available up to the Class HE:
A Formula Principal Distribution Amount as follows:
(A) if the remaining Sub-Pool HE Amount Available is less than
the Class HE: A Formula Principal Distribution Amount, then pro rata
to the Class HE: A Certificateholders based upon the amounts that
would have been distributed pursuant to clause (B), below, had the
remaining Sub-Pool HE Amount Available been equal to the Class HE: A
Formula Principal Distribution Amount.
(B) if the remaining Sub-Pool HE Amount Available is not less
than the Class HE: A Formula Principal Distribution Amount, then
(a) to the Class HE: A-1ARM Certificateholders, the Class
HE: A-1ARM Formula Principal Distribution Amount;
(b) to the Class HE: A-6 Certificateholders, the Class HE:
A-6 Lockout Distribution Amount, if any, but in no event more
than is necessary to reduce the Class HE: A-6 Principal Balance
to zero;
(c) if such Payment Date is on or prior to the First Cross-
over date, to the Class HE: A-1 Certificateholders, but in no
event more than is necessary to reduce the Class HE: A-1
Principal Balance to zero;
(d) if such Payment Date is on or after the First Cross-over
date, but on or prior to the Second Cross-over date, to the Class
HE: A-2 Certificateholders (reduced, if such Payment Date is on
the First Cross-over date, by that portion of the Sub-Pool HE
Senior Percentage of the Sub-Pool HE Formula Principal
Distribution Amount to be distributed to the Class HE: A-1
Certificateholders on such date in accordance with clause (a)
above), but in no event more than is necessary to reduce the
Class HE: A-2 Principal Balance to zero;
(e) if such Payment Date is on or after the Second Cross-
over date, but on or prior to the Third Cross-over date, to the
Class HE:
8-11
A-3 Certificateholders (reduced, if such Payment Date is on the
Second Cross-over date, by that portion of the Sub-Pool HE Senior
Percentage of the Sub-Pool HE Formula Principal Distribution
Amount to be distributed to the Class HE: A-2 Certificateholders
on such date in accordance with clause (b) above), but in no
event more than is necessary to reduce the Class HE: A-3
Principal Balance to zero;
(f) if such Payment Date is on or after the Third Cross-over
date, but on or prior to the Fourth Cross-over date, to the Class
HE: A-4 Certificateholders (reduced, if such Payment Date is on
the Third Cross-over date, by that portion of the Sub-Pool HE
Senior Percentage of the Sub-Pool HE Formula Principal
Distribution Amount to be distributed to the Class HE: A-3
Certificateholders on such date in accordance with clause (c)
above), but in no event more than is necessary to reduce the
Class HE: A-4 Principal Balance to zero; and
(g) if such Payment Date is on or after the Fourth Cross-
over date, but on or prior to the Fifth Cross-over date, to the
Class HE: A-5 Certificateholders (reduced, if such Payment Date
is on the Fourth Cross-over date, by that portion of the Sub-Pool
HE Senior Percentage of the Sub-Pool HE Formula Principal
Distribution Amount to be distributed to the Class HE: A-4
Certificateholders on such date in accordance with clause (d)
above), but in no event more than is necessary to reduce the
Class HE: A-5 Principal Balance to zero.
(iii) if there is no Class HE: A Liquidation Loss Principal Amount
as to such Payment Date, and if such Payment Date is after the Fifth Cross-
over date but on or before the Sixth Cross-over date, the remaining Sub-
Pool HE Amount Available up to the Class HE: A Formula Principal
Distribution Amount as follows:
(A) if the remaining Sub-Pool HE Amount Available is less than
the Class HE: A Formula Principal Distribution Amount, pro rata to the
Class HE: A-1ARM Certificateholders and the Class HE: A-6 Certificate
holders based on the amounts that would have been distributed pursuant to
clause (B), below, had the remaining Sub-Pool HE Amount Available been
equal to the Class HE: A Formula Principal Distribution Amount.
8-12
(B) if the remaining Sub-Pool HE Amount Available is not less
than the Class HE: A Formula Principal Distribution Amount, then
(a) to the Class HE: A-1ARM Certificateholders, the Class
HE: A-1ARM Formula Principal Distribution Amount; and
(b) to the Class HE: A-6 Certificateholders, the Sub-Pool HE
Senior Percentage of the Sub-Pool HE Formula Principal
Distribution Amount, but in no event more than is necessary to
reduce the Class HE: A6 Principal Balance to zero.
4. after payment of the amounts specified in clauses (1) through (3)
above, to the Class HE: M-1 Certificateholders as follows (and in the following
order of priority):
(i) the amount in clause (a) of the definition of Class HE: M-1
Formula Distribution Amount;
(ii) any Unpaid Class HE: M-1 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HE: M-1
Formula Distribution Amount;
5. after payment of the amounts specified in clauses (1) through (4)
above, to the Class HE: M-2 Certificateholders as follows (and in the following
order of priority):
(i) the amount in clause (a) of the definition of Class HE: M-2
Formula Distribution Amount;
(ii) any Unpaid Class HE: M-2 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HE: M-2
Formula Distribution Amount;
6. after payment of the amounts specified in clauses (1) through (5)
above, to the Class HE: B-1 Certificateholders as follows (and in the following
order of priority):
(i) the amount in clause (a) of the definition of Class HE: B-1
Formula Distribution Amount;
8-13
(ii) any Unpaid Class HE: B-1 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HE: B-1
Formula Distribution Amount;
7. after payment of the amounts specified in clauses (1) through
(6) above, to the Class HE: B-2 Certificateholders as follows (and in the
following order of priority):
(i) the amount in clause (a) of the definition of Class HE: B-2
Formula Distribution Amount;
(ii) any Unpaid Class HE: B-2 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of Class HE: B-2
Formula Distribution Amount;
8. after payment of the amounts specified in clauses (1) through
(7) above, to the Class HE: M and Class HE: B Certificateholders as follows (and
in the following order of priority):
(i) to the Class HE: M-1 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HE: M-1 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HE: M-1 Liquidation Loss Interest Shortfall;
(ii) to the Class HE: M-2 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HE: M-2 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HE: M-2 Liquidation Loss Interest Shortfall;
(iii) to the Class HE: B-1 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HE: B-1 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HE: B-1 Liquidation Loss Interest Shortfall; and
(iv) to the Class HE: B-2 Certificateholders, first an amount equal
to the amount specified in clause (a) of the definition of the term "Class
HE: B-2 Formula Liquidation Loss Interest Distribution Amount" and then to
any Unpaid Class HE: B-2 Liquidation Loss Interest Shortfall.
8-14
9. if the Sub-Pool HI Amount Available for such Payment Date
(determined without regarding to clause (a)(2) of the definition thereof) is
less than the amounts provided for in clauses (1) through (8) of Section
8.04(b), to add the amount of such deficiency (or the remaining Sub-Pool HE
Amount Available, if less) to the Sub-Pool HI Amount Available.
10. if the Company or a wholly owned subsidiary of the Company is the
Servicer, to pay the Servicer the Monthly Servicing Fee with respect to the Home
Equity Contracts;
11. to reimburse the Servicer or the Trustee, as applicable, for any
unreimbursed Advances made with respect to the Home Equity Contracts in respect
of current or prior Payment Dates and to reimburse the Company for any
unreimbursed advances made pursuant to Section 8.02(c);
12. to reimburse the Class C Certificateholder for expenses incurred
by and reimbursable to it pursuant to Section 10.06;
13. to reimburse the Company for any prior unreimbursed Class HE: B-2
Guaranty Payments;
14. to pay the Class HE: B-2 Guarantee Fee to the Company; and
15. to pay the remainder, if any, of the Sub-Pool HE Amount Available
to the Class C Certificateholder.
e. If the applicable Monthly Report indicates a Class HE: M-1 Interest
Deficiency Amount, a Class HE: M-2 Interest Deficiency Amount and/or a Class HE:
B-1 Interest Deficiency Amount for such Payment Date, the Trustee shall,
provided that there is no Class HE: A Interest Shortfall for such Payment Date,
withdraw from the Certificate Account (to the extent of funds on deposit therein
in respect of Home Equity Contracts two Business Days prior to such Payment
Date, after taking into account the distribution of the Sub-Pool HE Amount
Available pursuant to Section 8.04(d) and any Class HE: B-2 Guaranty Payment to
be distributed on such Payment Date) an amount equal to the lesser of (i) the
excess of such funds, after giving effect to any payment required as of the next
succeeding Payment Date under Section 8.04(d)(1), over the amount payable to
Class HE: A Certificateholders on the next succeeding Payment Date under clauses
(a) and (b) of the definition of Class HE: A Formula Distribution Amount and
(ii) the sum of the Class HE: M-1 Interest Deficiency Amount, the Class HE: M-2
Interest Deficiency Amount and the Class HE: B-1 Interest Deficiency Amount, and
distribute such amount, first, to the Class HE: M-1 Certificateholders up to the
amount of any Class HE: M-1 Interest Deficiency Amount, then to the Class HE: M-
2
8-15
Certificateholders up to the amount of any Class HE: M-2 Interest Deficiency
Amount, and then to the Class HE: B-1 Certificateholders up to the amount of any
Class HE: B-1 Interest Deficiency Amount.
f. If the Trustee shall not have received the applicable Monthly Report
by any Payment Date, the Trustee shall, in accordance with Sections 8.04(b) and
(d), distribute all funds then in the Certificate Account to Certificateholders
and the Class C Certificateholders, to the extent of such funds, on such Payment
Date.
SECTION 8.05. Reassignment of Repurchased and Replaced Contracts.
--------------------------------------------------
Upon receipt by the Trust, by deposit in the Certificate Account, of the
Repurchase Price under Section 3.05(a) or upon receipt by the Trust of an
Eligible Substitute Contract under Section 3.05(b) and receipt by the Trust, by
deposit in the Certificate Account, of any additional amount under Section
3.05(b)(vii), and upon receipt of a certificate of a Servicing Officer in the
form attached hereto as Exhibit M-1 or M-2, as applicable, the Trustee shall
convey and assign to the Company all of the Certificateholders' and the Class C
Certificateholder's right, title and interest in the repurchased Contract or
Replaced Contract without recourse, representation or warranty, except as to the
absence of liens, charges or encumbrances created by or arising as a result of
actions of the Trustee. Upon such deposit of the Repurchase Price or receipt of
such Eligible Substitute Contract and related deposit of any additional amount
under Section 3.05(b)(vii), the Servicer shall be deemed to have released any
claims to such Contract as a result of Advances with respect to such Contract.
SECTION 8.06. Servicer's Purchase Option.
--------------------------
a. The Servicer shall, subject to subsection (b) hereof, have the option
to purchase all of the Contracts and all property acquired in respect of any
Contract remaining in the Trust at a price equal to the greatest of:
A. the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which title to the underlying property has
been acquired and whose fair market value is included pursuant to clause
(y) below), together with accrued and unpaid interest on each such Contract
at the Weighted Average Pass-Through Rate, plus (y) the fair market value
of such acquired property (as reasonably determined by the Servicer as of
the close of business on the third Business Day preceding the date of such
purchase),
B. the aggregate fair market value (as reasonably determined by the
Servicer as of the close of business on such third Business Day) of all of
the assets of the Trust, and
8-16
C. the Aggregate Certificate Principal Balance as of the date of
such purchase (less any amounts on deposit in the Certificate Account on
such purchase date and representing payments of principal in respect of the
Contracts) plus an amount necessary to pay the Class HI: A Formula Interest
Distribution Amount, the Class HI: M-1 Formula Interest Distribution
Amount, the Class HI: M-1 Formula Liquidation Loss Interest Distribution
Amount, the Class HI: M-2 Formula Interest Distribution Amount, the Class
HI: M-2 Formula Liquidation Loss Interest Distribution Amount, the Class
HI: B-1 Formula Interest Distribution Amount, the Class HI: B-1 Formula
Liquidation Loss Interest Distribution Amount, the Class HI: B-2 Formula
Interest Distribution Amount, the Class HI: B-2 Formula Liquidation Loss
Interest Distribution Amount, the Class HE: A Formula Interest Distribution
Amount, the Class HE: M-1 Formula Interest Distribution Amount, the Class
HE: M-1 Formula Liquidation Loss Interest Distribution Amount, the Class
HE: M-2 Formula Interest Distribution Amount, the Class HE: M-2 Formula
Liquidation Loss Interest Distribution Amount, the Class HE: B-1 Formula
Interest Distribution Amount, the Class HE: B-1 Formula Liquidation Loss
Interest Distribution Amount, the Class HE: B-2 Formula Interest
Distribution Amount and the Class HE: B-2 Formula Liquidation Loss Interest
Distribution Amount due on the Payment Date occurring in the calendar month
following such purchase date (less any amounts on deposit in the
Certificate Account on such purchase date and representing payments of
interest in respect of the Contracts at the Weighted Average Pass-Through
Rate) .
b. The purchase by the Servicer of all of the Contracts pursuant to this
Section 8.06 shall be conditioned upon (1) the Pool Scheduled Principal Balance
of all Contracts, at the time of any such purchase, aggregating less than 10% of
the Cut-off Date Pool Principal Balance of all Contracts, (2) such purchase
constituting a plan of complete liquidation in accordance with Section 860F of
the Code, and (3) the Servicer having provided the Trustee and the Depository
(if any) with at least 30 days' written notice. If such option is exercised,
the Servicer shall provide to the Trustee (at the Servicer's expense) the
certification required by Section 12.04, which certificate shall constitute a
plan of complete liquidation within the meaning of Section 860F of the Code, and
the Trustee shall promptly sign such certification and release to the Servicer
the Contract Files pertaining to the Contracts being purchased.
8-17
ARTICLE IX
THE CERTIFICATES AND THE CLASS C CERTIFICATE
--------------------------------------------
SECTION 9.01. The Certificates and Class C Certificate.
----------------------------------------
The Class HI: A, the Class HI: M-1, the Class HI: M-2, the Class HI: B-1,
the Class HI: B-2, the Class HE: A, the Class HE: M-1, the Class HE: M-2, the
Class HE: B-1, the Class HE: B-2 and the Class C Certificates shall be
substantially in the forms set forth in Exhibits A, B, C, D, E, F and L, as
applicable, and shall, on original issue, be executed by the Trustee on behalf
of the Trust to or upon the order of the Company. The Certificates shall be
evidenced by (i) one or more Class HI: A-1 Certificates representing $29,200,000
in Original Class HI: A-1 Principal Balance, (ii)one or more Class HI: A-2
Certificates representing $18,000,000 in Original Class HI: A-2 Principal
Balance, (iii) one or more Class HI: A-3 Certificates representing $21,018,000
in Original Class HI: A-3 Principal Balance, (iv) one or more Class HI: M-1
Certificates representing $6,821,000 in Original Class HI: M-1 Principal
Balance, (v) one or more Class HI: M-2 Certificates representing $4,264,000 in
Original Class HI: M-2 Principal Balance, (vi) one or more Class HI: B-1
Certificates representing $4,051,000 in Original Class HI: B-1 Principal
Balance, (vii) one or more Class HI: B-2 Certificates representing $1,919,230 in
Original Class HI: B-2 Principal Balance, (viii) one or more Class HE: A-1ARM
Certificates representing $69,822,000 in Original Class HE: A-1ARM Principal
Balance, (ix) one or more Class HE: A-1 Certificates representing $41,500,000 in
Original Class HE: A-1 Principal Balance, (x) one or more Class HE: A-2
Certificates representing $29,000,000 in Original Class HE: A-2 Principal
Balance, (xi) one or more Class HE: A-3 Certificates representing $94,500,000 in
Original Class HE: A-3 Principal Balance, (xii) one or more Class HE: A-4
Certificates representing $25,000,000 in Original Class HE: A-4 Principal
Balance, (xiii) one or more Class HE: A-5 Certificates representing $62,522,000
in Original Class HE: A-5 Principal Balance, (xiv) one or more Class HE: A-6
Certificates representing $51,000,000 in Original Class HE: A-6 Principal
Balance, (xv) one or more Class HE: M-1 Certificates representing $23,877,000 in
Original Class HE: M-1 Principal Balance, (xvi) one or more Class HE: M-2
Certificates representing $15,194,000 in Original Class HE: M-2 Principal
Balance, (xvii) one or more Class HE: B-1 Certificates representing $15,194,000
in Original Class HE: B-1 Principal Balance, and (xviii) one or more Class HE:
B-2 Certificates representing $6,512,008 in Original Class HE: B-2 Principal
Balance, beneficial ownership of such Classes of Certificates to be held through
Book-Entry Certificates in minimum dollar denominations of $1,000. The Class C
Certificate shall be evidenced by a single Class C Certificate issued on the
Closing Date to the Company and shall represent 100% of the Percentage Interest
of Class C.
9-1
The Certificates and the Class C Certificate shall be executed by manual
signature on behalf of the Trustee by a duly authorized Responsible Officer or
authorized signatory. Certificates or the Class C Certificate bearing the
signatures of individuals who were at any time the proper officers of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificate or Class C Certificate, or did not hold such offices at the
date of such Certificates or Class C Certificate. No Certificate or Class C
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate or Class C Certificate has been
executed by manual signature in accordance with this Section, and such signature
upon any Certificate or Class C Certificate shall be conclusive evidence, and
the only evidence, that such Certificate or Class C Certificate has been duly
executed and delivered hereunder. All Certificates and the Class C Certificate
shall be dated the date of their execution, except for those Certificates and
the Class C Certificate executed on the Closing Date, which shall be dated the
Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates and
---------------------------------------------------------
the Class C Certificate.
-----------------------
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which the Trustee
--------------------
shall provide for the registration of Certificates and the Class C Certificate
and of transfers and exchanges of Certificates and the Class C Certificate as
herein provided. The Trustee initially appoints itself to be the "Certificate
-----------
Registrar" and transfer agent for the purpose of registering Certificates and
---------
the Class C Certificate and transfers and exchanges of Certificates and the
Class C Certificate as provided herein. The Trustee will give prompt written
notice to Certificateholders, the Class C Certificateholder and the Servicer of
any change in the Certificate Registrar.
b. (1) Subject to clauses (2) and (3) below, no transfer of a Class C
Certificate shall be made by the Company or any other Person unless such
transfer is exempt from the registration requirements of the Securities Act of
1933 (the "Act"), as amended, and any applicable state securities laws or is
---
made in accordance with the Act and laws. In the event that any such transfer
is to be made, (A) the Company may require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Company that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the Act and laws or is being made
pursuant to the Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee or the Company, and (B) the Trustee shall require the transferee
to execute an investment letter substantially in the form of Exhibit N attached
hereto, which investment letter shall not be an expense of the Trustee or the
Company. The Class C Certificateholder desiring to effect such transfer shall,
and does hereby agree to,
9-2
indemnify the Trustee, the Company and the Certificate Registrar 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.
(2) No transfer of a Class HI: M-1, Class HI: M-2, Class HI: B-1,
Class HI: B-2 Certificate, Class HE: M-1, Class HE: M-2, Class HE: B-1 or Class
HE: B-2 Certificate or the Class C Certificate or any interest therein shall be
made to any employee benefit plan, trust or account that is subject to ERISA, or
that is described in Section 4975(e)(1) of the Code (each, a "Plan"), unless the
----
prospective transferee of a Certificate or interest therein provides the
Servicer and the Trustee with a certification of facts and, at its own expense,
an Opinion of Counsel which establish to the satisfaction of the Servicer and
the Trustee that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or cause the Servicer, the Company or the
Trustee to be deemed a fiduciary of such Plan or result in the imposition of an
excise tax under Section 4975 of the Code. Unless such opinion is delivered,
each person acquiring such a Certificate will be deemed to represent to the
Trustee, the Company and the Servicer that such person is neither a Plan, nor
acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code.
(3) Notwithstanding anything to the contrary contained herein, (A)
neither the Class C Certificate, nor any interest therein, shall be transferred,
sold or otherwise disposed of to a "disqualified organization," within the
meaning of Section 860E(e)(5) of the Code (a "Disqualified Organization"),
-------------------------
including, but not limited to, (i) the United States, a state or political
subdivision thereof, a foreign government, an international organization or an
agency or instrumentality of any of the foregoing, (ii) an organization (other
than a cooperative described in Section 521 of the Code) which is exempt from
the taxes imposed by Chapter 1 of the Code and not subject to the tax imposed on
unrelated business income by Section 511 of the Code, or (iii) a cooperative
described in Section 1381(a)(2)(C) of the Code, and (B) prior to any
registration of any transfer, sale or other disposition of the Class C
Certificate, the proposed transferee shall deliver to the Trustee, under
penalties of perjury, an affidavit that such transferee is not a Disqualified
Organization, with respect to which the Trustee shall have no actual knowledge
that such affidavit is false, and the transferor and the proposed transferee
shall each deliver for the Trustee an affidavit with respect to any other
information reasonably required by the Trustee pursuant to the REMIC Provisions,
including, without limitation, information regarding the transfer of noneconomic
residual interests and transfers of any residual interest to or by a foreign
person; provided, however, that, upon the delivery to the Trustee of an Opinion
-------- -------
of Counsel, in form and substance satisfactory to the Trustee and rendered by
Independent counsel, to the effect that the beneficial ownership of the Class C
Certificate by any Disqualified Organization will not result in the imposition
of federal income tax upon the Trust or any Certificateholder or any other
person or otherwise adversely affect the status of the Trust as a REMIC, the
foregoing
9-3
prohibition on transfers, sales and other dispositions, as well as the foregoing
requirement to deliver a certificate prior to any registration thereof, shall,
with respect to such Disqualified Organization, terminate. Notwithstanding any
transfer, sale or other disposition of the Class C Certificate, or any interest
therein, to a Disqualified Organization or the registration thereof in the
Certificate Register, such transfer, sale or other disposition and any
registration thereof, unless accompanied by the Opinion of Counsel described in
the preceding sentence, shall be deemed to be void and of no legal force or
effect whatsoever and such Disqualified Organization shall be deemed to not be
the Class C Certificateholder for any purpose hereunder, including, but not
limited to, the receipt of distributions on the Class C Certificate, and shall
be deemed to have no interest whatsoever in the Class C Certificate. Each Class
C Certificateholder, by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 9.02(b)(3).
(4) Any transfer, sale or other disposition not in compliance with
the provisions of this Section 9.02(b) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed to not be
the Certificateholder or Class C Certificateholder, as applicable, for any
purpose hereunder, including, but not limited to, the receipt of distributions
on the Certificate or Class C Certificate, and shall be deemed to have no
interest whatsoever in the Certificate or Class C Certificate.
(5) The Trustee shall give notice to S&P and Fitch promptly following
any transfer, sale or other disposition of the Class C Certificate.
c. At the option of a Certificateholder or the Class C Certificateholder,
Certificates and the Class C Certificate may be exchanged for other Certificates
or Class C Certificate of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates or the Class C Certificate to
be exchanged at such office. Whenever any Certificates or the Class C
Certificate are so surrendered for exchange, the Trustee shall execute and
deliver the Certificates or Class C Certificate which the Certificateholder or
Class C Certificateholder making the exchange is entitled to receive. Every
Certificate or Class C Certificate presented or surrendered for transfer or
exchange shall be duly endorsed by, or shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing.
d. Except as provided in paragraph (e) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of the Certificates on the books
9-4
of the Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository, Depository Participants and indirect participating
firms as representatives of the Certificate Owners of the Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
e. If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository and (ii) the Trustee or the Company is unable to
locate a qualified successor or (y) the Company at its sole option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Company nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository one Class HI: A-1 Certificate, one Class HI: A-2 Certificate, one
Class HI: A-3 Certificate, one Class HI: M-1 Certificate, one Class HI: M-2
Certificate, one Class HI: B-1 Certificate, one Class HI: B-2 Certificate, one
Class HE: A-1ARM Certificate, one Class HE: A-1 Certificate, one Class HE: A-2
9-5
Certificate, one Class HE: A-3 Certificate, one Class HE: A-4 Certificate, one
Class HE: A-5 Certificate, one Class HE: A-6 Certificate, one Class HE: M-1
Certificate, one Class HE: M-2 Certificate, one Class HE: B-1 Certificate and
one Class HE: B-2 Certificate each in registered form registered in the name of
the Depository's nominee, Cede & Co., the total face amount of which represents
100% of the Original Class HI: A-1 Principal Balance, the Original Class HI: A-2
Principal Balance, the Original Class HI: A-3 Principal Balance, the Original
Class HI: M-1 Principal Balance, the Original Class HI: M-2 Principal Balance,
the Original Class HI: B-1 Principal Balance, the Original Class HI: B-2
Principal Balance, the Original Class HE: A-1ARM Principal Balance, the Original
Class HE: A-1 Principal Balance, the Original Class HE: A-2 Principal Balance,
the Original Class HE: A-3 Principal Balance, the Original Class HE: A-4
Principal Balance, the Original Class HE: A-5 Principal Balance, the Original
Class HE: A-6 Principal Balance, the Original Class HE: M-1 Principal Balance,
the Original Class HE: M-2 Principal Balance, the Original Class HE: B-1
Principal Balance and the Original Class HE: B-2 Principal Balance,
respectively. Each such Certificate registered in the name of the Depositary's
nominee shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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."
SECTION 9.03. No Charge; Disposition of Void Certificates or Class C
------------------------------------------------------
Certificate.
-----------
No service charge shall be made to a Certificateholder or Class C
Certificateholder for any transfer or exchange of Certificates or the Class C
Certificate, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates or the Class C
Certificate. All Certificates or the Class C Certificate surrendered for
transfer and exchange shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or Class C
------------------------------------------------------------
Certificate.
-----------
If (a) any mutilated Certificate or Class C Certificate is surrendered to
the Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of
9-6
the destruction, loss or theft of any Certificate or Class C Certificate, and
(b) there is delivered to the Certificate Registrar and the Trustee such
security or indemnity as may be required by each to save it harmless, then in
the absence of notice to the Certificate Registrar or the Trustee that such
Certificate or Class C Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate or Class C Certificate, a new
Certificate or Class C Certificate of like tenor and original denomination. Upon
the issuance of any new Certificate or Class C Certificate under this Section
9.04, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. Any duplicate Certificate or Class C
Certificate issued pursuant to this Section 9.04 shall constitute complete and
indefeasible evidence of ownership of the Percentage Interest, as if originally
issued, whether or not the mutilated, destroyed, lost or stolen Certificate or
Class C Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners.
---------------------
Prior to due presentation of a Certificate or Class C Certificate for
registration of transfer, the Servicer, the Company, the Trustee, the Paying
Agent and the Certificate Registrar may treat the person in whose name any
Certificate or Class C Certificate is registered as the owner of such
Certificate or Class C Certificate for the purpose of receiving remittances
pursuant to Section 8.01 and for all other purposes whatsoever, and none of the
Servicer, the Company, the Trustee, the Certificate Registrar, the Paying Agent
or any agent of the Servicer, the Company, the Trustee, the Paying Agent or the
Certificate Registrar shall be affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' and Class C
-------------------------------------------------
Certificateholder's Names and Addresses.
---------------------------------------
The Certificate Registrar will furnish to the Trustee and the Servicer,
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee in writing, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Certificateholders and the
Class C Certificateholder as of the most recent Record Date. If Holders of
Certificates representing, in the aggregate, 25% or more of the Aggregate
Certificate Principal Balance apply in writing to the Trustee (hereinafter
referred to as "Applicants"), and such application states that the Applicants
----------
desire to communicate with other Certificateholders or the Class C
Certificateholder with respect to their rights under this Agreement or under the
Certificates or the Class C Certificate and is accompanied by a copy of the
communication which such Applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
Applicants access during normal business hours to the most recent list of
Certificateholders and the Class C Certificateholder held by the Trustee. If
9-7
such list is as of a date more than 90 days prior to the date of receipt of such
Applicants' request, the Trustee shall promptly request from the Certificate
Registrar a current list as provided above, and shall afford such Applicants
access to such list promptly upon receipt. Every Certificateholder and the Class
C Certificateholder, by receiving and holding a Certificate or the Class C
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Company, the Certificate Registrar or the Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Certificateholders or the Class C Certificateholder hereunder,
regardless of the source from which such information was derived.
SECTION 9.07. Authenticating Agents.
---------------------
The Trustee may appoint one or more Authenticating Agents with power to act
on its behalf and subject to its direction in the execution and delivery of the
Certificates or the Class C Certificate. For all purposes of this Agreement,
the execution and delivery of Certificates or the Class C Certificate by the
Authenticating Agent pursuant to this Section shall be deemed to be the
execution and delivery of Certificates or the Class C Certificate "by the
Trustee."
9-8
ARTICLE X
INDEMNITIES
-----------
SECTION 10.01. Real Estate.
-----------
The Company will defend and indemnify the Trust, the Trustee (including the
Custodian and any other agents of the Trustee) and the Certificateholders and
the Class C Certificateholder against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation arising out of or resulting from the use or
ownership of any real estate related to a Contract by the Company or the
Servicer or any Affiliate of either. Notwithstanding any other provision of
this Agreement, the obligation of the Company under this Section shall not
terminate upon a Service Transfer pursuant to Article VII, except that the
obligation of the Company under this Section shall not relate to the actions of
any subsequent Servicer after a Service Transfer.
SECTION 10.02. Liabilities to Obligors.
-----------------------
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Certificateholders or the Class C
Certificateholder under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Trust, the Certificateholders and the Class C
Certificateholder expressly disclaim such assumption.
SECTION 10.03. Tax Indemnification.
-------------------
The Company agrees to pay, and to indemnify, defend and hold harmless the
Trust, the Trustee (including the Custodian and any other agents of the
Trustee), the Certificateholders and the Class C Certificateholder from, any
taxes which may at any time be asserted with respect to, and as of the date of,
the transfer of the Contracts to the Trust, including, without limitation, any
sales, gross receipts, general corporation, personal property, privilege or
license taxes (but not including any federal, state or other taxes arising out
of the creation of the Trust and the issuance of the Certificates and the Class
C Certificate) and costs, expenses and reasonable counsel fees in defending
against the same, whether arising by reason of the acts to be performed by the
Company, the Servicer or the Trustee under this Agreement or imposed against the
Trust, a Certificateholder, the Class C Certificateholder or otherwise.
10-1
SECTION 10.04. Servicer's Indemnities.
----------------------
The Servicer shall defend and indemnify the Trust, the Trustee (including
the Custodian and any other agents of the Trustee), the Certificateholders and
the Class C Certificateholder against any and all costs, expenses, losses,
damages, claims and liabilities, including any failure to comply with FHA
Regulations in enforcing an FHA-Insured Contract, including reasonable fees and
expenses of counsel and expenses of litigation, in respect of any action taken
or omitted to be taken by the Servicer with respect to any Contract. This
indemnity shall survive any Service Transfer (but the original Servicer's
obligations under this Section 10.04 shall not relate to any actions of any
subsequent Servicer after a Service Transfer) and any payment of the amount
owing under, or any repurchase by the Company of, any such Contract.
SECTION 10.05. Operation of Indemnities.
------------------------
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments to the Trustee pursuant
to this Article and the Trustee thereafter collects any of such amounts from
others, the Trust will repay such amounts collected to the Company or the
Servicer, as the case may be, without interest.
SECTION 10.06. REMIC Tax Matters.
-----------------
If the Class C Certificateholder, pursuant to Section 6.06, pays any taxes
or charges imposed upon the Trust as a REMIC or otherwise, such taxes or
charges, except to the extent set forth in the following proviso, shall be
expenses and costs of the Trust and the Class C Certificateholder shall be
entitled to be reimbursed therefor out of the Certificate Account as provided in
Section 8.04; provided, however, that any such taxes or charges shall not be
-----------------
expenses or costs of the Trust, nor will the Class C Certificateholder be
entitled to reimbursement therefor out of the Certificate Account, if and to the
extent that such taxes or charges resulted from a failure (i) by the Company,
the Trustee or any Servicer to comply with the provisions of Section 2.04, (ii)
by any Servicer to comply with the provisions of Section 6.06, or (iii) by the
Trustee to execute any tax returns pursuant to Section 11.11.
10-2
ARTICLE XI
THE TRUSTEE
-----------
SECTION 11.01. Duties of Trustee.
-----------------
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, 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 misconduct; provided, however, that:
-------- -------
a. Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
c. The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificateholders representing, in
the aggregate, 25% or more of
11-1
the Aggregate Certificate Principal Balance 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;
d. The Trustee shall not be charged with knowledge of any event
referred to in Section 7.01 unless a Responsible Officer of the Trustee at
the Corporate Trust Office obtains actual knowledge of such event or the
Trustee receives written notice of such event from the Servicer or the
Certificateholders representing, in the aggregate, 25% or more of the
Aggregate Certificate Principal Balance; and
e. The Trustee may rely and shall be protected in acting or
refraining from taking any action in reliance on the advice of the Servicer
in all matters with respect to FHA Insurance. The Trustee shall not be
liable for any actions taken by the Servicer with respect to FHA Insurance,
including but not limited to the maintenance of such insurance and the
submission of claims to FHA.
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 Company or 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. The Trustee shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee.
-------------------------------------
Except as otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of a Servicing Officer, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond 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. The Trustee may consult with counsel and any opinion of any
counsel for the Company or the Servicer shall be full and complete
authorization
11-2
and protection in respect of any action taken or suffered or omitted by the
Trustee hereunder in good faith and in accordance with such Opinion of
Counsel;
c. The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
provided, however, that nothing contained herein shall relieve the Trustee
-------- -------
of the obligations, upon the occurrence of an Event of Termination (which
has not been cured), to exercise such of the rights and powers vested in it
by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs;
d. Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, 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, consent, order, approval, bond or other paper or
document, unless requested in writing so to do by Certificateholders
representing, in the aggregate, 25% or more of the Aggregate Certificate
Principal Balance; provided, however, that if the payment within a
-------- -------
reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition
to so proceeding. The reasonable expense of every such examination shall be
paid by the Servicer or, if paid by the Trustee, shall be reimbursed by the
Servicer upon demand; and
e. The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions
of such agents, attorneys or custodians if appointed by it with due care
hereunder.
SECTION 11.03. Trustee Not Liable for Certificates, the Class C
------------------------------------------------
Certificate or Contracts.
------------------------
The Trustee assumes no responsibility for the correctness of the recitals
contained herein, in the Certificates or in the Class C Certificate (other than
the Trustee's execution thereof). The Trustee makes no representations as to
the validity or
11-3
sufficiency of this Agreement, of the Certificates or of the Class C Certificate
(other than its execution thereof) or of any Contract, Contract File or related
document. The Trustee shall not be accountable for the use or application by the
Servicer or the Company of funds paid to the Company in consideration of
conveyance of the Contracts to the Trust by the Company or deposited in or
withdrawn from the Certificate Account by the Servicer.
SECTION 11.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or other capacity may become the owner or
pledgee of Certificates representing less than all the beneficial interest in
the Trust with the same rights as it would have if it were not Trustee.
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive
-----------------------------------------------------------
Events of Termination.
---------------------
Holders of Certificates representing, in the aggregate, 25% or more of the
Aggregate Certificate Principal Balance shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
--------
however, that, subject to Section 11.01, the Trustee shall have the right to
-------
decline to follow any such direction if the Trustee being advised by counsel
determines that the action so directed may not lawfully be taken, or if the
Trustee in good faith shall, by a Responsible Officer or Officers of the
Trustee, determine that the proceedings so directed would be illegal or involve
it in personal liability or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and provided further that
-------- -------
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Certificateholders. Holders of the Certificates representing,
in the aggregate, 51% or more of the Aggregate Certificate Principal Balance may
on behalf of Certificateholders waive any past Event of Termination hereunder
and its consequences, except a default in respect of a covenant or provision
------
hereof which under Section 12.08 cannot be modified or amended without the
consent of all Certificateholders, and upon any such waiver, such Event of
Termination shall cease to exist and shall be deemed to have been cured for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other Event of Termination or impair any right consequent thereon.
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses.
-----------------------------------------------
The Servicer agrees:
a. to pay to the Trustee reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
b. except as otherwise expressly provided herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
c. to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust and its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
The covenants in this Section 11.06 shall be for the benefit of the Trustee
in its capacities as Trustee, Paying Agent and Certificate Registrar hereunder,
and shall survive the termination of this Agreement.
SECTION 11.07. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times be a financial institution
organized and doing business under the laws of the United States of America or
any State, authorized under such laws to exercise corporate trust powers and a
Title I approved lender pursuant to FHA Regulations, and shall have a combined
capital and surplus of at least $50,000,000 or shall be a member of a bank
holding system the aggregate combined capital and surplus of which is
$50,000,000, provided that the Trustee's separate capital and surplus shall at
--------
all times be at least the amount required by Section 310(a)(2) of the Trust
Indenture Act of 1939, as amended. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of a
supervising or examining authority, then for the purposes of this Section 11.07,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In addition, the Trustee (or, if the Trustee is First Trust
National Association, the parent company of First Trust National Association)
shall at all times have a long-term deposit rating from S&P of at least BBB or
as shall be otherwise acceptable to S&P and have a long-term deposit rating from
Fitch of at least BBB or as shall be otherwise acceptable to Fitch. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section
11-5
11.06, the Trustee shall resign immediately in the manner and with the effect
specified in Section 11.08.
SECTION 11.08. Resignation or Removal of Trustee.
---------------------------------
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer and the Company. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to each of the Servicer and the Company and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall 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.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 11.07 and shall fail to resign after written request
therefor by the Company, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Company may remove the
Trustee. If the Company shall have removed the Trustee under the authority of
the immediately preceding sentence, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.08 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.09.
SECTION 11.09. Successor Trustee.
-----------------
Any successor Trustee appointed as provided in Section 11.08 shall execute,
acknowledge and deliver to the Servicer, the Company and to its predecessor
Trustee an instrument accepting such appointment 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 fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. The
predecessor Trustee shall deliver or cause to be delivered to the successor
Trustee the Contracts and the Contract Files and any related documents and
statements held by it hereunder; and, if the Contracts are then held by a
11-6
Custodian pursuant to a custodial agreement, the predecessor Trustee and the
Custodian shall amend such custodial agreement to make the successor Trustee the
successor to the predecessor Trustee thereunder; and the Servicer, the Company
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Trustee all such rights, powers, duties and
obligations. If the predecessor Trustee is then the lender of record for
purposes of FHA Insurance (due to an Event of Termination), the predecessor
Trustee shall submit a report to FHA describing the transfer of the FHA-Insured
Contracts without recourse, in such form as is then required under FHA
Regulations to cause HUD to transfer to the successor Trustee the FHA insurance
reserves applicable to the FHA-Insured Contracts.
No successor Trustee shall accept appointment as provided in this Section
11.09 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Xxxxxxx as provided in this
Section 11.09, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to S&P, to Fitch and to each Certificateholder and the
Class C Certificateholder at their addresses as shown in the Certificate
Register. If the Servicer 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 Servicer.
SECTION 11.10. Merger or Consolidation of Trustee.
----------------------------------
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
--------
of Section 11.07, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee shall promptly notify S&P and Fitch in the event
it is a party to any merger, conversion or consolidation.
SECTION 11.11. Tax Returns.
-----------
Upon the Servicer's request, the Trustee will furnish the Servicer with all
such information as the Servicer may reasonably require in connection with
preparing all tax returns of the Trust and the Trustee shall execute such
returns.
11-7
SECTION 11.12. Obligor Claims.
--------------
In connection with any offset defenses, or affirmative claims for recovery,
asserted in legal actions brought by Obligors under one or more Contracts based
upon provisions therein complying with, or upon other rights or remedies arising
from, any legal requirements applicable to the Contracts, including, without
limitation, the Federal Trade Commission's Trade Regulation Rule Concerning
Preservation of Consumers' Claims and Defenses (16 C.F.R. (S) 433) as amended
from time to time:
a. The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any seller of home improvements, in the arrangement, origination or
making of Contracts. The Trustee is the holder of the Contracts only as
trustee on behalf of the Certificateholders and the Class C
Certificateholder, and not as a principal or in any individual or personal
capacity;
b. The Trustee shall not be personally liable for or obligated to
pay Obligors any affirmative claims asserted thereby, or responsible to
Certificateholders or the Class C Certificateholder for any offset defense
amounts applied against Contract payments, pursuant to such legal actions;
c. The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially approved settlement agreements,
resulting from such legal actions;
d. The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders and the
Class C Certificateholder;
e. The Trustee will cooperate with and assist Certificateholders and
the Class C Certificateholder in their defense of legal actions by Xxxxxxxx
to recover affirmative claims if such cooperation and assistance is not
contrary to the interests of the Trustee as a party to such legal actions
and if the Trustee is satisfactorily indemnified for all liability, costs
and expenses arising therefrom; and
f. The Company hereby agrees to indemnify, hold harmless and defend
the Trustee, Certificateholders and the Class C Certificateholder from and
against any and all liability, loss, costs and expenses of the Trustee,
Certificateholders and the Class C Certificateholder resulting from any
affirmative claims for recovery asserted or collected by Obligors under the
Contracts. Notwithstanding any other
11-8
provision of this Agreement, the obligation of the Company under this
Section 11.12(f) shall not terminate upon a Service Transfer pursuant to
Article VII.
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction having authority over the
Trust, the Contracts or the Obligors, the Company and Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Company and the Trustee may consider necessary or desirable. If
the Company shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in case an Event of Termination shall
have occurred and be continuing, the Trustee 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 11.07
hereunder and no notice to Certificateholders or the Class C Certificateholder
of the appointment of co-trustee(s) or separate trustee(s) shall be required
under Section 11.09 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 11.13 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 co-trustee or separate trustee jointly, 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 or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee or separate
trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then co-trustees and separate trustees, as
effectively as if given to each of them. Every instrument appointing any co-
trustee or separate trustee shall refer to this Agreement and the conditions of
this Article XI. Each co-trustee and separate 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
11-9
conduct of, affecting the liability of, or affording protection to, the Trustee.
Every such instrument shall be filed with the Trustee.
Any co-trustee or separate 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 co-trustee or separate 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.
SECTION 11.14. Certain Matters Relating to FHA Insurance.
-----------------------------------------
a. In the event the Company and the successor Servicer, if any, shall
fail to pay all FHA Insurance premiums with respect to the FHA-Insured Contracts
required by FHA Regulations, the Trustee shall pay such FHA Insurance premiums
and shall be entitled to reimbursement for such amounts pursuant to Section
8.04(b)(9).
b. If, following the termination of the Trust pursuant to Section 12.04,
HUD demands reimbursement from the Trustee of an FHA Insurance claim paid on an
FHA-Insured Contract prior to the termination of the Trust, the Trustee agrees
that it will not seek to recover any such amount from any Person other than the
Servicer that submitted such claim.
SECTION 11.15. Trustee and First Bank System, Inc.
----------------------------------
In the event the Trustee ceases to be a direct, wholly owned subsidiary of
First Bank System, Inc., the Trustee shall promptly notify S&P and Fitch.
SECTION 11.16. Trustee Advances.
----------------
a. If the Servicer fails to deposit into the Certificate Account
Advances as required by Section 8.02, then the Trustee shall, subject to the
provisions of paragraph (b) below, from its own funds, deposit into the
Certificate Account the amount not so deposited by the Servicer on or before the
Business Day preceding the related Payment Date (a "Trustee Advance").
---------------
b. The Trustee shall not be required to make any Trustee Advance if and
to the extent that it determines in good faith that the funds, if advanced,
would not be recoverable by it from subsequent amounts available in the
Certificate Account in accordance with Section 8.04(b) or Section 8.04(d), as
applicable.
11-10
c. The Trustee shall be entitled to reimbursement of a Trustee
Advance from funds subsequently available therefor in the Certificate Account in
accordance with Section 8.04(b) or Section 8.04(d), as applicable.
11-11
ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties.
------------------------------------------------------
The Servicer shall not resign from the obligations and duties hereby imposed
on it except upon determination that the performance of its duties hereunder is
no longer permissible under applicable law. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel for
the Servicer to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
7.03.
Notwithstanding the foregoing, the Company, if it is the Servicer, may
delegate some or all of its servicing duties to a wholly owned subsidiary of the
Company, for so long as said subsidiary remains, directly or indirectly, a
wholly owned subsidiary of the Company. Notwithstanding any such delegation,
the Company shall retain all of the rights and obligations of the Servicer
hereunder.
SECTION 12.02. Company Not to Engage in Certain Transactions with Respect
----------------------------------------------------------
to the Trust.
------------
The Company shall not:
a. Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
b. Purchase any Certificates in an agency or trustee capacity; or
c. Loan any money to the Trust.
SECTION 12.03. Maintenance of Office or Agency.
-------------------------------
The Trustee will maintain in Minneapolis or St. Xxxx, Minnesota, an office
or agency where Certificates or the Class C Certificate may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Certificates, the Class C Certificate and this
Agreement may be served. On the date hereof the Trustee's office for such
purposes is located at 000 Xxxx 0xx Xxxxxx, Xxxxxx Xxxxx, Xx. Xxxx, Xxxxxxxxx
00000. The Trustee will give prompt written notice to the Company, the
Servicer, the Certificateholders and the Class C
12-1
Certificateholder of any change in the location of the Certificate Register or
any such office or agency.
SECTION 12.04. Termination.
-----------
a. The Trust created hereby and the respective obligations and
responsibilities of the Company, the Servicer and the Trustee created hereby
(other than the responsibility of the Trustee to make any final distributions to
Certificateholders and the Class C Certificateholder as set forth below) shall
terminate on the earlier of (a) the Payment Date on which the principal balance
of all of the Contracts is reduced to zero; or (b) the Payment Date occurring in
the month following the Servicer's purchase of the Contracts pursuant to Section
8.06; provided, that in no event shall the trust created hereby continue beyond
--------
the expiration of 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 Xx. Xxxxx, living on the date hereof, and provided, further, that
-------- -------
the Servicer's and the Company's representations and warranties and indemnities
by the Company and the Servicer shall survive termination.
b. Notice of any termination, specifying the Final Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which all
Certificateholders or the Class C Certificateholder may surrender their
Certificates or the Class C Certificate to the Servicer for payment of the final
distribution and cancellation, shall be given promptly by the Trustee (upon
direction by the Servicer ten days prior to the date such notice is to be
mailed) by letter to S&P, to Fitch and to Certificateholders and the Class C
Certificateholder mailed no later than the fifth Business Day of the month of
the Final Payment Date specifying (1) the Final Payment Date upon which final
payment on the Certificates and the Class C Certificate will be made upon
presentation and surrender of Certificates and the Class C Certificate at the
office or agency of the Servicer therein designated; (2) the amount of any such
final payment; and (3) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates and the Class C Certificate at the office or agency of the
Servicer therein specified. Any notice of purchase of Contracts by the Servicer
pursuant to Section 8.06 shall constitute the adoption by the Trustee on behalf
of the Certificateholders and the Class C Certificateholder of a plan of
complete liquidation within the meaning of Section 860F of the Code on the date
such notice is given when signed by the Trustee. Each such notice shall, to the
extent required by the REMIC Provisions or other applicable law, be signed on
behalf of the Trust by the Trustee. The Trustee shall give such notice to the
Certificate Registrar at the time such notice is given to the Certificateholders
and the Class C Certificateholder. In the event such notice is given in
connection with the Servicer's election to purchase the Contracts, the Servicer
shall deposit in the Certificate Account on the Final Payment Date in
immediately available funds an amount equal to the purchase price described in
12-2
Section 8.06(a) and upon such deposit Certificateholders and the Class C
Certificateholder will be entitled to the amount of such purchase price but not
amounts in excess thereof, all as provided herein. Upon certification to the
Trustee by a Servicing Officer following such final deposit, the Trustee shall
promptly release to the Servicer the Contract Files for the remaining Contracts,
and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.
c. Upon presentation and surrender of the Certificates and the Class C
Certificate, the Trustee shall cause to be distributed from the Certificate
Account, in the following order of priority, to Certificateholders and the Class
C Certificateholder on the final Payment Date in proportion to their respective
Percentage Interests: (1) to the extent the Sub-Pool HI Amount Available is
sufficient therefor, an amount equal to (i) as to Class HI: A Certificates, the
Class HI: A-1 Principal Balance, the Class HI: A-2 Principal Balance, and the
Class HI: A-3 Principal Balance, together with any Unpaid Class HI: A Interest
Shortfall and one month's interest at the Class HI: A-1 Pass-through Rate, the
Class HI: A-2 Pass-through Rate and the Class HI: A-3 Pass-through Rate on the
Class HI: A-l Principal Balance, the Class HI: A-2 Principal Balance and the
Class HI: A-3 Principal Balance, respectively, (ii) as to Class HI: M-1
Certificates, the Class HI: M-1 Principal Balance, together with any Unpaid
Class HI: M-1 Interest Shortfall and one month's interest at the Class HI: M-1
Pass-through Rate on the Class HI: M-1 Principal Balance, (iii) as to Class HI:
M-2 Certificates, the Class HI: M-2 Principal Balance, together with any Unpaid
Class HI: M-2 Interest Shortfall and one month's interest at the Class HI: M-2
Pass-through Rate on the Class HI: M-2 Principal Balance, (iv) as to Class HI:
B-1 Certificates, the Class HI: B-1 Principal Balance, together with any Unpaid
Class HI: B-1 Interest Shortfall and one month's interest at the Class HI: B-1
Pass-through Rate on the Class HI: B-1 Principal Balance, (v) as to Class HI: B-
2 Certificates, the Class HI: B-2 Principal Balance, together with any Unpaid
Class HI: B-2 Interest Shortfall and one month's interest at the Class HI: B-2
Pass-through Rate on the Class HI: B-2 Principal Balance, and (vi) as to the
Class HI: M and Class HI: B Certificates, the amounts specified in Section
8.04(b)(8), in the order specified therein; (2) to the extent the Sub-Pool HE
Amount Available is sufficient therefor, an amount equal to (i) as to Class HE:
A Certificates, the Class HE: A-1ARM Principal Balance, the Class HE: A-1
Principal Balance, the Class HE: A-2 Principal Balance, the Class HE: A-3
Principal Balance, the Class HE: A-4 Principal Balance, the Class HE: A-5
Principal Balance, and the Class HE: A-6 Principal Balance, together with any
Unpaid Class HE: A Interest Shortfall and one month's interest at the Class HE:
A-1ARM Pass-Through Rate, the Class HE: A-1 Pass-through Rate, the Class HE: A-2
Pass-through Rate, the Class HE: A-3 Pass-through Rate, the Class HE: A-4 Pass-
Through Rate, the Class HE: A-5 Pass-Through Rate and the Class HE: A-6 Pass-
Through Rate on the Class HE: A-l Principal Balance, the Class HE: A-2 Principal
Balance, the Class HE: A-3 Principal Balance, the Class HE: A-4 Principal
Balance, the Class HE: A-5 Principal Balance and the Class HE: A-6 Principal
Balance, respectively,
12-3
(ii) as to Class HE: M-1 Certificates, the Class HE: M-1 Principal Balance,
together with any Unpaid Class HE: M-1 Interest Shortfall and one month's
interest at the Class HE: M-1 Pass-through Rate on the Class HE: M-1 Principal
Balance, (iii) as to Class HE: M-2 Certificates, the Class HE: M-2 Principal
Balance, together with any Unpaid Class HE: M-2 Interest Shortfall and one
month's interest at the Class HE: M-2 Pass-through Rate on the Class HE: M-2
Principal Balance, (iv) as to Class HE: B-1 Certificates, the Class HE: B-1
Principal Balance, together with any Unpaid Class HE: B-1 Interest Shortfall and
one month's interest at the Class HE: B-1 Pass-through Rate on the Class HE: B-1
Principal Balance, (v) as to Class HE: B-2 Certificates, the Class HE: B-2
Principal Balance, together with any Unpaid Class HE: B-2 Interest Shortfall and
one month's interest at the Class HE: B-2 Pass-through Rate on the Class HE: B-2
Principal Balance, (vi) as to the Class HE: M and Class HE: B Certificates, the
amounts specified in Section 8.04(d)(8), in the order specified therein; and (3)
as to the Class C Certificate, the amount which remains on deposit in the
Certificate Account (other than amounts retained to meet claims) after
application pursuant to clauses (1) and (2) above; provided that, any Class HI:
-------------
B-2 Guaranty Payment deposited in the Certificate Account shall be distributed
only to the Class HI: B-2 Certificateholders and any Class HE: B-2 Guaranty
Payment deposited in the Certificate Account shall be distributed only to the
Class HE: B-2 Certificateholders. The distribution on the Final Payment Date
pursuant to this Section 12.04 shall be in lieu of the distribution otherwise
required to be made on such Payment Date in respect of each Class of
Certificates and the Class C Certificate.
d. In the event that all of the Certificateholders and the Class C
Certificateholder do not surrender their Certificates and the Class C
Certificate for cancellation within three months after the time specified in the
above-mentioned written notice, the Company shall give a second written notice
to the remaining Certificateholders and the Class C Certificateholder to
surrender their Certificates and the Class C Certificate for cancellation and
receive the final distribution with respect thereto. If within three months
after the second notice all the Certificates and the Class C Certificate shall
not have been surrendered for cancellation, the Company shall transfer to itself
all amounts remaining on deposit in the Certificate Account, to hold in trust
for Certificateholders and the Class C Certificateholder who have not
surrendered their Certificates or the Class C Certificate, as the case may be,
for cancellation, together with the final record list of Certificateholders and
the Class C Certificateholder, and the Company shall take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and to contact the
Class C Certificateholder concerning its surrender of its Class C Certificate,
and the cost thereof shall be paid out of the funds and other assets which
remain in trust hereunder.
SECTION 12.05. Acts of Certificateholders and the Class C
------------------------------------------
Certificateholder.
-----------------
12-4
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates representing, in the aggregate, 51% or more of the
Aggregate Certificate Principal Balance.
b. Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders or the Class C Certificateholder may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders or the Class C Certificateholder 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 required, to the Servicer. 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 (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
c. The fact and date of the execution by any Certificateholder or the
Class C Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
d. The ownership of Certificates and the Class C Certificate shall be
proved by the Certificate Register.
e. Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder or the Class C Certificateholder shall bind
every holder of every Certificate or the Class C Certificate, as applicable,
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Company in reliance thereon, whether or not notation of such
action is made upon such Certificates or Class C Certificate.
f. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
SECTION 12.06. Calculations.
------------
12-5
Except as otherwise provided in this Agreement, all interest rate and basis
point calculations under this Agreement will be made on the basis of a 360-day
year and twelve 30-day months and will be carried out to at least three decimal
places.
SECTION 12.07. Assignment or Delegation by Company.
-----------------------------------
Except as specifically authorized hereunder, and except for its obligations
as Servicer which are dealt with under Article V and Article VII, the Company
may not convey and assign or delegate any of its rights or obligations hereunder
absent the prior written consent of Holders of Certificates representing, in the
aggregate, 66-2/3% or more of the Aggregate Certificate Principal Balance, and
any attempt to do so without such consent shall be void. Notwithstanding the
foregoing, the Company may not delegate its obligations under Section 8.03
hereof absent (a) the prior written consent of Holders of Certificates
representing, in the aggregate, 66-2/3% or more of the Aggregate Certificate
Principal Balance, and the prior written confirmation of S&P and Fitch that the
rating of the Certificates will not be lowered or withdrawn following such
delegation, or (b) the prior written consent of all of the Certificateholders,
and any attempt to do so without such consent shall be void.
SECTION 12.08. Amendment.
---------
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders
or the Class C Certificateholder, to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein, as the case may be, to make such
changes as are necessary to maintain the status of the Trust as a "real estate
mortgage investment conduit" under the REMIC Provisions of the Code or to
otherwise effectuate the benefits of such status to the Trust, the
Certificateholders or the Class C Certificateholder, including, without
limitation, to implement any provision permitted by law that would enable a
REMIC to avoid the imposition of any tax, or to make any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
-------- -------
action shall not, as evidenced by an Opinion of Counsel for the Servicer,
adversely affect in any material respect the interests of any Certificateholder.
b. This Agreement may also be amended by agreement of the Trustee, the
Servicer and the Company at any time without the consent of the
Certificateholders or the Class C Certificateholder to effect the transfer of
FHA Insurance reserves to another entity in compliance with revisions to FHA
Regulations, provided that prior to any such amendment S&P and Fitch have each
--------
confirmed in writing that the rating of the Certificates will not be lowered or
withdrawn following such amendment.
12-6
c. This Agreement may also be amended from time to time by the Servicer,
the Company and the Trustee, with the consent of Holders of Certificates
representing, in the aggregate, 66-2/3% or more of the Aggregate Certificate
Principal Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of such Certificateholders; provided,
--------
however, that no such amendment shall (a) reduce in any manner the amount of, or
-------
delay the timing of, collections of payments on the Contracts or distributions
which are required to be made on any Certificate, (b) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of the
holders of all Certificates then outstanding, (c) result in the disqualification
of the Trust as a REMIC under the Code, (d)adversely affect the status of the
Trust as a REMIC or the status of the Certificates as "regular interests"
therein or (e) cause any tax (other than any tax imposed on "net income from
foreclosure property" under Section 860G(c)(1) of the Code that would be imposed
without regard to such amendment) to be imposed on the Trust, including, without
limitation, any tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code. This Agreement may not be amended without the
consent of the Class C Certificateholder, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement which would modify in any manner the rights of the Class C
Certificateholder.
d. This Agreement shall not be amended under this Section without the
consent of 100% of the Certificateholders and the Class C Certificateholder if
such amendment would result in the disqualification of the Trust as a REMIC
under the Code.
e. Concurrently with the solicitation of any consent pursuant to this
Section 12.08, the Trustee shall furnish written notification to S&P and Fitch.
Promptly after the execution of any amendment or consent pursuant to this
Section 12.08, the Trustee shall furnish written notification of the substance
of such amendment to S&P, Fitch, each Certificateholder and the Class C
Certificateholder.
f. It shall not be necessary for the consent of Certificateholders and
the Class C Certificateholder under this Section 12.08 to approve the particular
form of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders and
the Class C Certificateholder shall be subject to such reasonable requirements
as the Trustee may prescribe.
12-7
g. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
h. In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel to the Servicer to the effect
that such amendment is authorized or permitted by this Agreement.
i. Upon the execution of any amendment or consent pursuant to this
Section 12.08, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Certificateholder or the Class C Certificateholder hereunder shall be
bound thereby.
j. In the absence of the consent described in subsection (d) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment (i) will
not adversely affect the status of the Trust as a REMIC or the status of the
Certificates as "regular interests" therein, and (ii) will not cause any tax
(other than any tax imposed on "net income from foreclosure property" under
Section 860G(c)(1) of the Code that would be imposed without regard to such
amendment) to be imposed on the Trust, including, without limitation, any tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
SECTION 12.09. Notices.
-------
All communications and notices pursuant hereto to the Servicer, the Company,
the Trustee, S&P and Fitch shall be in writing and delivered or mailed to it at
the appropriate following address:
If to the Company or the Servicer:
Green Tree Financial Corporation
1100 Landmark Towers
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-1639
Attention: Chief Financial Officer
Telecopier Number: (000) 000-0000
If to the Trustee:
First Trust National Association
12-8
Corporate Trust Department
000 Xxxx 0xx Xxxxxx
Xxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx-Xxxx
Telecopier Number: (000) 000-0000
If to S&P:
Standard & Poor's
00 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: _____________________________________
If to Fitch:
Fitch Investors Service, L.P.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: _____________________________________
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder or the
Class C Certificateholder shall be in writing and delivered or mailed at the
address shown in the Certificate Register.
SECTION 12.10. Merger and Integration.
----------------------
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 12.11. Headings.
--------
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.12. Governing Law.
-------------
12-9
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
12-10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized this 27th day of
March, 1997.
GREEN TREE FINANCIAL
CORPORATION
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
Vice President and Controller
Attest:
/s/ Xxxx X. Xxxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxxx
Senior Vice President and Secretary
FIRST TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely
as Trustee
By: /s/ Xxxxxx Xxxxxxx-Xxxx
-------------------------------------
Trust Officer
Attest:
/s/ Xxxxxx X. Xxxx
--------------------------
12-11
STATE OF MINNESOTA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this ____ day of March,
1997, by Xxxxx X. Xxxxx, Vice President and Controller of Green Tree Financial
Corporation, a Delaware corporation, on behalf of the corporation.
_________________________________________________
[SEAL] Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 26th day of
----
March, 1997, by Xxxxxx Xxxxxxx-Xxxx of First Trust National Association, a
-------------------
national banking association, on behalf of the national banking association.
/s/ Xxxxx X. Xxxx
-----------------------
[SEAL] Notary Public
12-12
EXHIBIT A
---------
FORM OF CLASS HI: A CERTIFICATE
-------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
Class HI: A-[1][2][3] No.
(Senior)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997: Denomination: $________
First Payment Date: Aggregate Denomination of
April 15, 1997 All Class HI: A-[1][2][3]
Certificates: $___________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: August 15, 2023
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _______________
A-1
CERTIFICATE FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HI: A-[1][2][3] (SENIOR)
---------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that _________ is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in the Certificates for Home Improvement and Home Equity Loans, Series 1997-A,
Class HI: A-[1][2][3] issued by Home Improvement and Home Equity Loan Trust
1997-A (the "Trust"), which includes among its assets two sub-pools, one of
which is comprised of home improvement loan contracts and promissory notes (the
"Home Improvement Contracts") and the other of which is comprised of home equity
loans (the "Home Equity Contracts" and, together with the Home Improvement
Contracts, collectively the "Contracts") (including, without limitation, all
mortgages, deeds of trust and security deeds relating to such Contracts and any
and all rights to receive payments due on the Home Improvement Contracts on and
after February 28, 1997 (or the date of origination thereof, if later)
(the "Cut-off Date") and payments received on the Home Equity Contracts on and
after the Cut-off Date). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of March 1, 1997, between Green
Tree Financial Corporation, as Seller and Servicer (the "Company"), and First
Trust National Association as Trustee of the Trust (the "Trustee"). This
Certificate is one of the Certificates described in the Agreement and is issued
pursuant and subject to the Agreement. By acceptance of this Certificate the
holder assents to and becomes bound by the Agreement. To the extent not defined
herein, all capitalized terms have the meanings assigned to such terms in the
Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HI: A-[1][2][3] Certificates with an aggregate
Percentage Interest of at least 5% of the Class HI: A-[1][2][3] Certificates and
so desires, by wire transfer pursuant to instructions delivered to the Trustee
at least 10 days prior to such Payment Date) to the registered Certificateholder
at the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the Certificate
holder's Percentage Interest of the Class HI: A-[1][2][3] Distribution Amount
for such Payment Date. Distributions of interest and principal on the Class HI:
A-[1][2][3] Certificates will be made primarily from amounts available in
respect of the Home
A-2
Improvement Contracts. The final scheduled Payment Date of this Certificate is
August 15, 2023 or the next succeeding Business Day if such August 15 is not a
Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account to the extent available
for distribution to the Certificateholder as provided in the Agreement for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Servicer, the
A-3
Trustee, the Paying Agent, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ___, 1997 HOME IMPROVEMENT AND HOME
EQUITY LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:
________________________________________
Authorized Officer
A-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________ the within Certificate for Home Improvement and
Home Equity Loans, Series 1997-A, and does hereby irrevocably constitute and
appoint Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated:_______________ By:
_________________________________________
Signature
A-5
EXHIBIT B
---------
FORM OF CLASS HI: M CERTIFICATE
-------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS HI: A
CERTIFICATES [AND CLASS HI: M-1 CERTIFICATES] AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
Class HI: M-[1][2] No.
(Subordinate)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997 Denomination: $________
First Payment Date: Aggregate Denomination of
April 15, 1997 all Class HI:
M-[1][2] Certificates:
$ ___________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: August 15, 2023
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: ______________
B-1
CERTIFICATE FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HI: M-[1][2] (SUBORDINATE)
-----------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that ______________ is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in the Certificates for Home Improvement and Home Equity Loans, Series 1997-A,
Class HI: M-[1][2] issued by Home Improvement and Home Equity Loan Trust 1997-A
(the "Trust"), which includes among its assets two sub-pools, one of which is
comprised of home improvement loan contracts and promissory notes (the "Home
Improvement Contracts") and the other of which is comprised of home equity loans
(the "Home Equity Contracts" and, together with the Home Improvement Contracts,
collectively the "Contracts") (including, without limitation, all mortgages,
deeds of trust and security deeds relating to such Contracts and any and all
rights to receive payments due on the Home Improvement Contracts on and after
February 28, 1997 (or the date of origination thereof, if later) (the "Cut-off
Date") and payments received on the Home Equity Contracts on and after the Cut-
off Date). The Trust has been created pursuant to a Pooling and Servicing
Agreement (the "Agreement"), dated as of March 1, 1997, between Green Tree
Financial Corporation, as Seller and Servicer (the "Company"), and First Trust
National Association as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HI: M-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% of the Class HI: M-[1][2] Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder at
the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class HI: M-[1][2] Distribution
Amount (plus the Class HI: M-[1][2] Interest Deficiency Amount, if any) for such
Payment Date. Distributions of interest and principal on the Class HI: M-[1][2]
Certificates will be made
B-2
primarily from amounts available in respect of the Home Improvement Contracts.
The final scheduled Payment Date of this Certificate is August 15, 2023 or the
next succeeding Business Day if such August 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account to the extent available
for distribution to the Certificateholder as provided in the Agreement, for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
No transfer of this Certificate or any interest herein by, on behalf of or
with plan assets of any employee benefit plan, trust or account that is subject
to the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
or that is described in Section 4975(e)(1) of the Code (each, a "Plan") will be
----
registered unless the transferee, at its expense, delivers to the Trustee and
the Servicer an opinion of counsel (satisfactory to the Trustee and the
Servicer) that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or cause the Servicer, the Company or the
Trustee to be deemed to be a fiduciary of such Plan or result in the imposition
of an excise tax under Section 4975 of the Code. Unless such opinion is
delivered, each person acquiring this Certificate will be deemed to represent to
the Trustee, the Company and the Servicer that such person is neither a Plan,
nor acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
B-3
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Servicer, the Trustee, the Paying Agent, the Certificate Registrar
nor any such agent shall be affected by any notice to the contrary.
B-4
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ____, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_____________________________________
Authorized Officer
B-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
___________________ the within Certificate for Home Improvement and Home Equity
Loans, Series 1997-A, and does hereby irrevocably constitute and appoint
_________________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: By:_____________________________________
Signature
B-6
EXHIBIT C
---------
FORM OF CLASS HI: B CERTIFICATE
-------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS HI: A
CERTIFICATES, THE CLASS HI: M CERTIFICATES [AND THE CLASS HI: B-1 CERTIFICATES]
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class HI: B-[1][2] No.
(Subordinate)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997 Denomination: $________
First Payment Date: Aggregate Denomination of
April 15, 1997 all Class HI: B-[1][2] Certificates:
$__________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: August 15, 2023
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: __________
C-1
CERTIFICATES FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HI: B-[1][2] (SUBORDINATE)
-----------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that ______________ is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in the Certificates for Home Improvement and Home Equity Loans, Series 1997-A,
Class HI: B-[1][2], issued by Home Improvement and Home Equity Loan Trust 1997-A
(the "Trust"), which includes among its assets two sub-pools, one of which is
comprised of home improvement loan contracts and promissory notes (the "Home
Improvement Contracts") and the other of which is comprised of home equity loans
(the "Home Equity Contracts" and, together with the Home Improvement Contracts,
collectively the "Contracts") (including, without limitation, all mortgages,
deeds of trust and security deeds relating to such Contracts and any and all
rights to receive payments due on the Home Improvement Contracts on and after
February 28, 1997 (or the date of origination thereof, if later) (the "Cut-off
Date") and payments received on the Home Equity Contracts on and after the Cut-
off Date) and the Class HI: B-2 Limited Guaranty. The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1997, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and First Trust National Association as Trustee of the Trust
(the "Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HI: B-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% of the Class HI: B-[1][2] Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder at
the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class HI: B-[1][2] Distribution
Amount [(plus the Class HI: B-1 Interest Deficiency Amount, if any)][and any
Class HI: B-2 Guaranty Payment] for such Payment
C-2
Date. Distributions of interest and principal on the Class HI: B-[1][2]
Certificates will be made primarily from amounts available in respect of the
Home Improvement Contracts. The final scheduled Payment Date of this Certificate
is August 15, 2023 or the next succeeding Business Day if such August 15 is not
a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account [and the Class HI: B-2
Limited Guaranty of the Company], to the extent available for distribution to
the Certificateholder as provided in the Agreement, for payment hereunder and
that the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein by, on behalf of or
with plan assets of any employee benefit plan, trust or account that is subject
to the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
or that is described in Section 4975(e)(1) of the Code (each, a "Plan") will be
----
registered unless the transferee, at its expense, delivers to the Trustee and
the Servicer an opinion of counsel (satisfactory to the Trustee and the
Servicer) that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or cause the Servicer, the Company or the
Trustee to be deemed to be a fiduciary of such Plan or result in the imposition
of an excise tax under Section 4975 of the Code. Unless such opinion is
delivered, each person acquiring this Certificate will be deemed to represent to
the Trustee, the Company and the Servicer that such person is neither a Plan,
nor acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
C-3
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Servicer, the Trustee, the Paying Agent, the Certificate Registrar
nor any such agent shall be affected by any notice to the contrary.
C-4
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ___, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_____________________________________
Authorized Officer
C-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________________ the within Certificate for Home Improvement
and Home Equity Loans, Series 1997-A, and does hereby irrevocably constitute and
appoint _________________________ Attorney to transfer the said certificate on
the Certificate Register maintained by the Trustee, with full power of
substitution in the premises.
Dated: By:_____________________________________
Signature
C-6
EXHIBIT D-1
-----------
FORM OF CLASS HE: A[1][2][3][4][5][6] CERTIFICATE
-------------------------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
Class HE: A-[1][2][3][4][5][6] No.
(Senior)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997: Denomination: $_______
First Payment Date: Aggregate Denomination of
April 15, 1997 All Class HE: A-[1][2][3][4][5][6]
Certificates: $__________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: March 15, 2028
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: __________
D-1-1
CERTIFICATE FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HE: A-[1][2][3][4][5][6] (SENIOR)
------------------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that ____________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement and Home Equity Loans,
Series 1997-A, Class HE: A-[1][2][3][4][5][6] issued by Home Improvement and
Home Equity Loan Trust 1997-A (the "Trust"), which includes among its assets two
sub-pools, one of which is comprised of home improvement loan contracts and
promissory notes (the "Home Improvement Contracts") and the other of which is
comprised of home equity loans (the "Home Equity Contracts" and, together with
the Home Improvement Contracts, collectively the "Contracts") (including,
without limitation, all mortgages, deeds of trust and security deeds relating to
such Contracts and any and all rights to receive payments due on the Home
Improvement Contracts on and after February 28, 1997 (or the date of origination
thereof, if later) (the "Cut-off Date") and payments received on the Home Equity
Contracts on and after the Cut-off Date). The Trust has been created pursuant
to a Pooling and Servicing Agreement (the "Agreement"), dated as of March 1,
1997, between Green Tree Financial Corporation, as Seller and Servicer (the
"Company"), and First Trust National Association as Trustee of the Trust (the
"Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HE: A-[1][2][3][4][5][6] Certificates with an
aggregate Percentage Interest of at least 5% of the Class HE: A-
[1][2][3][4][5][6] Certificates and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Payment
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such Payment
Date, in an amount equal to the Certificateholder's Percentage Interest of the
Class HE: A-[1][2][3][4][5][6] Distribution Amount for such Payment Date.
Distributions of interest and principal on the Class HE:
D-1-2
A-[1][2][3][4][5][6] Certificates will be made primarily from amounts available
in respect of the Home Equity Contracts. The final scheduled Payment Date of
this Certificate is March 15, 2028 or the next succeeding Business Day if such
March 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account to the extent available
for distribution to the Certificateholder as provided in the Agreement for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered
D-1-3
as the owner hereof for all purposes, and neither the Company, the Servicer, the
Trustee, the Paying Agent, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ___, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_____________________________________
Authorized Officer
D-1-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________ the within Certificate for Home Improvement and
Home Equity Loans, Series 1997-A, and does hereby irrevocably constitute and
appoint ________________________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated: By:_____________________________________
Signature
D-1-5
EXHIBIT D-2
-----------
FORM OF CLASS HE: A-1ARM CERTIFICATE
------------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
Class HE: A-1ARM No.
(Senior)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997: Denomination: $_______
First Payment Date: Aggregate Denomination of
April 15, 1997 All Class HE: A-1ARM
Certificates: $__________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: March 15, 2027
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: __________
D-2-1
CERTIFICATE FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HE: A-1ARM (SENIOR)
----------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that ____________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement and Home Equity Loans,
Series 1997-A, Class HE: A-1ARM issued by Home Improvement and Home Equity Loan
Trust 1997-A (the "Trust"), which includes among its assets two sub-pools, one
of which is comprised of home improvement loan contracts and promissory notes
(the "Home Improvement Contracts") and the other of which is comprised of home
equity loans (the "Home Equity Contracts" and, together with the Home
Improvement Contracts, collectively the "Contracts") (including, without
limitation, all mortgages, deeds of trust and security deeds relating to such
Contracts and any and all rights to receive payments due on the Home Improvement
Contracts on and after February 28, 1997 (or the date of origination thereof, if
later) (the "Cut-off Date") and payments received on the Home Equity Contracts
on and after the Cut-off Date). The Trust has been created pursuant to a
Pooling and Servicing Agreement (the "Agreement"), dated as of March 1, 1997,
between Green Tree Financial Corporation, as Seller and Servicer (the
"Company"), and First Trust National Association as Trustee of the Trust (the
"Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HE: A-1ARM Certificates with an aggregate
Percentage Interest of at least 5% of the Class HE: A-1ARM Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder at
the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class HE: A-1ARM Distribution
Amount for such Payment Date. Distributions of interest and principal on the
Class HE: A-1ARM Certificates will be made primarily from amounts available in
respect of the
D-2-2
Home Equity Contracts. The final scheduled Payment Date of this Certificate is
March 15, 2027 the next succeeding Business Day if such March 15 is not a
Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account to the extent available
for distribution to the Certificateholder as provided in the Agreement for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Servicer, the
D-2-3
Trustee, the Paying Agent, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ___, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_____________________________________
Authorized Officer
D-2-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________ the within Certificate for Home Improvement and
Home Equity Loans, Series 1997-A, and does hereby irrevocably constitute and
appoint ________________________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated: By:_________________________________________
Signature
D-2-5
EXHIBIT E
---------
FORM OF CLASS HE: M CERTIFICATE
-------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS HE: A
CERTIFICATES [AND CLASS HE: M-1 CERTIFICATES] AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
Class HE: M-[1][2] No.
(Subordinate)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997 Denomination: $_________
First Payment Date: Aggregate Denomination of
April 15, 1997 all Class HE: M-[1][2] Certificates:
$____________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: March 15, 2028
(or if such day is not a Business
Day, then the next succeeding
Business Day)
CUSIP: ____________
E-1
CERTIFICATE FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HE: M-[1][2] (SUBORDINATE)
-----------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that _____________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement and Home Equity Loans,
Series 1997-A, Class HE: M-[1][2] issued by Home Improvement and Home Equity
Loan Trust 1997-A (the "Trust"), which includes among its assets two sub-pools,
one of which is comprised of home improvement loan contracts and promissory
notes (the "Home Improvement Contracts") and the other of which is comprised of
home equity loans (the "Home Equity Contracts" and, together with the Home
Improvement Contracts, collectively the "Contracts") (including, without
limitation, all mortgages, deeds of trust and security deeds relating to such
Contracts and any and all rights to receive payments due on the Home Improvement
Contracts on and after February 28, 1997 (or the date of origination thereof, if
later) (the "Cut-off Date") and payments received on the Home Equity Contracts
on and after the Cut-off Date). The Trust has been created pursuant to a Pooling
and Servicing Agreement (the "Agreement"), dated as of March 1, 1997, between
Green Tree Financial Corporation, as Seller and Servicer (the "Company"), and
First Trust National Association as Trustee of the Trust (the "Trustee"). This
Certificate is one of the Certificates described in the Agreement and is issued
pursuant and subject to the Agreement. By acceptance of this Certificate the
holder assents to and becomes bound by the Agreement. To the extent not defined
herein, all capitalized terms have the meanings assigned to such terms in the
Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HE: M-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% of the Class HE: M-[1][2] Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder at
the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class HE: M-[1][2] Distribution
Amount (plus the Class HE: M-[1][2] Interest Deficiency Amount, if any) for such
Payment Date. Distributions of interest and principal on the Class HE: M-[1][2]
Certificates will be
E-2
made primarily from amounts available in respect of the Home Equity Contracts.
The final scheduled Payment Date of this Certificate is March 15, 2028 the next
succeeding Business Day if such March 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account to the extent available
for distribution to the Certificateholder as provided in the Agreement, for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
No transfer of this Certificate or any interest herein by, on behalf of or
with plan assets of any employee benefit plan, trust or account that is subject
to the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
or that is described in Section 4975(e)(1) of the Code (each, a "Plan") will be
----
registered unless the transferee, at its expense, delivers to the Trustee and
the Servicer an opinion of counsel (satisfactory to the Trustee and the
Servicer) that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or cause the Servicer, the Company or the
Trustee to be deemed to be a fiduciary of such Plan or result in the imposition
of an excise tax under Section 4975 of the Code. Unless such opinion is
delivered, each person acquiring this Certificate will be deemed to represent to
the Trustee, the Company and the Servicer that such person is neither a Plan,
nor acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
E-3
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Servicer, the Trustee, the Paying Agent, the Certificate Registrar
nor any such agent shall be affected by any notice to the contrary.
E-4
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ___, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_________________________________________________
Authorized Officer
E-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________________________ the within Certificate for Home Improvement and
Home Equity Loans, Series 1997-A, and does hereby irrevocably constitute and
appoint ________________________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated: By:_____________________________________
Signature
E-6
EXHIBIT F
---------
FORM OF CLASS HE: B CERTIFICATE
-------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS HE: A, THE
CLASS HE: M CERTIFICATES [AND THE CLASS HE: B-1 CERTIFICATES] AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class HE: B-[1][2] No.
(Subordinate)
Cut-off Date: Pass-Through Rate: ___%
February 28, 1997 Denomination: $_________
First Payment Date: Aggregate Denomination of
April 15, 1997 all Class HE: B-[1][2] Certificates:
$______________
Servicer: Final Scheduled Payment
Green Tree Financial Corporation Date: March 15, 2028
(or if such day is not a Business
Day, then the next succeeding
Business Day)
CUSIP: ___________
F-1
CERTIFICATES FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A, CLASS HE: B-[1][2] (SUBORDINATE)
-----------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET
FORTH IN THE AGREEMENT.
This certifies that ______________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement and Home Equity Loans,
Series 1997-A, Class HE: B-[1][2], issued by Home Improvement and Home Equity
Loan Trust 1997-A (the "Trust"), which includes among its assets two sub-pools,
one of which is comprised of home improvement loan contracts and promissory
notes (the "Home Improvement Contracts") and the other of which is comprised of
home equity loans (the "Home Equity Contracts" and, together with the Home
Improvement Contracts, collectively the "Contracts") (including, without
limitation, all mortgages, deeds of trust and security deeds relating to such
Contracts and any and all rights to receive payments due on the Home Improvement
Contracts on and after February 28, 1997 (or the date of origination thereof, if
later) (the "Cut-off Date") and payments received on the Home Equity Contracts
on and after the Cut-off Date) and the Class HE: B-2 Limited Guaranty. The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 1997, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and First Trust National
Association as Trustee of the Trust (the "Trustee"). This Certificate is one of
the Certificates described in the Agreement and is issued pursuant and subject
to the Agreement. By acceptance of this Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class HE: B-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% of the Class HE: B-[1][2] Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder at
the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class HE: B-[1][2] Distribution
Amount [(plus the Class HE: B-1 Interest Deficiency Amount, if any)][and any
Class HE: B-2
F-2
Guaranty Payment] for such Payment Date. Distributions of interest and principal
on the Class HE: B-[1][2] Certificates will be made primarily from amounts
available in respect of the Home Equity Contracts. The final scheduled Payment
Date of this Certificate is March 15, 2028 the next succeeding Business Day if
such March 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account [and the Class HE: B-2
Limited Guaranty of the Company], to the extent available for distribution to
the Certificateholder as provided in the Agreement, for payment hereunder and
that the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein by, on behalf of or
with plan assets of any employee benefit plan, trust or account that is subject
to the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
or that is described in Section 4975(e)(1) of the Code (each, a "Plan") will be
----
registered unless the transferee, at its expense, delivers to the Trustee and
the Servicer an opinion of counsel (satisfactory to the Trustee and the
Servicer) that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or cause the Servicer, the Company or the
Trustee to be deemed to be a fiduciary of such Plan or result in the imposition
of an excise tax under Section 4975 of the Code. Unless such opinion is
delivered, each person acquiring this Certificate will be deemed to represent to
the Trustee, the Company and the Servicer that such person is neither a Plan,
nor acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
F-3
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee 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
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Servicer, the Trustee, the Paying Agent, the Certificate Registrar
nor any such agent shall be affected by any notice to the contrary.
F-4
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ___, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_________________________________________________
Authorized Officer
F-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________ the within Certificate for Home Improvement and
Home Equity Loans, Series 1997-A, and does hereby irrevocably constitute and
appoint ___________________________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By:_____________________________________
Signature
F-6
EXHIBIT G
---------
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of March 1, 1997, between the undersigned and First Trust National
Association as Trustee (the "Trustee"), the undersigned does hereby transfer,
convey and assign, set over and otherwise convey, without recourse, to the
Trustee on behalf of the Trustee on behalf of Home Improvement and Home Equity
Loan Trust 1997-A, created by the Agreement, to be held in trust as provided in
the Agreement, (i) all right, title and interest in the home improvement
contracts and home equity loans (including, without limitation, all related
mortgages and deeds of trust and any and all rights to receive payments which
are due pursuant to the Contracts but excluding payments which were due pursuant
to the Home Improvement Contracts prior to February 28, 1997, and payments
received pursuant to the Home Equity Contracts prior to February 28, 1997)
identified in the List of Contracts delivered pursuant to Section 2.02(a) of the
Agreement, (ii) all rights under FHA Insurance as such insurance relates to the
Contracts, (iii) all rights under hazard insurance on the properties described
in the Contracts and, as to Contracts pertaining to properties located in
special flood areas designated by HUD, all rights under flood insurance policies
as such insurance relates to the Contracts, (iv) all rights under the Errors and
Omissions Protection Policy (as defined in Section 1.02 of the Agreement), (v)
all documents contained in the Contract Files (as defined in Section 1.02 of the
Agreement), (vi) all rights under any title insurance policies, if applicable,
on any of the properties securing the Contracts, and (vii) all proceeds and
products of the foregoing.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this _____ day March, 1997.
GREEN TREE FINANCIAL CORPORATION
[Seal] By:_________________________________________________
[Name]
[Title]
G-1
EXHIBIT H
---------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE OF OFFICER
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company in
connection with the Pooling and Servicing Agreement dated as of March 1, 1997
(the "Agreement") between the Company and First Trust National Association as
Trustee (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
(i) attached hereto as Exhibit I is a true and correct copy of the
Certificate of Incorporation of the Company, together with all amendments
thereto as in effect on the date hereof;
(ii) attached hereto as Exhibit II is a true and correct copy of the Bylaws
of the Company, as amended, as in effect on the date hereof;
(iii) the representations and warranties of the Company contained in
Sections 3.01 and 3.04 of the Agreement are true and correct on and as of the
date hereof and, to the best of his knowledge, the representations and
warranties of the Company contained in Sections 3.02 and 3.03 of the Agreement
are true and correct on and as of the date hereof;
(iv) no event with respect to the Company has occurred and is continuing
which would constitute an Event of Termination or an event that with notice or
lapse of time or both would become an Event of Termination under the Agreement;
and
(v) each of the agreements and conditions of the Company to be performed
on or before the date hereof pursuant to the Agreement have been performed in
all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
________________________ 1997.
____________________________________________________
[Name]
[Title]
H-1
EXHIBIT I
---------
FORM OF OPINION OF COUNSEL FOR THE COMPANY
The opinion of Xxxxxx and Xxxxxx, Professional Association, shall be to the
effect that (capitalized terms have the meanings set forth in the Pooling and
Servicing Agreement):
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with corporate power
to execute, deliver and perform its obligations under the Pooling and Servicing
Agreement (including the Class HI: B-2 Limited Guaranty and the Class HE: B-2
Limited Guaranty contained therein), the Certificates and the Class C
Certificate.
2. The Pooling and Servicing Agreement (including the Class HI: B-2
Limited Guaranty and the Class HE: B-2 Limited Guaranty contained therein) has
been duly authorized by all requisite corporate action, duly executed and
delivered by the Company, and constitutes the valid and binding obligation of
the Company enforceable in accordance with its terms. The Certificates have
been duly authorized by all requisite corporate action and, when duly and
validly executed by the Trustee in accordance with the Pooling and Servicing
Agreement, will be validly issued and outstanding and entitled to the benefits
of the Pooling and Servicing Agreement.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by the Company
for the consummation of the transactions contemplated by the Pooling and
Servicing Agreement, except such as may be required under blue sky laws under
any jurisdiction in connection with the offering of the Certificates by the
Underwriters pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and the Trust is not
required to be registered as an investment company under the Investment Company
Act of 1940.
5. Neither the transfer of the Contracts to the Trustee acting on behalf
of the Trust, nor the assignment of the Company's lien on the related real
estate which is the subject of a home improvement loan or a home equity loan,
nor the issuance or sale of the Certificates and the Class C Certificate, nor
the execution and delivery of the Pooling and Servicing Agreement, nor the
consummation of any other of the transactions contemplated in the Pooling and
Servicing Agreement, nor the fulfillment of the terms of the Certificates, the
Class C Certificate or the Pooling and Servicing Agreement by the Company will
conflict with, or result in a breach, violation or acceleration of, or
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constitute a default under, any term or provision of the Restated Certificate of
Incorporation or Bylaws of the Company or of any indenture or other agreement or
instrument known to us to which the Company is a party or by which it is bound,
or result in a violation of, or contravene the terms of any statute, order or
regulation, applicable to the Company, of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it.
6. There are no actions or proceedings pending or, to the best of our
knowledge, actions, proceedings or investigations pending or overtly threatened
against the Company before any court, administrative agency or other tribunal
(A) asserting the invalidity of the Pooling and Servicing Agreement, the
Certificates, the Class C Certificate, the hazard or flood insurance policies
applicable to any Contracts or the Errors and Omissions Protection Policy, (B)
seeking to prevent the issuance of the Certificates or the Class C Certificate
or the consummation of any of the transactions contemplated by the Pooling and
Servicing Agreement, (C) which is likely materially and adversely to affect the
performance by the Company of its obligations under, or the validity or
enforceability of the Pooling and Servicing Agreement, the Certificates or the
Class C Certificate, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates or the Class C Certificate described in the
Prospectus and the Prospectus Supplement under the heading "Certain Federal
Income Tax Consequences."
7. The transfer of the Contracts to the Trust in accordance with Section
2.01 of the Pooling and Servicing Agreement would not be avoidable as a
preferential transfer under Section 547 of the United States Bankruptcy Code (11
U.S.C. (S) 547), as in effect on the date hereof, in the event that the Company
became a debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Company has
transferred to the Trustee acting on behalf of the Trust all of the Company's
right, title and interest in the Contracts, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Contracts, and has delivered the Contract Files to the Trustee or its
custodian. No filing or other action, other than the filing of a financing
statement on Form UCC-1 with the Secretary of State of the State of Minnesota
identifying the Contracts as collateral and naming the Company as debtor and the
Trust as secured party, and the filing of continuation statements as required by
Section 4.02 of the Pooling and Servicing Agreement, is necessary to perfect as
against third parties the assignment of the Contracts by the Company to the
Trust. We have separately provided you with our opinion concerning whether such
assignment could be recharacterized as a pledge rather than a sale in the event
the Company became a debtor under the United States Bankruptcy Code. However,
in the event such assignment were characterized as a pledge securing a loan from
the Certificateholders to
I-2
the Company, it is our opinion that the Trustee would be deemed to have a valid
and perfected security interest in the Contracts and the proceeds thereof, which
security interest would be prior to any other security interest that may be
perfected under the Uniform Commercial Code as in effect in the State of
Minnesota and over any "lien creditor" (as defined in Minn. Stat. (S)336.9-
301(3)) who becomes such after the Closing Date, except that a subsequent
purchaser of any Contract who gives new value and takes possession thereof in
the ordinary course of his business would have priority over the Trustee's
security interest in such Contract, if such purchaser acts without knowledge
that such Contract was subject to a security interest. We have assumed for the
purposes of this opinion that during the term of the Pooling and Servicing
Agreement the Trustee, or its custodian, shall maintain possession of the
Contract Files for the purpose of perfecting the assignment to the Trustee of
the Contracts. We express no opinion with respect to the enforceability of any
individual Contract or the existence of any claims, rights or other matters in
favor of any Obligor or the owner of any financed home improvement.
9. In reliance upon certain representations and warranties set forth in
the Pooling and Servicing Agreement and assuming that the Company and the
Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing of a proper election, as of the date hereof the Trust
created pursuant to the Pooling and Servicing Agreement will qualify as a REMIC.
Further, the Certificates will evidence ownership of the "regular interests" and
the Class C Certificate will evidence ownership of the single class of "residual
interest" in such REMIC. For Minnesota income tax purposes, and subject to the
foregoing assumptions, and the provisions of Minnesota law as of the date
hereof, such Trust will not be subject to tax and the income of such Trust will
be taxable to the holders of interests therein, all in accordance with the
provisions of the Code concerning REMICs as amended through March 22, 1996.
Moreover, ownership of a Certificate will not be a factor in determining whether
such owner is subject to Minnesota income taxes. Therefore, if the owner of a
Certificate is not otherwise subject to Minnesota income or franchise taxes in
the State of Minnesota, such owner will not become subject to such Minnesota
taxes solely by virtue of owning a Certificate.
10. The transfer of the Contracts and the proceeds thereof by the Company
to the Trustee on the date hereof pursuant to the Pooling and Servicing
Agreement would not be avoidable as a fraudulent transfer under the Uniform
Fraudulent Transfer Act as in effect in Minnesota on the date hereof (Minn.
Stat. (S)(S) 513.41 through 513.51), nor, should the Company become a debtor
under the United States Bankruptcy Code, as a fraudulent transfer under Section
548 of the United States Bankruptcy Code (11 U.S.C. (S) 548) as in effect on the
date hereof.
I-3
EXHIBIT J
---------
FORM OF TRUSTEE'S ACKNOWLEDGMENT
First Trust National Association, national banking association organized
under the laws of the United States, acting as trustee (the "Trustee") of Home
Improvement and Home Equity Loan Trust 1997-A (the "Trust") created pursuant to
the Pooling and Servicing Agreement dated as of March 1, 1997 between Green Tree
Financial Corporation and the Trustee (the "Agreement") (all capitalized terms
used herein without definition having the respective meanings specified in the
Agreement) acknowledges, pursuant to Section 2.03 of the Agreement, that the
Trustee has received the following: (i) all right, title and interest in the
home improvement contracts and home equity loans (including, without
limitation, all mortgages, deeds of trust and security deeds relating to the
Contracts and any and all rights to receive payments which are due pursuant to
the Contracts excluding any rights to receive payments which were due pursuant
to the Home Improvement Contracts prior to February 28, 1997, and payments
received pursuant to the Home Equity Contracts prior to February 28, 1997)
identified in the List of Contracts delivered pursuant to Section 2.02 of the
Agreement, (ii) all rights the Company may have against the originating
contractor or lender with respect to Contracts originated by a contractor or
lender other than the Company, (iii) all rights under FHA Insurance as such
insurance relates to the FHA-Insured Contracts, (iv) all rights under hazard,
flood or other individual insurance on the properties described in the Contracts
and, as to Contracts pertaining to properties located in special flood areas
designated by HUD, all rights under flood insurance policies as such insurance
relates to the Contracts, (v) all rights under the Errors and Omissions
Protection Policy, as such policy relates to the Contracts, (vi) all documents
contained in the Contract Files (as defined in Section 1.02 of the Agreement),
(vii) all rights under any title insurance policies, if applicable, on any of
the properties securing Contracts, (viii) the Class HI: B-2 Limited Guaranty and
the Class HE: B-2 Limited Guaranty, and (ix) all proceeds and products of the
foregoing; and declares that, directly or through a Custodian, it will hold all
Contract Files that have been delivered in trust, upon the trusts set forth in
the Agreement for the use and benefit of all Certificateholders and the holder
of the Class C Certificate. The Trustee acknowledges that it has conducted a
cursory review of the Contract Files and hereby confirms that except as noted on
the document exception listing attached hereto, each Contract File contained (a)
an original contract or promissory note, (b) with respect to each Contract, an
original or a copy of the mortgage or deed of trust or similar evidence of a
lien on the related improved real estate, (c) in the case of Contracts
originated by a contractor, an original or a copy of an assignment of the
mortgage, deed of trust or security deed by the contractor to Green Tree, and
(d) a sale control document. The Trustee has not otherwise reviewed the
Contracts and Contract Files for compliance with the terms of the Pooling and
Servicing Agreement.
J-1
IN WITNESS WHEREOF, _______________________________________________, as
Trustee, has caused this acknowledgment to be executed by its duly authorized
officer and its corporate seal affixed hereto as of this _____ day of March,
1997.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
[Seal] By:_________________________________________________
[Name]
[Title]
J-2
EXHIBIT K
---------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is a [title] of Green Tree Financial
-----
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1997 between the Company and First Trust
National Association, as Trustee of Home Improvement and Home Equity Loan Trust
1997-A (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Monthly Report for the period from ___________ to ___________
attached to this certificate is complete and accurate in accordance with the
requirements of Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
March, 1997.
GREEN TREE FINANCIAL CORPORATION
By:_________________________________________________
[Name]
[Title]
K-1
EXHIBIT L
---------
FORM OF CLASS C CERTIFICATE
---------------------------
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS HI: A
CERTIFICATES, THE CLASS HI: M-1 CERTIFICATES, THE CLASS HI: M-2 CERTIFICATES,
THE CLASS HI: B-1 CERTIFICATES, THE CLASS HI: B-2 CERTIFICATES, THE CLASS HE: A
CERTIFICATES, THE CLASS HE: M-1 CERTIFICATES, THE CLASS HE: M-2 CERTIFICATES,
THE CLASS HE: B-1 CERTIFICATES AND THE CLASS HE: B-2 CERTIFICATES AS DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G and 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE (AS DEFINED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH TRANSFER
MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH POOLING AND
SERVICING AGREEMENT.
L-1
Class C No.
(Subordinate)
Cut-off Date: Percentage Interest: 100%
February 28, 1997
First Payment Date:
April 15, 1997
CERTIFICATE FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
------------------------------------------------------
SERIES 1997-A
-------------
Original Series 1997-A Certificate Principal Balance of the Trust: $519,394,238
------------
This certifies that ___________________________________________________ is
the registered owner of the Residual Interest represented by this Certificate,
and entitled to certain distributions out of Home Improvement and Home Equity
Loan Trust 1997-A (the "Trust"), which includes among its assets two sub-pools,
one of which is comprised of home improvement loan contracts and promissory
notes (the "Home Improvement Contracts") and the other of which is comprised of
home equity loans (the "Home Equity Contracts" and, together with the Home
Improvement Contracts, collectively the "Contracts") (including, without
limitation, all mortgages, deeds of trust and security deeds relating to such
Contracts and any and all rights to receive payments due on the Home Improvement
Contracts on and after March 1, 1997 (or the date of origination thereof, if
later) (the "Cut-off Date") and payments received on the Home Equity Contracts
on and after the Cut-off Date). The Trust has been created pursuant to a
Pooling and Servicing Agreement (the "Agreement"), dated as of March 1, 1997,
between Green Tree Financial Corporation, as Seller and Servicer (the
"Company"), and First Trust National Association, as Trustee of the Trust (the
"Trustee"). This Class C Certificate is described in the Agreement and is
issued pursuant and subject to the Agreement. By acceptance of this Class C
Certificate the holder assents to and becomes bound by the Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1997, so long
as the Agreement has not been terminated, by check to the registered Class C
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Payment Date, in an amount equal to (1)
the difference between (A) the Sub-Pool HI Amount Available, and (B) the sum of
(i) the Class HI: A Distribution
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Amount, (ii) the Class HI: M-1 Distribution Amount, (iii) the Class HI: M-2
Distribution Amount, (iv) the Class HI: B-1 Distribution Amount, (v) the Class
HI: B-2 Distribution Amount, (vi) the Monthly Servicing Fee with respect to the
Home Improvement Contracts, (vii) amounts to reimburse the Trustee or any
successor Servicer for any payments of FHA Insurance premiums not paid by the
Company, as Servicer, and for which the Trustee or such successor Servicer has
not been reimbursed by the Company, (viii) amounts to reimburse the Servicer or
the Trustee, as applicable, for prior Advances with respect to the Home
Improvement Contracts, and (ix) amounts necessary to reimburse the Company for
any previous unreimbursed Class HI: B-2 Guaranty Payments, and (2) the
difference between (A) the Sub-Pool HE Amount Available, and (B) the sum of (i)
the Class HE: A Distribution Amount, (ii) the Class HE: M-1 Distribution Amount,
(iii) the Class HI: M-2 Distribution Amount, (iv) the Class HE: B-1 Distribution
Amount, (v) the Class HE: B-2 Distribution Amount, (vi) the Monthly Servicing
Fee with respect to the Home Equity Contracts, (vii) amounts to reimburse the
Servicer or the Trustee, as applicable, for prior Advances with respect to the
Home Equity Contracts, and (viii) amounts necessary to reimburse the Company for
any previous unreimbursed Class HE: B-2 Guaranty Payments. The final scheduled
Payment Date of this Class C Certificate is March 15, 2028 or the next
succeeding Business Day if such March 15 is not a Business Day.
The Class C Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Class C Certificateholder as provided in the
Agreement for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Class C Certificateholder for any amounts
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement. By acceptance
of this Certificate, the Class C Certificateholder agrees to disclosure of his,
her or its name and address to other Certificateholders under the conditions
specified in the Agreement.
No transfer of this Certificate or any interest herein by, on behalf of or
with plan assets of any employee benefit plan, trust or account that is subject
to the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
or that is described in Section 4975(e)(1) of the Code (each, a "Plan") will be
----
registered unless the transferee, at its expense, delivers to the Trustee and
the Servicer an opinion of counsel (satisfactory to the Trustee and the
Servicer) that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or cause the Servicer, the Company or the
Trustee to be deemed to be a fiduciary of such Plan or result in the imposition
of an excise tax under Section 4975 of the Code. Unless such opinion is
delivered, each person acquiring this Certificate will be deemed to represent to
the Trustee, the Company and the Servicer that such person is neither a Plan,
nor acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code.
L-3
This Class C Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class C Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class C Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class C
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Minneapolis or St. Xxxx, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon a new Class C Certificate evidencing the
same Class C Certificate will be issued to the designated transferee or
transferees.
The Company, the Servicer, the Trustee, the Paying Agent and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee, the Paying
Agent or the Certificate Registrar may treat the person in whose name this Class
C Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
The holder of this Class C Certificate, by acceptance hereof, agrees that,
in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of the Trust for its first taxable year shall provide that
the Trust elects to be treated as a "real estate mortgage investment conduit" (a
"REMIC") under the Code for such taxable year and all subsequent taxable years.
The Certificates shall be "regular interests" in the REMIC and the Class C
Certificate shall be the "residual interest" in the REMIC. In addition, the
holder of this Class C Certificate, by acceptance hereof, (i) agrees to file tax
returns consistent with and in accordance with any elections, decisions or other
reports made or filed with regard to federal, state or local taxes on behalf of
the Trust, and (ii) agrees to cooperate with the Company in connection with
examinations of the Trust's affairs by tax authorities, including administrative
and judicial proceedings, and (iii) makes the additional agreements,
designations and appointments, and undertakes the responsibilities, set forth in
Section 6.06 of the Agreement.
L-4
IN WITNESS WHEREOF, Home Improvement and Home Equity Loan Trust 1997-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: March ____, 1997 HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1997-A
By: FIRST TRUST NATIONAL ASSOCIATION
By:_________________________________________________
Authorized Officer
L-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_________________________ the within Certificate for Home Improvement and Home
Equity Loans, Series 1997-A, and does hereby irrevocably constitute and appoint
___________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: By:__________________________________________
Signature
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EXHIBIT M-1
-----------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
-----
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Sections 3.05 and 8.05 of the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1997 between the Company and First Trust
National Association, as Trustee of Home Improvement and Home Equity Loan Trust
1997-A (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased by the
Company on the date hereof pursuant to Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to Section 8.05 of the Agreement, be assigned by the
Trustee to the Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ___ day of
March, 1997.
GREEN TREE FINANCIAL CORPORATION
By:_________________________________________________
[Name]
[Title]
M-1-1
EXHIBIT M-2
-----------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
-----
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Sections 3.05(b) and 8.05 of the Pooling and Servicing Agreement
(the "Agreement") dated as of March 1, 1997 between the Company and First Trust
National Association, as Trustee of Home Improvement and Home Equity Loan Trust
1997-A (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Contract and Contract File for each such Eligible Substitute
Contract [are being held by the Company, as Servicer] [have been delivered to
__________________, the successor Servicer].
2. The Contracts on the attached schedule are to be substituted on the
date hereof pursuant to Section 3.05(b) of the Agreement and each such Contract
is an Eligible Substitute Contract [description, as to each Contract, as to how
it satisfies the definition of "Eligible Substitute Contract"].
3. The UCC-1 financing statements in respect of the Contracts to be
substituted, in the form required by Section 3.05 (b)(iii) of the Agreement,
have been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to the
Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Contracts.
[5. There has been deposited in the Certificate Account the amounts listed
on the schedule attached hereto as the amount by which the Scheduled Principal
Balance of each Replaced Contract exceeds the Scheduled Principal Balance of
each Contract being substituted therefor.]
M-2-1
IN WITNESS WHEREOF, I have affixed hereunto my signature this ___ day of
March, 1997.
GREEN TREE FINANCIAL CORPORATION
By:_________________________________________________
[Name]
[Title]
M-2-2
EXHIBIT N
---------
FORM OF REPRESENTATION LETTER
-----------------------------
First Trust National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Green Tree Financial Corporation
0000 Xxxxxxxx Xxxxxx
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-1639
RE: Certificates for Home Improvement and Home Equity Loans,
Series 1997-A, Class C
The undersigned purchaser (the "Purchaser") understands that the purchase of
the above-referenced certificates (the "Certificates") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), which includes
banks, savings and loan associations, registered brokers and dealers, insurance
companies, investment companies, and organizations described in Section
501(c)(3) of the Internal Revenue Code, corporations, business trusts and
partnerships, not formed for the specific purpose of acquiring the Certificates
offered, with total assets in excess of $5,000,000. The undersigned represents
on behalf of the Purchaser that the Purchaser is an "Accredited Investor" within
the meaning of such definition. The Purchaser is urged to review carefully the
responses, representations and warranties it is making herein.
Representations and Warranties
------------------------------
The Purchaser makes the following representations and warranties in order to
permit the Trustee, Green Tree Financial Corporation, and ___________________ to
determine its suitability as a purchaser of Certificates and to determine that
the exemption from registration relied upon by Green Tree Financial Corporation
under Section 4(2) of the 1933 Act is available to it.
1. The Purchaser understands that the Certificates have not been and will
not be registered under the 1933 Act and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that Green Tree
Financial Corporation is not
N-1
required to register the Certificates and that any transfer must comply with
Section 9.02 of the Pooling and Servicing Agreement relating to the
Certificates.
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates.
3. The Purchaser is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment. The Purchaser has reviewed
the Prospectus Supplement dated March 20, 1997, to the Prospectus dated March
20, 1997 (the "Prospectus") with respect to the Certificates, and has been given
such information concerning the Certificates, the underlying installment sale
contracts and Green Tree Financial Corporation as it has requested.
4. The Purchaser is acquiring the Certificates as principal for its own
account (or for the account of one or more other institutional investors for
which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser does not qualify as (i) an employee benefit plan (a
"Plan") as defined in section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not it is subject to the
provisions of Title I of ERISA, (ii) a plan described in section 4975(e)(1) of
the Internal Revenue Code of 1986 (also a "Plan"), or (iii) an entity whose
underlying assets are deemed to be assets of a Plan by reason of such Plan's
investment in the entity (as determined under Department of Labor Regulations,
29 C.F.R. (S)2510.3-101 (1990)).
6. The Purchaser understands that such Certificate will bear a legend
substantially as set forth in the form of Certificate included in the Pooling
and Servicing Agreement.
7. The Purchaser, as holder of the Class C Certificate, acknowledges (i)
it may incur tax liabilities in excess of any cash flows generated by the
interest and (ii) it intends to pay the taxes associated with holding the Class
C Certificate as they become due.
8. The Purchaser agrees that it will obtain from any purchaser of the
Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 7 and in this paragraph 8.
N-2
The representations and warranties contained herein shall be binding upon
the heirs, executors, administrators and other successors of the undersigned.
If there is more than one signatory hereto, the obligations, representations,
warranties and agreements of the undersigned are made jointly and severally.
Executed at __________________, ____________________, this ___ day of
_____________.
Purchaser's Name (Print)
By:_______________________________________________
Signature
Its: __________________________________________
Address of Purchaser
Purchaser's Taxpayer
Identification Number
N-3
EXHIBIT O-1
-----------
LIST OF HOME IMPROVEMENT CONTRACTS
[To Be Supplied]
O-1-1
EXHIBIT O-2
-----------
LIST OF HOME EQUITY CONTRACTS
OTHER THAN ADJUSTABLE RATE CONTRACTS
[To Be Supplied]
O-2-1
EXHIBIT O-3
-----------
LIST OF ADJUSTABLE RATE CONTRACTS
[To Be Supplied]
O-3-1
EXHIBIT P
---------
LIST OF FHA-INSURED CONTRACTS
[To Be Supplied]
P-1
EXHIBIT Q
---------
FORM OF MONTHLY REPORT
----------------------
CERTIFICATES FOR HOME IMPROVEMENT AND HOME EQUITY LOANS
SERIES 1997-A
Distribution Date: _____________________
Class HI: A Certificates
------------------------
1(a) Sub-Pool HI Amount Available (including Monthly _______
Servicing Fee)
(b) Class HI: M-1 Interest Deficiency Amount (if
any), Class HI: M-2 Interest Deficiency Amount
(if any) and Class HI: B-1 Interest Deficiency
Amount (if any) withdrawn for prior
Payment Date _______
(c) Sub-Pool HI Amount Available after giving effect to
withdrawal of any Class HI: M-1 Interest
Deficiency Amount, Class HI: M-2 Interest
Deficiency Amount and Class HI: B-1
Interest Deficiency Amount for prior
Payment Date _______
Interest
2. Aggregate interest
(a) Class HI: A-1 Pass-through Rate (6.30%) _______
(b) Class HI: A-l Interest _______
(c) Class HI: A-2 Pass-through Rate (6.75%) _______
(d) Class HI: A-2 Interest _______
(e) Class HI: A-3 Pass-through Rate (7.05%) _______
(f) Class HI: A-3 Interest _______
3. Amount applied to Unpaid Class HI: A Interest Shortfall _______
Q-1
4. Remaining Unpaid Class HI: A Interest Shortfall _______
Principal
5. Sub-Pool HI Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Previously undistributed (a)-(d) amounts _______
6. Pool Scheduled Principal Balance of Sub-Pool HI _______
7. Sub-Pool HI Senior Percentage for such
Payment Date _______
8. Class HI: A principal distribution:
(a) Class HI: A-1 _______
(b) Class HI: A-2 _______
(c) Class HI: A-3 _______
9. (a) Class HI: A-1 Principal Balance _______
(b) Class HI: A-2 Principal Balance _______
(c) Class HI: A-3 Principal Balance _______
Class HI: M-1 Certificates
--------------------------
10. Sub-Pool HI Amount Available less the Class HI: A
Distribution Amount (including
Monthly Servicing Fee) _______
Interest on Class HI: M-1 Principal Balance less
Class HI: M-1 Liquidation Loss Principal Amount
11. Current interest
(a) Class HI: M-1 Pass-through Rate (7.47%)
(b) Class HI: M-1 Interest _______
12. Amount applied to Unpaid Class HI: M-1
Interest Shortfall _______
13. Amount applied to Class HI: M-1 Interest
Q-2
Deficiency Amount _______
14. Remaining unpaid Class HI: M-1 Interest
Deficiency Amount _______
15. Remaining Unpaid Class HI: M-1
Interest Shortfall _______
Principal
16. Sub-Pool HI Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Previously undistributed (a) - (d) amounts _______
17. Pool Scheduled Principal Balance of Sub-Pool HI _______
18. Sub-Pool HI Senior Percentage for such
Payment Date _______
19. Class HI: M-1 principal distribution _______
20. Class HI: M-1 Principal Balance _______
Interest on Liquidation Loss Principal Amount
21. Sub-Pool HI Aggregate Liquidation Loss Principal Amount _______
22. Class HI: M-1 Liquidation Loss Principal Amount _______
23. Interest at Class HI: M-1 Pass-Through Rate on:
(a) Class HI: M-1 Liquidation Loss Principal Amount _______
(b) Unpaid Class HI: M-1 Liquidation Loss
Interest Shortfall _______
24. Amount applied to such interest _______
25. Liquidation Loss interest remaining unpaid _______
Q-3
Class HI: M-2 Certificates
--------------------------
26. Sub-Pool HI Amount Available less the Class HI: A
Distribution Amount and Class HI: M-1
Distribution Amount (including
Monthly Servicing Fee) _______
Interest on Class HI: M-2 Principal Balance less
Class HI: M-2 Liquidation Loss Principal Amount
27. Current interest
(a) Class HI: M-2 Pass-through Rate (7.76%)
(b) Class HI: M-2 Interest _______
28. Amount applied to Unpaid Class HI: M-2
Interest Shortfall _______
29. Amount applied to Class HI: M-2 Interest
Deficiency Amount _______
30. Remaining unpaid Class HI: M-2 Interest
Deficiency Amount _______
31. Remaining Unpaid Class HI: M-2
Interest Shortfall _______
Principal
32. Sub-Pool HI Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Previously undistributed (a) - (d) amounts _______
33. Pool Scheduled Principal Balance of Sub-Pool HI _______
34. Sub-Pool HI Senior Percentage for such
Payment Date _______
35. Class HI: M-2 principal distribution _______
Q-4
36. Class HI: M-2 Principal Balance _______
Interest on Liquidation Loss Principal Amount
37. Sub-Pool HI Aggregate Liquidation Loss Principal Amount _______
38. Class HI: M-2 Liquidation Loss Principal Amount _______
39. Interest at Class HI: M-2 Pass-Through Rate on:
(a) Class HI: M-2 Liquidation Loss Principal Amount _______
(b) Unpaid Class HI: M-2 Liquidation Loss
Interest Shortfall _______
40. Amount applied to such interest _______
41. Liquidation Loss interest remaining unpaid _______
Class HI: B Principal Distribution Tests (tests must be satisfied on and after
----------------------------------------
the Payment Date occurring in April 2000)
42. Sub-Pool HI Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date _______
(b) Sub-Pool HI Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this
month and two preceding months;
may not exceed 2.5%) _______
43. Sub-Pool HI Average Thirty-Day Delinquency Ratio Test
(a) Thirty-Day Delinquency Ratio for
current Payment Date _______
(b) Sub-Pool HI Average Thirty-Day Delinquency Ratio
Test (arithmetic average of ratios
for this month and two preceding
months; may not exceed 5.0%) _______
Q-5
44. Sub-Pool HI Cumulative Realized Losses Test
Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance may not
exceed 10.0%) _______
45. Sub-Pool HI Current Realized Losses Test
(a) Current Realized Losses
for current Payment Date _______
(b) Current Realized Loss Ratio (total
Realized Losses for most recent
three months, multiplied by 4,
divided by arithmetic
average of Pool Scheduled Principal
Balances for third preceding
Remittance and for current Remittance
Date; may not exceed 2.5%) _______
46. Class HI: B Principal Balance Test
Class HI: B Principal Balance (before
any distributions on current
Payment Date) divided by Pool
Scheduled Principal Balance for
prior Payment Date (must equal
or exceed 14.0% _______
Class HI: B-1 Certificates
--------------------------
47. Sub-Pool HI Amount Available less the Class HI: A
Distribution Amount and Class HI: M
Distribution Amount (including
Monthly Servicing Fee) _______
Interest on Class HI: B-1 Principal Balance less
Class HI: B-1 Liquidation Loss Principal Amount
48. Class HI: B-1 Pass-through Rate (7.58%) _______
Q-6
49. Current interest _______
50. Amount applied to Unpaid
Class HI: B-1 Interest Shortfall _______
51. Amount applied to Class HI: B-1 Interest
Deficiency Amount _______
52. Remaining unpaid Class HI: B-1 Interest
Deficiency Amount _______
53. Remaining Unpaid Class HI: B-1
Interest Shortfall _______
Principal
54. Sub-Pool HI Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Previously undistributed (a) - (d) amounts _______
55. Pool Scheduled Principal Balance of Sub-Pool HI _______
56. Class HI: B Percentage for such Payment Date _______
57. Class HI: B Percentage of Formula Principal
Distribution Amount _______
58. Class HI: B Principal Balance _______
59. Class HI: B-1 Principal Balance _______
Interest on Liquidation Loss Principal Amount
60. Sub-Pool HI Aggregate Liquidation Loss Principal Amount _______
61. Class HI: B-1 Liquidation Loss Principal Amount _______
Q-7
62. Interest at Class HI: B-1 Pass-Through Rate on:
(a) Class HI: B-1 Liquidation Loss Principal Amount _______
(b) Unpaid Class HI: B-1 Liquidation Loss
Interest Shortfall _______
63. Amount applied to such interest _______
64. Liquidation Loss interest remaining unpaid _______
Class HI: B-2 Certificates
--------------------------
65. Remaining Sub-Pool HI Amount Available _______
Interest on Class HI: B-2 Principal Balance less
Liquidation Loss Principal Amount
66. Class HI: B-2 Pass-through Rate (7.90%)
67. Current interest _______
68. Amount applied to Unpaid Class
B-2 Interest Shortfall _______
69. Remaining Unpaid Class HI: B-2
Interest Shortfall _______
Principal
70. Sub-Pool HI Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Previously undistributed (a) - (d) amounts _______
71. Pool Scheduled Principal Balance of Sub-Pool HI _______
72. Class HI: B Percentage for such
Payment Date _______
73. Class HI: B Percentage of Formula
Q-8
Principal Distribution Amount _______
74. Current principal (Class HI: B Percentage of Formula
Principal Distribution Amount less
Class HI: B-1 Principal Balance)
75. Class HI: B-2 Liquidation Loss Principal
Amount _______
76. Class HI: B-2 Guaranty Payment _______
77. Class HI: B-2 Principal Balance _______
Interest on Liquidation Loss Principal Amount
78. Sub-Pool HI Aggregate Liquidation Loss Principal Amount _______
79. Class HI: B-2 Liquidation Loss Principal Amount _______
80. Interest at Class HI: B-2 Pass-Through Rate on:
(a) Class HI: B-2 Liquidation Loss Principal Amount _______
(b) Unpaid Class HI: B-2 Liquidation Loss
Interest Shortfall _______
81. Amount applied to such interest _______
82. Liquidation Loss interest remaining unpaid _______
Class HI: A, Class HI: M and Class HI: B Certificates
------------------------------------------------------
83. Sub-Pool HI Pool Factor _______
84. Contracts Delinquent:
30 - 59 days _______
60 or more days _______
85. Principal Balance of Defaulted Contracts _______
86. Number of Liquidated Contracts and
Net Liquidated Loss _______
Q-9
87. Number of Loans Remaining _______
88. Number and Principal Balance of Contracts
with FHA claims finally rejected, or no FHA
claim was submitted because FHA Insurance
was unavailable _______
89. FHA Insurance reserve amount _______
90. Amount received from FHA Insurance _______
Company and Class C Certificates
--------------------------------
91. Monthly Servicing Fee _______
92. Class HI: B-2 Guarantee Fee _______
93. Class C Residual Payment _______
Class HE: A Certificates
------------------------
1(a) Sub-Pool HE Amount Available (including Monthly _______
Servicing Fee)
(b) Class HE: M-1 Interest Deficiency Amount (if
any), Class HE: M-2 Interest Deficiency Amount
(if any) and Class HE: B-1 Interest Deficiency
Amount (if any) withdrawn for prior
Payment Date _______
(c) Sub-Pool HE Amount Available after giving effect to
withdrawal of any Class HE: M-1 Interest
Deficiency Amount, Class HE: M-2 Interest
Deficiency Amount and Class HE: B-1
Interest Deficiency Amount for prior
Payment Date _______
Interest
2. Aggregate interest
(a) Class HE: A-1ARM Pass-through Rate (______%) _______
Q-10
(b) Class HE: A-1 Interest _______
(c) Class HE: A-1 Pass-through Rate (5.99%) _______
(d) Class HE: A-1ARM Interest _______
(e) Class HE: A-2 Pass-through Rate (6.32%) _______
(f) Class HE: A-2 Interest _______
(g) Class HE: A-3 Pass-through Rate (6.62%) _______
(h) Class HE: A-3 Interest _______
(i) Class HE: A-4 Pass-through Rate (6.85%) _______
(j) Class HE: A-4 Interest _______
(k) Class HE: A-5 Pass-through Rate (7.21%) _______
(l) Class HE: A-5 Interest _______
(m) Class HE: A-6 Pass-through Rate (7.16%) _______
(n) Class HE: A-6 Interest
3. Amount applied to Unpaid Class HE: A Interest Shortfall _______
4. Remaining Unpaid Class HE: A Interest Shortfall _______
Principal
5. Class HE:A-1 ARM Formula Principal
Distribution Amount (lesser of _______
Class HE: A-1 ARM Principal Balance
or sum of (a)-(f))
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Clause (v) of definition _______
(f) March 2027 Payment Date:
Scheduled Principal Balance of
Adjustable Rate Contracts _______
6. Sub-Pool HE Formula Principal Distribution Amount: _______
(a) Scheduled principal _______
(b) Principal Prepayments _______
(c) Liquidated Contracts _______
(d) Repurchases _______
(e) Previously undistributed (a)-(d) amounts _______
(f) less Class HE: A-1ARM Formula Principal Distribution Amount _______
----
7. Pool Scheduled Principal Balance of Sub-Pool HE _______
Q-11
Scheduled Principal Balance of Adjustable Rate Contracts _______
8. Sub-Pool HE Senior Percentage for such
Payment Date _______
9. Class HE: A-6 Lockout Percentage for such
Payment Date _______
10. Class HE: A principal distribution:
(a) Class HE: A-1ARM _______
(b) Class HE: A-6 Lockout Remittance Amount _______
(c) Balance of Sub-Pool HE Senior Percentage of Sub-Pool _______
HE Formula Principal Distribution Amount:
(i) Class HE: A-1 _______
(ii) Class HE: A-2 _______
(iii) Class HE: A-3 _______
(iv) Class HE: A-4 _______
(v) Class HE: A-5 _______
(vi) Class HE: A-6 _______
11. (a) Class HE: A-1ARM Principal Balance _______
(b) Class HE: A-1 Principal Balance _______
(c) Class HE: A-2 Principal Balance _______
(d) Class HE: A-3 Principal Balance _______
(e) Class HE: A-4 Principal Balance _______
(f) Class HE: A-5 Principal Balance _______
(g) Class HE: A-6 Principal Balance _______
Class HE: M-1 Certificates
--------------------------
12. Sub-Pool HE Amount Available less the Class HE: A
Distribution Amount (including
Monthly Servicing Fee) _______
Interest on Class HE: M-1 Principal Balance less
Class HE: M-1 Liquidation Loss Principal Amount
13. Current interest
(a) Class HE: M-1 Pass-through Rate (7.71%)
(b) Class HE: M-1 Interest _______
Q-12
14. Amount applied to Unpaid Class HE: M-1
Interest Shortfall __________
15. Amount applied to Class HE: M-1 Interest
Deficiency Amount __________
16. Remaining unpaid Class HE: M-1 Interest
Deficiency Amount __________
17. Remaining Unpaid Class HE: M-1
Interest Shortfall __________
Principal
18. Sub-Pool HE Formula Principal Distribution Amount: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
(e) Previously undistributed (a) - (d) amounts __________
(f) less Class HE: A-1ARM Formula Principal
----
Distribution Amount __________
19. Pool Scheduled Principal Balance of Sub-Pool HE __________
Scheduled Principal Balance of Adjustable Rate
Contracts __________
20. Sub-Pool HE Senior Percentage for such
Payment Date __________
21. Class HE: M-1 principal distribution __________
22. Class HE: M-1 Principal Balance __________
Interest on Liquidation Loss Principal Amount
23. Sub-Pool HE Aggregate Liquidation Loss Principal
Amount __________
24. Class HE: M-1 Liquidation Loss Principal Amount __________
25. Interest at Class HE: M-1 Pass-Through Rate on:
(a) Class HE: M-1 Liquidation Loss Principal
Amount __________
(b) Unpaid Class HE: M-1 Liquidation Loss
Q-13
Interest Shortfall __________
26. Amount applied to such interest __________
27. Liquidation Loss interest remaining unpaid __________
Class HE: M-2 Certificates
--------------------------
28. Sub-Pool HE Amount Available less the Class HE: A
Distribution Amount and Class HE: M-1
Distribution Amount (including
Monthly Servicing Fee) __________
Interest on Class HE: M-2 Principal Balance less
Class HE: M-2 Liquidation Loss Principal Amount
29. Current interest
(a) Class HE: M-2 Pass-through Rate (7.90%)
(b) Class HE: M-2 Interest __________
30. Amount applied to Unpaid Class HE: M-2
Interest Shortfall __________
31. Amount applied to Class HE: M-2 Interest
Deficiency Amount __________
32. Remaining unpaid Class HE: M-2 Interest
Deficiency Amount __________
33. Remaining Unpaid Class HE: M-2
Interest Shortfall __________
Principal
34. Sub-Pool HE Formula Principal Distribution Amount: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
(e) Previously undistributed (a) - (d) amounts __________
(f) Less Class HE: A-1ARM Formula
Principal Distribution Amount __________
Q-14
35. Pool Scheduled Principal Balance of Sub-Pool HE __________
Scheduled Principal Balance of Adjustable Rate Contracts __________
36. Sub-Pool HE Senior Percentage for such
Payment Date __________
37. Class HE: M-2 principal distribution __________
38. Class HE: M-2 Principal Balance __________
Interest on Liquidation Loss Principal Amount
39. Sub-Pool HE Aggregate Liquidation Loss Principal Amount __________
40. Class HE: M-2 Liquidation Loss Principal Amount __________
41. Interest at Class HE: M-2 Pass-Through Rate on:
(a) Class HE: M-2 Liquidation Loss Principal Amount __________
(b) Unpaid Class HE: M-2 Liquidation Loss
Interest Shortfall __________
42. Amount applied to such interest __________
43. Liquidation Loss interest remaining unpaid __________
Class HE: B Principal Distribution Tests (tests must be satisfied on and after
----------------------------------------
the Payment Date occurring in April 2000)
44. Sub-Pool HE Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date __________
(b) Sub-Pool HE Average Sixty-Day Delinquency
Ratio Test (arithmetic average of ratios for this
month and two preceding months;
may not exceed 2.5%) __________
45. Sub-Pool HE Average Thirty-Day Delinquency Ratio Test
(a) Thirty-Day Delinquency Ratio for
current Payment Date __________
Q-15
(b) Sub-Pool HE Average Thirty-Day Delinquency Ratio
Test (arithmetic average of ratios
for this month and two preceding
months; may not exceed 5%) __________
46. Sub-Pool HE Cumulative Realized Losses Test
Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance may not
exceed 7.5%) __________
47. Sub-Pool HE Current Realized Losses Test
(a) Current Realized Losses
for current Payment Date __________
(b) Current Realized Loss Ratio (total
Realized Losses for most recent
three months, multiplied by 4,
divided by arithmetic
average of Pool Scheduled Principal
Balances for third preceding
Remittance and for current Remittance
Date; may not exceed 2.0%) __________
48. Class HE: B Principal Balance Test
Class HE: B Principal Balance (before
any distributions on current
Payment Date) divided by Pool
Scheduled Principal Balance for
prior Payment Date (must equal
or exceed 10.0% __________
Class HE: B-1 Certificates
--------------------------
49. Sub-Pool HE Amount Available less the Class HE: A
Distribution Amount and Class HE: M
Distribution Amount (including
Monthly Servicing Fee) __________
Q-16
Interest on Class HE: B-1 Principal Balance less
Class HE: B-1 Liquidation Loss Principal Amount
50. Class HE: B-1 Pass-through Rate (7.87%) __________
51. Current interest __________
52. Amount applied to Unpaid
Class HE: B-1 Interest Shortfall __________
53. Amount applied to Class HE: B-1 Interest
Deficiency Amount __________
54. Remaining unpaid Class HE: B-1 Interest
Deficiency Amount __________
55. Remaining Unpaid Class HE: B-1
Interest Shortfall __________
Principal
56. Sub-Pool HE Formula Principal Distribution Amount: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
(e) Previously undistributed (a) - (d) amounts __________
(f) Less Class HE: A-1ARM Formula
Principal Distribution Amount __________
57. Pool Scheduled Principal Balance of Sub-Pool HE __________
Scheduled Principal Balance of Adjustable Rate Contracts __________
58. Class HE: B Percentage for such
Payment Date __________
59. Class HE: B Percentage of Formula
Principal Distribution Amount __________
60. Class HE: B Principal Balance __________
Q-17
61. Class HE: B-1 Principal Balance __________
Interest on Liquidation Loss Principal Amount
62. Sub-Pool HE Aggregate Liquidation Loss Principal Amount __________
63. Class HE: B-1 Liquidation Loss Principal Amount __________
64. Interest at Class HE: B-1 Pass-Through Rate on:
(a) Class HE: B-1 Liquidation Loss Principal Amount __________
(b) Unpaid Class HE: B-1 Liquidation Loss
Interest Shortfall __________
65. Amount applied to such interest __________
66. Liquidation Loss interest remaining unpaid __________
Class HE: B-2 Certificates
--------------------------
67. Remaining Sub-Pool HE Amount Available __________
Interest on Class HE: B-2 Principal Balance less
Liquidation Loss Principal Amount
68. Class HE: B-2 Pass-through Rate (8.08%)
69. Current interest __________
70. Amount applied to Unpaid Class
B-2 Interest Shortfall __________
71. Remaining Unpaid Class HE: B-2
Interest Shortfall __________
Principal
72. Sub-Pool HE Formula Principal Distribution Amount: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
Q-18
(e) Previously undistributed (a) - (d) amounts __________
(f) Less Class HE: A-1ARM Formula
Principal Distribution Amount __________
73. Pool Scheduled Principal Balance of Sub-Pool HE __________
Scheduled Principal Balance of Adjustable Rate Contracts __________
74. Class HE: B Percentage for such
Payment Date __________
75. Class HE: B Percentage of Sub-Pool HE Formula
Principal Distribution Amount __________
76. Current principal (Class HE: B Percentage of
Sub-Pool HE Formula Principal Distribution Amount
less Class HE: B-1 Principal Balance) __________
77. Class HE: B-2 Liquidation Loss Principal
Amount __________
78. Class HE: B-2 Guaranty Payment __________
79. Class HE: B-2 Principal Balance __________
Interest on Liquidation Loss Principal Amount
80. Sub-Pool HE Aggregate Liquidation Loss Principal Amount __________
81. Class HE: B-2 Liquidation Loss Principal Amount __________
82. Interest at Class HE: B-2 Pass-Through Rate on:
(a) Class HE: B-2 Liquidation Loss Principal Amount __________
(b) Unpaid Class HE: B-2 Liquidation Loss
Interest Shortfall __________
83. Amount applied to such interest __________
84. Liquidation Loss interest remaining unpaid _________
Class HE: A, Class HE: M and Class HE: B Certificates
------------------------------------------------------
Q-19
85. Sub-Pool HE Pool Factor __________
86. Contracts Delinquent:
30 - 59 days
Total HE __________
Adjustable Rate Contracts __________
60 or more days
Total HE __________
Adjustable Rate Contracts __________
87. Principal Balance of Defaulted Contracts
Total HE __________
Principal Balance of Defaulted Adjustable Rate
Contracts __________
88. Number of Liquidated Contracts and
Net Liquidated Loss __________
Total HE __________
Adjustable Rate Contracts __________
89. Number of Contracts Remaining __________
Total HE __________
Adjustable Rate Contracts __________
90. Number and Principal Balance of Contracts
with FHA claims finally rejected, or no FHA
claim was submitted because FHA Insurance
was unavailable __________
91. FHA Insurance reserve amount __________
92. Amount received from FHA Insurance __________
Class C Certificates
--------------------
93. Monthly Servicing Fee __________
94. Class HE: B-2 Guarantee Fee __________
95. Class C Residual Payment __________
Q-20
Please contact the Bondholder Relations Department of First Trust National
Association at (000) 000-0000 with any questions regarding this Statement or
your Distribution.
Q-21
