Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1997-1
Among
CONTISECURITIES ASSET FUNDING CORP.,
as the Depositor
CONTIMORTGAGE CORPORATION,
as a Seller and the Servicer,
CONTIWEST CORPORATION,
as a Seller
and
MANUFACTURERS AND TRADERS TRUST COMPANY
as the Trustee
Dated as of February 1, 1997
CONTENTS
Page
CONVEYANCE................................................................. 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION................. 2
Section 1.01 Definitions............................................. 2
Section 1.02 Use of Words and Phrases................................ 30
Section 1.03 Captions; Table of Contents............................. 30
Section 1.04 Opinions................................................ 30
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST........ 31
Section 2.01 Establishment of the Trust.............................. 31
Section 2.02 Office.................................................. 31
Section 2.03 Purposes and Powers..................................... 31
Section 2.04 Appointment of the Trustee; Declaration of Trust........ 31
Section 2.05 Expenses of the Trust................................... 31
Section 2.06 Ownership of the Trust.................................. 32
Section 2.07 Situs of the Trust...................................... 32
Section 2.08 Miscellaneous REMIC Provisions.......................... 32
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS.... 35
Section 3.01 Representations and Warranties of the Depositor......... 35
Section 3.02 Representations and Warranties of the Servicer.......... 37
Section 3.03 Representations and Warranties of the Sellers........... 38
Section 3.04 Covenants of the Sellers to Take Certain Actions
with Respect to the Home Equity Loans In
Certain Situations................................... 44
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages................................ 50
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee............... 54
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES.................. 56
Section 4.01 Issuance of Certificates................................ 56
Section 4.02 Sale of Certificates.................................... 56
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS............. 57
Section 5.01 Terms................................................... 57
Section 5.02 Forms................................................... 57
Section 5.03 Execution, Authentication and Delivery.................. 57
Page
Section 5.04 Registration and Transfer of Certificates.............. 58
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates...... 60
Section 5.06 Persons Deemed Owners.................................. 60
Section 5.07 Cancellation........................................... 60
Section 5.08 Limitation on Transfer of Ownership Rights............. 61
Section 5.09 Assignment of Rights................................... 62
ARTICLE VI
COVENANTS.......................................... 63
Section 6.01 Distributions.......................................... 63
Section 6.02 Money for Distributions to be Held in Trust;
Withholding......................................... 63
Section 6.03 Protection of Trust Estate............................. 64
Section 6.04 Performance of Obligations............................. 64
Section 6.05 Negative Covenants..................................... 65
Section 6.06 No Other Powers........................................ 65
Section 6.07 Limitation of Suits.................................... 65
Section 6.08 Unconditional Rights of Owners to Receive
Distributions....................................... 66
Section 6.09 Rights and Remedies Cumulative......................... 66
Section 6.10 Delay or Omission Not Waiver........................... 66
Section 6.11 Control by Owners...................................... 66
Section 6.12 Indemnification........................................ 67
Section 6.13 Access to Owners of Certificates' Names and Addresses.. 67
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES............... 68
Section 7.01 Collection of Money.................................... 68
Section 7.02 Establishment of Accounts.............................. 68
Section 7.03 Flow of Funds.......................................... 68
Section 7.04 Reserved............................................... 71
Section 7.05 Investment of Accounts................................. 71
Section 7.06 Payment of Trust Expenses.............................. 72
Section 7.07 Eligible Investments................................... 72
Section 7.08 Accounting and Directions by Trustee................... 74
Section 7.09 Reports by Trustee to Owners........................... 75
Section 7.10 Reports by Trustee. .................................. 76
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS............................. 78
Section 8.01 Servicer and Sub-Servicers............................. 78
Section 8.02 Collection of Certain Home Equity Loan Payments........ 79
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers....................................... 79
Section 8.04 Successor Sub-Servicers................................ 79
Section 8.05 Liability of Servicer; Indemnification ................ 79
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners .............................. 80
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee.......................................... 80
Section 8.08 Principal and Interest Account......................... 80
Page
Section 8.09 Delinquency Advances and Servicing Advances............ 82
Section 8.10 Compensating Interest; Repurchase of Home Equity
Loans............................................... 83
Section 8.11 Maintenance of Insurance............................... 83
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.......................................... 84
Section 8.13 Realization Upon Defaulted Home Equity Loans;
Inspection.......................................... 84
Section 8.14 Trustee to Cooperate; Release of Files................. 85
Section 8.15 Servicing Compensation................................. 86
Section 8.16 Annual Statement as to Compliance...................... 87
Section 8.17 Annual Independent Certified Public Accountants'
Reports............................................. 87
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans..................... 87
Section 8.19 Assignment of Agreement................................ 87
Section 8.20 Removal of Servicer; Resignation of Servicer........... 87
Section 8.21 Inspections; Errors and Omissions Insurance............ 90
ARTICLE IX
TERMINATION OF TRUST.............................. 91
Section 9.01 Termination of Trust................................... 91
Section 9.02 Termination Upon Option of Owners of Class R
Certificates........................................ 91
Section 9.03 Termination Upon Loss of REMIC Status.................. 92
Section 9.04 Disposition of Proceeds................................ 93
ARTICLE X
THE TRUSTEE.................................... 94
Section 10.01 Certain Duties and Responsibilities.................... 94
Section 10.02 Removal of Trustee for Cause........................... 95
Section 10.03 Certain Rights of the Trustee.......................... 96
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates........................................ 97
Section 10.05 May Hold Certificates.................................. 98
Section 10.06 Money Held in Trust.................................... 98
Section 10.07 Compensation and Reimbursement; No Lien for Fees....... 98
Section 10.08 Corporate Trustee Required; Eligibility................ 98
Section 10.09 Resignation and Removal; Appointment of Successor...... 98
Section 10.10 Acceptance of Appointment by Successor Trustee......... 99
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.............................100
Section 10.12 Reporting; Withholding.................................100
Section 10.13 Liability of the Trustee...............................101
Section 10.14 Appointment of Co-Trustee or Separate Trustee..........101
ARTICLE XI
MISCELLANEOUS.....................................103
Section 11.01 Compliance Certificates and Opinions...................103
Section 11.02 Form of Documents Delivered to the Trustee.............103
Section 11.03 Acts of Owners.........................................104
Section 11.04 Notices, etc. to Trustee...............................104
Page
Section 11.05 Notices and Reports to Owners; Waiver of Notices.......104
Section 11.06 Rules by Trustee.......................................105
Section 11.07 Successors and Assigns.................................105
Section 11.08 Severability...........................................105
Section 11.09 Benefits of Agreement..................................105
Section 11.10 Legal Holidays.........................................105
Section 11.11 Governing Law; Submission to Jurisdiction..............106
Section 11.12 Counterparts...........................................106
Section 11.13 Usury..................................................106
Section 11.14 Amendment..............................................107
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.....107
Section 11.16 REMIC Status...........................................108
Section 11.17 Additional Limitation on Action and Imposition of Tax..109
Section 11.18 Appointment of Tax Matters Person......................110
Section 11.19 Notices................................................110
SCHEDULE I SCHEDULE OF HOME EQUITY LOANS
SCHEDULE II RESERVED
SCHEDULE III HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
SCHEDULE IV HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
SCHEDULE V HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT A-9 FORM OF CLASS A-9 CERTIFICATE
EXHIBIT A-10 FORM OF CLASS A-10IO CERTIFICATE
EXHIBIT B-1 FORM OF CLASS M-1 CERTIFICATE
EXHIBIT B-2 FORM OF CLASS M-2 CERTIFICATE
EXHIBIT B-3 FORM OF CLASS B CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT C FORM OF CLASS C CERTIFICATE
EXHIBIT D FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H [RESERVED]
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY
LOAN TRUST 1997-1, dated as of February 1, 1997 by and among CONTISECURITIES
ASSET FUNDING CORP., a Delaware corporation, in its capacity as Depositor (the
"Depositor"), CONTIMORTGAGE CORPORATION, a Delaware corporation in its
capacities as a Seller (in such capacity, a "Seller") and as Servicer (in such
capacity, the "Servicer"), CONTIWEST CORPORATION, a Nevada corporation, in its
capacity as a Seller (a "Seller" and together with ContiMortgage Corporation,
the "Sellers") and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking
corporation, in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish the Trust and provide for
the allocation and sale of the beneficial interests therein and the maintenance
and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee, valid instruments, and to
make this Agreement a valid agreement, in accordance with their and its terms,
have been done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve in
the capacity of Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sellers, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal of
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, each Seller hereby bargains, sells,
conveys, assigns and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trust, without recourse
and for the exclusive benefit of the Owners of the Certificates, all of its
respective right, title and interest in and to any and all benefits accruing to
it from (a) the Home Equity Loans (other than any principal and interest
payments received thereon on or prior to the Cut-Off Date) listed in Schedule I
to this Agreement which the Sellers are causing to be delivered to the Depositor
and the Depositor is causing to be delivered to the Trustee herewith (and all
substitutions therefor as provided by Sections 3.03, 3.04 and 3.06), together
with the related Home Equity Loan documents and each Seller's interest in any
Property which secured a Home Equity Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Certificate Account and the
Upper-Tier Distribution Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided herein), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified herein ((a)-(c) above shall be collectively referred to herein as the
"Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Certificates and any Payment
Date, the calendar month immediately preceding the month in which the Payment
Date occurs; provided, that in the case of the first Payment Date, the Accrual
Period shall be the period from January 18, 1997 through and including February
28, 1997. A "calendar month" shall be deemed to be 30 days.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) the
Weighted Average Pass-Through Rate, (b) the Class A-10IO Pass-Through Rate, and
(c) any portion of the Trustee Fee (calculated as a percentage of the
outstanding principal amount of the Certificates) then accrued and outstanding.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": As of any Payment Date, the excess of
(x) the Aggregate Certificate Principal Balance on such Payment Date, after
taking into account the distribution of the Principal Distribution Amount on
such Payment Date but prior to the application of the Applied Realized Loss
Amount, if any, on such Payment Date over (y) the aggregate outstanding Loan
Balance of the Home Equity Loans as of the last day of the related Remittance
Period.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Home Equity Loan, or, in the case of a Home Equity Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
2
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in The City of New York, or in the city in
which the principal corporate trust office of the Trustee is located, are
authorized or obligated by law or executive order to be closed.
"Certificate": Any one of the Class A Certificates, Mezzanine
Certificates, Class B Certificates, Class C Certificates or Class R
Certificates, each representing the interests and the rights described in this
Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $50,750,000
Class A-2 Certificates - $57,500,000
Class A-3 Certificates - $84,500,000
Class A-4 Certificates - $37,250,000
Class A-5 Certificates - $28,250,000
Class A-6 Certificates - $20,000,000
Class A-7 Certificates - $24,250,000
Class A-8 Certificates - $21,500,000
Class A-9 Certificates - $30,000,000
Class M-1 Certificates - $18,000,000
Class M-2 Certificates - $23,000,000
Class B Certificates - $ 5,000,000
The Class A-10IO Certificates, Class C Certificates and the Class R
Certificates do not have a Certificate Principal Balance.
"Class": Any Class of the Class A Certificates, either Class of the
Mezzanine Certificates, the Class B Certificates, the C Certificates or the
Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates or Class A-10IO Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates (other than the Class A-10IO Certificates) less any amounts
actually distributed on such Class A Certificates with respect to the Class A
Principal Distribution Amount pursuant to Section 7.03(c) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount, the Class A-8
Distribution Amount, the Class A-9 Distribution Amount and the Class A-10IO
Current Interest.
3
"Class A Principal Distribution Amount": As of any Payment Date (a)
prior to the Stepdown Date or with respect to which a Trigger Event has
occurred, 100% of the Principal Distribution Amount and (b) on or after the
Stepdown Date or as to which a Trigger Event has not occurred, the excess of (x)
the aggregate Class A Certificate Principal Balance immediately prior to such
Payment Date over (y) the lesser of (A) the product of (i) 75% and (ii) the
outstanding Loan Balance of the Home Equity Loans as of the last day of the
related Remittance Period and (B) the outstanding aggregate Loan Balance of the
Home Equity Loans as of the last day of the related Remittance Period minus
$2,000,000.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-1 Certificates as it relates to interest previously paid on the Class
A-1 Certificates.
"Class A-1 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.03(c) hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": 6.25% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
4
"Class A-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-2 Certificates as it relates to interest previously paid on the Class
A-2 Certificates.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of Class A-2 Certificates pursuant to Section 7.03(c) hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-2
Pass-Through Rate.
"Class A-2 Pass-Through Rate": 6.31% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-3 Certificates as it relates to interest previously paid on the Class
A-3 Certificates.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-3 Certificates pursuant to Section 7.03(c) hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": 6.48% per annum.
5
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-4 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-4 Certificates as it relates to interest previously paid on the Class
A-4 Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-4 Certificates pursuant to Section 7.03(c) hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": 6.68% per annum.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-5 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-5 Certificates as it relates to interest previously paid on the Class
A-5 Certificates.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry
Forward Amount and (z) the Class A Principal
6
Distribution Amount payable to the Owners of the Class A-5 Certificates pursuant
to Section 7.03(c) hereof.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": 6.91% per annum.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-6 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-6 Certificates as it relates to interest previously paid on the Class
A-6 Certificates.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-6 Current Interest, (y) the Class A-6 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-6 Certificates pursuant to Section 7.03(c) hereof.
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Pass-Through Rate": 7.06% per annum.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
7
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-7 Certificates as it relates to interest previously paid on the Class
A-7 Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-7 Certificates pursuant to Section 7.03(c) hereof.
"Class A-7 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"Class A-7 Pass-Through Rate": 7.32% per annum.
"Class A-8 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A-8, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(c) hereof with
respect to principal thereon on all prior Payment Dates.
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-8 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-8 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-8 Certificates as it relates to interest previously paid on the Class
A-8 Certificates.
"Class A-8 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-8 Current Interest, (y) the Class A-8 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-8 Certificates pursuant to Section 7.03(c) hereof.
"Class A-8 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-8 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-8 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-8 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
8
"Class A-8 Pass-Through Rate": On any Payment Date, the lesser of (x)
7.62% per annum and (y) the weighted average of the Coupon Rates of the Home
Equity Loans less the sum of (A) 1.60% per annum and (B) the Trustee Fee Rate.
"Class A-9 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-9 Certificate, substantially in the form annexed
hereto as Exhibit A-9, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-9 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-9 Certificates less any amounts actually distributed with respect to the
Class A Distribution Amount pursuant to Section 7.03(c) hereof with respect to
principal thereon on all prior Payment Dates.
"Class A-9 Certificate Termination Date": The Payment Date on which the
Class A-9 Certificate Principal Balance is reduced to zero.
"Class A-9 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-9 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-9 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-9 Certificates as it relates to interest previously paid on the Class
A-9 Certificates.
"Class A-9 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class A-9 Current Interest, (x) the Class A-9 Interest Carry
Forward Amount, (y) the Class A-9 Lockout Distribution Amount payable to the
Owners of the Class A-9 Certificates pursuant to Section 7.03(c) and (z) the
Class A Principal Distribution Amount payable to the Owners of the Class A-9
Certificates pursuant to Section 7.03(c) hereof.
"Class A-9 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-9 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-9 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-9 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-9
Pass-Through Rate.
"Class A-9 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-9 Lockout Percentage for such Payment Date
and (ii) the Class A-9 Lockout Pro Rata Distribution Amount for such Payment
Date.
"Class A-9 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-9
Payment Dates Lockout Percentage
------------- ------------------
March 1997 - February 2000 0%
March 2000 - February 2002 45%
March 2002 - February 2003 80%
March 2003 - February 2004 100%
March 2004 and thereafter 300%
"Class A-9 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-9 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate
9
Principal Balance of the Class A Certificates immediately prior to such Payment
Date and (y) the Class A Principal Distribution Amount for such Payment Date.
"Class A-9 Pass-Through Rate": On any Payment Date, the lesser of (x)
7.05% per annum and (y) the weighted average of the Coupon Rates of the Home
Equity Loans less the sum of (A) 1.60% per annum and (B) the Trustee Fee Rate.
"Class A-10IO Certificate": Any one of the Certificates designated on
the face thereof as a Class A-10IO Certificate, substantially in the form
annexed hereto as Exhibit 10IO, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-10IO Certificate Termination Date": The Payment Date on which
the Class A-10IO Notional Principal Amount is reduced to zero.
"Class A-10IO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-10IO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class A-10IO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-10IO Certificates as it relates to interest previously paid on the
Class A-10IO Certificates plus the Class A-10IO Interest Carry Forward Amount.
"Class A-10IO Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-10IO Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-10IO Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution made to Owners
of the Class A-10IO Certificates on such immediately preceding Payment Date and
(y) 30 days' interest on such amount at the Class A-10IO Pass-Through Rate.
"Class A-10IO Notional Principal Amount": As of any date of
determination, the aggregate outstanding Loan Balance of the Home Equity Loans.
"Class A-10IO Pass-Through Rate: 1.10% per annum.
"Class B Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class B Applied Realized Loss Amount,
if any, on such Payment Date) and (y) the Applied Realized Loss Amount as of
such Payment Date.
"Class B Certificate": Any one of the Certificates designated on the
face thereof as a Class B Certificate, substantially in the form annexed hereto
as Exhibit B-3, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class B Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B Certificates less the sum of (x) any amounts of the Class B Principal
Distribution Amount actually distributed to the Owners of the Class B
Certificates pursuant to Section 7.03(c) hereof on all prior Payment Dates and
(y) the aggregate, cumulative amount of the Class B Applied Realized Loss
Amounts on all prior Payment Dates.
"Class B Certificate Termination Date": The Payment Date on which the
Class B Certificate Principal Balance is reduced to zero.
10
"Class B Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class B Certificates as it relates to interest previously paid on the Class B
Certificates.
"Class B Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B Current Interest, (x) the Class B Principal Distribution
Amount, if any, (y) the Class B Interest Carry Forward Amount, if any, and (z)
the Class B Realized Loss Amortization Amount, if any.
"Class B Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class B
Current Interest as of the immediately preceding Payment Date and (B) any unpaid
Class B Interest Carry Forward Amount from all previous Payment Dates exceeds
(ii) the amount of the actual distribution with respect to interest made to the
Owners of the Class B Certificates on such immediately preceding Payment Date
and (y) 30 days' interest on such amount at the Class B Pass-Through Rate.
"Class B Pass-Through Rate": On any Payment Date, the lesser of (x)
7.92% per annum and (y) the weighted average of the Coupon Rates of the Home
Equity Loans less the sum of (A) 1.60% per annum and (B) the Trustee Fee Rate.
"Class B Principal Distribution Amount": As of any Payment Date on or
after the Stepdown Date and as long as a Trigger Event has not occurred, the
excess of (x) the Aggregate Certificate Principal Balance (after taking into
account the payment of the Class A Principal Distribution Amount, the Class M-1
Principal Distribution Amount and the Class M-2 Principal Distribution Amount on
such Payment Date) over (y) the lesser of (A) the product of (i) 98% and (ii)
the outstanding aggregate Loan Balance of the Home Equity Loans as of the last
day of the related Remittance Period and (B) the aggregate outstanding Loan
Balance of the Home Equity Loans as of the last day of the related Remittance
Period minus $2,000,000.
"Class B Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Class B Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Extra Principal Distribution Amount, the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the Class
M-1 Interest Carry Forward Amount, the Class M-2 Interest Carry Forward Amount
and the Class B Interest Carry Forward Amount in each case for such Payment
Date.
"Class C Certificate": Any one of the Certificates designated on the
face thereof as a Class C Certificate, substantially in the form annexed hereto
as Exhibit C-1, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein. The Class C Certificates represent a
class of "regular interests" in the Upper-Tier REMIC.
"Class C Distribution Amount": With respect to any Payment Date, the
sum of:
(a) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-1 Certificate Principal Balance over (y) the
interest payable at the Class A-1 Pass-Through Rate on the Class A-1
Certificate Principal Balance; and
(b) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-2 Certificate Principal Balance over (y) the
interest payable at the Class A-2 Pass-Through Rate on the Class A-2
Certificate Principal Balance; and
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(c) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-3 Certificate Principal Balance over (y) the
interest payable at the Class A-3 Pass-Through Rate on the Class A-3
Certificate Principal Balance; and
(d) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-4 Certificate Principal Balance over (y) the
interest payable at the Class A-4 Pass-Through Rate on the Class A-4
Certificate Principal Balance; and
(e) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-5 Certificate Principal Balance over (y) the
interest payable at the Class A-5 Pass-Through Rate on the Class A-5
Certificate Principal Balance; and
(f) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-6 Certificate Principal Balance over (y) the
interest payable at the Class A-6 Pass-Through Rate on the Class A-6
Certificate Principal Balance; and
(g) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-7 Certificate Principal Balance over (y) the
interest payable at the Class A-7 Pass-Through Rate on the Class A-7
Certificate Principal Balance; and
(h) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-8 Certificate Principal Balance over (y) the
interest payable at the Class A-8 Pass-Through Rate on the Class A-8
Certificate Principal Balance; and
(i) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class A-9 Certificate Principal Balance over (y) the
interest payable at the Class A-9 Pass-Through Rate on the Class A-9
Certificate Principal Balance; and
(j) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class M-1 Certificate Principal Balance over (y) the
interest payable at the Class M-1 Pass-Through Rate on the Class M-1
Certificate Principal Balance; and
(k) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class M-2 Certificate Principal Balance over (y) the
interest payable at the Class M-2 Pass-Through Rate on the Class M-2
Certificate Principal Balance; and
(l) the excess of (x) the interest payable at the Net Weighted Average
Coupon Rate on the Class B Certificate Principal Balance over (y) the
interest payable at the Class B Pass-Through Rate on the Class B
Certificate Principal Balance.
"Class M-1 Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class M-1 Applied Realized Loss
Amount, if any, on such Payment Date) and (y) the excess of (i) the Applied
Realized Loss Amount as of such Payment Date over (ii) the sum of the Class M-2
Applied Realized Loss Amount and the Class B Applied Realized Loss Amount, in
each case as of such Payment Date.
"Class M-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class M-1 Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
12
"Class M-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1 Certificates less the sum of (x) any amounts of the Class M-1
Principal Distribution Amount actually distributed to the Owners of the Class
M-1 Certificates pursuant to Section 7.03(c) hereof on all prior Payment Dates
and (y) the aggregate, cumulative amount of Class M-1 Applied Realized Loss
Amounts on all prior Payment Dates.
"Class M-1 Certificate Termination Date": The Payment Date on which the
Class M-1 Certificate Principal Balance is reduced to zero.
"Class M-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class M-1 Certificates as it relates to interest previously paid on the Class
M-1 Certificates.
"Class M-1 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1 Current Interest, (x) the Class M-1 Principal
Distribution Amount, if any, (y) the Class M-1 Interest Carry Forward Amount and
(z) the Class M-1 Realized Loss Amortization Amount.
"Class M-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1
Pass-Through Rate.
"Class M-1 Pass-Through Rate": 7.42% per annum; provided, that on any
Payment Date on which the aggregate Certificate Principal Balance of the Class
M-2 Certificates and the Class B Certificates is $0, the Class M-1 Pass-Through
Rate shall be the lesser of (x) 7.42% per annum and (y) the weighted average of
the Coupon Rates of the Home Equity Loans less the sum of (A) 1.60% per annum
and (B) the Trustee Fee Rate.
"Class M-1 Principal Distribution Amount": As of any Payment Date on or
after the Stepdown Date and as long as a Trigger Event has not occurred, the
excess of (x) the sum of (i) the aggregate Class A Certificate Principal Balance
(after taking into account the payment of the Class A Principal Distribution
Amount on such Payment Date) and (ii) the Class M-1 Certificate Principal
Balance immediately prior to such Payment Date over (y) the lesser of (A) the
product of (i) 84% and (ii) the outstanding Loan Balance of the Home Equity
Loans as of the last day of the related Remittance Period and (B) the aggregate
outstanding Loan Balance of the Home Equity Loans as of the last day of the
related Remittance Period minus $2,000,000.
"Class M-1 Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Class M-1 Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Extra Principal Distribution Amount and the Class M-1 Interest Carry
Forward Amount, in each case for such Payment Date.
"Class M-2 Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class M-2 Applied Realized Loss
Amount, if any, on such Payment Date) and (y) the excess of (i) the Applied
Realized Loss Amount as of such Payment Date over (ii) the sum of the Class B
Applied Realized Loss Amount and the Class M-1 Applied Realized Loss Amount, in
each case as of such Payment Date.
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"Class M-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class M-2 Certificate, substantially in the form annexed
hereto as Exhibit B-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class M-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2 Certificates less the sum of (x) any amounts of the Class M-2
Principal Distribution Amount actually distributed and to the Owners of the
Class M-2 Certificates, pursuant to Section 7.03(c) hereof on all prior Payment
Dates and (y) the aggregate, cumulative amount of Class M-2 Applied Realized
Loss Amounts on all prior Payment Dates.
"Class M-2 Certificate Termination Date": The Payment Date on which the
Class M-2 Certificate Principal Balance is reduced to zero.
"Class M-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class M-2 Certificates as it relates to interest previously paid on the Class
M-2 Certificates.
"Class M-2 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2 Current Interest, (x) the Class M-2 Principal
Distribution Amount, if any, (y) the Class M-2 Interest Carry Forward Amount, if
any, and (z) the Class M-2 Realized Loss Amortization Amount, if any.
"Class M-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2
Pass-Through Rate.
"Class M-2 Pass-Through Rate": 7.67% per annum; provided, that on any
Payment Date on which the Class B Certificate Principal Balance is $0, the Class
M-2 Pass-Through Rate shall be the lesser of (x) 7.67% per annum and (y) the
weighted average of the Coupon Rates of the Home Equity Loans less the sum of
1.60% per annum and the Trustee Fee Rate.
"Class M-2 Principal Distribution Amount": As of any Payment Date on or
after the Stepdown Date and as long as a Trigger Event has not occurred, the
excess of (x) the sum of (i) the aggregate Class A Certificate Principal Balance
(after taking into account the payment of the Class A Principal Distribution
Amount on such Payment Date), (ii) the Class M-1 Certificate Principal Balance
(after taking into account the payment of the Class M-1 Principal Distribution
Amount on such Payment Date) and (iii) the Class M-2 Certificate Principal
Balance immediately prior to such Payment Date over (y) the lesser of (A) the
product of (i) 95.5% and (ii) the outstanding Loan Balance of the Home Equity
Loans as of the last day of the related Remittance Period and (B) the aggregate
outstanding Loan Balance of the Home Equity Loans as of the last day of the
related Remittance Period minus $2,000,000.
"Class M-2 Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Class M-2 Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Extra Principal Distribution Amount, the Class M-1 Realized Loss
Amortization Amount, the Class M-1 Interest Carry Forward Amount and the Class
M-2 Interest Carry Forward Amount, in each case for such Payment Date.
14
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C-2, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Upper-Tier REMIC for the purposes
of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate Loan Balances of the Home Equity Loans has declined to $40,000,000 or
less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"ContiMortgage": ContiMortgage Corporation, a Delaware corporation that
is the originator of each Home Equity Loan, one of the Sellers and the Servicer.
"ContiWest": ContiWest Corporation, a Nevada corporation that is one of
the Sellers.
"Corporate Trust Office": The principal office of the Trustee at Xxx
X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Equity Loans since
the Cut-Off Date.
"Current Interest": With respect to any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class A-8 Current Interest, the Class A-9 Current Interest, the Class A-10IO
Current Interest, the Class M-1 Current Interest, the Class M-2 Current Interest
and the Class B Current Interest.
"Cut-Off Date": As of the close of business on January 17, 1997.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which, pursuant to
the Note relating thereto, interest is computed and charged to the Mortgagor at
the Coupon Rate on the outstanding principal balance of such Note based on the
number of days elapsed between receipt of the Mortgagor's last payment through
receipt of the Mortgagor's most current payment.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
15
"Delivery Order": Each delivery order in the form set forth as Exhibit
G hereto and delivered by each Seller to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acting in its fiduciary
capacity, having combined capital and surplus of at least $50,000,000; provided,
however, that if the Principal and Interest Account is not maintained with the
Trustee, (i) such institution shall have a long-term debt rating of at least "A"
by Standard & Poor's and "A2" by Moody's and (ii) if such Principal and Interest
Account is moved to a new institution, the Servicer shall provide the Trustee
and the Owners with a statement identifying the location of the Principal and
Interest Account.
"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"Disqualified Organization": Shall have the meaning set forth from time
to time in the definition thereof at Section 860E(e)(5) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Extra Principal Distribution Amount": As of any Payment Date, the
lesser of (x) the Monthly Excess Interest Amount for such Payment Date and (y)
the Overcollateralization Deficiency for such Payment Date.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to Section 3.05
hereof pertaining to a particular Home Equity Loan and any additional documents
required to be added to the File pursuant to this Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of Certificates, as set
out in Section 2.08(k).
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to the related Property.
16
"Fitch": Fitch Investors Service, L.P.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by
FNMA from time to time, and the Servicer shall elect to apply such amendments in
accordance with Section 8.01 hereof.
"Highest Lawful Rate": As defined in Section 11.13.
"Home Equity Loans": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"Interest Amount Available": As of any Payment Date, the Interest
Remittance Amount less the Trustee Fee.
"Interest Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) all interest due during the related Remittance
Period with respect to the Home Equity Loans (less the Servicing Fee with
respect to such Home Equity Loans), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date and (iii) the portion of the
Substitution Amount relating to interest on the Home Equity Loans.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of any
defaulted Home Equity Loan, such expenses including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.09(b) with respect to the related Home Equity
Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
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"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such Home Equity Loan included in
previous Monthly Remittance Amounts, provided, however, that the Loan Balance
for any Home Equity Loan that has become a Liquidated Loan shall be zero as of
the first day of the Remittance Period following the Remittance Period in which
such Home Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances and Servicing Advances which the Servicer has theretofore
failed to remit with respect to such Home Equity Loan and (iii) all reimbursed
Delinquency Advances to the extent that reimbursement is not made from the
Mortgagor or from Liquidation Proceeds from the respective Home Equity Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
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"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": For any Payment Date the Net
Weighted Average Coupon Rate.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date the Net
Weighted Average Coupon Rate.
"Lower-Tier A-9 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-9 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-9 Pass-Through Rate.
"Lower-Tier A-9 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-10IO Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-10IO immediately prior to such Payment Date during the related
Accrual Period at the Lower-Tier A-10IO Pass-Through Rate.
"Lower-Tier A-10IO Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier B Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Lower-Tier Interest
B immediately prior to such Payment Date during the related Accrual Period at
the Lower-Tier B Pass-Through Rate.
"Lower-Tier B Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
19
"Lower-Tier M-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1 Pass-Through Rate.
"Lower-Tier M-1 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier M-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2 Pass-Through Rate.
"Lower-Tier M-2 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payments
Dates pursuant to Section 7.03(c)(iii).
"Lower-Tier Distribution Amount": With respect to any Payment Date, the
sum of the Lower- Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly
Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly
Interest, the Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly
Interest, the Lower-Tier A-7 Monthly Interest, the Lower-Tier A-8 Monthly
Interest, the Lower-Tier A-9 Monthly Interest, the Lower-Tier A-10IO Monthly
Interest, the Lower-Tier B Monthly Interest, the Lower-Tier M-1 Monthly
Interest, the Lower-Tier M-2 Monthly Interest, the Class A Principal
Distribution Amount, the Class M-1 Principal Distribution Amount, the Class M-2
Principal Distribution Amount and the Class B Principal Distribution Amount.
Such Class A Principal Distribution Amount is allocated as follows: (a) to the
Lower-Tier Interest A-9 an amount equal to the Class A-9 Lockout Distribution
Amount and (b) the remainder as follows, as a distribution on the Lower-Tier
Interest A-1 until the Lower-Tier Interest A-1 Termination Date, the Class A-1
Distribution Amount; as a distribution on the Lower-Tier Interest A-2 until the
Lower-Tier Interest A-2 Termination Date, the Class A-2 Distribution Amount; as
a distribution on the Lower-Tier Interest A-3 until the Lower-Tier Interest A-3
Termination Date, the Class A-3 Distribution Amount; as a distribution on the
Lower-Tier Interest A-4 until the Lower-Tier Interest A-4 Termination Date, the
Class A-4 Distribution Amount; as a distribution on the Lower-Tier Interest A-5
until the Lower-Tier Interest A-5 Termination Date, the Class A-5 Distribution
Amount; as a distribution on the Lower-Tier Interest A-6 until the Lower-Tier
Interest A-6 Termination Date, the Class A-6 Distribution Amount; as a
distribution on the Lower-Tier Interest A-7 until the Lower-Tier Interest A-7
Termination Date, the Class A-7 Distribution Amount; as a distribution on the
Lower-Tier Interest A-8 until the Lower-Tier Interest A-8 Termination Date; and
as a distribution on the Lower-Tier Interest A-9 until the Lower-Tier Interest
A-9 Termination Date. The Class M-1 Principal Distribution Amount shall be
distributed to the Lower-Tier M-1 Interest, the Class M-2 Principal Distribution
Amount shall be distributed to the Lower-Tier M-2 Interest and the Class B
Principal Distribution Amount shall be distributed to the Lower-Tier B Interest.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
20
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-9": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-10IO": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B": The interest of that name established pursuant
to Section 2.08(a) hereof.
"Lower-Tier Interest M-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-2 on such Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-5 on such Payment Date.
21
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-6 on such Payment Date.
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-7 on such Payment Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-8 on such Payment Date.
"Lower-Tier Interest A-9 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-9 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-9 on such Payment Date.
"Lower-Tier Interest A-10IO Termination Date": The Payment Date on
which the Lower-Tier Balance of Lower-Tier Interest A-10IO is reduced to zero
through the distribution made in respect of Lower-Tier Interest A-10IO on such
Payment Date.
"Lower-Tier Interest B Termination Date": The Payment Date on which the
Lower-Tier Balance of Lower-Tier Interest B is reduced to zero through the
distribution made in respect of Lower-Tier Interest B on such Payment Date.
"Lower-Tier Interest M-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest M-1 on such Payment Date.
"Lower-Tier Interest M-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest M-2 on such Payment Date.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Distribution Account which is an asset
of the Upper-Tier REMIC.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999% to
ContiSecurities Asset Funding II, L.L.C. and 0.001% to ContiFunding Corporation,
as Tax Matters Person. Such interests shall be non-transferrable, except that
ContiFunding Corporation may assign such interest to another person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof. The Lower-Tier REMIC Residual Class is entitled only to any
amounts at any time held in the Certificate Account and not required to be paid
to the Upper-Tier REMIC, which is expected to be zero at all times during the
term of this Agreement.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates and
the Class M-2 Certificates.
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"Monthly Excess Cashflow Amount": For any Payment Date, the sum of (x)
the Monthly Excess Interest Amount and (y) the Overcollateralization Release
Amount for such Payment Date.
"Monthly Excess Interest Amount": With respect to any Payment Date, the
sum of (x) the excess, if any, of (i) the sum of (A) the Interest Remittance
Amount for the related Remittance Period, (B) any Delinquency Advances made by
the Servicer during the related Remittance Period and (C) any Compensating
Interest paid by the Servicer for the related Remittance Period over (ii) the
Current Interest on such Payment Date and (y) any interest accrued during such
Remittance Period on the Overcollateralization Amount.
"Monthly Remittance Amount": As of any Monthly Remittance Date, the sum
of (i) the Interest Remittance Amount and (ii) the Principal Remittance Amount
for such Monthly Remittance Date.
"Monthly Remittance Date": The 10th day of each month or, if such day
is not a Business Day, the Business Day succeeding such day, commencing in the
month following the Startup Day.
"Moody's": Xxxxx'x Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"Net Weighted Average Coupon Rate": With respect to any Payment Date,
the weighted average of the Coupon Rates of the Home Equity Loans (weighted by
the Loan Balances of the Home Equity Loans), less 1.60% per annum.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Subordinate Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
"Operative Documents": Collectively, this Agreement, the Underwriting
Agreement and the Certificates.
"Original Aggregate Loan Balance": The aggregate Loan Balances of the
Home Equity Loans as of the Cut-Off Date, i.e., $399,999,864.54.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
23
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Amount": As of any Payment Date, the difference
between (x) the Loan Balance of the Home Equity Loans as of the last day of the
immediately preceding Remittance Period and (y) the Aggregate Certificate
Principal Balance (after taking into account all distributions of principal on
such Payment Date).
"Overcollateralization Deficiency": As of any Payment Date, the excess,
if any, of (x) the Targeted Overcollateralization Amount for such Payment Date
over (y) the Overcollateralization Amount for such Payment Date, calculated for
this purpose after taking into account the reduction on such Payment Date of the
Aggregate Certificate Principal Balance resulting from the distribution of the
Principal Remittance Amount (but not the Extra Principal Distribution Amount) on
such Payment Date, but prior to taking into account any Applied Realized Loss
Amount on such Payment Date.
"Overcollateralization Release Amount": As of any Payment Date, the
lesser of (x) the Principal Remittance Amount for such Payment Date and (y) the
excess of (i) the Overcollateralization Amount for such Payment Date, assuming
that 100% of the Principal Remittance Amount is applied on such Payment Date to
the payment of principal on the Offered Certificates and (ii) the Targeted
Overcollateralization Amount for such Payment Date.
"Owner": The Person in whose name a Certificate is registered in the
Register to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder, if
any Offered Certificates are beneficially owned by a Seller or any affiliate
thereof, such Seller or such affiliate shall not be considered an Owner
hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day.
"Percentage Interest": With respect to a Class of the Offered
Certificates (other than the Class A-10IO Certificates), a fraction, expressed
as a percentage, the numerator of which is the initial Certificate Principal
Balance represented by such Certificate and the denominator of which is the
aggregate initial Certificate Principal Balance represented by all the
Certificates in such Class. With respect to a Class of the Class A-10IO
Certificates a fraction, expressed as a percentage, the numerator of which is
the initial Class A-10IO Notional Principal Amount represented by such Class
A-10IO
24
Certificate and the denominator of which is the aggregate initial Class
A-10IO Notional Principal Amount represented by all of the Class A-10IO
Certificates. With respect to a Class C Certificate or a Class R Certificate,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, all of which shall total 100% with respect to
the related Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Offered Certificates, any
amounts of Current Interest and principal included in previous distributions to
the Owners of such Certificates which are recovered from such Owners as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court
having competent jurisdiction and which have not theretofore been repaid to such
Owners and for which there has been full compliance with the provisions of
Section 7.11.
"Prepaid Installment": With respect to any Home Equity Loan, any
installment of principal thereof and interest thereon received by the Servicer
prior to the scheduled due date for such installment, intended by the Mortgagor
as an early payment thereof and not as a Prepayment with respect to such Home
Equity Loan.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment),
Substitution Amounts, the portion of the purchase price of any Home Equity Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.06(b), 8.10(b) or
8.13(a) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Home Equity
Loan shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal Distribution Amount": As of any Payment Date, the sum of (i)
the Principal Remittance Amount (minus, for Payment Dates occurring on and after
the Stepdown Date and with respect to which no Trigger Event has occurred, the
Overcollateralization Release Amount, if any) and (ii) the Extra Principal
Distribution Amount, if any.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the
Servicer with respect to Home Equity Loans during the related Remittance Period,
(ii) the Loan Balance of each Home Equity Loan that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the extent such Loan
Balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan to the extent such Substitution
Amounts were actually deposited in the Principal and Interest Account on or
prior to such Monthly Remittance Date, and (iv) all Net Liquidation Proceeds
actually collected by the Servicer with respect to the Home Equity Loans during
the related Remittance Period (to the extent such Net Liquidation Proceeds
related to principal).
25
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property (including all building thereon)
securing a Home Equity Loan.
"Prospectus": The Prospectus dated April 17, 1996 constituting part of
the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1997-1 Prospectus Supplement dated January 30, 1997 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a Coupon
Rate at least equal to the Coupon Rate of the Home Equity Loan being replaced,
(ii) is of the same property type or is a single family dwelling and the same
occupancy status or is a primary residence as the replaced Home Equity Loan,
(iii) shall mature no later than February 1, 2027, (iv) has a Loan-to-Value
Ratio as of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio
of the replaced Home Equity Loan at such time, (v) shall be of the same or
higher credit quality classification (determined in accordance with
ContiMortgage's credit underwriting guidelines set forth in ContiMortgage's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) has a Loan Balance as of the related Replacement Cut-Off
Date equal to or less than the Loan Balance of the replaced Home Equity Loan as
of such Replacement Cut-Off Date, (vii) shall not provide for a "balloon"
payment if the related Home Equity Loan did not provide for a "balloon" payment
(and if such related Home Equity Loan provided for a "balloon" payment, such
Qualified Replacement Mortgage shall have an original maturity of not less than
the original maturity of such related Home Equity Loan) and (viii) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Rating Agencies": Collectively, Xxxxx'x and Fitch or any successors
thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess of Net
Liquidation Proceeds realized thereon applied in reduction of such Loan Balance.
"Record Date": With respect to any Payment Date, the last day of the
calendar month immediately preceding the calendar month in which such Payment
Date occurs.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
26
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
33-99340), including all amendments thereto and including the Prospectus
relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the month
in which a Monthly Remittance Date occurs; provided that the initial Remittance
Period shall be the period from January 18, 1997 through February 28, 1997.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"Retained Certificates": Collectively, the Class C Certificates and the
Class R Certificates.
"Schedule of Home Equity Loans": The schedule of Home Equity Loans
listing each Home Equity Loan to be conveyed on the Startup Day. Such Schedule
of Home Equity Loans shall identify each Home Equity Loan by the Servicer's loan
number and the borrower's name and address (including the state) of the Property
and shall set forth as to each Home Equity Loan the lien status thereof, the
Loan-to-Value Ratio and the Loan Balance as of the Cut-Off Date the Coupon Rate
thereof, the current scheduled monthly payment of principal and interest and the
maturity of the related Note, the property type, occupancy status, Appraised
Value and original term-to-maturity thereof, whether or not such Home Equity
Loan (including related Note) has been modified and the aggregate Loan Balances
of all Home Equity Loans. Such Schedule shall also identify the Seller of each
Home Equity Loan.
"Scheduled Payment": As of any date of calculation, with respect to a
Home Equity Loan, the then stated scheduled monthly installment of principal and
interest payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date).
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
27
"Sellers": ContiMortgage and ContiWest.
"Senior Enhancement Percentage": For any Payment Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balance of the Subordinate Certificates and (ii) the Overcollateralization
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount on such Payment Date by (y) the Loan Balance of the Home
Equity Loans as of the last day of the related Remittance Period.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Property having a first priority lien.
"Senior Specified Enhancement Percentage": On any date of determination
thereof means 25.0%.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to 0.50%
per annum of the then outstanding principal amount of such Home Equity Loan as
of the first day of each calendar month payable on a monthly basis.
"60+ Day Delinquent Loan": With respect to any Determination Date, all
REO Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, two
months or more past due (without giving effect to any grace period).
"Startup Day": February 6, 1997.
"Stepdown Date": The later to occur of (x) the Payment Date in March
2000 and (y) the first Payment Date on which the Senior Enhancement Percentage
(after taking into account distributions of principal on such Payment Date) is
equal to or greater than the Senior Specified Enhancement Percentage.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Overcollateralization Amount": On any Payment Date (x) prior
to the Stepdown Date, $4,000,000 and (y) on or after the Stepdown Date, the
greater of (x) 2% of the aggregate outstanding Loan Balance of the Home Equity
Loans as of the last day of the related Remittance Period and (y) $2,000,000.
28
"Tax Matters Certificate": The Class R Certificate initially issued to
ContiFunding Corporation as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates and the Lower-Tier REMIC Residual Class, each of which
shall be issued to and held by ContiFunding Corporation throughout the term
hereof unless another Person shall accept an assignment of such interest and the
designation of Tax Matters Person pursuant to Section 11.18 hereof.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Trigger Event": A Trigger Event has occurred with respect to a Payment
Date if the percentage obtained by dividing (x) the amount of 60+ Day Delinquent
Loans by (y) the aggregate outstanding Loan Balance of the Home Equity Loans as
of the last day of the immediately preceding Remittance Period exceeds one-half
of the Senior Enhancement Percentage.
"Trust": ContiMortgage Home Equity Loan Trust 1997-1, the trust created
under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Manufacturers and Traders Trust Company, a New York banking
corporation, the Corporate Trust Department of which is located on the date of
execution of this Agreement at Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000, not in
its individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date in an
amount equal to one-twelfth of the sum of (i) 0.0055% multiplied by the
then-outstanding Aggregate Certificate Principal Balance and (ii) $4,750.
"Trustee Fee Rate": A fraction expressed as a percentage, the numerator
of which is the product of (x) 12 and (y) the Trustee Fee and the denominator of
which is the Aggregate Certificate Principal Balance.
"Underwriters": Greenwich Capital Markets, Inc., ContiFinancial
Services Corporation and Xxxxxx Xxxxxxx & Co. Incorporated.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
"Upper-Tier Distribution Account": The Upper-Tier Distribution Account
established pursuant to Section 7.02(a) hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Certificates. The assets of the Upper-Tier REMIC
shall include the Upper-Tier Distribution Account and the right to receive the
distributions deposited therein with respect to each Lower-Tier Interest.
29
"Weighted Average Pass-Through Rate": As to any Payment Date, the sum
of (x) weighted average of the Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through
Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through Rate, the
Class A-7 Pass-Through Rate, the Class A-8 Pass-Through Rate, the Class A-9
Pass-Through Rate, the Class M-1 Pass-Through Rate, the Class M-2 Pass-Through
Rate and the Class B Pass-Through Rate (such rate calculated for this purpose
on the basis of 360-day year assumed to consist of twelve 30 day months)
weighted by the respective Certificate Principal Balance of the related Class as
of such Payment Date before taking into account any distributions to be made on
such Payment Date and (y) the Class A-10IO Pass-Through Rate.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
30
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "ContiMortgage Home Equity Loan Trust 1997-1."
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000, Attention Corporate Trust Department, or
at such other address as the Trustee may designate by notice to the Depositor,
the Seller and the Servicer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect either the Lower-Tier REMIC's or the Upper-Tier REMIC's status
as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section 7.03(c)
hereof), (ii) any reasonable expenses of the Trustee, and (iii) any other
expenses of the Trust that have been reviewed by ContiMortgage, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
ContiMortgage. ContiMortgage shall pay directly the reasonable fees and expenses
of counsel to the Trustee. The reasonable fees and expenses of the Trustee's
counsel in connection with the review and delivery of this Agreement and related
documentation shall be paid by ContiMortgage on the Startup Day.
31
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in the
State of New York and payments will be received by the Trustee only in the State
of New York and payments from the Trustee will be made only from the State of
New York. The Trust's only office will be at the office of the Trustee as set
forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows:
Initial Lower- Lower-Tier Final Scheduled
Class Designation Tier Balance Pass-Through Rate Payment Dates
----------------- ------------ ----------------- -------------
Lower-Tier Interest A-1 $50,750,000 (1) May 15, 2006
Lower-Tier Interest A-2 $57,500,000 (1) December 15, 2011
Lower-Tier Interest A-3 $84,500,000 (1) January 15, 2012
Lower-Tier Interest A-4 $37,250,000 (1) January 15, 2012
Lower-Tier Interest A-5 $28,250,000 (1) January 15, 2012
Lower-Tier Interest A-6 $20,000,000 (1 January 15, 2015
Lower-Tier Interest A-7 $24,250,000 (1) September 15, 2021
Lower-Tier Interest A-8 $21,500,000 (1) March 15, 2028
Lower-Tier Interest A-9 $30,000,000 (1) March 15, 2028
Lower-Tier Interest A-10IO $0* (1 Xxxxx 00, 0000
Xxxxx-Xxxx Interest M-1 $18,000,000 (1) March 15, 2028
Lower-Tier Interest M-2 $23,000,000 (1) March 15, 2028
Lower-Tier Interest B $ 5,000,000 (1) March 15, 2028
Lower-Tier REMIC Residual Class (2) (2) March 15, 2028
-------------------
* Notional principal amount equal to the aggregate outstanding Loan
Balance.
(1) On any Payment Date, the Net Weighted Average Coupon Rate.
(2) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier Balance
or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interest X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0,
A-10IO, M-1, M-2 and B Certificates shall be issued as non-certificated
interests. The Lower-Tier REMIC Residual Class shall be issued from the
Lower-Tier REMIC as a non-certificated interest.
(c) The Depositor hereby designates Lower-Tier Interest X-0, Xxxxx-Xxxx
Xxxxxxxx X-0, Xxxxx-Xxxx Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx
Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest A-7, Lower-Tier
Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest A-10IO,
32
Lower-Tier Interest M-1, Lower-Tier Interest M-2 and Lower Tier Interest B as
"regular interests" and the Lower-Tier REMIC Residual Class as the single class
of "residual interests" in the Lower-Tier REMIC for purposes of the REMIC
Provisions.
(d) The Depositor hereby designates the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class X-0, Xxxxx X-0, Class A-10IO,
Class M-1, Class M-2, Class B and Class C Certificates as "regular interests,"
and the Class R Certificates as the single class of "residual interests" in the
Upper-Tier REMIC for purposes of the REMIC Provisions. The Depositor hereby
designates the Lower-Tier Interest A-1, the Lower-Tier Interest A-2, the
Lower-Tier Interest A-3, the Lower-Tier Interest A-4, the Lower-Tier Interest
A-5, the Lower-Tier Interest A-6, the Lower-Tier Interest A-7, the Lower-Tier
Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest A-10IO, Lower-Tier
Interest M-1, Lower Tier Interest M-2, Lower Tier Interest B, and the Upper-Tier
Distribution Account as the only assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interests in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Upper-Tier REMIC and amounts, if any, distributed on the Lower-Tier REMIC
Residual Class, if any, shall be treated as distributions by the Lower-Tier
REMIC. It is expected that there shall not be any distributions to the
Lower-Tier REMIC Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
33
(k) For federal income tax purposes, the Final Scheduled Payment Date
for each Class of the Offered Certificates is hereby set to be the Payment Date
indicated below:
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates May 15, 2006
Class A-2 Certificates December 15, 2011
Class A-3 Certificates January 15, 2012
Class A-4 Certificates January 15, 2012
Class A-5 Certificates January 15, 2012
Class A-6 Certificates January 15, 2015
Class A-7 Certificates September 15, 2021
Class A-8 Certificates March 15, 2028
Class A-9 Certificates March 15, 2028
Class A-10IO Certificates March 15, 2028
Class M-1 Certificates March 15, 2028
Class M-2 Certificates March 15, 2028
Class B Certificates March 15, 2028
END OF ARTICLE II
34
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee
and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
35
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
36
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee
and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Servicer and each Sub- Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer is designated as
an approved seller-servicer by FNMA for first and second mortgage loans and has
combined equity and subordinated debt of at least $1,500,000, as determined in
accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which the Servicer is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
37
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they were
made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with relevant
FNMA guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of either Seller, the Servicer, any Sub-Servicer,
any Owner or the Trustee (each, for purposes of this paragraph, a party) of a
breach of any of the representations and warranties set forth in this Section
3.02 which materially and adversely affects the interests of the Owners, the
party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach, the
Servicer shall cure such breach in all material respects and, upon the
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee pursuant to Section 8.20 hereof.
Section 3.03 Representations and Warranties of the Sellers.
(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee and the Owners that as of the Startup Day:
(a) ContiMortgage is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing as a foreign
38
corporation in each jurisdiction in which the nature of its business, or the
properties owned or leased by it, make such qualification necessary.
ContiMortgage has all requisite corporate power and authority to own and operate
its properties, to carry out its business as presently conducted and as proposed
to be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by
ContiMortgage and its performance and compliance with the terms of this
Agreement and the other Operative Documents to which it is a party have been
duly authorized by all necessary corporate action on the part of ContiMortgage
and will not violate ContiMortgage's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which ContiMortgage is a party or by
which ContiMortgage is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over ContiMortgage or any of its properties.
(c) This Agreement and the other Operative Documents to which
ContiMortgage is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of ContiMortgage, enforceable against it in accordance with
the terms hereof and thereof, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) ContiMortgage is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiMortgage or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiMortgage is a party.
(e) No litigation is pending with respect to which
ContiMortgage has received service of process or, to the best of ContiMortgage's
knowledge, threatened against ContiMortgage which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Documents to which it is a party or that would materially and
adversely affect the condition (financial or otherwise) or operations of
ContiMortgage or its properties or might have consequences that would materially
and adversely affect its performance hereunder and under the other Operative
Documents to which ContiMortgage is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by ContiMortgage
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement
which describe ContiMortgage or matters or activities for which ContiMortgage is
responsible in accordance with the Operative Documents or which are attributable
to ContiMortgage therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiMortgage required to be stated therein or necessary to make
the statements contained therein with respect to ContiMortgage, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to
39
ContiMortgage that materially adversely affects or in the future may (so far as
ContiMortgage can now reasonably foresee) materially adversely affect
ContiMortgage or the Home Equity Loans or the ownership interests therein
represented by the Certificates that has not been set forth in the Registration
Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by ContiMortgage to
the Depositor and by the Depositor to the Trustee under this Agreement, the
Trust will have good title to such Home Equity Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) Neither ContiMortgage nor any affiliate thereof will
report on any financial statement any part of the Servicing Fee as an adjustment
to the sales price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which ContiMortgage makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by
ContiMortgage of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiMortgage and the
performance by ContiMortgage of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(k) The origination practices used by ContiMortgage with
respect to the Home Equity Loans have been, in all material respects, legal,
proper, prudent and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiMortgage.
(m) ContiMortgage is not insolvent, nor will it be made
insolvent by the transfer of the Home Equity Loans, nor is ContiMortgage aware
of any pending insolvency.
(n) The transfer, assignment and conveyance of the Notes and
the Mortgages by ContiMortgage hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(o) ContiMortgage is not transferring the Home Equity Loans to
the Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03(1) shall survive delivery of the respective Home
Equity Loans to the Trustee.
40
Upon discovery by any of the Servicer, any Sub-Servicer, either Seller
or the Trustee (each, for purposes of this paragraph, a "party") of a breach of
any of the representations and warranties set forth in this Section 3.03 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties.
ContiMortgage hereby covenants and agrees that within 60 days of its discovery
or its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, ContiMortgage may (or
may cause an affiliate of ContiMortgage to) on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) substitute in lieu of any
Home Equity Loan not in compliance with clause (h) a Qualified Replacement
Mortgage and, if the outstanding principal amount of such Qualified Replacement
Mortgage as of the applicable Replacement Cut-Off Date is less than the Loan
Balance of such Home Equity Loan as of such Replacement Cut-Off Date, deliver an
amount equal to such difference together with the aggregate amount of (A) all
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan and (B) all Delinquency Advances and Servicing Advances
which the Servicer has theretofore failed to remit with respect to such Home
Equity Loan (a "Substitution Amount") to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan from the
Trust at the Loan Purchase Price, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. Notwithstanding any
provision of this Agreement to the contrary, with respect to any Home Equity
Loan which is not in default or as to which no default is imminent, no
repurchase or substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made
unless ContiMortgage obtains for the Trustee an opinion of counsel experienced
in federal income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for the Trust or any
REMIC therein or otherwise subject the Trust or any REMIC therein to tax and
would not jeopardize the status of either of the Lower-Tier REMIC or Upper-Tier
REMIC as a REMIC (a "REMIC Opinion") addressed to the Trustee and acceptable to
the Trustee. Any Home Equity Loan as to which repurchase or substitution was
delayed pursuant to this Section shall be repurchased or substituted for
(subject to compliance with Sections 3.03, 3.04 or 3.06, as the case may be)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such Home Equity Loan and (b) receipt by the Trustee of a REMIC
Opinion.
(2) ContiWest hereby represents, warrants and covenants to the Trustee
and the Owners that as of the Startup Day:
(a) ContiWest is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it,
make such qualification necessary. ContiWest has all requisite corporate power
and authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by ContiWest
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of ContiWest and will not violate
ContiWest's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiWest is a party or by which ContiWest is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over ContiWest or any of
its properties.
(c) This Agreement and the other Operative Documents to which
ContiWest is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each
41
constitutes a valid, legal and binding obligation of ContiWest, enforceable
against it in accordance with the terms hereof and thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) ContiWest is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiWest or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest
has received service of process or, to the best of ContiWest's knowledge,
threatened against ContiWest which litigation might have consequences that would
prohibit its entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect the condition
(financial or otherwise) or operations of ContiWest or its properties or might
have consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by ContiWest contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement
which describe ContiWest or matters or activities for which ContiWest is
responsible in accordance with the Operative Documents or which are attributable
to ContiWest therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiWest required to be stated therein or necessary to make the
statements contained therein with respect to ContiWest, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiWest that materially
adversely affects or in the future may (so far as ContiWest can now reasonably
foresee) materially adversely affect ContiWest or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by ContiWest to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which ContiWest makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by
ContiWest of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or
42
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiWest and the performance
by ContiWest of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiWest.
(k) ContiWest is not insolvent, nor will it be made insolvent
by the transfer of the Home Equity Loans, nor is ContiWest aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and
the Mortgages by ContiWest hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(m) ContiWest is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03(2) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either Seller
or the Trustee (each, for purposes of this paragraph, a "party") of a breach of
any of the representations and warranties set forth in this Section 3.03 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties.
ContiWest hereby covenants and agrees that within 60 days of its discovery or
its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, ContiWest may (or may
cause an affiliate of ContiWest to) on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) substitute in lieu of any
Home Equity Loan not in compliance with clause (h) a Qualified Replacement
Mortgage and, if the outstanding principal amount of such Qualified Replacement
Mortgage as of the applicable Replacement Cut-Off Date is less than the Loan
Balance of such Home Equity Loan as of such Replacement Cut-Off Date, deliver an
amount equal to such difference together with the aggregate amount of (A) all
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan and (B) all Delinquency Advances and Servicing Advances
which the Servicer has theretofore failed to remit with respect to such Home
Equity Loan (a "Substitution Amount") to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan from the
Trust at the Loan Purchase Price, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. Notwithstanding any
provision of this Agreement to the contrary, with respect to any Home Equity
Loan which is not in default or as to which no default is imminent, no
repurchase or substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made
unless ContiWest obtains for the Trustee an opinion of counsel experienced in
federal income tax matters to the effect that such a repurchase or substitution
would not constitute a Prohibited Transaction for the Trust or any REMIC therein
or otherwise subject the Trust or any REMIC therein to tax and would not
jeopardize the status of either of the Lower-Tier REMIC or Upper-Tier REMIC as a
REMIC (a "REMIC Opinion") addressed to the Trustee and acceptable to the
Trustee. Any Home Equity Loan as to which repurchase or substitution was delayed
pursuant to this Section shall be repurchased or substituted for (subject to
compliance with Sections 3.03, 3.04 or 3.06, as the case may be) upon the
earlier of (a) the occurrence of a default or imminent default with respect to
such Home Equity Loan and (b) receipt by the Trustee of a REMIC Opinion.
43
Section 3.04 Covenants of the Sellers to Take Certain Actions
with Respect to the Home Equity Loans In
Certain Situations.
(a) Upon the discovery by either Seller, the Servicer, any Sub-Servicer
or the Trustee (i) that any of the statements set forth in subsection (b) below
were untrue as of the Startup Day with the result that the interests of the
Owners are materially and adversely affected or (ii) that statements set forth
in Clauses (ix), (x), (xiii), (xxxvi), (xl), or (xli) of subsection (b) below
were untrue in any material respect as of the Startup Day, the party discovering
such breach shall give prompt written notice to the other parties. Upon the
earliest to occur of such Seller's discovery, its receipt of notice of breach
from any one of the other parties or such time as a situation resulting from an
existing statement which is untrue materially and adversely affects the
interests of the Owners, such Seller hereby covenants and warrants that it shall
promptly cure such breach in all material respects or subject to the last two
sentences of Section 3.03 it shall on the second Monthly Remittance Date next
succeeding such discovery, receipt of notice or such time (i) substitute in lieu
of each Home Equity Loan which has given rise to the requirement for action by
such Seller a Qualified Replacement Mortgage and deliver the Substitution Amount
to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. Other than as
specified in Section 6.12 hereof, it is understood and agreed that the
obligation of a Seller so to substitute or purchase any Home Equity Loan as to
which such a statement set forth below is untrue in any material respect and has
not been remedied shall constitute the sole remedy respecting a discovery of any
such statement which is untrue in any material respect in this Section 3.04
available to the Owners and the Trustee.
(b) Unless otherwise specified, the information set out below specifies
as of the Startup Day:
(i) The information with respect to each Home Equity Loan and
the aggregate Loan Balance of all Home Equity Loans set forth in the
related Schedule of Home Equity Loans is true and correct as of the
Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Home Equity Loan has been or will be delivered to
the Trustee on the Startup Day or as otherwise provided in Section
3.05;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums and
townhouses, manufactured housing or small multifamily or mixed-use
property but shall not include co-operatives or mobile homes;
provided, however, that not more than 0.02% of the aggregate Loan
Balance of the Home Equity Loans are secured by condominiums with
more than 4 stories and no more than 0.55% are secured by
condominiums of less than 4 stories;
(v) No Home Equity Loan has a Loan-to-Value Ratio in excess of
85%, except 13.31% of such Home Equity Loans which have a
Loan-to-Value Ratio not greater than 96%;
(vi) Each Home Equity Loan is being serviced by the Servicer;
(vii) The Note related to each Home Equity Loan bears a fixed
Coupon Rate of at least 7.90% per annum. The weighted average Coupon
Rate of the Home Equity Loans is at least 11.56%;
44
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal monthly
Scheduled Payments which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date (other
than Notes representing not more than 55.62% of the aggregate Loan
Balance of the Initial Home Equity Loans which may provide for a
"balloon" payment due at the end of the 15th year, which maturity
date is not more than 15 years from the date of origination);
(ix) As of the Startup Day, each Mortgage is a valid and
subsisting first or second lien of record on the Property subject in
the case of any Second Mortgage Loan only to a Senior Lien on such
Property and subject in all cases to the exceptions to title set
forth in the title insurance policy or attorney's opinion of title
with respect to the related Home Equity Loan, which exceptions are
generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by such
Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the related Seller to the Depositor and by the
Depositor to the Trust herein contemplated, such Seller and the
Depositor, as the case may be, held good and indefeasible title to,
and was the sole owner of, each Home Equity Loan (including the
related Note) conveyed by such Seller subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
clause (ix) or other liens which will be released simultaneously
with such transfer and assignment; and immediately upon the transfer
and assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity
Loan subject to no liens, charges, mortgages, encumbrances or rights
of others except as set forth in paragraph (ix) or other liens which
will be released simultaneously with such transfer and assignment;
(xi) As of the Startup Day, (a) no more than 1.48% of the Home
Equity Loans as a percentage of the outstanding aggregate Loan
Balance of the Home Equity Loans are 30-59 days Delinquent, (b) no
more than 0.05% of the Home Equity Loans as a percentage of the
outstanding aggregate Loan Balance of the Home Equity Loans, are
60-89 days Delinquent, (c) none of the Home Equity Loans, is 90 or
more days Delinquent, (d) no Mortgagor of any Home Equity Loan has
been 30 days or more Delinquent more than once during the 12 months
immediately preceding the Startup Day except as indicated on
Schedule III attached hereto and (e) no Mortgagor of any Home Equity
Loan has been 90 or more days Delinquent during the 12 months
immediately preceding the Startup Day except as indicated on
Schedule III attached hereto.
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of
the related Mortgagor to pay the unpaid principal of or interest on
such Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to,
or equal with, the lien of the related Mortgage except those which
are insured against by any title insurance policy referred to in
paragraph (xvi) below;
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(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, usury,
equal credit opportunity, disclosure and recording laws (provided
that less than 0.21% of the Home Equity Loans have been identified
by one of the Sellers as requiring additional disclosure in order to
be in compliance herewith; the related Seller of such Home Equity
Loans confirms that it shall make such disclosure in compliance with
the terms of this Agreement);
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no title policy
has been obtained (provided that no title policy has been obtained
with respect to not more than 1.0% of the Original Aggregate Loan
Balance of the Home Equity Loans), or (b) a lender's title insurance
policy, issued in standard American Land Title Association form by a
title insurance company authorized to transact business in the state
in which the related Property is situated, in an amount at least
equal to the original balance of such Home Equity Loan together, in
the case of a Second Mortgage Loan, with the then-current principal
balance of the mortgage note relating to the Senior Lien, insuring
the mortgagee's interest under the related Home Equity Loan as the
holder of a valid first or second mortgage lien of record on the
real property described in the related Mortgage, as the case may be,
subject only to exceptions of the character referred to in paragraph
(ix) above, was effective on the date of the origination of such
Home Equity Loan, and, as of the Startup Day, such policy is valid
and thereafter such policy shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as
defined in Section 8.03 with respect to the Home Equity Loans
serviced by it;
(xviii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Property;
(xix) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting
the requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien),
(B) the minimum amount required to compensate for damage or loss on
a replacement cost basis or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance
with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity
Loan had full legal capacity to execute all documents relating to
such Home Equity Loan and convey the estate therein purported to be
conveyed;
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(xxi) Each Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by such Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee;
(xxii) As of the Startup Day, no more than 0.31% of the
aggregate Loan Balance of the Home Equity Loans will be secured by
Properties located within any single zip code area;
(xxiii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such recordation
is necessary to perfect the lien thereof as against creditors of or
purchasers from the Seller delivering the related Home Equity Loan
(or, subject to Section 3.05 hereof, are in the process of being
recorded);
(xxiv) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interest of the Owners and which has been delivered to the Trustee.
The substance of any such alteration or modification is reflected on
the related Schedule of Home Equity Loans;
(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee
to make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Home Equity Loans were paid;
(xxvi) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvii) No Home Equity Loan was originated under a buydown
plan;
(xxviii) No Home Equity Loan has a shared appreciation
feature, or other contingent interest feature;
(xxix) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected
thereon;
(xxx) Each Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the related Home
Equity Loan in the event the related Property is sold without the
prior consent of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the respective Schedule of Home Equity Loans. The consolidated
principal amount does not exceed the original principal amount of
the related Home Equity Loan. No Note permits or obligates the
Servicer to make future advances to the related Mortgagor at the
option of the Mortgagor;
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(xxxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement.
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxiv) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxv) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder
thereof adequate for the realization against the related Property of
the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Property at a trustee's
sale or the right to foreclose the related Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and neither the Servicer
nor the related Seller has waived any default, breach, violation or
event of acceleration;
(xxxviii) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement which has been approved by the primary mortgage
guaranty insurer, if any, and which has been delivered to the
Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least
twelve months prior to the maturity date of the related first
mortgage loan if such first mortgage loan provides for a balloon
payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xli) The credit underwriting guidelines applicable to each
Home Equity Loan conform in all material respects to the description
thereof set forth in the Prospectus Supplement;
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(xlii) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xliii) The Home Equity Loans were not selected for inclusion
in the Trust by the Sellers on any basis intended to adversely
affect the Trust;
(xliv) No more than 4.74% of the aggregate Loan Balance of the
Home Equity Loans are secured by Properties that are non-owner
occupied Properties (i.e., investor-owned and vacation);
(xlv) No more than 5.22% of the aggregate Loan Balance of the
Home Equity Loans are secured by Home Equity Loans which were
originated under ContiMortgage's non-income verification program;
(xlvi) Neither Seller has any actual knowledge that there
exist any hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation on any Property;
(xlvii) Both Sellers were properly licensed or otherwise
authorized, to the extent required by applicable law, to originate
or purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home
Equity Loans by the Trustee as trustee of the Trust will not involve
the violation of such laws;
(xlviii) With respect to each Property subject to a ground
lease (i) the current ground lessor has been identified and all
ground rents which have previously become due and owing have been
paid; (ii) the ground lease term extends, or is automatically
renewable, for at least five years beyond the maturity date of the
related Home Equity Loan; (iii) the ground lease has been duly
executed and recorded; (iv) the amount of the ground rent and any
increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (v) the ground rent
payment is included in the borrower's monthly payment as an expense
item; (vi) the Trust has the right to cure defaults on the ground
lease; and (vii) the terms and conditions of the leasehold do not
prevent the free and absolute marketability of the Property. As of
the Cut-Off Date, the Loan Balance of the Home Equity Loans with
related Properties subject to ground leases does not exceed 1% of
the Original Aggregate Loan Balance;
(xlix) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient
to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;
(l) As of the Startup Day, neither Seller has received a
notice of default of any first mortgage loan secured by any Property
which has not been cured by a party other than such Seller;
(li) Reserved;
49
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $450,000;
(liii) Each Home Equity Loan is secured by a mortgage on
property which, at the time of origination of each Home Equity Loan,
has an appraised value of not more than $2,000,000; and
(liv) No more than 6.78% of the Home Equity Loans are in a
second priority position.
(c) In the event that any such repurchase results in a prohibited
transaction tax, the Trustee shall immediately notify the related Seller in
writing thereof and such Seller will, within 10 days of receiving notice thereof
from the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In the event that any Qualified Replacement Mortgage is delivered by
either Seller to the Trust pursuant to Section 3.03, Section 3.04 or Section
3.06 hereof, such Seller shall be obligated to take the actions described in
Section 3.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the other Seller, the Servicer, any Sub-Servicer
or the Trustee that the statements set forth in clause (ix), (x), (xiii),
(xxxvi), (xl) or (xli) of subsection (b) above are untrue in any material
respect on the date such Qualified Replacement Mortgage is conveyed to the Trust
or that any of the other statements set forth in subsection (b) above are untrue
on the date such Qualified Replacement Mortgage is conveyed to the Trust such
that the interests of the Owners in the related Qualified Replacement Mortgage
are materially and adversely affected; provided, however, that for the purposes
of this subsection (c) the statements in subsection (b) above referring to items
"as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to
such items as of the date such Qualified Replacement Mortgage is conveyed to the
Trust. Notwithstanding the fact that a representation contained in subsection
(b) above may be limited to a Seller's knowledge, such limitation shall not
relieve a Seller of its repurchase obligation under this Section and Section
3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day each Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys to
the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys, without recourse,
to the Trust all of their respective right, title and interest in and to the
Trust Estate; provided, however, that each Seller reserves and retains all of
its right, title and interest in and to principal (including Prepayments)
collected and interest accrued on each Home Equity Loan on or prior to the
Cut-Off Date. The transfer by the Depositor of the Home Equity Loans set forth
on the Schedule of Home Equity Loans to the Trustee is absolute and is intended
by the Owners and all parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Home Equity Loans conveying good
title thereto free and clear of any liens and
50
encumbrances from each Seller to the Depositor and from the Depositor to the
Trust and that the Home Equity Loans not be part of the Depositor's or either
Seller's estate in the event of insolvency. In the event that such conveyance is
deemed to be a loan, the parties intend that each Seller shall be deemed to have
granted to the Depositor and the Depositor shall be deemed to have granted to
the Trustee a first priority perfected security interest in the Trust Estate,
and that this Agreement shall constitute a security agreement under applicable
law.
In connection with such sale, transfer, assignment, and conveyance from
the Sellers to the Depositor, each Seller has filed, in the appropriate office
or offices in the States of Delaware, Pennsylvania and Nevada, as the case may
be, a UCC-1 financing statement executed by such Seller as debtor, naming the
Depositor as secured party and listing the Home Equity Loans and the other
property described above as collateral. The characterization of a Seller as
debtor and the Depositor as secured party on such financing statements is solely
for protective purposes and shall in no way be construed as being contrary to
the intent of the parties that this transaction be treated as a sale of such
Seller's entire right, title and interest in and to the Trust Estate. In
connection with such filing, each Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's and the Owners' interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of New York and Delaware, a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee as secured party and
listing the Home Equity Loans and the other property described above as
collateral. The characterization of the Depositor as debtor and the Trustee as
secured party in such financing statements is solely for protective purposes and
shall in no way be construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Depositor's entire right, title and
interest in and to the Trust Estate. In connection with such filing, the
Depositor agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's and the
Owners' interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Home Equity
Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the Startup Day
with respect to each Home Equity Loan (A) the original Notes endorsed
in blank or to the order of the Trustee, (B) the original title
insurance policy or a copy certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening assignments, showing a complete
chain of title from origination to the Trustee, if any, including
warehousing assignments, with evidence of recording thereon, (D)
originals of all assumption and modification agreements, if any and (E)
either: (1) the original Mortgage, with evidence of recording thereon
(if such original Mortgage has been returned to the related Seller from
the applicable recording office or a certified copy thereof if such
original Mortgage has not been returned to the related Seller from the
applicable recording office), or (2) a copy of the Mortgage certified
by the public recording office in those instances where the original
recorded Mortgage has been lost,
(ii) cause, within 60 days following the Startup Day,
assignments of the Mortgages to "Manufacturers and Traders Trust
Company, as Trustee of ContiMortgage Home Equity Loan Trust 1997-1
under the Pooling and Servicing Agreement dated as of February 1, 1997"
to be submitted for recording in the appropriate jurisdictions;
provided, however, that the Depositor shall not be required to record
an assignment of a Mortgage if the Depositor furnishes to the
51
Trustee, on or before the Startup Day, at the Depositor's expense an
opinion of counsel with respect to the relevant jurisdiction that such
recording is not necessary to perfect the Trustee's interest in the
related Home Equity Loans (in form and substance and from counsel
satisfactory to the Rating Agencies); and
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments, to
the Trustee within 15 days of receipt thereof by the Depositor (but in
any event, with respect to any Mortgage as to which original recording
information has been made available to the Depositor, within one year
after the Startup Day).
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the second preceding paragraph, each Seller shall deliver to
the Trustee a list of all Mortgages with respect to Home Equity Loans delivered
by such Seller for which no Mortgage assignment has yet been submitted for
recording by such Seller, which list shall state the reason why such Seller has
not yet submitted such Mortgage assignments for recording. With respect to any
Mortgage assignment disclosed on such list as not yet submitted for recording
for a reason other than a lack of original recording information, the Trustee
shall make an immediate demand on such Seller to prepare such Mortgage
assignments. Thereafter, the Trustee shall cooperate in executing any documents
submitted to the Trustee in connection with this provision. Following the
expiration of the 60-day period referred to in clause (ii) of the second
preceding paragraph, each Seller shall promptly prepare a Mortgage assignment
for any Mortgage with respect to Home Equity Loans delivered by such Seller for
which original recording information is subsequently received by such Seller,
and shall promptly deliver a copy of such Mortgage assignment to the Trustee.
Each Seller agrees that it will follow its normal servicing procedures and
attempt to obtain the original recording information necessary to complete a
Mortgage assignment with respect to Home Equity Loans delivered by such Seller.
In the event that a Seller is unable to obtain such recording information with
respect to any Mortgage prior to the end of the 18th calendar month following
the Startup Day and has not provided to the Trustee a Mortgage assignment with
evidence of recording thereon relating to the assignment of such Mortgage to the
Trustee, the Trustee shall notify such Seller of such Seller's obligation to
provide a completed assignment (with evidence of recording thereon) on or before
the end of the 20th calendar month following the Startup Day with respect to the
Home Equity Loans. A copy of such notice shall be sent by the Trustee to the
Rating Agencies. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation contained
in clause (xxiii) of Section 3.04(b) hereof; provided, however, that if as of
the end of such 20th calendar month either Seller then required to deliver such
a completed assignment demonstrates to the satisfaction of the Trustee that it
is exercising its best efforts to obtain such completed assignment and, during
each month thereafter until such completed assignment is delivered to the
Trustee, such Seller continues to demonstrate to the satisfaction of the Trustee
that it is exercising its best efforts to obtain such completed assignment, the
related Home Equity Loan will not be deemed to have breached such
representation. The requirement to deliver a completed assignment with evidence
of recording thereon will be deemed satisfied upon delivery of a copy of the
completed assignment certified by the applicable public recording office.
52
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 with respect to
one or more Home Equity Loans shall be accomplished at the expense of the Seller
delivering such Home Equity Loan.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of such Seller in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by such Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all
its right, title and interest to principal and interest due on such Qualified
Replacement Mortgage after the applicable Replacement Cut-Off Date; provided,
however, that such Seller shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such Qualified Replacement
Mortgage on or prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the order of the Seller delivering such Home Equity Loan, all
of its right, title and interest in and to such released Home Equity Loan and
all the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such released Home
Equity Loan on or prior to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, each Seller agrees
to (i) deliver without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating thereto, endorsed in
blank or to the order of the Trustee, (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by such Seller (but in any event
within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title in the same manner required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and on
the order of the Seller delivering such Qualified Replacement Mortgage (i) the
original Note relating thereto, endorsed without recourse or representation, to
such Seller, (ii) the original Mortgage so released and all assignments relating
thereto and (iii) such other documents as constituted the File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller that delivered the corresponding Home Equity Loan shall prepare a
substitute assignment or cure such defect, as the case may be, and thereafter
cause each such assignment to be duly recorded.
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Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee agrees, for the
benefit of the Owners, to review such items within 45 days after the Startup Day
(or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Qualified Replacement Mortgage, within
45 days after the assignment thereof) and to deliver to the Depositor, each of
the Sellers and the Servicer a certification in the form attached hereto as
Exhibit F (a "Pool Certification") to the effect that, as to each Home Equity
Loan listed in the Schedule of Home Equity Loans (other than any Home Equity
Loan paid in full or any Home Equity Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Home Equity Loan and (iii)
based on its examination and only as to the foregoing documents, the information
set forth on the Schedule of Home Equity Loans accurately reflects the
information set forth in the File. The Trustee shall have no responsibility for
reviewing any File except as expressly provided in this subsection 3.06(a).
Without limiting the effect of the preceding sentence, in reviewing any File,
the Trustee shall have no responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Trustee is the assignee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Home Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers and the Owners. In performing any such
review, the Trustee may conclusively rely as to the purported genuineness of any
such document and any signature thereon. It is understood that the scope of the
Trustee's review of the items delivered by each of the Sellers pursuant to
Section 3.05(b)(i) is limited solely to confirming that the documents listed in
Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. Each Seller agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File delivered by such Seller of which it is so notified by the Trustee.
If, however, within 60 days after the Trustee's notice to it respecting such
defect the related Seller has not remedied the defect and the defect materially
and adversely affects the interest of the Owners in the related Home Equity Loan
such Seller will (or will cause an affiliate of such Seller to) on the next
succeeding Monthly Remittance Date (i) substitute in lieu of such Home Equity
Loan a Qualified Replacement Mortgage and deliver the Substitution Amount to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Home Equity Loan
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at a purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be delivered to the Servicer for deposit in the Principal and
Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 12th month after the Startup Day indicating the current status
of the exceptions previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the Trustee and the
Servicer shall monitor no less frequently than monthly, updated certifications
indicating the then current status of exceptions, until all such exceptions have
been eliminated.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Xxxxx Xxxxxxxxxx, 1301 Avenue of the Americas, New York, New York
(or at such other location acceptable to the Seller), the Sellers will sell and
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters the Offered
Certificates with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co., or in such other names as the Underwriters
shall direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, and (ii) to the respective
registered owners thereof, a Class C Certificate with a Percentage Interest
equal to 100%, registered in the name of ContiSecurities Asset Funding II,
L.L.C., a Class R Certificate with a Percentage Interest equal to 99.999%,
registered in the name of ContiSecurities Asset Funding II, L.L.C. and a Class R
Certificate with a Percentage Interest equal to .001%, registered in the name of
ContiFunding Corporation.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Offered Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law). The Certificates are payable
solely from payments received on or with respect to the Home Equity Loans (other
than the Servicing Fees), moneys in the Principal and Interest Account, earnings
on moneys and the proceeds of property held as a part of the Trust Estate. Each
Certificate entitles the Owner thereof to receive monthly on each Payment Date,
in order of priority of distributions with respect to such Class of Certificates
as set forth in Section 7.03, a specified portion of such payments with respect
to the Home Equity Loans, pro rata in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class A-9 Certificates, the Class A-10IO Certificates, the Class M-1
Certificates, the Class M-2 Certificates, the Class B Certificates, the Class C
Certificates and the Class R Certificates shall be in substantially the forms
set forth in Exhibits X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-00XX, X-0,
X-0, X-0, C-1 and C-2 hereof, respectively, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement or as may in the Depositor's judgment be necessary, appropriate
or convenient to comply, or facilitate compliance, with applicable laws, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
applicable securities laws or as may, consistently herewith, be determined by
the Authorized Officer of the Depositor executing such Certificates, as
evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the
manual or facsimile signature of one of the Depositor's Authorized Officers and
shall be authenticated by the manual or facsimile signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Depositor shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners and the Trustee shall have the right to inspect the
Register during the Trustee's normal hours and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Registrar by an Authorized Officer thereof as to the names and addresses of
the Owners of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Offered Certificates then Outstanding, or if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates, the Trustee will give the Owners prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register. In connection with any such appointment
the annual fees of the bank then serving as Trustee and Registrar shall
thenceforth be reduced by the amount to be agreed upon by the Trustee and the
Depositor at such time and the reasonable fees of the Registrar shall be paid,
as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or percentage interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or
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other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Certificates; any other expenses in
connection with such transfer or exchange shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Certificate of such Class. Upon initial issuance, the ownership of each such
Certificate shall be registered in the Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository.
On the Startup Day, the Offered Certificates (other than the Class
A-10IO Certificates) shall be issued in denominations of no less than $1,000 and
integral multiples thereof. On the Startup Day, the Class A-10IO Certificates
shall be issued in denominations of no less than $1,000 (based on the Class X-
00XX Notional Principal Amount thereof) and integral multiple thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Sellers and the Trustee shall have no responsibility or obligation
to Direct or Indirect Participants or beneficial owners for which the Depository
holds Offered Certificates from time to time as a Depository. Without limiting
the immediately preceding sentence, the Depositor, the Servicer, the Sellers and
the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Offered Certificate as shown in the Register,
of any notice with respect to the Offered Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of
Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Offered Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Offered Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in whatever name or names registered Owners of Offered Certificates
transferring the Offered Certificates shall designate, in accordance with the
provisions hereof.
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(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Offered Certificates is registered in the name of Cede
& Co., as nominee of the Depository, all distributions of principal or interest
on such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee harmless, then, in the absence of notice to the Trustee or the
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the Owner of such Certificate for the
purpose of receiving distributions with respect to such Certificate and for all
other purposes whatsoever and the Trustee or any agent of the Trustee shall not
be affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
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Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate or assignment of an interest in the Lower-Tier REMIC
Residual Class (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate or assignment of an
interest in the Lower-Tier REMIC Residual Class (whether pursuant to a purchase,
a transfer resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be an
Owner for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Class R Certificate or Lower-Tier REMIC Residual Class.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Class R Certificate
nor authenticate and make available any new Class R Certificate unless the
Trustee has received an affidavit from the proposed transferee in the form
attached hereto as Exhibit I. Each holder of a Class R Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.08(a). The Lower-Tier REMIC Residual Class is not
transferable except that the Owner of the Tax Matters Person Residual Interest
in the Lower-Tier REMIC may assign its interest to another Person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Class C Certificate or a Class R Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is made in accordance with said Act and
laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee or the Depositor shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the Depositor in
the event that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Act and laws or is
being made pursuant to said Act and laws, which opinion of counsel shall not be
an expense of the Trustee or the Trust Estate, and (ii) the Trustee shall
require the Transferee to execute an investment letter acceptable to and in form
and substance satisfactory to each of the Sellers certifying to the Trustee and
each of the Sellers the facts surrounding such transfer, which investment letter
shall not be an expense of the Trustee, the Trust Estate, or either of the
Sellers. The Owner of a Class C Certificate or a Class R Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor and each of the Sellers against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No transfer of a Mezzanine Certificate, Class B Certificate, Class
C or Class R Certificate shall be made unless the Trustee shall have received a
representation letter from the transferee of such Mezzanine Certificate, Class B
Certificate, Class C or Class R Certificate, acceptable to and in form and
substance satisfactory to the Trustee, to the effect that such transferee is not
an employee benefit plan subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 4975 of the Code (collectively, a "Plan"), nor is acting on
behalf of any Plan nor using the assets of any Plan to effect such transfer.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to or on behalf of any Plan without the delivery to the Trustee a
representation letter as described above shall be null and void and of no
effect.
(d) No sale or other transfer of any Offered Certificate may be made to
the Depositor, the Sellers or the Servicer. No sale or other transfer of any
Offered Certificate may be made to an affiliate of either Seller unless the
Trustee shall have been furnished with an opinion of counsel acceptable to the
Trustee experienced in federal bankruptcy matters to the effect that such sale
or transfer would not adversely affect the character of the conveyance of the
Home Equity Loans to the Trust as a sale. No
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sale or other transfer of the Class R Certificate issued to ContiFunding
Corporation on the Startup Day may be transferred or sold to any Person, except
to a person who accepts the appointment of Tax Matters Person pursuant to
Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) an Offered Certificate (other than a Class
A-10IO Certificate) having an original principal balance of not less than
$1,000,000, (B) a Class A-10IO Certificate having an original Notional Principal
Amount of not less than $1,000,000 or (C) a Class C Certificate or Class R
Certificate having a Percentage Interest of not less than 10% in writing not
later than one Business Day prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment Date,
in each case to each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account, shall be made by and on behalf of the Trustee, and no amounts so
withdrawn from the Certificate Account, for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid to the Owners of the
Class R Certificates; and the Owner of such Offered Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent before being
required to make any such payment, may, at the expense of the Trust, cause to be
published once, in the eastern edition of The Wall Street Journal, notice that
such money
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remains unclaimed and that, after a date specified therein, which shall be not
fewer than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be paid to the Owners of the Class R
Certificates. The Trustee shall, at the direction of the Depositor, also adopt
and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and, at the request of the Depositor, will from time to time execute
and deliver all such supplements and amendments hereto pursuant to Section 11.14
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Depositor to take any action pursuant to this Section 6.03 to the other parties
hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement or the Owners, by
action, suit or proceeding at law or equity, provided, however, that nothing in
this Section shall require any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by this Agreement, have been requested by the Owners of a majority of
the Percentage Interests represented by the Offered Certificates then
Outstanding or, if there are no longer any Offered Certificates then
outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
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Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly permitted
hereby or (B) permit any lien, charge, adverse claim, security
interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or for the appointment of a receiver
or trustee of the Trust, or for any other remedy with respect to an event of
default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor and the Trustee of such Owner's intention to
institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Offered Certificates then Outstanding or,
if there are no Offered Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class C Certificates and the Class R Certificates, shall have
made written request to the Trustee to institute such
proceeding in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
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(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Offered Certificates or, if there are no Offered Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class C Certificates and the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(5) of this Section 6.07, the Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provision of this Agreement.
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee or the Owners is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee or any Owner of any Certificate to exercise any
right or remedy under this Agreement with respect to any event described in
Section 8.20(a) or (b) shall impair any such right or remedy or constitute a
waiver of any such event or an acquiescence therein. Every right and remedy
given by this Article VI or by law to the Trustee or the Owners may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or
the Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding or if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
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(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that neither of the Sellers
nor the Trustee, as the case may be, need take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
Section 6.12 Indemnification.
The Depositor agrees to indemnify and hold the Trustee and each Owner
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Trustee and any Owner may sustain in any way related to the failure of
the Depositor to perform its duties in compliance with the terms of this
Agreement. The Depositor shall immediately notify the Trustee and each Owner if
such a claim is made by a third party with respect to this Agreement, and the
Depositor shall assume (with the consent of the Trustee) the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Servicer, either of the Sellers, the Trustee and/or any
Owner in respect of such claim. The Trustee may, if necessary, reimburse the
Depositor from amounts otherwise distributable on the Class C or Class R
Certificates for all amounts advanced by it pursuant to the preceding sentence,
except when the claim relates directly to the failure of the Depositor to
perform its duties in compliance with the terms of this Agreement. In addition
to the foregoing, ContiMortgage agrees to indemnify and hold the Trustee and
each Owner harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs, fees and
expenses that the Trustee and any Owner may sustain in any way related to the
breach by ContiMortgage of its representations and warranties set forth in
Section 3.04(b)(xiii) or (xv) hereof with respect to a Home Equity Loan if such
Home Equity Loan qualifies as a "high cost mortgage" pursuant to Section 226.32
of the Truth-in-Lending Act, as amended. The provisions of this Section 6.12
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 6.13 Access to Owners of Certificates' Names and Addresses. (a)
If any Owner (for purposes of this Section 6.13, an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Owners with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement, including all payments due on the Home
Equity Loans in accordance with the respective terms and conditions of such Home
Equity Loans and required to be paid over to the Trustee by the Servicer or by
any Sub-Servicer. The Trustee shall hold all such money and property received by
it, other than pursuant to or as contemplated by Section 6.02(e) hereof, as part
of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
The Depositor shall cause to be established on the Startup Day, and the
Trustee shall maintain, at the Corporate Trust Office, the Certificate Account
and the Upper-Tier Distribution Account, each of which is to be held by the
Trustee on behalf of the Owners of the Certificates and the Trustee.
Section 7.03 Flow of Funds.
(a)(i) The Trustee shall deposit to the Certificate Account, without
duplication, upon receipt, the proceeds of any liquidation of the assets of the
Trust, all remittances made to the Trustee pursuant to Section 8.08(d)(ii) and
the Monthly Remittance Amount remitted by the Servicer.
(ii) On each Payment Date, the Trustee shall transfer the Lower-Tier
Distribution Amount from the Certificate Account to the Upper-Tier Distribution
Account.
(b) With respect to the Upper-Tier Distribution Account on each Payment
Date, the Trustee shall make the following disbursements from the Interest
Remittance Amount transferred thereto pursuant to subsection (a)(ii), in the
following order of priority, and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the Trustee Fee;
(ii) Second, to the Owners of the Class A Certificates
(including the Class A-10IO Certificates), the
related Class A Current Interest plus the related
Class A Interest Carry Forward Amount with respect to
each such Class of Class A Certificates without any
priority among such Class A Certificates; provided,
that if the Interest Amount Available is not
sufficient to make a full distribution of interest
with respect to all Classes of the Class A
Certificates, the Interest Amount Available will be
distributed among the outstanding Classes of Class A
Certificates pro rata based on the aggregate amount
of interest due on each such Class, and the amount
of the shortfall will be carried forward;
(iii) Third, to the extent of the Interest Amount Available
then remaining, to the Owners of the Class M-1
Certificates, the Class M-1 Current Interest;
(iv) Fourth, to the extent of the Interest Amount
Available then remaining, to the Owners of the Class
M-2 Certificates, the Class M-2 Current Interest;
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(v) Fifth, to the extent of the Interest Amount Available
then remaining, to the Owners of the Class B
Certificates, the Class B Current Interest; and
(vi) Sixth, the Monthly Excess Interest Amount shall be
applied or distributed as provided in subsection (d)
of this Section 7.03.
(c) With respect to the Upper-Tier Distribution Account, on each
Payment Date, the Trustee shall make the following disbursements from amounts
relating to principal transferred thereto pursuant to subsection (a)(ii), in the
following order of priority and each such disbursement shall be treated as
having occurred only after all preceding disbursements have occurred:
(i) On each Payment Date (a) before the Stepdown Date or
(b) with respect to which a Trigger Event has
occurred, Owners of the Class A Certificates (other
than the Class A-10IO Certificates) will be entitled
to receive payment of 100% of the Principal
Distribution Amount as follows: (I) to the Owners of
the Class A-9 Certificates, the Class A-9 Lockout
Distribution Amount and (II) to the Owners of the
Class A Certificates (other than the Class A-10IO
Certificates), as follows: first, to the Owners of
the Class A-1 Certificates, until the Class A-1
Certificate Principal Balance is reduced to zero;
second, to the Owners of the Class A-2 Certificates,
until the Class A-2 Certificate Principal Balance is
reduced to zero; third, to the Owners of the Class
A-3 Certificates, until the Class A-3 Certificate
Principal Balance is reduced to zero; fourth, to the
Owners of the Class A-4 Certificates, until the Class
A-4 Certificate Principal Balance is reduced to zero;
fifth, to the Owners of the Class A-5 Certificates,
until the Class A-5 Certificate Principal Balance is
reduced to zero; sixth, to the Owners of the Class
A-6 Certificates, until the Class A-6 Certificate
Principal Balance is reduced to zero; seventh, to the
Owners of the Class A-7 Certificates, until the Class
A-7 Certificate Principal Balance is reduced to zero;
eighth to the Owners of the Class A-8 Certificates,
until the Class A-8 Certificate Principal Balance is
reduced to zero; and, ninth, to the Owners of the
Class A-9 Certificates, until the Class A-9
Certificate Principal Balance is reduced to zero;
provided, however, that on any Payment Date on which
the sum of the Certificate Principal Balance of the
Subordinate Certificates and the
Overcollateralization Amount is zero, any amounts of
principal payable to the Owners of the Class A
Certificates on such Payment Date shall be
distributed pro rata and not sequentially.
(ii) On each Payment Date (a) on or after the Stepdown
Date and (b) as long as a Trigger Event has not
occurred and is not continuing, the Owners of the
Certificates (other than the Class A-10IO
Certificates) will be entitled to receive payments of
principal, in the order of priority, in the amounts
set forth below and to the extent of the Principal
Distribution Amount as follows:
(A) First, the lesser of (x) the Principal
Distribution Amount and (y) the Class A
Principal Distribution Amount shall be
distributed (I) to the Owners of the Class
A-9 Certificates, in an amount equal to the
Class A-9 Lockout Distribution Amount and
(II) the remainder paid to the Owners of the
Class A Certificates (other than the Class
A-10IO Certificates) as follows: first, to
the Owners of the Class A-1 Certificates,
until the Class A-1 Certificate Principal
Balance is reduced to zero; second, to the
Owners of the Class A-2 Certificates, until
the Class A-2 Certificate Principal Balance
is reduced to zero; third, to the
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Owners of the Class A-3 Certificates, until
the Class A-3 Certificate Principal Balance
is reduced to zero; fourth, to the Owners of
the Class A-4 Certificates, until the Class
A-4 Certificate Principal Balance is reduced
to zero; fifth, to the Owners of the Class
A-5 Certificates, until the Class A-5
Certificate Principal Balance is reduced to
zero; sixth, to the Owners of the Class A-6
Certificates, until the Class A-6
Certificate Principal Balance is reduced to
zero; seventh, to the Owners of the Class
A-7 Certificates, until the Class A-7
Certificate Principal Balance is reduced to
zero; eighth to the Owners of the Class A-8
Certificates, until the Class A-8
Certificate Principal Balance is reduced to
zero; and, ninth, to the Owners of the Class
A-9 Certificates, until the Class A-9
Certificate Principal Balance is reduced to
zero; provided, however, that on any Payment
Date on which the sum of the Certificate
Principal Balance of the Subordinate
Certificates and the Overcollateralization
Amount is zero, any amounts of principal
payable to the Owners of the Class A
Certificates on such Payment Date shall be
distributed pro rata and not sequentially.
(B) Second, the lesser of (x) the excess of (i)
the Principal Distribution Amount over (ii)
the amount distributed to the Owners of the
Class A Certificates in clause (A) above and
(y) the Class M-1 Principal Distribution
Amount shall be distributed to the Owners of
the Class M-1 Certificates, until the Class
M-1 Certificate Principal Balance has been
reduced to zero;
(C) Third, the lesser of (x) the excess of (i)
the Principal Distribution Amount over (ii)
the sum of the amount distributed to the
Owners of the Class A Certificates in clause
(A) above and the amount distributed to the
Owners of the Class M-1 Certificates in
clause (B) above and (y) the Class M-2
Principal Distribution Amount shall be
distributed to the Owners of the Class M-2
Certificates, until the Class M-2
Certificate Principal Balance has been
reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i)
the Principal Distribution Amount over (ii)
the sum of the amount distributed to the
Owners of the Class A Certificates pursuant
to clause (A) above, the amount distributed
to the Owners of the Class M-1 Certificates
pursuant to clause (B) above and the amount
distributed to the Owners of the Class M-2
Certificates pursuant to clause (C) above
and (y) the Class B Principal Distribution
Amount shall be delivered to the Owners of
the Class B Certificates, until the Class B
Certificate Principal Balance has been
reduced to zero; and
(E) Fifth, any portion of the Principal
Remittance Amount remaining after making all
of the distributions in clauses (A), (B),
(C) and (D) above shall be distributed as
provided in subsection (d) of this Section
7.03.
(d) On any Payment Date, the Monthly Excess Cashflow Amount is required
to be applied in the following order of priority on such Payment Date:
(i) to fund the Extra Principal Distribution Amount for
such Payment Date;
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(ii) to fund the Class M-1 Interest Carry Forward Amount,
if any;
(iii) to fund the Class M-1 Realized Loss Amortization
Amount for such Payment Date;
(iv) to fund the Class M-2 Interest Carry Forward Amount,
if any;
(v) to fund the Class M-2 Realized Loss Amortization
Amount for such Payment Date;
(vi) to fund the Class B Interest Carry Forward Amount, if
any;
(vii) to fund the Class B Realized Loss Amortization Amount
for such Payment Date;
(viii) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances;
(ix) to fund a distribution to Owners of the Class C
Certificates, the lesser of (x) the amount of the
Monthly Excess Cashflow Amount then remaining and (y)
the sum of (i) the Class C Distribution Amount and
(ii) the Overcollateralization Release Amount; and
(x) to fund a distribution to the Owners of the Class R
Certificates, the remainder.
(e) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clause (c) shall not exceed the original Certificate Principal
Balance of the related Certificates.
(f) The rights of the Owners to receive distributions from the proceeds
of the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class C Certificates and the Class R Certificates to
receive distributions in respect of the Class C Certificates and the Class R
Certificates, and all ownership interests of the Owners of the Class C
Certificates and the Class R Certificates in and to such distributions, shall be
subject and subordinate to the preferential rights of the holders of the Offered
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class C Certificates and
the Class R Certificates in amounts deposited in the Accounts from time to time
shall not vest unless and until such amounts are distributed in respect of the
Class C Certificates and the Class R Certificates in accordance with the terms
of this Agreement. Notwithstanding anything contained in this Agreement to the
contrary, the Owners of the Class C Certificates and the Class R Certificates
shall not be required to refund any amount properly distributed on the Class C
Certificates and the Class R Certificates pursuant to this Section 7.03.
Section 7.04 Reserved.
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners shall be invested
and reinvested by the Trustee in the name of the Trustee for the benefit of the
Owners, as directed in writing by the Depositor, in one or more Eligible
Investments bearing interest or sold at a discount. The bank serving as Trustee
or any affiliate thereof
71
may be the obligor on any investment which otherwise qualifies as an Eligible
Investment. No investment in any Account shall mature later than the Business
Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest in money market funds described in Section
7.07(i); to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt, and any
loss resulting from such investments shall be charged to such Account, as
appropriate, subject to the requirement of Section 8.08(b) that the Servicer
contribute funds in an amount equal to such loss in the case of the Principal
and Interest Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on ContiMortgage to pay the amount of
the expenses of the Trust (including Trustee's fees and expenses not covered by
Section 7.03(b)(i)) and ContiMortgage shall promptly pay such expenses directly
to the Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated in
one of the two highest ratings categories by Xxxxx'x and Fitch;
(c) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch and P-1 by Xxxxx'x;
72
(d) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Xxxxx'x and BBB by Fitch) which has
combined capital, surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits insured by the FDIC;
(e) Investment agreements provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations rated Aa2
or better by Xxxxx'x and AA or better by Fitch, and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other obligations
of such insurance company or bank, and
4. The sa me guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or
bank;
(f) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
Xxxxx'x and F-1+ or AA, respectively, or better by Fitch, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank or (b) a
bank which is a member of the FDIC and which has combined capital,
surplus and undivided profits of not less than $125 million and the
Trustee shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent for
the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
73
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106% and such collateral
securities must be valued weekly and market-to-market at current market
price plus accrued interest.
(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Fitch and Xxxxx'x;
and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated Aaa by Xxxxx'x, and AAA, if rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and the
Trustee), the Trustee shall notify (subject to the terms of Section 10.03(j)
hereof, based solely on information provided to the Trustee by the Servicer) the
Depositor, each of the Sellers and each Owner of the following information with
respect to the next Payment Date (which notification may be given by facsimile
or by telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate
Account;
(2) The Class A Distribution Amount, with respect to each
Class individually and all Classes of the Class A Certificates in the
aggregate, on the next Payment Date the Class M-1 Distribution Amount,
the Class M-2 Distribution Amount and the Class B Distribution Amount;
(3) The application of the amounts described in clause (1)
preceding to the allocation and distribution of the related Class A
Distribution Amount, the Class M-1 Distribution Amount, the Class M-2
Distribution Amount and the Class B Distribution Amount, on such
Payment Date in accordance with Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the
Offered Certificates (other than the Class A-10IO Certificates), the
Class A-10IO Notional Principal Amount, the aggregate amount of the
principal of each Class of Certificates to be paid on such Payment Date
and the remaining Certificate Principal Balance (or Class A-10IO
Notional Principal Amount) of each Class of Certificates following any
such payment;
(5) The amount, if any, of any Realized Losses for the related
Remittance Period; and
(6) The amount of 60+ Day Delinquent Loans.
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Section 7.09 Reports by Trustee to Owners.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Underwriters and the Rating Agencies:
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other recoveries of principal included therein;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) the Interest Carry Forward Amount for each Class;
(v) the principal amount (or notional principal amount) of
each Class of Offered Certificates (based on a Certificate in the
original principal amount of $1,000) which will be Outstanding after
giving effect to any payment of principal on such Payment Date;
(vi) the aggregate Loan Balance of all Home Equity Loans
after giving effect to any payment of principal on such Payment Date;
(vii) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(viii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(ix) the weighted average Coupon Rate of the Home Equity
Loans.
(x) whether a Trigger Event has occurred;
(xi) the amount of any Extra Principal Distribution Amount;
(xii) the Senior Enhancement Percentage;
(xiii) the Overcollateralization Amount and the Certificate
Principal Balance of each Class of the Offered Certificates then
outstanding after giving effect to any payment of principal on such
Payment Date; and
(xiv) the amount of any Applied Realized Loss Amount,
Realized Loss Amortization Amount and Unpaid Realized Loss Amount for
each Class as of the close of such Payment Date.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (vii), (viii), (ix), (xi), (xii),
(xiii) and (xiv) shall be based solely
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upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.01 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, each Owner, the Underwriters and the Rating Agencies, together
with the information described in Subsection (a) preceding, the following
information which is hereby required to be prepared by the Servicer and
furnished to the Trustee for such purpose on or prior to the related Monthly
Remittance Date:
(i) the number and aggregate principal balances of
Home Equity Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent
and (c) 90 or more days Delinquent, as of the close of business on the
last Business Day of the calendar month next preceding such Payment
Date,
(ii) the status and the number and dollar amounts of
all Home Equity Loans in foreclosure proceedings as of the close of
business on the last Business Day of the calendar month next preceding
such Payment Date, separately stating, for this purpose, all Home
Equity Loans with respect to which foreclosure proceedings were
commenced in the immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances
of Home Equity Loans of (a) the related Mortgages involved in
bankruptcy proceedings as of the close of business on the last Business
Day of the calendar month next preceding such Payment Date and (b) Home
Equity Loans that are "balloon" loans;
(iv) the existence and status of any REO Properties,
as of the close of business of the last Business Day of the month next
preceding the Payment Date;
(v) the book value of any REO Property as of the
close of business on the last Business Day of the calendar month next
preceding the Payment Date;
(vi) the amount of Cumulative Realized Losses; and
(vii) the aggregate Loan Balance of 60+ Day
Delinquent Loans.
(c) The Servicer shall furnish to the Trustee during the term of this
Agreement, such periodic, special, or other reports or information not
specifically provided for herein, as may be necessary, reasonable, or
appropriate with respect to the Trustee, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee may reasonably require; provided, that the Servicer shall be entitled to
be reimbursed by the requesting party for the fees and actual expenses
associated with providing such reports, if such reports are not generally
produced in the ordinary course of business.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, each of the Sellers, the
Underwriters and each Owner, with respect to the amount on deposit in the
Certificate Account and the identity of the investments included therein, as the
Depositor or the Seller may from time to time request. Without limiting the
generality of the foregoing, the Trustee shall, at the request of the Depositor
or either of the Sellers transmit promptly to the Depositor and each of the
Sellers copies of all accountings of receipts in respect of the Home Equity
Loans furnished to it by the Servicer and shall notify each of the Sellers if
any Monthly Remittance Amount has not been received by the Trustee when due.
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(b) The Trustee shall report to each Owner with respect to any written
notices it may from time to time receive which provide an Authorized Officer
with actual knowledge that any of the statements set forth in Section 3.04(b)
hereof are inaccurate.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the servicing standards set forth in the FNMA
Guide and shall have full power and authority, acting alone, to do or cause to
be done any and all things in connection with such servicing and administration
which it may deem necessary or desirable. It is the intent of the parties hereto
that the Servicer shall have all of the servicing obligations hereunder which a
lender would have under the FNMA Guide (as such provisions relate to second lien
mortgages); provided, however, that to the extent that such standards, such
obligations or the FNMA Guide are amended by FNMA after the date hereof and the
effect of such amendment would be to impose upon the Servicer any material
additional costs or other burdens relating to such servicing obligations, the
Servicer may, at its option, determine not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that Section 8.14(a) shall constitute an
authorization from the Trustee to the Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Home Equity Loan paid in full (or with respect to which payment in full has been
escrowed). The Trustee shall execute any documentation furnished to it by the
Servicer for recordation by the Servicer in the appropriate jurisdictions as
shall be necessary to effectuate the foregoing. Subject to Sections 8.13 and
8.14, the Trustee shall execute any authorizations and other documents as the
Servicer or such Sub-Servicer shall reasonably request that are furnished to the
Trustee to enable the Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
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Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FNMA Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution that is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and (x) has (i) been designated
an approved seller-servicer by FHLMC or FNMA for second mortgage loans and (ii)
has equity of at least $5,000,000, as determined in accordance with generally
accepted accounting principles or (y) is a Servicer Affiliate. The Servicer
shall give notice to the Trustee and the Rating Agencies of the appointment of
any Sub-Servicer. For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Home Equity Loans when any Sub-Servicer has
received such payments. Each Sub-Servicer shall be required to service the Home
Equity Loans in accordance with this Agreement and any such Sub-Servicing
Agreement shall be consistent with and not violate the provisions of this
Agreement. Each Sub-Servicing Agreement shall provide that a successor Servicer
shall have the option to terminate such agreement without payment of any fees if
the original Servicer is terminated or resigns.
Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 Liability of Servicer; Indemnification .
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Trustee and each Owner harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee and any Owner may sustain in any way
related to the failure of
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the Servicer to perform its duties and service the Home Equity Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee and each Owner if a claim is made by a third party with
respect to this Agreement, and the Servicer shall assume (with the consent of
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Trustee and/or Owner in respect of such claim. The Trustee may, if necessary,
reimburse the Servicer from amounts otherwise distributable on the Class R
Certificates for all amounts advanced by it pursuant to the preceding sentence
except when the claim relates directly to the failure of the Servicer to service
and administer the Home Equity Loans in compliance with the terms of this
Agreement. The provisions of this Section 8.05 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee
or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on the part of the Trustee; provided, however,
that the successor Servicer may terminate the Sub-Servicer as provided in
Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: Manufacturers and Traders
Trust Company, as Trustee under the Pooling and Servicing Agreement dated as of
February 1, 1997. If the institution at any time holding the Principal and
Interest Account ceases to be eligible as a Designated Depository Institution
hereunder, then the Servicer shall, within 30 days, be required to name a
successor institution meeting the requirements for a Designated Depository
Institution hereunder. If the Servicer fails to name such a successor
institution, then the Principal and Interest Account shall thenceforth be held
as a trust account with a qualifying Designated Depository Institution. The
Servicer shall notify the Trustee and the Owners if there is a change in the
name, account number or institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
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(b) All funds in the Principal and Interest Account shall be held (i)
uninvested (up to the limits insured by the FDIC) or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trustee for the benefit of the Owners. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Monthly Excess Interest Amount included
therein) by the Servicer. Any investment losses on funds held in the Principal
and Interest Account shall be for the account of the Servicer and promptly upon
the realization of such loss shall be contributed by the Servicer to the
Principal and Interest Account. Any references herein to amounts on deposit in
the Principal and Interest Account shall refer to amounts net of such investment
earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal collections on the Home Equity
Loans received, and interest collections on the Home Equity Loans accrued after
the Cut-Off Date including any Prepayments and Net Liquidation Proceeds, other
recoveries or amounts related to the Home Equity Loans received by the Servicer
and any income from REO Properties, but net of (i) the Servicing Fee with
respect to each Home Equity Loan and other servicing compensation to the
Servicer as permitted by Section 8.15 hereof, (ii) principal collected and
interest accrued on any Home Equity Loan on or prior to the Cut-Off Date, (iii)
Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the
sum of (I) the Loan Balance of the related Home Equity Loan immediately prior to
liquidation, (II) accrued and unpaid interest on such Home Equity Loan (net of
the Servicing Fee) to the date of such liquidation, and (III) any Realized
Losses incurred during the related Remittance Period, (iv) reimbursements for
Delinquency Advances and (v) reimbursements for amounts deposited in the
Principal and Interest Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amount herein referred to as
"Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Principal and Interest Account only in the following
priority and for the following purposes:
(A) to withdraw interest paid with respect to any Home Equity
Loans that had accrued for periods prior to the Cut-Off Date;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the Principal
and Interest Account in error; and
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Remittance Date, deliver to the Trustee a monthly servicing report
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containing the following information: principal and interest collected,
scheduled interest, Liquidated Loans, summary and detailed delinquency reports,
Liquidation Proceeds and other similar information concerning the servicing of
the Home Equity Loans. In addition, the Servicer shall inform the Trustee on
each Monthly Remittance Date of the amounts of any Loan Purchase Prices or
Substitution Amounts so remitted during the related Remittance Period.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee
to perform its reporting requirements under Section 7.09 and the Trustee shall
forward such information to the Underwriters within five Business Days of
receipt thereof.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) If the amount on deposit in the Certificate Account as of any
Monthly Remittance Date is less than the sum of (I) the Interest Remittance
Amount on such Monthly Remittance Date and (II) the Principal Remittance Amount
on such Monthly Remittance Date, the Servicer shall remit to the Trustee for
deposit into the Certificate Account a sufficient amount of its own funds to
make the total amount remitted to the Trustee equal to such sum. Such amounts of
the Servicer's own funds so deposited are "Delinquency Advances", including but
not limited to any amount advanced due to the invocation by a Mortgagor of the
relief provisions provided by the Soldiers' and Sailors' Civil Relief Act of
1940.
The Servicer shall be permitted to fund its payment of Delinquency
Advances on any Business Day and to reimburse itself for any Delinquency
Advances paid from the Servicer's own funds from collections on any Home Equity
Loan deposited to the Principal and Interest Account subsequent to the related
Remittance Period and shall deposit into the Principal and Interest Account with
respect thereto (i) collections from the Mortgagor whose Delinquency gave rise
to the shortfall which resulted in such Delinquency Advance and (ii) Net
Liquidation Proceeds recovered on account of the related Mortgage Loan to the
extent of the amount of aggregate Delinquency Advances related thereto. If not
recovered from the related Mortgagor or the related Net Liquidation Proceeds,
the Servicer shall recover Delinquency Advances pursuant to Section 7.03(d)(8).
Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
aggregate remaining Scheduled Payments due on the Home Equity Loans, the
Servicer shall not be required to make any future Delinquency Advances, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided above. The Servicer shall give written notice of such
determination to the Trustee; and the Trustee shall promptly furnish a copy of
such notice to the Owners of the Class R Certificates; provided, that the
Servicer shall be entitled to recover any unreimbursed Delinquency Advances from
the aforesaid Liquidation Proceeds prior to the payment of the Liquidation
Proceeds to any other party to this Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a "Servicing
Advance". The Servicer may recover Servicing Advances (x) from the Mortgagors to
the extent permitted by the Home Equity Loans or, if not recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(d)(8). The Servicer shall be entitled to recover
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the Servicing Advances from the aforesaid Liquidation Proceeds prior to the
payment of the Liquidation Proceeds to any other party to this Agreement. Except
as provided in the previous sentence, in no case may the Servicer recover
Servicing Advances from the principal and interest payments on any Home Equity
Loan or from any amounts relating to any other Home Equity Loan except as
provided in Section 7.03(d)(8).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment of a Home Equity Loan occurs during any calendar
month or if the amount received with respect to a date-of-payment or simple
interest Home Equity Loan represents less than a full month's interest, any
difference between the interest collected from the Mortgagor and the full
month's interest at the Coupon Rate less the Servicing Fee ("Compensating
Interest") that is due shall be deposited by the Servicer (but not in excess of
the aggregate Servicing Fee for the related Remittance Period) to the Principal
and Interest Account on the next succeeding Monthly Remittance Date and shall be
included in the Monthly Remittance to be made available to the Trustee on such
Monthly Remittance Date.
(b) The Servicer has the right and the option, but not the obligation,
for administrative convenience, to purchase for its own account any Home Equity
Loan which becomes Delinquent, in whole or in part, as to four consecutive
monthly installments or any Home Equity Loan as to which enforcement proceedings
have been brought by the Servicer pursuant to Section 8.13; provided, however,
that the Servicer may not purchase any such Home Equity Loan unless the Servicer
has delivered to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee to the effect that such a purchase would
not constitute a Prohibited Transaction for the Trust or otherwise subject the
Trust to tax and would not jeopardize the status of either the Upper-Tier REMIC
or the Lower-Tier REMIC as a REMIC. Any such Loan so purchased shall be
purchased by the Servicer on a Monthly Remittance Date at a purchase price equal
to the Loan Purchase Price thereof, which purchase price shall be deposited in
the Principal and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage, and which provides for a recovery by
the Trust of insurance proceeds relating to such Home Equity Loan in an amount
not less than the least of (i) the outstanding principal balance of the Home
Equity Loan (plus the related senior lien loan, if any), (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis and (iii)
the full insurable value of the premises. The Servicer shall maintain the
insurance policies required hereunder in the name of the mortgagee, its
successors and assigns, as loss payee. The policies shall require the insurer to
provide the mortgagee with 30 days' notice prior to any cancellation or as
otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by Xxxxx'x and Fitch. Upon the request of the Trustee,
the Servicer will cause to be delivered to such requesting Person a certified
true copy of such blanket policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting
83
the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Trust of insurance proceeds
relating to such Home Equity Loan of not less than the least of (i) the
outstanding principal balance of the Home Equity Loan (plus the related senior
lien loan, if any), (ii) the minimum amount required to compensate for damage or
loss on a replacement cost basis and (iii) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel to the
foregoing effect shall conclusively establish the reasonableness of such belief.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note. The Home Equity Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Servicer
shall notify the Trustee that any such assumption or substitution agreement has
been completed by forwarding to the Trustee the original copy of such assumption
or substitution agreement (indicating the File to which it relates) which copy
shall be added by the Trustee to the related File and which shall, for all
purposes, be considered a part of such File to the same extent as all other
documents and instruments constituting a part thereof. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the required
monthly payment on the related Home Equity Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Home Equity Loan shall
not be changed nor shall any required monthly payments of principal or interest
be deferred or forgiven. Any fee collected by the Servicer or the Sub-Servicer
for consenting to any such conveyance or entering into an assumption or
substitution agreement shall be retained by or paid to the Servicer as
additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans; Inspection.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree
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of care and skill in their exercise or use, as prudent mortgage lenders would
exercise or use under the circumstances in the conduct of their own affairs and
consistent with the servicing standards set forth in the FNMA Guide, including,
but not limited to, advancing funds for the payment of taxes, amounts due with
respect to Senior Liens, and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section 8.09(b) hereof.
The Servicer shall sell any REO Property within 23 months of its acquisition by
the Trust, at such price as the Servicer deems necessary to comply with this
covenant unless the Seller which delivered the related Home Equity Loan obtains
for the Trustee and the Servicer an opinion of counsel experienced in federal
income tax matters acceptable to the Trustee, addressed to the Trustee and the
Servicer, to the effect that the holding by the Trust of such REO Property for
any greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust or any REMIC therein as defined in Section 860F of
the Code or cause either the Lower-Tier REMIC or the Upper-Tier REMIC to fail to
qualify as a REMIC under the REMIC Provisions at any time that any Certificates
are outstanding. Notwithstanding the generality of the foregoing provisions, the
Servicer shall manage, conserve, protect and operate each REO Property for the
Owners solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Lower-Tier REMIC or the Upper Tier REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions. Pursuant to its efforts to sell such REO Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Owners, rent
the same, or any part thereof, as the Servicer deems to be in the best interest
of the Owners for the period prior to the sale of such REO Property. The
Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Property in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Property. With respect to any Home
Equity Loan secured by a mixed use Property, the Servicer shall, prior to
foreclosing upon or otherwise comparably effecting the ownership in the name of
the Servicer on behalf of the Trust, either (x) perform a "phase one
environmental study" of such Property or (y) repurchase such Property at the
Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the FNMA Guide,
when it has recovered, whether through trustee's sale, foreclosure sale or
otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan". After a Home Equity Loan has become a Liquidated Loan, the
Servicer shall promptly prepare and forward to the Depositor and the Trustee a
report detailing the Liquidation Proceeds received from the Liquidated Loan,
expenses incurred with respect thereto, and any loss incurred in connection
therewith.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee the FNMA "Request for Release of Documents" (FNMA Form 2009). Upon
receipt of such Request for Release of Documents, the Trustee shall promptly
release the related File, in trust, in its reasonable discretion to (i) the
Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of the
Trustee. Upon any such payment in full, or the receipt of such notification that
such funds have been placed in escrow, the Servicer is authorized to give, as
attorney-in-fact for the Trustee and the mortgagee
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under the Mortgage which secured the Note, an instrument of satisfaction (or
assignment of Mortgage without recourse) regarding the Property relating to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Principal and Interest Account. In
lieu of executing any such satisfaction or assignment, as the case may be, the
Servicer may prepare and submit to the Trustee a satisfaction (or assignment
without recourse, if requested by the Person or Persons entitled thereto) in
form for execution by the Trustee with all requisite information completed by
the Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of the Servicer and
delivery to the Trustee of a receipt signed by an Authorized Officer of the
Servicer, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer; provided that there shall not be released and
unreturned at any one time more than 10% of the entire number of Files. Such
receipt shall obligate the Servicer to return the File to the Trustee when the
need therefor by the Servicer no longer exists unless the Home Equity Loan shall
be liquidated, in which case, upon receipt of the FNMA "Liquidation Schedule"
relating to such liquidation, the receipt shall be released by the Trustee to
the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio after any release does not exceed the Loan-to-Value Ratio of
such Home Equity Loan as of the date of origination thereof; and (z) the lien
priority of the related Mortgage is not affected. Upon receipt by the Trustee of
an Officer's Certificate executed on behalf of the Servicer setting forth the
action proposed to be taken in respect of a particular Home Equity Loan and
certifying that the criteria set forth in the immediately preceding sentence
have been satisfied, the Trustee shall execute and deliver to the Servicer the
consent or partial release so requested by the Servicer. A proposed form of
consent or partial release, as the case may be, shall accompany any Officer's
Certificate delivered by the Servicer pursuant to this paragraph. The Servicer
shall notify the Rating Agencies if an application is approved under clause (y)
above.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer.
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Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor and the Rating Agencies, on or before March 31 of each year,
commencing in 1998, an Officer's Certificate stating, as to each signer thereof,
that (i) a review of the activities of the Servicer during such preceding
calendar year and of performance under this Agreement has been made under such
officers' supervision, and (ii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officers and
the nature and status thereof including the steps being taken by the Servicer to
remedy such default.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before June 30 of any year, commencing in 1998, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Depositor, which in no event shall exceed $1,000 per annum), shall cause to
be delivered to the Trustee and the Rating Agencies a letter or letters of a
firm of independent, nationally recognized certified public accountants, dated
as of the date of the Servicer's fiscal audit for subsequent letters, stating
that such firm has examined the Servicer's overall servicing operations in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Trustee the FDIC and the supervisory
agents and examiners of each of the foregoing (which, in the case of supervisory
agents and examiners, may be required by applicable state and federal
regulations) access to the documentation regarding the Home Equity Loans, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
Section 8.19 Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Trustee, which consent shall not be unreasonably withheld; provided, however,
that any assignee must meet the eligibility requirements set forth in Section
8.20(i) hereof for a successor servicer.
Section 8.20 Removal of Servicer; Resignation of Servicer.
(a) The Trustee (or the Trustee acting upon the request of a majority
of the Percentage Interests of the Offered Certificates then Outstanding) may
remove the Servicer upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or
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insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing; or
(ii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or similar entity with
respect to the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business Day in the case of a
delay in making a required payment to the Trustee under Section
8.08(d)(ii)(a)) after the earlier of (a) actual knowledge of an officer
of the Servicer or (b) receipt of notice from the Trustee of said
failure; or
(iv) The Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the Owners for
a period of sixty (60) days after the earlier of the Servicer's
discovery or receipt of notice thereof; or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (1) the Servicer is
the surviving entity of such combination or (2) the surviving entity is
a corporation or a state-chartered or national bank (acceptable to the
Owners of the Class R Certificates as provided below) organized and
doing business under the laws of any state or the United States.
(b) Reserved.
(c) Each party hereto agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of such party from time to time.
(d) Reserved.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Trustee.
(f) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
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(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(i) Upon removal or resignation of the Servicer, the Trustee (x) may
solicit bids for a successor servicer as described below, and (y) pending the
appointment of a successor servicer as a result of soliciting such bids, shall
serve as Servicer. The Trustee shall, if it is unable to obtain a qualifying bid
and is prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing and home finance institution,
bank or mortgage servicing institution which has been designated as an approved
seller-servicer by FNMA or FHLMC for first and second mortgage loans and having
equity of not less than $10,000,000, as determined in accordance with generally
accepted accounting principles and acceptable to the Owners of the Class R
Certificates as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. The compensation of any successor Servicer (including, without
limitation, the Trustee) so appointed shall be the aggregate Servicing Fee,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Sections 8.08 and 8.15;
provided, however, that if the Trustee acts as successor Servicer then
ContiMortgage agrees to pay to the Trustee at such time that the Trustee becomes
such successor Servicer a set-up fee of twenty-five dollars ($25.00) for each
Home Equity Loan then included in the Trust Estate. The Trustee shall be
obligated to serve as successor Servicer whether or not the fee described in the
preceding sentence is paid by ContiMortgage, but shall in any event be entitled
to receive, and to enforce payment of, such fee from ContiMortgage.
(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain servicing. The Trustee shall deduct from any sum received by
the Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust from the Servicer shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the successor
Servicer.
(k) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Servicer, as applicable, all amounts
which then have been
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or should have been deposited in the Principal and Interest Account by the
Servicer or which are thereafter received with respect to the Home Equity Loans.
Neither the Trustee nor any other successor Servicer shall be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Servicer to
deliver, or any delay in delivering, cash, documents or records to it, or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
Servicer. If the Servicer resigns or is replaced hereunder, the Seller agrees to
reimburse the Trust and the Owners for the costs and expenses associated with
the transfer of servicing to the replacement Servicer, but subject to a maximum
reimbursement to all such parties in the amount of twenty-five dollars ($25.00)
for each Home Equity Loan then included in the Trust Estate.
(l) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately make all Delinquency Advances
and deposit them to the Principal and Interest Account which the Servicer has
theretofore failed to remit with respect to the Home Equity Loans; provided,
however, that if the Trustee is acting as successor Servicer, the Trustee shall
only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (l)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the Home Equity Loans.
(m) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors and the Rating Agencies of the transfer of the
servicing to the successor Servicer.
(n) The Trustee shall give notice to the Owners, the Trustee, the
Seller, and the Rating Agencies of the occurrence of any event described in
paragraphs (a) or (b) above of which the Trustee is aware.
Section 8.21 Inspections; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
provided, however, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer;
(b) The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FNMA Guide or any successor provision thereof; provided, however, that if
the Trustee shall become the Servicer, any customary insurance coverage that the
Trustee maintains shall be deemed sufficient hereunder; provided, further, that
in the event that the fidelity bond or the errors and omissions coverage is no
longer in effect, the Trustee shall promptly give such notice to the Owners.
Upon the request of the Trustee, the Servicer shall cause to be delivered to
such requesting Person a certified true copy of such fidelity bond or errors and
omission policy.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement upon the latest to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Home Equity
Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation is effected as described below. To effect a
termination of this Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall (i) unanimously direct the Trustee on behalf
of the Lower-Tier REMIC and the Upper-Tier REMIC to adopt a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and (ii) provide
to the Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Trustee to the effect that each such liquidation constitutes a
Qualified Liquidation, and the Trustee either shall sell the Home Equity Loans
and distribute the proceeds of the liquidation of the Trust Estate, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to
the Court of Saint Xxxxx, living on the date hereof. The Trustee shall give
written notice of termination of the Agreement to each Owner in the manner set
forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R
Certificates.
(a) On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the Class R
Certificates then outstanding may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Adjusted
Pass-Through Rate, plus all accrued and unpaid Servicing Fees plus the aggregate
amount of any unreimbursed Delinquency Advances and Servicing Advances and any
Delinquency Advances which the Servicer has theretofore failed to remit. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) In connection with any such purchase, such Owners of the Class R
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to the Lower-Tier REMIC and the Upper-Tier REMIC, a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and shall provide
to the Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Trustee to the effect that such purchase and liquidations
constitutes, as to the Lower-Tier REMIC and the Upper-Tier REMIC, a Qualified
Liquidation. In addition, such Owners of the Class R
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Certificates shall provide to the Trustee an opinion of counsel acceptable to
the Trustee to the effect that such purchase and liquidation does not constitute
a preference payment pursuant to the United States Bankruptcy Code.
(c) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or
otherwise upon their order, in a manner similar to that described in Section
8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal or, if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
does not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final Determination"), at any time on or after the date which is 30
calendar days following such Final Determination the Owners of a majority in
Percentage Interests represented by the Offered Certificates then Outstanding
may direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code.
The Trustee shall notify the Owners of the Class R Certificates of such
election to liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount at the Adjusted
Pass-Through Rate, (b) the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and (c) any Delinquency Advances which the
Servicer has theretofore failed to remit. If, during the Purchase Option Period,
the Owners of the Class R Certificates have not exercised the option described
in the immediately preceding paragraph, then upon the expiration of the Purchase
Option Period in the event that the Owners of the Offered Certificates have
given the Trustee the direction described in clause (a)(i) above, the Trustee
shall sell the Home Equity Loans and distribute the proceeds of the liquidation
of the Trust Estate, each in accordance with the plan of complete liquidation,
such that, if so directed, the liquidation of the Trust Estate, the distribution
of the proceeds of the liquidation and the termination of this Agreement occur
no later than the close of the 60th day, or such later day as the Owners of the
Offered Certificates shall permit or direct in writing, after the expiration of
the Purchase Option Period. In connection with such purchase, the Servicer shall
remit to the Trustee all amounts then on deposit in the Principal and Interest
Account for deposit to the Certificate Account, which deposit shall be deemed to
have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Trustee of an opinion of counsel experienced in
federal income tax matters acceptable to the Trustee selected by the Owners of
the Class R Certificates, which opinion shall be reasonably satisfactory in form
and substance to Trustee, to the effect that the effect of the Final
Determination is to increase substantially the probability that the gross income
of the Trust will be subject to federal taxation, purchase from the Trust all
(but not fewer than all) Home Equity Loans and all property theretofore acquired
by foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a purchase price equal to the aggregate Loan Balances of all
Home Equity Loans as of the date of such purchase, plus (a) one month's interest
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on such amount computed at the Adjusted Pass-Through Rate, (b) the aggregate
amount of unreimbursed Delinquency Advances and (c) any Delinquency Advances
which the Servicer has theretofore failed to remit. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Trustee gives the
Owners of a majority of the Percentage Interests of the Class R Certificates
notice that such opinion is not satisfactory within thirty days after receipt of
such opinion. In connection with any such purchase, such Owners shall direct the
Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer from
the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished pursuant to
and conforming to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicer, the Servicer and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer, have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Owners of a majority in Percentage Interest of
the Certificates of the affected Class or Classes relating to the
time, method and place of conducting any proceeding for any
remedy available to the
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Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Sellers, or by the Owners of at least 25% of the
aggregate Percentage Interests in the Trust Estate represented by the
Offered Certificates then Outstanding, or, if there are no Offered
Certificates then Outstanding, by such Percentage Interests represented
by the Class R Certificates, a written notice specifying such failure
or breach and requiring it to be remedied; or
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(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give notice to the Rating Agencies of the
occurrence of any such event of which the Depositor is aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case the Depositor and the Owners of a majority of the
Percentage Interests represented by the Offered Certificates or if there are no
Offered Certificates then outstanding by such majority of the Percentage
Interests represented by the Retained Certificates, may, whether or not the
Trustee resigns pursuant to Section 10.09(b) hereof, immediately, concurrently
with the giving of notice to the Trustee, and without delaying the 30 days
required for notice therein, appoint a successor Trustee pursuant to the terms
of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, either of the Sellers or
the Owners of any Class of Certificates mentioned herein shall be sufficiently
evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodians;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and to make
various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good faith
on any such information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the Trustee has actual
knowledge, or is advised by any Owner of a Certificate (either in writing or
orally with prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, either of the Sellers or the
Servicer in respect of the Home Equity Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by the Depositor,
the Servicer or either of the Sellers, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
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thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(b)(i) and Section 7.06 hereof.
The Trustee shall have no lien on either the Trust Estate for the payment of
such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, and having a deposit rating of at least A2 by Moody's (or such lower
rating as may be acceptable to Moody's) and, if rated by Fitch, having a rating
of at least A- from Fitch (or such lower rating as may be acceptable to Fitch).
If such Trustee publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of ContiMortgage resign
immediately in the manner and with the effect hereinafter specified in this
Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Owners at their addresses appearing on the Register; provided, that the Trustee
cannot resign solely for the failure to receive the Trustee Fee. A copy of such
notice shall be sent by the resigning Trustee to the Rating Agencies. Upon
receiving notice of resignation, the Depositor
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shall promptly appoint a successor trustee or trustees by written instrument, in
duplicate, executed on behalf of the Trust by an Authorized Officer of
ContiMortgage, one copy of which instrument shall be delivered to the Trustee so
resigning and one copy to the successor trustee or trustees. If no successor
trustee shall have been appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Owner may, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor, the Depositor may remove the Trustee and appoint a successor trustee
by written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Offered Certificates or, if there are no Offered Certificates then
Outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates, may at any time remove the Trustee and appoint a successor
trustee by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor and to the Servicer copies of the record of the act
taken by the Owners, as provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, ContiMortgage may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by ContiMortgage duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
ContiMortgage shall promptly appoint a successor trustee. If within one year
after such resignation, removal or incapability or the occurrence of such
vacancy, a successor trustee shall be appointed by act of ContiMortgage or the
Owners of a majority of the Percentage Interests represented by the Offered
Certificates then Outstanding, the successor trustee so appointed shall
forthwith upon its acceptance of such appointment become the successor trustee
and supersede the successor trustee appointed by the Depositor. If no successor
trustee shall have been so appointed by the Depositor or the Owners and shall
have accepted appointment in the manner hereinafter provided, any Owner may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the Rating
Agencies and to the Owners as their names and addresses appear in the Register.
Each notice shall include the name of the successor Trustee and the address of
its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further
99
act, deed or conveyance, shall become vested with all the rights, powers,
trusts, duties and obligations of its predecessor hereunder; but, on request of
the Depositor or the successor Trustee, such predecessor Trustee shall, upon
payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor trustee all property and money held by such Trustee so ceasing to
act hereunder. Upon request of any such successor trustee, the Depositor on
behalf of the Trust shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor trustee all such rights,
powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with respect to
such allocation of expenses. The Trustee shall, upon request of the Depositor,
collect any forms or reports from the Owners determined by the Depositor to be
required under applicable federal, state and local tax laws.
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(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Depositor, either of the Sellers, the Servicer or any Owner for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Trustee, its directors, officers, employees
or agents or any such Person against any liability which would otherwise be
imposed by reason of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Subject to the foregoing sentence, the Trustee
shall not be liable for losses on investments of amounts in the Certificate
Account (except for any losses on obligations on which the bank serving as
Trustee is the obligor). In addition, the Depositor, each of the Sellers and
Servicer covenant and agree to indemnify the Trustee, and when the Trustee is
acting as Servicer, the Servicer, from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Depositor shall pay all amounts
not otherwise paid pursuant to Sections 2.05 and 7.06 hereof. The Trustee and
any director, officer, employee or agent of the Trustee may rely and shall be
protected in acting or refraining from acting in good faith on any certificate,
notice or other document of any kind prima facie properly executed and submitted
by the Authorized Officer of any Person respecting any matters arising
hereunder. The provisions of this Section 10.13 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-Trustee or co-Trustees, jointly with the Trustee, of all or
any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 10.14,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case any event indicated in Section 8.20(a) shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-Trustee or separate Trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 10.08 and no
notice to Owners of the appointment of any co-Trustee or separate Trustee shall
be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
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(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate Trustee or
co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
The Servicer and the Trustee hereby appoint First Union National Bank
(the "Initial Co-Trustee") as co-trustee with respect to the Mortgage Loans
secured by Mortgaged Properties situated in New Jersey and any other part of the
Trust Estate or property securing the same that at any time may be situated in
New Jersey.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller or the
Owners to the Trustee to take any action under any provision of this Agreement,
the Depositor, either of the Sellers or the Owners, as the case may be, shall
furnish to the Trustee a certificate stating that all conditions precedent, if
any, provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matters upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, either of the Sellers or
the Servicer, stating that the information with respect to such factual matters
is in the possession of the Depositor, such Seller or the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any opinion of counsel may be based on the
103
written opinion of other counsel, in which event such opinion of counsel shall
be accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to one or both of
the Sellers. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner
the Depositor or either of the Sellers shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such
104
report. In any case where a notice or report to Owners is mailed in the manner
provided above, neither the failure to mail such notice or report nor any defect
in any notice or report so mailed to any particular Owner shall affect the
sufficiency of such notice or report with respect to other Owners, and any
notice or report which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given or provided. Notwithstanding the
foregoing, if the Servicer is removed or resigns or the Trust is terminated,
notice of any such events shall be made by overnight courier, registered mail or
telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice,
105
as the case may be, and no interest shall accrue for the period from and after
any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, the Sellers and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful attorney
and duly authorized agent for acceptance of service of legal process with
respect to any action, suit or proceeding set forth in paragraph (b) hereof.
Each of the Sellers and the Servicer agrees that service of such process upon
the Trustee shall constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller or the Servicer or any third-party beneficiary
hereunder, as the case may be, to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Home Equity Loans
against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
106
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, either of the Sellers and the Servicer
may, at any time and from time to time, and without notice to or the consent of
the Owners amend this Agreement, subject to the provisions of Section 11.16 and
11.17 and the Trustee shall consent to such amendment, for the purpose of (i)
curing any ambiguity, correcting or supplementing any provision hereof which may
be inconsistent with any other provision hereof, or adding provisions hereto
which are not inconsistent with the provisions hereof; (ii) upon receipt of an
opinion of counsel experienced in federal income tax matters to the effect that
no entity-level tax will be imposed on the Trust or upon the transferor of a
Class R Certificate as a result of the ownership of any Class R Certificate by a
Disqualified Organization, removing the restriction on transfer set forth in
Section 5.08(b) hereof or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder including any amendments
necessary to maintain REMIC status or (iv) for any other purpose, provided that
in the case of this clause (iv) ContiMortgage deliver such amendment shall not
adversely affect in any material respect any Owner. Any such amendment shall be
deemed not to adversely affect in any material respect any Owner if there is
delivered to the Trustee written notification from each Rating Agency that such
amendment will not cause such Rating Agency to reduce its then current rating
assigned to any Class of the Certificates. Notwithstanding anything to the
contrary herein, no such amendment shall change in any manner the amount of, or
change the timing of, payments which are required to be distributed to any Owner
without the consent of the Owner of such Certificate.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Owner in the manner set forth in Section 11.05, and to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any amendments
to this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
107
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Owners by mailing notice thereof at their
addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall each constitute, and that the affairs of the Lower-Tier
REMIC and the Upper-Tier REMIC shall each be conducted so as to qualify it as a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
ContiFunding Corporation or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as "tax matters person" (as
defined in the REMIC Provisions) for the Trust and in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely manner, annual tax
returns and any other tax return required to be filed by the Lower-Tier REMIC
and the Upper-Tier REMIC established hereunder using a calendar year as the
taxable year for the Lower-Tier REMIC and the Upper-Tier REMIC established
hereunder; (ii) in the related first such tax return, make (or cause to be made)
an election satisfying the requirements of the REMIC Provisions, on behalf of
the Lower-Tier REMIC and the Upper-Tier REMIC, for it to be treated as a REMIC;
(iii) prepare and forward, or cause to be prepared and forwarded, to the Owners
all information, reports or tax returns required with respect to the Lower-Tier
REMIC and the Upper-Tier REMIC as, when and in the form required to be provided
to the Owners, and to the Internal Revenue Service and any other relevant
governmental taxing authority in accordance with the REMIC Provisions and any
other applicable federal, state or local laws, including without limitation
information reports relating to "original issue discount" as defined in the Code
based upon the prepayment assumption and calculated by using the "Issue Price"
(within the meaning of Section 1273 of the Code) of the Certificates of the
related Class; (iv) not take any action or omit to take any action that would
cause the termination of the REMIC status of either the Lower-Tier REMIC or the
Upper-Tier REMIC, except as provided under this Agreement; (v) represent the
Trust of the Lower-Tier REMIC or the Upper-Tier REMIC in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year of
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC, enter into settlement
agreements with any governmental taxing agency, extend any statute of
108
limitations relating to any tax item of the Trust or the Lower-Tier REMIC or the
Upper-Tier REMIC, and otherwise act on behalf of the Trust or any REMIC therein
in relation to any tax matter involving the Trust or any REMIC therein; (vi)
comply with all statutory or regulatory requirements with regard to its conduct
of activities pursuant to the foregoing clauses of this Section 11.16,
including, without limitation, providing all notices and other information to
the Internal Revenue Service and Owners of Class R Certificates required of a
"tax matters person" pursuant to subtitle F of the Code and the Treasury
Regulations thereunder; (vii) make available information necessary for the
computation of any tax imposed (A) on transferors of residual interests to
certain Disqualified Organizations or (B) on pass-through entities, any interest
in which is held by a Disqualified Organization; and (viii) acquire and hold the
Tax Matters Person Residual Interest. The obligations of ContiFunding
Corporation or such other designated Tax Matters Person pursuant to this Section
11.16 shall survive the termination or discharge of this Agreement.
(b) Each of the Sellers, the Depositor, the Trustee and the Servicer
covenant and agree for the benefit of the Owners (i) to take no action which
would result in the termination of "REMIC" status for the Lower-Tier REMIC or
the Upper-Tier REMIC, (ii) not to engage in any "prohibited transaction", as
such term is defined in Section 860F(a)(2) of the Code, (iii) not to engage in
any other action which may result in the imposition on the Trust of any other
taxes under the Code and (iv) to cause the Servicer not to take or engage in any
such action, to the extent the Sellers are aware of any such proposed action by
the Servicer.
(c) The Lower-Tier REMIC and the Upper-Tier REMIC shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee shall
enter into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither the
Trustee nor either of the Sellers may engage in any of the transactions
prohibited by such clauses, unless the Trustee shall have received an opinion of
counsel experienced in federal income tax matters acceptable to the Trustee to
the effect that such transaction does not result in a tax imposed on the Trustee
or cause a termination of REMIC status for the Lower-Tier REMIC or the
Upper-Tier REMIC; provided, however, that such transaction is otherwise
permitted under this Agreement.
(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC
as a result of their negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the effect that such transaction does
not result in a tax imposed on the Trust or the Lower-Tier REMIC or the
Upper-Tier REMIC or cause a termination of REMIC status for the Lower-Tier REMIC
or the Upper-Tier REMIC, (i) sell any assets in the Trust Estate, (ii) accept
any contribution of assets after the Startup Day or (iii) agree to any
modification of this Agreement. To the extent that sufficient amounts cannot be
so retained to pay or provide for the payment of such tax, the Trustee is hereby
authorized to and shall
109
segregate, into a separate non-interest bearing account, the net income from any
such Prohibited Transactions of the Lower-Tier REMIC and the Upper-Tier REMIC
and use such income, to the extent necessary, to pay such tax; provided that, to
the extent that any such income is paid to the Internal Revenue Service, the
Trustee shall retain an equal amount from future amounts otherwise distributable
to the Owners of Class R Certificates and shall distribute such retained amounts
to the Owners of Offered Certificates to the extent they are fully reimbursed
and then to the Owners of the Class R Certificates. If any tax, including
interest penalties or assessments, additional amounts or additions to tax, is
imposed on the Trust, such tax shall be charged against amounts otherwise
distributable to the owners of the Class R Certificates on a pro rata basis. The
Trustee is hereby authorized to and shall retain from amounts otherwise
distributable to the Owners of the Class R Certificates sufficient funds to pay
or provide for the payment of, and to actually pay, such tax as is legally owed
by the Trust (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC and the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC and the
Upper-Tier REMIC shall be ContiFunding Corporation as long as it owns a Class R
Certificate. If ContiFunding Corporation does not own a Class R Certificate, the
Tax Matters Person may be any other entity that owns a Class R Certificate and
accepts a designation hereunder as Tax Matters person by delivering an affidavit
in the form of Exhibit I. ContiFunding Corporation shall notify the Trustee in
writing of the name and address of another person who accepts a designation as
Tax Matters Person hereunder.
Section 11.19 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Manufacturers and Traders Trust Company
----------- Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Corporate Trust Administration
The Depositor: ContiSecurities Asset Funding Corp.
-------------- 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
The Sellers: ContiMortgage Corporation
----------- 000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: President and Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
110
ContiWest Corporation
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
The Servicer: ContiMortgage Corporation
------------ 000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Senior Vice President and
Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
Moody's: Xxxxx'x Investors Service
------- 00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Home Equity
Monitoring Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Fitch: Fitch Investors Service, L.P.
------ Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Underwriters: Greenwich Capital Markets, Inc.
------------- 000 Xxxxxxxxx Xx.
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
ContiFinancial Services Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel, Chief
Financial Officer and Chief
Operating Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
111
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Owners: As set forth in the Register.
-------
Others: Any notice to the Depositor, either Seller
------- or the Servicer shall
also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
END OF ARTICLE XI
112
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ Xxxx Xxxx
---------------------------------
Title: Authorized Signatory
By: /s/ Xxxxx X'Xxxxxxx
---------------------------------
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION, as Seller
By: /s/ Xxxxxx Xxxxx
---------------------------------
Title: President and CEO
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Title: Executive Vice President and COO
CONTIWEST CORPORATION, as Seller
By: /s/ Xxxxx Xxxxxx
---------------------------------
Title: President
By: /s/ R. E. Xxxxx
---------------------------------
Title: Vice President and Secretary
CONTIMORTGAGE CORPORATION, as Servicer
By: /s/ Xxxxxx Xxxxx
---------------------------------
Title: President and CEO
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Title: Executive Vice President and COO
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Title: Assistant Vice President
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of _____________, 1997, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of ContiSecurities Asset Funding Corp., a
Delaware Corporation; and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of _____________, 1997, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of ContiMortgage Corporation, a Delaware
Corporation; and that he signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of _____________, 1997, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________,
____________________, _______________________; that he is the Chief Operating
Officer of ContiMortgage Corporation, a Delaware corporation; and that he signed
his name thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of _____________, 1997, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________,
____________________, _______________________; that he is the
_______________________________________ of ContiWest Corporation, a Nevada
corporation; and that he signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________
Notary Public
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the _____ day of February, 1997, before me personally came Xxxx X.
Xxxxxx, to me known, who, being by me duly sworn did depose and say that he
resides at Clarence, New York; that he is an Assistant Vice President of
Manufacturers and Traders Trust Company, the New York banking corporation
described in and that executed the above instrument as Trustee; and that he
signed his name thereto by order of the Board of Directors of said New York
banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
________________________________
Notary Public
SCHEDULE I
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE II
RESERVED
SCHEDULE III
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE IV
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE V
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
