EXECUTION COPY
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POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1999
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among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Seller and Servicer,
CONTIWEST CORPORATION,
as Seller,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Master Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
HOME EQUITY LOAN PASS-THROUGH CERTIFICATES
SERIES 1999-3
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION...................................3
Section 1.01 Definitions..............................................3
Section 1.02 Use of Words and Phrases................................35
Section 1.03 Captions; Table of Contents.............................35
Section 1.04 Opinions................................................35
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST........................36
Section 2.01 Establishment of the Trust..............................36
Section 2.02 Office..................................................36
Section 2.03 Purposes and Powers.....................................36
Section 2.04 Appointment of the Trustee; Declaration of Trust........36
Section 2.05 Expenses of the Trust...................................36
Section 2.06 Ownership of the Trust..................................37
Section 2.07 Situs of the Trust......................................37
Section 2.08 Miscellaneous REMIC Provisions..........................37
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR,
THE SERVICER AND THE SELLERS; COVENANT OF SELLERS TO
CONVEY HOME EQUITY LOANS..........................................43
Section 3.01 Representations and Warranties of the Depositor.........43
Section 3.02 Representations and Warranties of the Servicer..........45
Section 3.03 Representations and Warranties of the Sellers...........48
Section 3.04 Covenants of the Sellers to Take Certain Actions
with Respect to the Home Equity Loans In Certain
Situations..............................................54
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages...................................63
Section 3.06 Acceptance by Trustee; Certain Substitutions of
Home Equity Loans; Certification by Trustee.............70
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES..................................72
Section 4.01 Issuance of Certificates................................72
Section 4.02 Sale of Certificates....................................72
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS..............................73
Section 5.01 Terms...................................................73
Section 5.02 Forms...................................................73
Section 5.03 Execution, Authentication and Delivery..................73
Section 5.04 Registration and Transfer of Certificates...............74
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.......76
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Section 5.06 Persons Deemed Owners...................................77
Section 5.07 Cancellation............................................77
Section 5.08 Limitation on Transfer of Ownership Rights..............77
Section 5.09 Assignment of Rights....................................78
ARTICLE VI COVENANTS .........................................................80
Section 6.01 Distributions...........................................80
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.............................................80
Section 6.03 Protection of Trust Estate..............................81
Section 6.04 Performance of Obligations..............................82
Section 6.05 Negative Covenants......................................82
Section 6.06 No Other Powers.........................................83
Section 6.07 Limitation of Suits.....................................83
Section 6.08 Unconditional Rights of Owners to Receive
Distributions...........................................84
Section 6.09 Rights and Remedies Cumulative..........................84
Section 6.10 Delay or Omission Not Waiver............................84
Section 6.11 Control by Owners.......................................84
Section 6.12 Indemnification.........................................85
Section 6.13 Access to Names and Addresses of Owners
of Certificates.........................................85
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES..............................87
Section 7.01 Collection of Money.....................................87
Section 7.02 Establishment of Accounts...............................87
Section 7.03 Flow of Funds...........................................87
Section 7.04 [Reserved]..............................................91
Section 7.05 Investment of Accounts..................................91
Section 7.06 Payment of Trust Expenses...............................92
Section 7.07 Eligible Investments....................................92
Section 7.08 Accounting and Directions by Trustee....................94
Section 7.09 Reports by Trustee to Owners and the
Certificate Insurer.....................................95
Section 7.10 Reports by Trustee.....................................100
Section 7.11 Preference Payments....................................101
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS...............103
Section 8.01 Servicer and Sub-Servicers.............................103
Section 8.02 Collection of Certain Home Equity Loan Payments........104
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers..........................................104
Section 8.04 Successor Sub-Servicers................................105
Section 8.05 Liability of Servicer; Indemnification.................105
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee, Certificate Insurer or the Owners.............105
Section 8.07 Assumption or Termination of Sub-Servicing
Agreement by Trustee...................................106
Section 8.08 Principal and Interest Account.........................106
Section 8.09 Delinquency Advances and Servicing Advances............108
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Section 8.10 Compensating Interest; Repurchase of Home Equity
Loans.................................................109
Section 8.11 Maintenance of Insurance..............................110
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements............................................110
Section 8.13 Realization Upon Defaulted Home Equity Loans;
Modification..........................................111
Section 8.14 Trustee to Cooperate; Release of Files................113
Section 8.15 Servicing Compensation; Amounts to be paid to the
Owners of the Class R Certificates....................114
Section 8.16 Annual Statement as to Compliance.....................114
Section 8.17 Annual Independent Certified Public
Accountants' Reports..................................115
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans.......................115
Section 8.19 Assignment of Agreement...............................115
Section 8.20 Removal of Servicer; Resignation of Servicer..........115
Section 8.21 Successor Servicers...................................119
Section 8.22 Inspections by Certificate Insurer; Errors and
Omissions Insurance...................................122
ARTICLE IX TERMINATION OF TRUST.............................................123
Section 9.01 Termination of Trust..................................123
Section 9.02 Termination Upon Option of Owners of Class R-I
Certificates..........................................123
Section 9.03 Termination Upon Loss of REMIC Status.................124
Section 9.04 Disposition of Proceeds...............................126
ARTICLE X THE TRUSTEE ......................................................127
Section 10.01 Certain Duties and Responsibilities...................127
Section 10.02 Removal of Trustee for Cause..........................128
Section 10.03 Certain Rights of the Trustee.........................130
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates..........................................131
Section 10.05 May Hold Certificates.................................131
Section 10.06 Money Held in Trust...................................132
Section 10.07 Compensation and Reimbursement; No Lien for Fees......132
Section 10.08 Corporate Trustee Required; Eligibility...............132
Section 10.09 Resignation and Removal; Appointment of Successor.....132
Section 10.10 Acceptance of Appointment by Successor Trustee........134
Section 10.11 Merger, Conversion, Consolidation or Succession
to Business of the Trustee............................134
Section 10.12 Reporting; Withholding................................135
Section 10.13 Liability of the Trustee..............................135
Section 10.14 Appointment of Co-Trustee or Separate Trustee.........136
ARTICLE XI MISCELLANEOUS....................................................138
Section 11.01 Compliance Certificates and Opinions..................138
Section 11.02 Form of Documents Delivered to the Trustee............138
Section 11.03 Acts of Owners........................................139
Section 11.04 Notices, etc. to Trustee..............................140
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Section 11.05 Notices and Reports to Owners; Waiver of Notices......140
Section 11.06 Rules by Trustee......................................140
Section 11.07 Successors and Assigns................................141
Section 11.08 Severability..........................................141
Section 11.09 Benefits of Agreement.................................141
Section 11.10 Legal Holidays........................................141
Section 11.11 Governing Law; Submission to Jurisdiction.............141
Section 11.12 Counterparts..........................................142
Section 11.13 Usury.................................................142
Section 11.14 Amendment.............................................143
Section 11.15 Paying Agent; Appointment and Acceptance of Duties....143
Section 11.16 REMIC Status..........................................144
Section 11.17 Additional Limitation on Action and Imposition
of Tax................................................146
Section 11.18 Appointment of Tax Matters Person.....................146
Section 11.19 The Certificate Insurer...............................146
Section 11.20 Reserved..............................................147
Section 11.21 Third Party Rights....................................147
Section 11.22 Notices...............................................147
ARTICLE XII THE MASTER SERVICER.............................................151
Section 12.01 Appointment and Duties of the Master Servicer.........151
Section 12.02 Representations, Warranties and Covenants of
the Master Servicer...................................153
SCHEDULE I-A...................................................I-A-1
SCHEDULE I-B...................................................I-B-1
SCHEDULE II....................................................II-1
SCHEDULE III...................................................III-1
SCHEDULE IV....................................................IV-1
EXHIBIT A-1....................................................A-1-1
EXHIBIT A-2....................................................A-2-1
EXHIBIT A-3....................................................A-3-1
EXHIBIT A-4....................................................A-4-1
EXHIBIT A-5....................................................A-5-1
EXHIBIT A-6....................................................A-6-1
EXHIBIT A-7....................................................A-7-1
EXHIBIT A-8....................................................A-8-1
EXHIBIT A-9IO..................................................A-9-IO-1
EXHIBIT B......................................................B-1
EXHIBIT C .....................................................C-1
EXHIBIT R......................................................R-1
EXHIBIT R-I....................................................R-I-1
EXHIBIT R-II...................................................R-II-1
EXHIBIT D......................................................D-1
EXHIBIT E......................................................E-1
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EXHIBIT F......................................................F-1
EXHIBIT G......................................................G-1
EXHIBIT H......................................................H-1
EXHIBIT I......................................................I-1
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POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY
LOAN TRUST 1999-3 as of June 1, 1999 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"),
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in
its capacity as the Master Servicer (the "Master Servicer") and MANUFACTURERS
AND TRADERS TRUST COMPANY, a New York banking corporation, in its capacity as
the trustee (the "Trustee") of the Trust.
WHEREAS, the Depositor wishes to establish the Trust and two subtrusts
thereof and to provide for the allocation and sale of the beneficial interests
therein and the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, the Master Servicer has agreed to perform the master servicing
functions described herein;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee, valid instruments, and to make this Agreement
a valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve in
the capacity of Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sellers, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal of
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, each Seller hereby bargains, sells,
conveys, assigns and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee on behalf of the
Trust, without recourse (except as otherwise provided herein) and for the
exclusive benefit of the Owners of the Certificates and the Certificate Insurer,
all of their respective rights, titles, and interests of every kind and nature
whatsoever, whether now owned and existing or hereafter acquired or arising, in
and to the following: (a) the Home Equity Loans listed in Schedules I-A and I-B
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
concurrently herewith (and all substitutions therefor as provided by Sections
3.03, 3.04 and 3.06 hereof), together with the related Other
Assets, including, without limitation, the related Files and other Records and
each Seller's interest in any Property securing a Home Equity Loan 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, but specifically excluding any principal and interest payments
received on such Home Equity Loans on or prior to the Cut-Off Date (it being
understood that such amounts shall be reserved to and retained by the Sellers);
(b) such amounts as may be held from time to time by the Trustee in the
Certificate Account, together with investment earnings on such amounts, and such
amounts as may be held in any other Account, exclusive of investment earnings
thereon (except as otherwise provided herein), in all events whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); (c) the Certificate Insurance Policy; and (d)
any and all 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) (all the items in clauses
(a)-(d) above, subject to any exclusions or exceptions specified therein, being
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.
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Article I
DEFINITIONS; RULES OF CONSTRUCTION
.1 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 Fixed Rate Certificates and any
Payment Date, the calendar month immediately preceding the month in which the
Payment Date occurs. A "calendar month" shall be deemed to be 30 days. With
respect to the Class A-8 Certificates and any Payment Date, the period
commencing on the immediately preceding Payment Date (or the Closing Date in the
case of the first Payment Date) to and including the day prior to the current
Payment Date. All calculations of interest on the Fixed Rate Certificates will
be made on the basis of a 360-day year assumed to consist of twelve 30-day
months and calculations of interest on the Class A-8 Certificates will be made
on the basis of the actual number of days elapsed in the related Accrual Period
and in a year of 360 days.
"Adjustable Rate Home Equity Loans": The Home Equity Loans identified
in Schedule I-B hereto as having adjustable Coupon Rates, including any
Qualified Replacement Mortgages delivered in replacement thereof.
"Aggregate Certificate Principal Balance": As of any time of
determination, the sum of the Aggregate Class A Certificate Principal Balance
plus the Class B Certificate Principal Balance. Unless otherwise specified
herein with respect to any particular provision with respect to a Payment Date
the "Aggregate Certificate Principal Balance" shall be calculated after taking
into account the Class A Principal Distribution Amount and the Class B Principal
Distribution Amount on such Payment Date.
"Aggregate Class A Certificate Principal Balance": As of any time of
determination, the sum of the Class A Certificate Principal Balances of all
Class A Certificates. Unless otherwise specified herein with respect to any
particular provision, with respect to a Payment Date, the "Aggregate Class A
Certificate Principal Balance" shall be calculated after taking into account the
Class A Principal Distribution Amount on such Payment Date.
"Aggregate Extra Principal Distribution Amount": As of any Payment
Date, the excess, if any, of (x) the Class A Principal Distribution Amount plus
the Class B Principal Distribution Amount over (y) the Principal Remittance
Amount with respect to both Loan Groups, in each case with respect to such
Payment Date.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
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"Applied Class B Realized Loss Amount": As of any Payment Date, the
excess of (x) the Aggregate Certificate Principal Balance on such Payment Date,
after taking into account all distributions of principal of the Class A
Certificates and the Class B Certificates on such Payment Date, but prior to the
reduction of the Class B Certificate Principal Balance pursuant to Section
7.03(h), if any, on such Payment Date over (y) the Combined Pool Balance as of
the end 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.
"Available Funds": As defined in Section 7.03(b).
"Balance Ratio": As defined in Section 2.08(c) hereof.
"Balloon Loans": Home Equity Loans having scheduled amortization based
on a longer remaining term than the actual remaining term, with the result that
a relatively large principal amount is due on the final scheduled due date
(e.g., a 360-month amortization schedule where all unamortized principal is due
in 180 months).
"Business Day": Any day that is not a Saturday, Sunday or other day on
which the Certificate Insurer or commercial banking institutions in the City of
New York, or in the city in which either the principal corporate trust office of
the Trustee or the master servicing offices of the Master Servicer, if
applicable, is located, are authorized or obligated by law or executive order to
be closed.
"Certificate": Any one of the Class A Certificates, Class B
Certificates or Class R Certificates, each representing the interests and the
rights described in this Agreement.
"Certificates": The Offered Certificates, the Class C Certificates and
the Class R Certificates.
"Certificate Account": The certificate account established in
accordance with Section 7.02 hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Insurance Policy": With respect to the Class A
Certificates, the certificate guaranty insurance policy (number AB0273BE) dated
June 17, 1999 issued by the
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Certificate Insurer for the benefit of the Owners of the Class A Certificates
pursuant to which the Certificate Insurer guarantees Insured Payments.
"Certificate Insurer": Ambac Assurance Corporation, a Wisconsin stock
insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under a
Certificate Insurance Policy in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction in the premises of (A)
a final and nonappealable decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (B) a final and nonappealable decree or
order adjudging the Certificate Insurer as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganizing, rehabilitation, arrangement,
adjustment or composition of or in respect of the Certificate Insurer under any
applicable United States federal or state law, or appointing a custodian,
receiver, liquidator, rehabilitator, assignee, trustee, sequestrator or other
similar official of the Certificate Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(ii)the commencement by the Certificate Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate Insurer to
pay debts generally as they become due, or the admission by the Certificate
Insurer in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Certificate Insurer in furtherance
of any such action.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
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CLASS INITIAL
------------------------- CERTIFICATE
PRINCIPAL
BALANCE
-------------------
Class A-1 $ 209,100,000
Class A-2 $ 126,300,000
Class A-3 $ 72,700,000
Class A-4 $ 41,500,000
Class A-5 $ 40,900,000
Class A-6 $ 72,700,000
Class A-7 $ 44,800,000
Class A-8 $ 152,000,000
Class A-9-IO N/A
Class B $ 40,000,000
Class C N/A
The Class A-9IO and the Residual Certificates do not have a Certificate
Principal Balance.
As of any time of determination, the Certificate Principal Balance of
any Class of Certificates is the Certificate Principal Balance as of the Startup
Day of such Class less any amounts actually distributed on such Class with
respect to principal thereon on all prior Payment Dates pursuant to Sections
7.03(b), (c), (d) and (e) hereof (except, for purposes of effecting the
Certificate Insurer's subrogation rights, that portion of Insured Payments made
in respect of principal) and, additionally in the case of the Class B
Certificates, less the amount of any reduction in the Class B Certificate
Principal Balance on all prior Payment Dates pursuant to Section 7.03(i).
"Chapter 13 Loan": A Home Equity Loan with a Mortgagor in bankruptcy
under a "Chapter 13" Plan.
"Chief Executive Office": As such term is defined in Section
9-103(3)(d) of the UCC.
"Class": Any Class of the Class A Certificates, the Class B
Certificates, the Class C Certificates or the Residual Certificates.
"Class A Certificate": Any one of the Certificates designed on the face
thereof as a Class A Certificate, substantially in the form annexed hereto as
Exhibit A, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A Certificate Principal Balance": As of any time of
determination and with respect to any Class of Class A Certificates, the
Certificate Principal Balance as of the Startup Day of all Class A Certificates
of such Class plus any amount previously distributed thereon with respect to
principal that is recovered as a voidable preference by a trustee in bankruptcy
pursuant to a final nonappealable order less any amounts actually distributed to
the Owners of such Class of the Class A Certificates with respect to the related
Class A Principal Distribution Amount pursuant to Sections 7.03(b), 7.03(c),
7.03(d) and 7.03(e) hereof on all prior Payment Dates
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(except, for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments made in respect of principal).
"Class A Current Interest": With respect to any Payment Date and with
respect to any individual Class of Class A Certificates, the amount of interest
accrued on the Class A Certificate Principal Balance (or, with respect to the
Class A-9IO Certificates, the Class A-9IO Notional Principal Amount) immediately
prior to such Payment Date during the related Accrual Period at the related
Class A Pass-Through Rate.
"Class A Distribution Amount": With respect to any Payment Date, and
with respect to any individual Class of Class A Certificates, the sum of (x) the
related Class A Current Interest, (y) the related Class A Interest Carry Forward
Amount and (z) except for the Class A-9IO Certificates, the portion of Class A
Principal Distribution Amount payable to the Owners of the Class A Certificates
of such Class pursuant to Sections 7.03(b), 7.03(c), 7.03(d) and 7.03(e) hereof.
"Class A Interest Carry Forward Amount": With respect to any Payment
Date and with respect to any Class of Class A Certificates, the sum of (x) the
amount, if any, by which (i) the sum of (A) the related Class A Current Interest
as of the immediately preceding Payment Date and (B) any related unpaid Class A
Interest Carry Forward Amount with respect to such Class as of the immediately
preceding Payment Date exceeds (ii) the amount of the actual distribution with
respect to interest made to the Owners of such Class of Class A Certificates on
such immediately preceding Payment Date and (y) 30 days' interest on such amount
at the related Class A Pass-Through Rate.
"Class A Optimal Balance": As of any Payment Date and with respect to
both Loan Groups together, as follows, but in no event less than zero:
I. Prior to the Stepdown Date, the lesser of:
(a) (i) if a Cumulative Realized Loss Trigger Event is not then in
effect, the excess of :
(x) the Combined Pool Balance as of the end of the related
Remittance Period
over
(y) an amount equal to 7.45% of the Original Combined Pool
Balance; or
(ii) if a Cumulative Realized Loss Trigger Event is in effect, the
excess of:
(x) the Combined Pool Balance as of the end of the related
Remittance Period
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over
(y) an amount equal to 8.10% of the Original Combined Pool
Balance;
or
(b) the product of :
(x) 100% minus two times the excess of:
(a) one-half of the Six-Month Rolling Average 90+ Day
Delinquency Rate over
(b) three times the Six-Month Rolling Average Excess
Spread and
(y) the Combined Pool Balance as of the end of the related
Remittance Period.
II. On and after the Stepdown Date, the least of:
(a) (i) if a Cumulative Realized Loss Trigger Event is not then in
effect, the greater of:
(x) the excess of (i) the Combined Pool Balance as of the
end of the related Remittance Period over (ii) an amount
equal to 14.90% of the Combined Pool Balance as of the
end of the related Remittance Period;
and
(y) the excess of (i) the Combined Pool Balance as of the
end of the related Remittance Period over (ii) an amount
equal to 7.45% of the Original Combined Pool Balance;
(ii) if a Cumulative Realized Loss Trigger Event is then in
effect, the excess of:
(x) the product of (i) 90% and (ii) the Combined Pool
Balance as of the end of the related Remittance
Period
over
(y) an amount equal to 3.10% of the Original Combined
Pool Balance;
or
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(b) the product of:
(x) 100% minus two times the excess of
(a) one-half of the Six-Month Rolling Average 90+ Day
Delinquency Rate over
(b) three times the Six-Month Rolling Average Excess
Spread and
(y) the Combined Pool Balance as of the end of the related
Remittance Period;
or
(c) the excess of (x) the Combined Pool Balance as of the end of
the related Remittance Period over (y) an amount equal to
0.50% of the Original Combined Pool Balance;
or
(d) the excess of (x) the Combined Pool Balance as of the end of
the related Remittance Period over (y) the sum of the Loan
Balances as of the end of the related Remittance Period of the
three Home Equity Loans having the largest Loan Balances.
"Class A Overcollateralization Deficit": For any Payment Date, the
excess of the Aggregate Class A Certificate Principal Balance over the
outstanding Combined Pool Balance as of the last day of the related Remittance
Period.
"Class A Pass-Through Rate": As applicable, 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 and the Class A-9IO Pass-Through Rate.
"Class A Principal Distribution Amount": As of any Payment Date, the
actual amount distributed as principal to the Owners of the Class A Certificates
pursuant to Section 7.03(b), 7.03(c), 7.03(d) and 7.03(e) on such Payment Date.
"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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-1 Pass-Through Rate": With respect to any Payment Date, 6.42%
per annum.
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"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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-2 Pass-Through Rate": With respect to any Payment Date, 6.77%
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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-3 Pass-Through Rate": With respect to any Payment Date, 6.93%
per annum.
"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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-4 Pass-Through Rate": With respect to any Payment Date, 7.12%
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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-5 Pass-Through Rate": With respect to any Payment Date the
lesser of (x) 7.36% per annum and (y) the Group I Available Funds Cap.
"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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-6 Pass-Through Rate": For any Payment Date, the lesser of
(i)(a) with respect to any Payment Date which occurs on or prior to the Step-Up
Payment Date, 7.68% per annum, or (b) with respect to any Payment Date
thereafter, 8.18% per annum or (ii) the Group I Available Funds Cap for such
Payment Date.
"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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
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"Class A-7 Pass-Through Rate": For any Payment Date, the lesser of
(i)(a) with respect to any Payment Date which occurs on or prior to the Step-Up
Payment Date, 7.28% per annum, or (b) with respect to any Payment Date
thereafter, 7.78% per annum or (ii) the Group I Available Funds Cap Rate for
such Payment Date.
"Class A-7 Principal Distribution Amount": For any Payment Date
occurring during the periods set forth below is the "applicable percentage" set
forth below of the Class A-7 Pro Rata Principal Distribution Amount with respect
to such Payment Date:
Payment Date Applicable
Percentage
-----------------------------------------------------
1-36 0%
37-60 45%
61-72 80%
73-84 100%
85-end 300%
"Class A-7 Pro Rata Principal Distribution Amount": For any Payment
Date is the product of (x) the Class A Principal Distribution Amount for such
Payment Date and (y) a fraction, the numerator of which is the Class A-7
Certificate Principal Balance immediately prior to such Payment Date and the
denominator of which is the Group I Class A Certificate Principal Balance
immediately prior to such Payment Date.
"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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-8 Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) (i) if such Payment Date occurs on or prior to the Step-Up Payment
Date, LIBOR plus 0.28%% per annum and (ii) if such Payment Date occurs after the
Step-Up Payment Date, LIBOR plus 0.56% per annum and (y) the Group II Available
Funds Cap.
"Class A-9IO Certificate": Any one of the Certificates designated on
the face thereof as a Class A-9IO Certificate, substantially in the form annexed
hereto as Exhibit A-9IO, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-9IO Notional Principal Amount": With respect to any Payment
Date, the lesser of (x) the dollar amount shown in the schedule below with
respect to that Payment Date, or (x) the Group I Pool Balance as of the end of
the related Remittance Period.
-------------------------- ------------------------------------------
Payment Dates Scheduled Notional Principal Amount
-------------------------- ------------------------------------------
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-------------------------- ------------------------------------------
1-3 $185,000,000
-------------------------- ------------------------------------------
4-6 $120,000,000
-------------------------- ------------------------------------------
7-9 $60,000,000
-------------------------- ------------------------------------------
10-12 $54,000,000
-------------------------- ------------------------------------------
13-15 $22,500,000
-------------------------- ------------------------------------------
16-18 $20,000,000
-------------------------- ------------------------------------------
19-21 $18,500,000
-------------------------- ------------------------------------------
22-24 $17,500,000
-------------------------- ------------------------------------------
25-27 $12,500,000
28-30 $10,000,000
-------------------------- ------------------------------------------
Thereafter $0
-------------------------- ------------------------------------------
"Class A-9IO Pass-Through Rate": With respect to any Payment Date,
6.00% per annum.
"Class B Applied Realized Loss Amount": With respect to any Payment
Date, the lesser of (x) the Class B Certificate Principal Balance (after taking
into account the distribution of the Class B Principal Distribution Amount on
such Payment Date, but prior to the reduction of such Class B Certificate
Principal Balance pursuant to Section 7.03(h), if any, on such Payment Date) and
(y) the Applied Class B Realized Loss Amount as of such Payment Date.
"Class B Certificates": Any one of the Certificates designated on the
face thereof as a Class B Certificate, substantially in the form annexed hereto
as Exhibit B, executed authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class B Certificate Principal Balance": As of any time of
determination and with respect to the Class B Certificates, the Certificate
Principal Balance as of the Startup Day of all Class B Certificates plus any
amount previously distributed thereon with respect to principal that is
recovered as a voidable preference by a trustee in bankruptcy pursuant to a
final, nonappealable order, less the sum of (x) any amounts of the Class B
Principal Distribution Amount actually distributed to the Owners of such Class B
Certificates pursuant to Section 7.03(b)(vii) 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.
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"Class B Current Interest": With respect to any Payment Date and with
respect to the Class B Certificates, the amount of interest accrued during the
related Accrual Period 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.
"Class B Distribution Amount": With respect to any Payment Date and
with respect to the Class B Certificates, the sum of (w) the Class B Current
Interest, (x) the Class B Principal Distribution Amount, if any, payable to the
Owners of the Class B Certificates pursuant to Section 7.03(b)(vii) hereof, (y)
the Class B Interest Carry Forward Amount, if any, and (z) the Class B Realized
Loss Amortization Amount, if any.
"Class B Interest Carry Forward Amount": With respect to any Payment
Date and with respect to the Class B Certificates, the sum of (x) the amount, if
any, by which (i) the sum of (A) the Class B Current Interest as of the
immediately preceding Payment Date and (B) any unpaid Class B Interest Carry
Forward Amount as of the immediately preceding Payment Date exceeds (ii) the
amount of the actual distribution with respect to interest made to the Owners of
the Class B Certificates on such immediately preceding Payment Date and (y) 30
days' interest on such amount at the Class B Pass-Through Rate.
"Class B Pass-Through Rate": For any Payment Date, the lesser of (i)(a)
with respect to any Payment Date which occurs on or prior to the Step-Up Payment
Date, 7.00% per annum, or (b) with respect to any Payment Date thereafter, 7.50%
per annum or (ii) the lesser of (x) the Group I Available Funds Cap for such
Payment Date or (y) the Group II Available Funds Cap for such Payment Date.
"Class B Principal Distribution Amount": With respect to any Payment
Date, the actual amount distributed as principal to the Owners of the Class B
Certificates in accordance with Section 7.03(b)(vii) hereof on such Payment
Date.
"Class B Optimal Balance": As of any Payment Date:
I. Prior to the Stepdown Date and if the Aggregate Class A Certificate
Principal Balance is then greater than zero, the Class B Initial
Certificate Principal Balance; and
II. On and after the Stepdown Date, or if the Aggregate Class A
Certificate Principal Balance then equals zero, the excess of:
(a) the Combined Pool Balance as of the end of the related
Remittance Period over
(b) the Aggregate Class A Certificate Principal Balance (after
taking into account any reduction thereof on such Payment
Date) plus the Targeted Overcollateralization Amount.
In the event that, on any Payment Date, paying the Aggregate Class A
Certificate Balance down to the Class A Optimal Balance results in an actual
Overcollateralization Amount
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greater than the Targeted Overcollateralization Amount, then that higher, actual
Overcollateralization Amount will control over the Targeted
Overcollateralization Amount for purposes of clause (b) above on such Payment
Date.
"Class B Realized Loss Amortization Amount": As of any Payment Date and
with respect to the Class B Certificates, the lesser of (x) the Unpaid Class B
Realized Loss Amount as of such Payment Date and (y) the amount of Available
Funds remaining after funding priorities "(i)" through "(vii)" of Section
7.03(b) hereof.
"Class C Certificates": Any one of the Certificates designated on the
face thereof as a Class C Certificate, substantially in the form annexed hereto
as Exhibit C, executed 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 REMIC III.
"Class C Distribution Amount": With respect to any Payment Date, the
amount payable to the Class C Certificates pursuant to footnotes 5 and 6 of
Section 2.08(c).
"Class C Pass-Through Rate": With respect to any Payment Date, the
interest payable on the Group I and Group II Loans in excess of the interest
payable on the Class A and Class B Certificates.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit R, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC III for the purposes of the REMIC Provisions.
"Class R-I Certificate": Any one of the Certificates designated herein
as a Class R-I Certificate, substantially in the form annexed hereto as Exhibit
R-I, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC I for the purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Certificates designated herein
as a Class R-II Certificate, substantially in the form annexed hereto as Exhibit
R-II, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC II for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date immediately
following the date on which the Combined Pool Balance has declined to
$80,000,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
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"Collections": With respect to any Home Equity Loan, all cash
collections and other cash proceeds of such Home Equity Loan received by the
Servicer, any Sub-Servicer or any other Person, including all payments made by
the related Mortgagor on such Home Equity Loan and all cash proceeds of the
Related Security with respect to such Home Equity Loan.
"Combined Pool Balance": As of any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group I and Loan Group II as of the
close of business on such date.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Compensating Interest Shortfall": With respect to any Payment Date,
the excess, if any, of (x) the aggregate amount of Compensating Interest for the
related Remittance Period over (y) the lesser of (i) the aggregate amount of the
Servicing Fee for such Remittance Period and (ii) the actual aggregate amount of
Compensating Interest funded by the Servicer and/or the Master Servicer with
respect to such Payment Date.
"ContiMortgage": ContiMortgage Corporation, a Delaware corporation, and
the originator of each Home Equity Loan, one of the Sellers and the Servicer.
"ContiWest": ContiWest Corporation, a Nevada corporation, and one of
the Sellers.
"Corporate Trust Office": The principal office of the Trustee at Xxx
X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Loss Trigger Event": A Cumulative Realized Loss
Trigger Event occurs on any date of determination if the amount of Cumulative
Realized Losses with respect to both Loan Groups expressed as a percentage of
the Original Combined Pool Balance on any date of determination equals or
exceeds the percentage for such date set out below:
Date Percentage
---- ----------
July 1999 - June 2001 1.225%
July 2001 - June 2002 2.100%
July 2002 - June 2003 2.800%
July 2003 - June 2004 3.325%
July 2004 and thereafter 3.500%
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Equity Loans since
the Startup Day.
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"Curtailment": Prepayment of principal by a Mortgagor which does not
satisfy the Note in full, and which is not intended as a Prepaid Installment.
"Cut-Off Date": As of the close of business on May 31, 1999.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which, pursuant to
the Note relating thereto, interest is computed and charged to the Mortgagor at
the Coupon Rate on the outstanding principal balance of such Note based on the
number of days elapsed between receipt of the Mortgagor's last payment through
receipt of the Mortgagor's most current payment.
"Deed in Lieu": The Servicer's acceptance of a deed in lieu of
foreclosure.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delivery Order": Each delivery order in the form set forth as Exhibit
G hereto and delivered by the Depositor to the Trustee on the Startup Day
pursuant to Section 4.01 hereof.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer acting in its fiduciary capacity, having combined capital and surplus of
at least $50,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A2" by Xxxxx'x, and, if rated by Fitch, at
least "A" by Fitch (ii) a short-term debt rating of at least "A-1" by Standard &
Poor's and (iii) if such Principal and Interest Account is moved to a new
institution, the Servicer shall provide the Trustee, the Master Servicer, the
Certificate Insurer 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.
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"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FannieMae Guide": FannieMae's Servicing Guide, as the same may be
amended by FannieMae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"File": The documents delivered to the Trustee pursuant to Section 3.05
hereof pertaining to a particular Home Equity Loan and any additional documents
required to be added to the File pursuant to this Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
"Final Determination": As defined in Section 9.03 hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to the related Property.
"Fiscal Agent": State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Certificate Insurer under the Certificate Insurer Policy or any
successor thereto appointed by the Certificate Insurer.
"Fitch": Fitch IBCA, Inc.
"Fixed Rate Loans": Home Equity Loans bearing interest at fixed rate.
"Fixed Rate Certificates": The Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-9IO and Class B Certificates.
"Fixed Rate Loans" or "Fixed Rate Home Equity Loans": Home Equity Loans
bearing interest at a fixed rate.
-17-
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"Group I Available Funds Cap": With respect to any Payment Date, the
weighted average Coupon Rate of the Home Equity Loans in Loan Group I as of the
opening of business on the first day of the related Remittance Period, less the
sum of (i) the annualized percentage equivalent of a fraction equal to (a) the
sum of the related Premium Amount plus the sum of the related Trustee Fee, the
related Servicing Fee, the related Master Servicing Fee, (so long as the Master
Servicer is engaged under this Agreement), divided by (b) the aggregate Pool
Balance of Loan Group I as of the opening of business on the first day of the
related Remittance Period, and (ii) during the period commencing on the first
Payment Date and ending on the 30th Payment Date, the annualized percentage
equivalent of the product of (a) the Class A-9IO Pass-Through Rate and (b) the
Class A-9IO Notional Principal Amount divided by the outstanding aggregate Pool
Balance of Loan Group I as of the opening of business on the first day of the
related Remittance Period.
"Group I Class A Optimal Balance": With respect to any Payment Date is
an amount equal to the product of:
(x) the Group I Pool Balance as of the end of the related Remittance
Period; and
(y) a fraction, the numerator of which is equal to (i) the Aggregate
Class A Certificate Principal Balance immediately prior to such Payment Date
minus (ii) the Class A Principal Distribution Amount for such Payment Date and
the denominator of which is (y) the Combined Pool Balance as of the end of the
related Remittance Period.
"Group I Class A Principal Distribution Amount": For any Payment Date
is an amount equal to the lesser of:
(I) the excess of (x) the aggregate Certificate Principal Balance of
the Class A Group I Certificates immediately prior to such Payment Date over (y)
the Group I Class A Optimal Balance with respect to such Payment Date; and
(II) the Class A Principal Distribution Amount with respect to such
Payment Date;
provided, however, that in no event will the aggregate Certificate
Principal Balance of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-7 Certificates exceed the Group I Pool Balance as of the
last day of the related Remittance Period.
"Group I Loans": The Home Equity Loans in Loan Group I.
"Group I Pool Balance": For any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group I as of the close of business on
such date.
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"Group II Available Funds Cap": With respect to any Payment Date, the
weighted average Coupon Rate of the Home Equity Loans in Loan Group II as of the
opening of business on the first day of the related Remittance Period, less the
sum of (i) the annualized percentage equivalent of a fraction equal to (a) the
sum of the related Premium Amount plus the sum of the related Trustee Fee, the
related Servicing Fee and the related Master Servicing Fee, (so long as the
Master Servicer is engaged under this Agreement), divided by (b) the aggregate
Loan Balance of the Home Equity Loans in Loan Group II as of the opening of
business on the first day of the related Remittance Period, and (ii) 0.50% per
annum.
"Group II Class A Optimal Balance": With respect to any Payment Date is
an amount equal to the product of:
(x) the aggregate Group II Pool Balance as of the end of the related
Remittance Period; and
(y) a fraction, the numerator of which is equal to (i) the Aggregate
Class A Certificate Principal Balance immediately prior to such Payment Date
minus (ii) the Class A Principal Distribution Amount for such Payment Date and
the denominator of which is (y) the Combined Pool Balance as of the end of the
related Remittance Period.
"Group II Class A Principal Distribution Amount": For any Payment Date
is an amount equal to the lesser of:
(I) the excess of (x) the aggregate Certificate Principal Balance of
the Class A Group II Certificates immediately prior to such Payment Date over
(y) the Group II Class A Optimal Balance with respect to such Payment Date; and
(II) the Class A Principal Distribution Amount with respect to such
Payment Date;
provided, however, that in no event will the Certificate Principal
Balance of the Class A-8 Certificates exceed the Group II Pool Balance as of the
last day of the related Remittance Period.
"Group II Loans": The Home Equity Loans in Loan Group II.
"Group II Pool Balance": For any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group II as of the close of business on
such date.
"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
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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.
"Home Equity Loan Documents": With respect to any Home Equity Loan, all
agreements, instruments, promissory notes, financing statements, mortgages,
security agreements, assignments and other documents executed and delivered by
any Person in connection with such Home Equity Loan, whether such documents are
in the possession or under the control of the Trustee, the Servicer or any other
Person (including any Sub-Servicer).
"Indemnification Agreement": The Indemnification Agreement dated June
17, 1999 among the Certificate Insurer and the Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Offered Certificate.
"Insurance and Indemnity Agreement": The Insurance and Indemnity
Agreement dated as of June 17, 1999, among the Depositor, the Sellers, the
Servicer, the Master Servicer, the Certificate Insurer and the Trustee as it may
be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"Insurance Proceeds": Payments received with respect to any Insurance
Policy, except the Certificate Insurance Policy.
"Insured Payment": With respect to any Payment Date, without
duplication, (A) the excess, if any, of (i) the sum of the aggregate Current
Interest of the Class A Certificates (less any Relief Act Shortfalls or
Compensating Interest Shortfalls) and the then existing Class A
Overcollateralization Deficit, if any, over (ii) the amount of the Monthly
Remittance Amount or deposit in the Certificate Account on such Payment Date,
less the aggregate amount of the Trustee Fee and the Premium Amount, plus (B) an
amount equal to the aggregate Preference Amount with respect to the Class A
Certificates.
"Interest Amount Available": As defined in Section 7.03(b) hereof.
"Interest Only Period": The period from the Startup Day through and
including the 30th Payment Date.
"Interest Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum, without duplication, of (i) all interest
due during the related Remittance Period with respect to the Home Equity Loans
in such Loan Group, and collected or advanced (less the Servicing Fee with
respect to such Home Equity Loans), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date with respect to such Home Equity
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Loans, (iii) the portion of the Substitution Amount relating to interest on the
Home Equity Loans in such Loan Group substituted during the related Remittance
Period, (iv) the portion of any Loan Purchase Price relating to interest on any
such Home Equity Loan in such Loan Group repurchased during the related
Remittance Period and (v) the portion of Net Liquidation Proceeds relating to
interest in such in Home Equity Loans in such Loan Group liquidated during the
related Remittance Period, in all cases after taking into account items which
are withdrawn from the Principal and Interest Account pursuant to Section
8.08(d) hereof.
"Involuntary Payoff": The amount of Net Liquidation Proceeds received
with respect to a Liquidated Loan.
"Late Payment Rate": As defined in the Insurance and Indemnity
Agreement.
"LIBOR": With respect to any Accrual Period for the Class A-8
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR Determination Dates": are:
o June 15, 1999 for the period beginning on and including the
Closing Date and ending on and excluding July 26, 1999; and
o the second London Business Day prior to the first day of each
Accrual Period for the Class A-8 Certificates following the first
Accrual Period.
"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, Short Sale or otherwise.
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"Liquidity Agreement": As defined in Section 8.3(b).
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such Home Equity Loan included in
previous Monthly Remittance 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 Group" or "Group": Loan Group I or Loan Group II, as applicable.
"Loan Group I": The Home Equity Loans identified in Schedule I-A
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof. Loan Group I will constitute a separate sub-trust of the Trust.
"Loan Group II": The Home Equity Loans identified in Schedule I-B
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof. Loan Group II will constitute a separate sub-trust of the Trust.
"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 and the Master
Servicer have 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.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
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"Master Servicer" Norwest Bank Minnesota, National Association, a
national banking association, and its permitted successors and assigns.
"Master Servicing Fee" With respect to any Home Equity Loan, the amount
to be paid to the Master Servicer on each Payment Date as compensation for its
master servicing duties relating to such Home Equity Loan, and equal to the
Master Servicing Fee Rate times the then outstanding principal amount of such
Home Equity Loan as of the first day of each calendar month.
"Master Servicing Fee Rate" 0.045% per annum.
"Maximum Certificate Insurer Current Reimbursement Amount" With respect
to any Payment Date, equals the lesser of (x) the Available Funds remaining in
the Certificate Account after taking into account all distributions described in
clauses "First" through "Third" in Section 7.03(b) hereof and (y) the excess of
(1) the sum of (a) the aggregate Loan Balance plus (b) the amount described in
the immediately preceding clause (x) over (2) the Aggregate Class A Certificate
Principal Balance prior to taking into account any payment of principal on such
Payment Date.
"Monthly Excess Cashflow Amount": As defined in Section 7.03(b)(viii)
hereof.
"Monthly Remittance Amount": As of any Monthly Remittance Date and with
respect to a Loan Group, the sum of (i) the Interest Remittance Amount and (ii)
the Principal Remittance Amount, in each case with respect to such Loan Group,
for such Monthly Remittance Date.
"Monthly Remittance Date": The 20th 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.
"Monthly Report Date": The 15th 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 Liquidation Proceeds
include Net Post-REMIC Recovered Proceeds.
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"Net Post-REMIC Recovery Proceeds": With respect to any Optional Buyout
Loan, Post-REMIC Recovery Proceeds less the costs and expenses incurred by the
Servicer in conducting its loss mitigation strategy with respect thereto,
including, without limitation, legal fees and expenses.
"No Equity Secured Mortgage": A Home Equity Loan in which no material
equity in the related Mortgaged Property secures the related Note.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Offered Certificates": The Class A Certificates and the Class B
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, the Certificates, the Certificate Insurance Policy, the Insurance and
Indemnity Agreement and the Indemnification Agreement.
"Optional Buyout Loan": A Home Equity Loan repurchased from the Trust
for the purpose of allowing the Servicer to use its loss mitigation strategy in
maximizing the Post-REMIC Recovery Proceeds thereof.
"Original Group I Pool Balance": The original aggregate Loan Balance of
the Home Equity Loans in Loan Group I as of the Cut-Off Date.
"Original Group II Pool Balance": The original aggregate Loan Balance
of the Home Equity Loans in Loan Group II as of the Cut-Off Date.
"Original Pool Balance": The applicable Original Group I Loan Balance
or Original Group II Loan Balance.
"Original Combined Pool Balance": The sum of the Original Group I Pool
Balance and the Original Group II Pool Balance.
"Other Assets": With respect to any Home Equity Loan, any and all
Related Security and Collections relating to such Home Equity Loan and any and
all Proceeds of such Home Equity Loan, Related Security and/or Collections.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or delivered to
the Registrar for cancellation;
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(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 means the
positive difference, if any, between (x) the Combined Pool Balance and (y) the
Aggregate Certificate Principal Balance.
"Owner": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section 5.06 and
Section 7.03 (m) hereof, respectively 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.
"Overcollateralization Floor": An amount equal to 0.50% of the Original
Combined Pool Balance ($4,000,000).
"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 25th 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, 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 the Class
A-9IO Certificates, a fraction, expressed as a percentage, the numerator of
which is the initial Class A-9IO Notional Principal Amount represented by such
Class A-9IO Certificate and the denominator of which is the aggregate initial
Class A-9IO Notional Principal Amount represented by all of the Class A-9IO
Certificates. With respect to a Class R, Class R-I or Class
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R-II Certificates, 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%.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan": As defined in Section 5.08(c) hereof.
"Pool Balance": As of any date, the aggregate outstanding Loan Balance
of the Home Equity Loans in the related Loan Group as of the last day of the
close of business on such date.
"Pool Certification": As defined in Section 3.06(a) hereof.
"Post-REMIC Recovery Proceeds": With respect to any Optional Buyout
Loan, any amounts (including the proceeds of any Insurance Policy) recovered by
the Servicer in connection with such Optional Buyout Loan, whether through
trustee's sale, foreclosure sale, a Short Sale, or otherwise.
"Preference Amount": With respect to the Class A Certificates and Class
B Certificates, any amounts of Current Interest and principal included in
previous distributions to the Owners of such Certificates which are recovered
from such Owners as a voidable preference by a trustee in bankruptcy pursuant to
the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Owners.
"Premium Amount": As of any Payment Date, the product of (x)
one-twelfth of the Premium Percentage and (y) the Aggregate Class A Certificate
Principal Balance.
"Premium Percentage": As defined in the Insurance and Indemnity
Agreement.
"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,
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expenditures for real estate property taxes, hazard insurance premiums, property
restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum, without duplication, of (i) the principal
actually collected by the Servicer on the Home Equity Loans in the related Loan
Group during the related Remittance Period, (ii) the Loan Balance of each Home
Equity Loan in the related Loan Group that was repurchased from the Trust during
the related Remittance Period, (iii) any Substitution Amount relating to
principal delivered by the Seller in connection with a substitution of a Home
Equity Loan in the related Loan Group during the related Remittance Period, (iv)
any Insurance Proceeds actually collected by the Servicer during the related
Remittance Period with respect to a Home Equity Loan in the related Loan Group
(to the extent such Insurance Proceeds relate to principal) and (v) all Net
Liquidation Proceeds actually collected by the Servicer during the related
Remittance Period with respect to in the related Loan Group (to the extent such
Net Liquidation Proceeds relate to principal), in all cases after taking into
account items which are withdrawn from the Principal and Interest Account
pursuant to Section 8.08(d) hereof.
"Proceeds": Whether or not capitalized, "proceeds" as such term is
defined in Section 9-306(1) of the UCC, including all cash and non-cash proceeds
and further including all accounts, accounts receivable, contract rights, money,
claims for money (whether or not earned by performance), checks, deposit
accounts, documents, instruments, chattel paper, investment property (including
securities, securities entitlements, securities accounts, commodity contracts
and commodity accounts), general intangibles, insurance proceeds and other
property (including fixtures, products and accessions).
"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 buildings and other
improvements thereon) securing a Home Equity Loan, together with any personal
property, fixtures and other property or rights pertaining thereto.
"Prospectus": The Prospectus dated September 17, 1998 constituting part
of the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1999-3 Prospectus Supplement dated June 9, 1999 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03 hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
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"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 June 30, 2029, (iv) has a Loan-to-Value Ratio
as of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the
replaced Home Equity Loan at such time, (v) shall be of the same or higher
credit quality classification (determined in accordance with ContiMortgage's
credit underwriting guidelines set forth in ContiMortgage's underwriting manual)
as the Home Equity Loan which such Qualified Replacement Mortgage replaces, (vi)
has a Loan Balance as of the related Replacement Cut-Off Date equal to or less
than the Loan Balance of the replaced Home Equity Loan as of such Replacement
Cut-Off Date, (vii) shall not provide for a "balloon" payment if the related
Home Equity Loan did not provide for a "balloon" payment (and if such related
Home Equity Loan provided for a "balloon" payment, such Qualified Replacement
Mortgage shall have an original maturity of not less than the original maturity
of such related Home Equity Loan), (viii) shall be a fixed rate Home Equity Loan
if the Home Equity Loan being replaced is a Fixed Rate Home Equity Loan and
shall be a first lien adjustable rate Home Equity Loan if the Home Equity Loan
being replaced is an Adjustable Rate Home Equity Loan and (ix) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Rating Agencies": Collectively, Xxxxx'x, Standard & Poor's and Fitch
or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess of Net
Liquidation Proceeds realized thereon applied in reduction of such Loan Balance.
As to any Optional Buyout Loan, the amount, if any, by which the Loan Balance
thereof as of the date of the Servicer's final loss determination with respect
thereto is in excess of the Net Post-REMIC Recovery Proceeds realized thereon
applied in reduction of such Loan Balance.
"Record Date": With respect to the Fixed Rate Certificates and any
Payment Date, the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs and with respect to the Class
A-8 Certificates, the day immediately preceding the related Payment Date.
"Records": With respect to any Home Equity Loan, all Home Equity Loan
Documents and other material documents held or maintained by or for the Sellers,
the Depositor, the Trustee, the Servicer or any other Person (including any
Sub-Servicer) with respect to such Home Equity Loan and/or the related
Mortgagor, including the File and any and all Servicing Records.
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"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with either Seller or any affiliate thereof, (iii) whose
quotations appear on Telerate Page 3750 on the relevant LIBOR Determination Date
and (iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39505), including all amendments thereto and including the Prospectus
relating to the Offered Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date and as to the
Certificate Insurance Policy, the sum of (x)(i) all Insured Payments previously
paid to the Trustee by the Certificate Insurer and not previously repaid to the
Certificate Insurer pursuant to Section 7.03(b)(iv) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Reimbursement Late Payment Rate and (y)(i) any amounts then due and owing to the
Certificate Insurer under the Insurance and Indemnity Agreement plus (ii)
interest on such amounts at the Late Payment Rate. The Certificate Insurer shall
notify the Trustee, the Depositor and the Sellers of the amount of any
Reimbursement Amount.
"Related Security": With respect to any Home Equity Loan, all right,
title and interest of any and all of the Sellers and the Depositor in and to:
(i) the related Property securing such Home Equity Loan;
(ii) all other security interests or liens and property subject thereto
from time to time, if any, purporting to secure payment of such Home Equity
Loan, whether pursuant to the related Home Equity Loan Documents or
otherwise, together with all financing statements and similar documents
signed by a Mortgagor describing any collateral securing such Home Equity
Loan;
(iii) all guarantees, indemnities, warranties, insurance policies
(including any premium refunds and other proceeds thereof) and other
agreements or arrangements of any kind from time to time supporting or
securing payment of such Home Equity Loan, whether pursuant to the Home
Equity Loan Documents related to such Home Equity Loan or otherwise; and
(iv) all Records related to such Home Equity Loan.
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"Relief Act Shortfall": With respect to any Payment Date, for any Home
Equity Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended Remittance Period as a result of
the application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (a) the interest collectible on such Home
Equity Loan during such Remittance Period is less than (b) the interest due on
such Home Equity Loan during such Remittance Period, calculated at the related
Coupon Rate.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC I": A REMIC established pursuant to Section 2.08 hereof.
"REMIC I Certificates": As defined in Section 2.08(b) hereof.
"REMIC I Regular Interests": As defined in Section 2.08(b) hereof.
"REMIC II": A REMIC established pursuant to Section 2.08 hereof.
"REMIC II Certificates": As defined in Section 2.08(c) hereof.
"REMIC II Regular Interests": As defined in Section 2.08(c) hereof.
"REMIC III": A REMIC established pursuant to Section 2.08 hereof.
"REMIC III Regular Interests": As defined in Section 2.08(d) hereof.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the month
in which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
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"Residual Certificates": Collectively, the Class R-I, Class R-II and
Class R Certificates.
"Retained Certificates": Collectively, the Class C, Class R-I, Class
R-II and Class R Certificates.
"Schedule of Home Equity Loans": Each of the schedules of Home Equity
Loans, segregated by Loan Group I and Loan Group II, listing each Home Equity
Loan in such category to be conveyed on the Startup Day. Such Schedules 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 (and with
respect to Adjustable Rate Home Equity Loans, the margin), the Loan-to-Value
Ratio and the Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the
current scheduled monthly payment of principal and interest and the maturity of
the related Note, the property type, occupancy status, Appraised Value and
original term-to-maturity thereof, whether or not such Home Equity Loan
(including the related Note) has been modified and the aggregate Loan Balances
of all Home Equity Loans. Such Schedules shall also identify the Seller of each
Home Equity Loan.
"Scheduled Payment": As of any date of calculation, with respect to a
Home Equity Loan, the then stated scheduled monthly installment of principal and
interest payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date).
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Sellers": ContiMortgage and ContiWest.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Property having a first priority lien.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Extension Notice": As defined in Section 8.20(i) hereof.
"Servicer Termination Event": Any event described in paragraph (a), (b)
or (c) of Section 8.20 hereof.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
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"Servicing Fee": With respect to any Home Equity Loan, the amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to the
Servicing Fee Rate times the then outstanding principal amount of such Home
Equity Loan as of the first day of each calendar month payable on a monthly
basis.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Records": With respect to any Home Equity Loan, all books
and records in any form or format whatsoever (including records kept in
electronic form) that have been maintained by or for the Servicer or any
Sub-Servicer with respect to such Home Equity Loan, including all documents
(whether originals or copies), files, records, databases, computer tapes, floppy
disks, tax bills, assessment notices, binders and other proof of insurance
coverage, insurance policies, insurance premium notices, appraisals, other
closing documentation, payment history records, agreements, and any other
records in any way relating to or evidencing the servicing of any of such Home
Equity Loan.
"Six-Month Rolling Average 90+ Day Delinquency Rate": With respect to
any Payment Date, the fraction, expressed as a percentage (A) the numerator of
which is the sum of the following six (or lesser number of Remittance Periods
which have elapsed since the Closing Date) percentages for each of the past six
(or such lesser number) Remittance Periods (x) the aggregate outstanding Loan
Balance of all 90+ Day Delinquent Loans as of the last day of the related
Remittance Period divided by (x) the Combined Pool Balance as of the end of the
related Remittance Period and (B) the denominator of which is six (or such
lesser number).
"Six-Month Rolling Average Excess Spread": With respect to any Payment
Date, the fraction, expressed as a percentage (A) the numerator of which is the
sum of the following six (or lesser number of Remittance Periods) which have
elapsed since the Closing Date) percentages for each of the past six (or such
lesser number) Remittance Periods (x) the weighted average Coupon Rate of the
Home Equity Loans as of the opening of business on the first day of the related
Remittance Period, less (a) the sum of (i) the aggregate Premium Amount, the
aggregate Servicing Fee, the aggregate Trustee Fee and the aggregate Master
Servicing Fee (if the Master Servicer is then engaged under this Agreement) for
such Remittance Period, (ii) the aggregate Current Interest for the Class A and
Class B Certificates with respect to such Payment Date and (iii) Realized Losses
which occurred during such Remittance Period divided by (b) the Combined Pool
Balance as of the end of the related Remittance Period and (B) the denominator
of which is six (or such lesser number).
"90+ Day Delinquent Loan": With respect to any Determination Date, all
REO Properties, each Home Equity Loan with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, three
months or more past due (without giving effect to any grace period), each Home
Equity Loan in Foreclosure and each Home Equity Loan for which the mortgagor has
filed for bankruptcy.
"Short Sale": A sale of a Home Equity Loan at a price less than the
outstanding Loan Balance thereof.
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"Six-Month LIBOR Loans": Home Equity Loans bearing interest at an
adjustable rate indexed to six-month LIBOR.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
the XxXxxx-Xxxx Companies, Inc.
"Startup Day": June 17, 1999.
"Stepdown Date": The later to occur of (x) the Payment Date in July
2002 and (y) the first Payment Date on which the Aggregate Class A Certificate
Principal Balance is less than or equal to the Class A Optimal Balance for such
Payment Date.
"Step-Up Payment Date": The first Payment Date which occurs after the
Clean-Up Call Date.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Overcollateralization Amount" as of any Payment Date means:
(i) prior to the Stepdown Date:
(A) if no Cumulative Realized Loss Trigger Event is in effect,
2.45% of the Original Combined Pool Balance (i.e., $19,600,000); or
(B) if a Cumulative Realized Loss Trigger Event is in effect, an
amount equal to 3.10% of the Original Combined Pool Balance (i.e.,
$24,800,000);
(ii) on and after the Stepdown Date:
(A) if a Cumulative Realized Loss Trigger Event is not in effect,
the greater of (I) the lesser of (x) 2.45% of the Original Combined
Pool Balance (i.e., $19,600,000) and (y) 4.90% of the Combined Pool
Balance and (II) 0.50% of the Original Combined Pool Balance (i.e.,
$4,000,000); or
(B) if a Cumulative Realized Loss Trigger Event is in effect, an
amount equal to 3.10% of the Original Combined Pool Balance (i.e.,
$24,800,000).
In the event that, on any Payment Date, paying the Aggregate Class A
Certificate Balance down to the Class A Optimal Balance results in an actual
Overcollateralization Amount
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greater than the Targeted Overcollateralization Amount, then that higher, actual
Overcollateralization Amount will control over the Targeted
Overcollateralization Amount for purposes of establishing the actual level of
enhancement provided by the Overcollateralization Amount.
"Tax Matters Certificate": The Residual Certificate initially issued to
ContiFunding Corporation as the initial Tax Matters Person for each REMIC.
"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 each
Class of the Residual Certificates 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.
"Telerate Page 3750": The display designated as page "3750" on
the Dow Xxxxx Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)
Weighted Average Pass-Through Rate, (b) any portion of the Trustee Fee
(calculated as a percentage of the outstanding principal amount of the Offered
Certificates) then accrued and outstanding and (c) the Premium Amount
(calculated as a percentage of the outstanding principal amount of the Class A
Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03 hereof.
"3/27 Loans": Home Equity Loans which bear interest for the first three
years following origination at a fixed rate, and at an adjustable rate
thereafter.
"Trust": ContiMortgage Home Equity Loan Trust 1999-3, 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) 0.0027% multiplied by the
then-outstanding Aggregate Certificate Principal Balance and (ii) $4,750.
"2/28 Loans": Home Equity Loans which bear interest for the first two
years following origination at a fixed rate, and at an adjustable rate
thereafter.
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"UCC": The Uniform Commercial Code, as in effect in the relevant
jurisdiction, as amended from time to time.
"Underwriters": Credit Suisse First Boston Corporation, Bear, Xxxxxxx &
Co. Inc., Greenwich Capital Markets, Inc., Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx,
Incorporated, and Xxxxxx Xxxxxxx & Co. Incorporated.
"Unpaid Class B Realized Loss Amount": With respect to any Payment Date
and each Loan Group, the excess of (x) the aggregate cumulative amount of Class
B Applied Realized Loss Amounts with respect to the Class B Certificates related
to such Loan Group for all prior Payment Dates over (y) the aggregate,
cumulative amount of Class B Realized Loss Amortization Amounts with respect to
the Class B Certificates related to such Loan Group for all prior Payment Dates.
"Voluntary Payoff": A Prepayment which satisfies the related Note in
full, and did not result from a liquidation of the related Home Equity Loan, or
its repurchase from the Trust.
.2 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.
.3 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.
.4 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
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Article II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
.1 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 1999-3."
.2 Office.
The office of the Trust shall be in care of the Trustee, addressed to
Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000, Attention Corporate Trust
Administration, or at such other address as the Trustee may designate by notice
to the Depositor, the Seller, the Certificate Insurer, the Master Servicer and
the Servicer.
.3 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect any of the REMIC I's, REMIC II's or REMIC III's status as a
REMIC.
.4 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.
.5 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section 7.03(b)
hereof), (ii) any reasonable expenses of the Trustee, and (iii) any other
expenses of the Trust that have been reviewed by ContiMortgage, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
ContiMortgage. ContiMortgage shall pay directly the reasonable fees and expenses
of counsel to
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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.
.6 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.
.7 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.
.8 Miscellaneous REMIC Provisions.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC
III shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The assets of REMIC I shall include the Home Equity Loans, the
Accounts, any REO Property, and any proceeds of the foregoing. The REMIC I
Regular Interests (as defined below) shall constitute the assets of REMIC II.
The REMIC II Regular Interests (as defined below) shall constitute the assets of
REMIC III.
(b) REMIC I will be evidenced by (x) the Class IA, Class IB, Class IC,
Class ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ, Class IK
and Class IL Certificates (the "REMIC I Regular Interests"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC I and (y) the Class R-I Certificates, which are hereby
designated as the single "residual interest" in REMIC I (the REMIC I Regular
Interests, together with the Class R-I Certificates, the "REMIC I
Certificates"). The REMIC I Regular Interests shall be recorded on the records
of REMIC I as being issued to and held by the Trustee on behalf of REMIC II.
The REMIC I Regular Interests will have the following initial principal
balances:
Class IA $455,000,000
Class IB $65,000,000
Class IC $60,000,000
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Class ID $6,000,000
Class IE $31,500,000
Class IF $2,500,000
Class IG $1,500,000
Class IH $1,000,000
Class II $5,000,000
Class IJ $2,500,000
Class IK $10,000,000
Class IL $160,000,000
On each Payment Date, principal collections on the Group I Home Equity
Loans shall be allocated to the Class IA Certificates through the Class IK
Certificates, sequentially, in the amounts necessary to reduce their respective
principal balances to zero. Any Aggregate Extra Principal Distribution Amount
and Realized Losses on the Group I Home Equity Loans shall be allocated in the
same priority.
On each Payment Date, all principal collections and Realized Losses on
the Group II Home Equity Loans shall be allocated to the Class IL Certificates.
The Class IA, Class IB, Class IC, Class ID, Class IE, Class IF, Class
IG, Class IH, Class II, Class IJ, and Class IK Certificates shall each have
Pass-Through Rates equal to the weighted average Coupon Rate of the Group I Home
Equity Loans net of the sum of the Servicing Fee for Loan Group I, the Trustee
Fee for Loan Group I, and the Premium Amount for Loan Group I (the sum expressed
as a per annum rate on the Group Loan Balance for Loan Group I). The Class IL
Certificate shall have a Pass-Through Rate equal to the weighted average Coupon
Rate of the Group II Home Equity Loans net of the sum of the Servicing Fee for
Loan Group II, the Trustee Fee for Loan Group II, and the Premium Amount for
Loan Group II (the sum expressed as a per annum rate on the Group Loan Balance
for Loan Group II). The Class R-I Certificates shall have no principal balance
and no Pass-Through Rate and shall be entitled to only those distributable
assets, if any, remaining in the REMIC I on each Payment Date after all amounts
required to be distributed to the REMIC I Regular Interests and applicable Trust
expenses have been paid.
(c) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class
II-A-8, Class A-9IO-1, Class A-9IO-2, Class A-9IO-3, Class A-9IO-4, Class
A-9IO-5, Class A-9IO-6, Class A-9IO-7, Class A-9IO-8, Class A-9IO-9, Class
A-9IO-10, Class II-B-1, Class II-B-2, Class II-M-1, Class II-M-2, and Class
II-M-3 Certificates (the "REMIC II Regular Interests"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class R-II Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-II Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC III.
Any Aggregate Extra Principal Distribution Amount will not be paid as
interest to the REMIC II Regular Interests, but instead to the extent available,
a portion of the interest
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payable with respect to the Class II-M-3 Certificates which equals 1% of the
Extra Principal Distribution Amount (and, to the extent 1% of the Extra
Principal Distribution Amount exceeds the interest payable on the Class II-M-3
Certificates, a pro rata portion of the interest payable on the Class II-M-1 and
Class II-M-2 Certificates equal to such excess) will be payable as a reduction
of the principal balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class II-A-8, Class II-B-1 and
Class II-B-2 Certificates in the same manner in which the Extra Principal
Distribution Amount is allocated among the Class X-0, Xxxxx X-0, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and, with respect to both
the Class II-B-1 and Class II-B-2 Certificates, to Class B Certificates,
respectively (and will be accrued and added to principal on the Class II-M-1 and
Class II-M-2 Certificates in the same proportion as interest payable on such
Certificates is used to reduce principal on other Certificates as just
described).
Principal payments on the Home Equity Loans shall be allocated 99% to
the Class II-M-1, Class II-M-2 and Class II-M-3 Certificates, and 1% to the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class
II-A-6, Class II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2 Certificates
until paid in full. The aggregate amount of principal allocated to the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2 Certificates shall be
apportioned among such Classes in the same manner in which principal on the Home
Equity Loans is payable with respect to the Class X-0, Xxxxx X-0, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and, with respect to both
the Class II-B-1 and Class II-B-2 Certificates, to Class B Certificates,
respectively. The aggregate amount of principal allocated to the Class II-M-1,
Class II-M-2 and Class II-M-3 Certificates shall be allocated and apportioned
among such Certificates first, to the Class II-M-1 and Class II-M-2 Certificates
the least amount of principal necessary which when applied to such classes can
be applied so that the ratio of the principal balance of the Class II-M-1
Certificates to the principal balance of the Class II-M-2 Certificates equals
the ratio of the Group I Loan Balance to the Group II Loan Balance (the "Balance
Ratio") and second, to the Class II-M-3 Certificates.
Notwithstanding the above, principal payments on the Home Equity Loans
that are attributable to the Aggregate Overcollateralization Release Amount
shall be allocated to the Class II-M-1, Class II-M-2 and Class II-M-3
Certificates (allocated first to the Class II-M-3 Certificates until such
certificates are paid in full, and second to the Class II-M-1 and Class II-M-2
Certificates and apportioned among the Class II-M-1 and Class II-M-2
Certificates in such a manner that the Balance Ratio is maintained until paid in
full).
Realized Losses shall be applied such that after all distributions have
been made on such Payment Date the principal balances of the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7,
Class II-A-8, and the sum of the Class II-B-1 and Class II-B-2 Certificates are
each 1% of the principal balances of the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class B Certificates,
respectively, and the aggregate principal balance of the Class II-M-1, Class
II-M-2 and Class II-M-3 Certificates is equal to the Total Loan Balances of the
Home Equity Loans less an amount equal to the sum of the principal balances of
the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class
II-A-6, Class II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2
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Certificates and is allocated and apportioned first, to the Class II-M-1 and
Class II-M-2 Certificates the least amount of Realized Losses necessary which
when applied to such Classes can be applied in such a manner that the Balance
Ratio is maintained, and second, to the Class II-M-3 Certificates.
The REMIC II Certificates will have the following designations and
Pass-Through Rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:
REMIC II Initial Pass- Allocation Allocation
Certificates Balance Through of of
----------------------------- ---------------------- Rate Principal Interest
---------------- ---------------- -----------------
II-A-1 $2,091,000 (1) (5) (6)
II-A-2 $1,263,000 (1) (5) (6)
II-A-3 $727,000 (1) (5) (6)
II-A-4 $415,000 (1) (5) (6)
II-A-5 $409,000 (1) (5) (6)
II-A-6 $727,000 (1) (5) (6)
II-A-7 $448,000 (1) (5) (6)
II-A-8 $1,520,000 (1) (5) (6)
II-A-9IO-1 (notional) (2) (notional) (7)
II-A-9IO-2 (notional) (2) (notional) (7)
II-A-9IO-3 (notional) (2) (notional) (7)
II-A-9IO-4 (notional) (2) (notional) (7)
II-A-9IO-5 (notional) (2) (notional) (7)
II-A-9IO-6 (notional) (2) (notional) (7)
II-A-9IO-7 (notional) (2) (notional) (7)
II-A-9IO-8 (notional) (2) (notional) (7)
II-A-9IO-9 (notional) (2) (notional) (7)
II-A-9IO-10 (notional) (2) (notional) (7)
II-B-I $319,998.047 (1) (5) (6)
II-B-2 $80,002.782 (1) (5) (6)
II-M-1 $6,400,013.79 (3) (5) (6)
II-M-2 $1,600,002.78 (4) (5) (6)
II-M-3 $784,001,640.68 (1) (5) (6)
R-II 0 (8) (8) (8)
-----------------
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at any time
of determination equal the weighted average of (i) the Class IA Pass-Through
Rate, (ii) the Class IL Pass-Though Rate, (iii) the excess of the Class IB
Pass-Through Rate over (a) 6.00% for the first 3 Payment Dates and (b) 0.0%
thereafter, (iv) the excess of the Class IC Pass-Through Rate over (a) 6.00%
for the first 6 Payment Dates and (b) 0.0% thereafter, (v) the excess of the
Class ID Pass-Through Rate over (a) 6.00% for the first 9 Payment Dates and
(b) 0.0% thereafter, (vi) the excess of the Class IE Pass-Through Rate over
(a) 6.00% for the first 12 Payment Dates and (b) 0.0% thereafter, (vii) the
excess of the Class IF Pass-Through Rate over (a) 6.00% for the first 15
Payment Dates and (b) 0.0% thereafter, (viii) the excess of the Class IG
Pass-Through Rate over (a) 6.00% for the first 18 Payment Dates and (b) 0.0%
thereafter, (ix) the excess of the Class IH
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Pass-Through Rate over (a) 6.00% for the first 21 Payment Dates and (b) 0.0%
thereafter, (x) the excess of the Class II Pass-Through Rate over (a) 6.00%
for the first 24 Payment Dates and (b) 0.0% thereafter, (xi) the excess of
the Class IJ Pass-Through Rate over (a) 6.00% for the first 27 Payment Dates
and (b) 0.0% thereafter, and (xii) the excess of the Class IK Pass-Through
Rate over (a) 6.00% for the first 30 Payment Dates and (b) 0.0% thereafter.
(2) Interest on the Class II-A-9IO-1 will equal 6.00% per annum on the principal
balance of the Class IB Certificate for the first 3 Payment Dates and 0.0%
thereafter. Interest on the Class II-A-9IO-2 will equal 6.00% per annum on
the principal balance of the Class IC Certificate for the first 6 Payment
Dates and 0.0% thereafter. Interest on the Class II-A-9IO-3 will equal 6.00%
per annum on the principal balance of the Class ID Certificate for the first
9 Payment Dates and 0.0% thereafter. Interest on the Class II-A-9IO-4 will
equal 6.00% per annum on the principal balance of the Class IE Certificate
for the first 12 Payment Dates and 0.0% thereafter. Interest on the Class
II-A-9IO-5 will equal 6.00% per annum on the principal balance of the Class
IF Certificate for the first 15 Payment Dates and 0.0% thereafter. Interest
on the Class II-A-9IO-6 will equal 6.00% per annum on the principal balance
of the Class IG Certificate for the first 18 Payment Dates and 0.0%
thereafter. Interest on the Class II-A-9IO-7 will equal 6.00% per annum on
the principal balance of the Class IH Certificate for the first 21 Payment
Dates and 0.0% thereafter. Interest on the Class II-A-9IO-8 will equal 6.00%
per annum on the principal balance of the Class II Certificate for the first
24 Payment Dates and 0.0% thereafter. Interest on the Class II-A-9IO-9 will
equal 6.00% per annum on the principal balance of the Class IJ Certificate
for the first 27 Payment Dates and 0.0% thereafter. Interest on the Class
II-A-9IO-10 will equal 6.00% per annum on the principal balance of the Class
IK Certificate for the first 30 Payment Dates and 0.0% thereafter.
(3) The Pass-Through Rate on this REMIC II Regular Interest shall at any time of
determination equal the weighted average of (i) the Class IA Pass-Through
Rate, (ii) the excess of the Class IB Pass-Through Rate over (a) 6.00% for
the first 3 Payment Dates and (b) 0.0% thereafter, (iii) the excess of the
Class IC Pass-Through Rate over (a) 6.00% for the first 6 Payment Dates and
(b) 0.0% thereafter, (iv) the excess of the Class ID Pass-Through Rate over
(a) 6.00% for the first 9 Payment Dates and (b) 0.0% thereafter, (v) the
excess of the Class IE Pass-Through Rate over (a) 6.00% for the first 12
Payment Dates and (b) 0.0% thereafter, (vi) the excess of the Class IF
Pass-Through Rate over (a) 6.00% for the first 15 Payment Dates and (b) 0.0%
thereafter, (vii) the excess of the Class IG Pass-Through Rate over (a)
6.00% for the first 18 Payment Dates and (b) 0.0% thereafter, (viii) the
excess of the Class IH Pass-Through Rate over (a) 6.00% for the first 21
Payment Dates and (b) 0.0% thereafter, (ix) the excess of the Class II
Pass-Through Rate over (a) 6.00% for the first 24 Payment Dates and (b) 0.0%
thereafter, (x) the excess of the Class IJ Pass-Through Rate over (a) 6.00%
for the first 27 Payment Dates and (b) 0.0% thereafter, and (xi) the excess
of the Class IK Pass-Through Rate over (a) 6.00% for the first 30 Payment
Dates and (b) 0.0% thereafter.
(4) The Pass-Through Rate on this REMIC II Regular Interest shall at any time of
determination equal the Pass-Through Rate on the Class IL Certificate.
(5) Principal will be allocated to and apportioned among the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and
Class B Certificates in the same proportion as principal from the Home
Equity Loans is payable with respect to such Certificates, except that a
portion of such principal in an amount equal to the Overcollateralization
Stepdown Amount shall first be allocated as a payment of interest to the
Class C Certificates, and all principal will be allocated as a payment of
interest to the Class C Certificates after the principal balances of the
Class A and Class B Certificates have been reduced to zero.
(6) Except as provided in the next sentence, interest will be allocated among
the Class X-0, Xxxxx X-0, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9IO and Class B Certificates in the same proportion
as interest is payable on such Certificates.
Any interest with respect to each REMIC II Certificate in excess of the
product of (i) 100 times the weighted average coupon of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, Class A-9IO-1, Class A-9IO-2, Class A-9IO-3, Class
A-9IO-4, Class X-
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0XX-0, Class A-9IO-6, Class A-9IO-7, Class A-9IO-8, Class A-9IO-9,
Class A-9IO-10, Class II-B-1, Class II-B-2, Class II-M-1, Class II-M-2 and
Class II-M-3 Certificates, where each of such Classes, other than the Class
II-M-1, Class II-M-2 and Class II-M-3 Certificates, is first subject to a
cap and floor equal to the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, with respect to Class A-9IO-1, Class
A-9IO-2, Class A-9IO-3, Class A-9IO-4, Class A-9IO-5, Class A-9IO-6, Class
A-9IO-7, Class A-9IO-8, Class A-9IO-9, Class A-9IO-10 Certificates, the
Class A-9IO, respectively and, with respect to the Class II-B-1 and Class
II-B-2 Certificates, the Class B Pass-Through Rate, respectively, and the
Class II-M-1, Class II-M-2 and Class II-M-3 Certificates are each subject to
a cap equal to 0%, and (ii) the principal balance of each such REMIC II
Certificate, shall not be allocated to the Class A and Class B Certificates
but will be allocated to the Class C Certificates. However, the Class C
Certificates shall be subordinated to the extent provided in Section 7.03.
(7) to Class A-9IO
(8) On each Distribution Date, available funds, if any, remaining in the REMIC
II after payments of interest and principal, as designated above, will be
distributed to the Class R-II Certificate. It is expected that there shall
not be any distributions on the Class R-II Certificates.
(d) The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9IO, Class B and Class C Certificates are
hereby designated as "regular interests" with respect to the REMIC III (the
"REMIC III Regular Interests") and the Class R Certificate is hereby designated
as the single "residual interest" with respect to REMIC III. On each Payment
Date, available funds, if any, remaining in REMIC III after payments of interest
and principal as designated herein shall be distributed to the Class R
Certificates.
(e) For federal income tax purposes, the "latest possible maturity
date" for each of the REMIC I Regular Interests, REMIC II Regular Interests and
REMIC III Regular Interests (other than the Class A-9IO Certificates) is hereby
set to be the Payment Date of December 25, 2029 and for the Class A-9IO
Certificates is hereby set to be the Payment Date of December 25, 2001.
(f) The Startup Day is hereby designated for each of REMIC I, REMIC II
and REMIC III as the "startup day" within the meaning of Section 860G(a)(9) of
the Code.
(g) The Trustee shall provide to the Internal Revenue Service and to
the persons described in Section 860E(e)(3) and (6) of the Code, the information
described in Treasury regulations Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto, with respect to each of REMIC I, REMIC II and REMIC III.
Such information will be provided in the manner described in Treasury
regulations Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
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Article III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
.1 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Master Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder or under the other Operative Documents to which the
Depositor is a party.
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(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.
(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) Immediately following the sale, assignment, transfer and conveyance
described in Section 3.05(a)(i) hereof and immediately prior to the sale,
assignment, transfer and conveyance described in Section 3.05(a)(ii) hereof, the
Depositor will hold good title to, and be
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the sole owner of, the Home Equity Loans referred to therein free and clear
of any liens, charges, mortgages, encumbrances or rights of others, except
as set forth in Section 3.04(b)(ix) (other than liens which will be
simultaneously released).
(j) The Depositor has valid business reasons for entering into the
transactions contemplated by this Agreement (including, without limitation, the
sale of its interests in the Home Equity Loans and other assets in the Trust
Estate to the Trustee), and all such transactions are in the ordinary course of
business of the Depositor.
(k) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans and other assets in the Trust Estate, nor
is the Depositor aware of any pending insolvency.
(l) The sale, assignment, transfer 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.
(m) The Depositor is not transferring the Home Equity Loans and other
assets in the Trust Estate to the Trustee with any intent to hinder, delay or
defraud its creditors.
(n) The Depositor received fair consideration and reasonably equivalent
value in exchange for the sale, assignment, transfer and conveyance of its
interests in the Home Equity Loans and other assets in the Trust Estate to the
Trustee.
(o) The Chief Executive Office of the Depositor is located at 0000 Xxxx
Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000, and the Depositor's
federal taxpayer identification number is 00-0000000.
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.
.2 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee,
the Master Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Servicer and each Sub-Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer is designated as
an approved seller-servicer by FannieMae for first and second mortgage loans and
has
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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.
(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
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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
FannieMae guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of either Seller, the Servicer, the Master
Servicer, any Sub-Servicer, any Owner, the Certificate Insurer or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach, the
Servicer shall cure such breach in all material respects and, upon the
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee pursuant to Section 8.20 hereof; provided, however, that if any
party can establish to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer.
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.3 Representations and Warranties of the Sellers.
(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee, the Master Servicer, the Certificate Insurer and the Owners that as of
the Startup Day:
(a) ContiMortgage is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it, make such
qualification necessary. ContiMortgage has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by ContiMortgage and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of ContiMortgage and will not violate
ContiMortgage's Certificate of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiMortgage is a party or by which ContiMortgage is
bound or violate any 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.
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(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiMortgage contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiMortgage or matters or activities for which ContiMortgage is
responsible in accordance with the Operative Documents or which are attributable
to ContiMortgage therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiMortgage required to be stated therein or necessary to make
the statements contained therein with respect to ContiMortgage, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiMortgage that
materially adversely affects or in the future may (so far as ContiMortgage can
now reasonably foresee) materially adversely affect ContiMortgage or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) Immediately prior to the sale, assignment, transfer and conveyance
described in Section 3.05(a)(i) hereof, ContiMortgage will hold good title to,
and be the sole owner of, the Home Equity Loans being transferred by it as
described therein, free and clear of any liens, charges, mortgages, encumbrances
or rights of others except as set forth in Section 3.04(b)(ix) (other than liens
which will be simultaneously released).
(i) 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 liens, charges,
mortgages, encumbrances or rights of others except as set forth in Section
3.04(b)(ix) (other than liens which will be simultaneously released).
(j) 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.
(k) 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
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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.
(l) 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.
(m) ContiMortgage has valid business reasons for entering into the
transactions contemplated by this Agreement (including, without limitation, the
sale of its interests in the Home Equity Loans and other assets in the Trust
Estate to the Depositor), and all such transactions are in the ordinary course
of business of ContiMortgage.
(n) ContiMortgage is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans and other assets in the Trust Estate, nor
is ContiMortgage aware of any pending insolvency.
(o) The sale, assignment, transfer 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.
(p) ContiMortgage is not transferring the Home Equity Loans and other
assets in the Trust Estate to the Depositor with any intent to hinder, delay or
defraud its creditors.
(q) ContiMortgage received fair consideration and reasonably equivalent
value in exchange for the sale, assignment, transfer and conveyance of its
interests in the Home Equity Loans and other assets in the Trust Estate to the
Depositor.
(r) The Chief Executive Office of ContiMortgage is located at One Xxxxx
Park, 000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, and
ContiMortgage's federal taxpayer identification number is 00-0000000.
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.
Upon discovery by any of the Servicer, the Master Servicer, any
Sub-Servicer, either Seller, the Certificate Insurer or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the representations
and warranties set forth in this Section 3.03 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
ContiMortgage hereby covenants and agrees that within 60 days of its discovery
or its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, ContiMortgage may (or
may cause an affiliate of ContiMortgage to) on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) if such monthly
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Remittance Date is within two years following the Startup Day substitute in lieu
of any Home Equity Loan not in compliance with clause (h) a Qualified
Replacement Mortgage and, if the outstanding principal amount of such Qualified
Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than
the Loan Balance of such Home Equity Loan as of such Replacement Cut-Off Date,
deliver an amount equal to such difference together with the aggregate amount of
(A) all Delinquency Advances and Servicing Advances theretofore made with
respect to such Home Equity Loan and (B) all Delinquency Advances and Servicing
Advances which the Servicer and the Master Servicer have theretofore failed to
remit with respect to such Home Equity Loan (a "Substitution Amount") to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Home Equity Loan from the Trust at the Loan Purchase Price, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the contrary, with
respect to any Home Equity Loan which is not in default or as to which no
default is imminent, no repurchase or substitution pursuant to Section 3.03,
3.04 or 3.06 shall be made unless ContiMortgage obtains for the Trustee and the
Certificate Insurer an opinion of counsel experienced in federal income tax
matters to the effect that such a repurchase or substitution would not
constitute a Prohibited Transaction for the Trust or any REMIC therein or
otherwise subject the Trust or any REMIC therein to tax and would not jeopardize
the status of any REMIC therein as a REMIC (a "REMIC Opinion") addressed to the
Trustee and the Certificate Insurer and acceptable to the Trustee and the
Certificate Insurer. Any Home Equity Loan as to which repurchase or substitution
was delayed pursuant to this Section shall be repurchased or substituted for
(subject to compliance with Sections 3.03, 3.04 or 3.06, as the case may be)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such Home Equity Loan and (b) receipt by the Trustee and the
Certificate Insurer of a REMIC Opinion.
(2) ContiWest hereby represents, warrants and covenants to the Trustee,
the Master Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
(a) ContiWest is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it, make such qualification
necessary. ContiWest has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
this Agreement and the other Operative Documents to which it is a party.
(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 Articles 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.
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(c) Agreement and the other Operative Documents to which ContiWest is a
party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
ContiWest, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) ContiWest is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of ContiWest or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest has
received service of process or, to the best of ContiWest's knowledge, threatened
against ContiWest which litigation might have consequences that would prohibit
its entering into this Agreement or any other Operative Documents to which it is
a party or that would materially and adversely affect the condition (financial
or otherwise) or operations of ContiWest or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiWest contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiWest or matters or activities for which ContiWest is responsible
in accordance with the Operative Documents or which are attributable to
ContiWest therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiWest required to be stated therein or necessary to make the
statements contained therein with respect to ContiWest, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact 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) Immediately prior to the sale, assignment, transfer and conveyance
described in Section 3.05(a)(i) hereof, ContiWest will hold good title to, and
be the sole owner of, the Home Equity Loans being transferred by it as described
therein, free and clear of any
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liens, charges, mortgages, encumbrances or rights of others except as set forth
in Section 3.04(b)(ix) (other than liens which will be simultaneously released).
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which ContiWest makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by ContiWest of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of ContiWest and the performance by ContiWest of its obligations under
this Agreement and such of the other Operative Documents to which it is a party.
(k) ContiWest has valid business reasons for entering into the
transactions contemplated by this Agreement (including, without limitation, the
sale of its interests in the Home Equity Loans and other assets in the Trust
Estate to the Depositor), and all such transactions are in the ordinary course
of business of ContiWest.
(l) ContiWest is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans and other assets in the Trust Estate, nor is
ContiWest aware of any pending insolvency.
(m) The sale, assignment, transfer 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.
(n) ContiWest is not transferring the Home Equity Loans and other
assets in the Trust Estate to the Depositor with any intent to hinder, delay or
defraud its creditors.
(o) ContiWest received fair consideration and reasonably equivalent
value in exchange for the sale, assignment, transfer and conveyance of its
interests in the Home Equity Loans and other assets in the Trust Estate to the
Depositor.
(p) The Chief Executive Office of ContiWest is located at 0000 Xxxx
Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000, and ContiWest's
federal taxpayer identification number is 00-0000000.
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.
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Upon discovery by any of the Servicer, any Sub-Servicer, either Seller,
the Certificate Insurer or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.03 which materially and adversely affects the interests of the
Owners or of the Certificate Insurer, the party discovering such breach shall
give prompt written notice to the other parties. ContiWest hereby covenants and
agrees that within 60 days of its discovery or its receipt of notice of breach,
it shall cure such breach in all material respects or, with respect to a breach
of clause (h) above, ContiWest may (or may cause an affiliate of ContiWest to)
on the Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) if such monthly Remittance Date is within two years of the startup
day substitute in lieu of any Home Equity Loan not in compliance with clause (h)
a Qualified Replacement Mortgage and, if the outstanding principal amount of
such Qualified Replacement Mortgage as of the applicable Replacement Cut-Off
Date is less than the Loan Balance of such Home Equity Loan as of such
Replacement Cut-Off Date, deliver an amount equal to such difference together
with the aggregate amount of (A) all Delinquency Advances and Servicing Advances
theretofore made with respect to such Home Equity Loan and (B) all Delinquency
Advances and Servicing Advances which the Servicer and the Master Servicer have
theretofore failed to remit with respect to such Home Equity Loan (a
"Substitution Amount") to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless
ContiWest obtains for the Trustee and the Certificate Insurer a REMIC Opinion
addressed to the Trustee and the Certificate Insurer and acceptable to the
Trustee and the Certificate Insurer. Any Home Equity Loan as to which repurchase
or substitution was delayed pursuant to this Section shall be repurchased or
substituted for (subject to compliance with Sections 3.03, 3.04 or 3.06, as the
case may be) upon the earlier of (a) the occurrence of a default or imminent
default with respect to such Home Equity Loan and (b) receipt by the Trustee and
the Certificate Insurer of a REMIC Opinion.
.4 Covenants of the Sellers to Take Certain Actions with Respect to the
Home Equity Loans In Certain Situations.
(a) Upon the discovery by either Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee (i) that any of the
statements set forth in subsection (b) below were untrue as of the Startup Day
with the result that the interests of the Owners or the Certificate Insurer are
materially and adversely affected or (ii) that statements set forth in Clauses
(ix), (x), (xiii), (xxxvi), (xl), or (xli) of subsection (b) below were untrue
in any material respect as of the Startup Day, the party discovering such breach
shall give prompt written notice to the other parties. Upon the earliest to
occur of such Seller's discovery, its receipt of notice of breach from any one
of the other parties or such time as a situation resulting from an existing
statement which is untrue materially and adversely affects the interests of the
Owners or of the Certificate Insurer, such Seller hereby covenants and warrants
that it shall promptly cure such breach in all material respects or subject to
the last two sentences of Section 3.03 it shall on the second Monthly Remittance
Date next succeeding such discovery, receipt of notice or such time (i) if such
Monthly Remittance Date is within two years of the Startup Day substitute in
lieu of each
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Home Equity Loan which has given rise to the requirement for action by such
Seller a Qualified Replacement Mortgage and deliver the Substitution Amount to
the Servicer for deposit in the Principal and Interest Account or (ii) purchase
such Home Equity Loan from the Trust at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be delivered to the Servicer
for deposit in the Principal and Interest Account. Other than as specified in
Section 6.12 hereof, it is understood and agreed that the obligation of a Seller
so to substitute or purchase any Home Equity Loan as to which such a statement
set forth below is untrue in any material respect and has not been remedied
shall constitute the sole remedy under this Agreement respecting a discovery of
any such statement which is untrue in any material respect in this Section 3.04
available to the Owners, the Certificate Insurer and the Trustee, the
Certificate Insurer.
(b) The information set out below speaks as of the Startup Day, unless
a different date is specified:
(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 0.10% and 0.21% of
the aggregate Loan Balance of the Home Equity Loans in Loan
Group I and Loan Group II, respectively, are secured by
condominiums with more than four stories and no more than 0.69%
and 1.62% of the Loan Balance of the Home Equity Loans in Loan
Group I and Loan Group II, respectively, are secured by
condominiums of less than four stories;
(v) No Home Equity Loan in Loan Group I has a Loan-to-Value Ratio in
excess of 85%, except 24.60% of such Home Equity Loans which
have a combined Loan-to-Value Ratio not greater than 100%; no
Home Equity Loan in Loan Group II has a Loan-to-Value Ratio in
excess of 85%, except 19.36% of such Home Equity Loans which
have a Loan-to-Value Ratio not greater than 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer;
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(vii) The Note related to each Home Equity Loan in the Loan Group I
bears a fixed Coupon Rate of at least 6.25% per annum; the Note
related to each Home Equity Loan in Loan Group II bears a
current Coupon Rate of at least 6.75% per annum. The weighted
average Coupon Rate of the Home Equity Loans in the Loan Group I
is approximately 10.20%; the weighted average Coupon Rate of the
Home Equity Loans in Loan Group II is approximately 10.04%;
(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 26.69% of the aggregate Loan
Balance of the fixed rate Home Equity Loans, which may provide
for a "balloon" payment due on a maturity date which generally
is 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 0.18% and 1.43% of the
Home Equity Loans in Loan Group I and Loan Group II,
respectively, as a percentage of the outstanding aggregate Loan
Balance of such Home Equity Loans are 30-59 days Delinquent, (b)
no more than 0.01% and 0.08% of the Home Equity Loans in Loan
Group I and Loan Group II,
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respectively, as a percentage of the outstanding aggregate Loan
Balance of such Home Equity Loans, are 60-89 days Delinquent,
(c) none of the Home Equity Loans, is 90 or more days
Delinquent, (d) no Mortgagor of any Home Equity Loan has been 30
days or more Delinquent more than once during the 12 months
immediately preceding the Startup Day except as indicated on
Schedule 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;
(xv) Each Home Equity Loan at the time it was made complied in all
material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, usury,
equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an attorney's
opinion of title has been obtained but no title policy has been
obtained (provided that no title policy has been obtained with
respect to not more than 1.0% of the Original Combined Pool
Balance of the Home Equity Loans), or (b) a lender's title
insurance policy, issued in standard American Land Title
Association form by a title insurance company authorized to
transact business in the state in which the related Property is
situated, in an amount at least equal to the original balance of
such Home Equity Loan, 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, 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;
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(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;
(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 0.33% of the aggregate Loan
Balance of the Home Equity Loans Loan Group I and 0.53% in Loan
Group II, respectively, 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
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been delivered for recordation or have been recorded in the
appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof as against creditors of or
purchasers from the Seller delivering the related Home Equity
Loan (or, subject to Section 3.05 hereof, are in the process of
being recorded);
(xxiv) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to
protect the interest of the Owners and the Certificate Insurer
and which has been delivered to the Trustee. The substance of
any such alteration or modification is reflected on the related
Schedule of Home Equity Loans;
(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the
mortgagee to make future advances thereunder. Any and all
requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Home Equity
Loans were paid;
(xxvi) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien
of the corresponding Mortgage;
(xxvii) No Home Equity Loan was originated under a buydown plan;
(xxviii) No Home Equity Loan has a shared appreciation feature, or
other contingent interest feature;
(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, unless any such improvements 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
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in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty
insurer, if any, and which has been delivered to the Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least twelve
months prior to the maturity date of the related first
mortgage loan if such first mortgage loan provides for a
balloon payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity
Loans in the aggregate conform, in all material respects to
the description thereof set forth in the Prospectus
Supplement;
(xli) The credit underwriting guidelines applicable to each Home
Equity Loan conform in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xlii) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the
subject property;
(xliii) The Home Equity Loans were not selected for inclusion in the
Trust by the Sellers on any basis intended to adversely
affect the Trust;
(xliv) No more than 5.43% and 6.24% of the aggregate Loan Balance of
the Home Equity Loans in the Loan Group I and Loan Group II,
respectively, are secured by Properties that are non-owner
occupied Properties (i.e., investor-owned and vacation);
(xlv) No more than 3.38% and 8.57% of the aggregate Loan Balance of
the Home Equity Loans in Loan Group I and Loan Group II,
respectively, 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
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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) All of the Adjustable Rate Home Equity Loans are in a first
lien position;
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $498,513.06;
(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 $632,000;
(liv) No more than 6.92% of the Fixed Rate Home Equity Loans and
none of the Adjustable Rate Home Equity Loans are in a second
priority position; and
(lv) The weighted average margin of the Home Equity Loans in Loan
Group II is 6.51%.
(c) In the event that any action required by paragraph (a) above
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
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Mortgage is delivered by either Seller to the Trust pursuant to Section 3.03,
Section 3.04 or Section 3.06 hereof, such Seller shall be obligated to take the
actions described in Section 3.04(a) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the other Seller, the
Servicer, any Sub-Servicer, the Certificate Insurer or the Trustee that the
statements set forth in clause (ix), (x), (xiii), (xxxvi), (xl) or (xli) of
subsection (b) above are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust or that any of the other
statements set forth in subsection (b) above are untrue on the date such
Qualified Replacement Mortgage is conveyed to the Trust such that the interests
of the Owners or the Certificate Insurer in the related Qualified Replacement
Mortgage are materially and adversely affected; provided, however, that for the
purposes of this subsection (c) the statements in subsection (b) above referring
to items "as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to
refer to such items as of the date such Qualified Replacement Mortgage is
conveyed to the Trust. Notwithstanding the fact that a representation contained
in subsection (b) above may be limited to a Seller's knowledge, such limitation
shall not relieve a Seller of its repurchase obligation under this Section and
Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
.5 Conveyance of the Home Equity Loans and Qualified Replacement
Mortgages.
(a) (i) On the Startup Day, each Seller, concurrently with the
execution and delivery hereof, hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse (except as otherwise
provided herein), all of its respective right, title and interest of every kind
and nature whatsoever, whether now owned and existing or hereafter acquired or
arising, in and to the Trust Estate. In that connection, the parties acknowledge
that each Seller has reserved and retained all of its right, title and interest
in and to all principal (including Prepayments) and interest due and received on
or prior to the Cut-Off Date with respect to the Home Equity Loans being
transferred by it and, accordingly, such amounts do not form part of the Trust
Estate. The transfer by each Seller of the Home Equity Loans set forth on the
Schedule of Home Equity Loans and the other assets in the Trust Estate to the
Depositor is absolute and is intended by the Owners and all parties hereto to be
treated as a sale by each Seller for all purposes (including tax, reporting and
accounting purposes).
It is the express intent of the parties that, for each Seller, the
transfer and conveyance described in the immediately preceding paragraph
constitute a sale of the Home Equity Loans and other assets in the Trust Estate
conveying good title thereto free and clear of any liens and encumbrances from
such Seller to the Depositor and that the Home Equity Loans and other assets in
the Trust Estate not be part of such Seller's estate in the event of bankruptcy
or
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insolvency. Further, it is not the intent of the parties that any such transfer
and conveyance be deemed a grant by such Seller to the Depositor of a security
interest in the Home Equity Loans and other assets in the Trust Estate conveyed
by it hereunder in order to secure a debt or other obligation of such Seller.
However, in the event and to the extent that, notwithstanding the intent of the
parties hereto, any or all of the Home Equity Loans and other assets in the
Trust Estate conveyed by any Seller to the Depositor hereunder are held or
otherwise determined to have been property of such Seller or not to have been
conveyed to the Depositor in an absolute sale, then (i) this Agreement shall
also be deemed to be, and hereby constitutes, a security agreement within the
meaning of Article 9 of the UCC; (ii) any conveyance hereunder by such Seller of
a Home Equity Loan or other asset in the Trust Estate shall be deemed to be, and
hereby constitutes, a grant by such Seller to the Depositor of a first priority
security interest in all of such Seller's right, title and interest in and to
the Home Equity Loan or other asset; (iii) the possession by the Depositor or
any of its bailees or agents of items of property that constitute goods,
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the UCC; (iv) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Depositor for the purpose of perfecting
such security interest under applicable law; and (v) the obligations secured by
the first priority security interest described in clause (iii) above shall be
deemed to include any and all obligations of such Seller to the Depositor under
this Agreement, any and all obligations of the Depositor to the Trustee and any
and all obligations of the Trustee to the Owners and other Persons pursuant to
this Agreement and the other Operative Documents, including any obligation to
pay the principal of and interest on the Certificates to the related Owners as
and when due and any obligation to distribute or pay any other fees, costs,
expenses and other amounts required to be distributed or paid under this
Agreement or any of the other Operative Documents. Any assignment or other
transfer of the rights of the Depositor under any provision hereof shall also be
deemed to be an assignment of any security interest created hereby. Each Seller
covenants that, to the extent consistent with this Agreement, it will take such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Home Equity Loans, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and would be maintained as such throughout the terms of this
Agreement and the other Operative Documents. Each Seller also covenants not to
pledge, assign or grant a security interest in any of the Home Equity Loans to
any third party.
In connection with the transfer and conveyance described above by each
of 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, UCC-1 financing statements 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 an
absolute 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
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execute such documents as are necessary to perfect and protect the Depositor's,
the Trustee's, the Certificate Insurer's and the Owners' interest in the Trust
Estate.
(ii) On the Startup Day, the Depositor, concurrently with the execution
and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise
conveys to the Trustee on behalf of the Trust, without recourse (except as
otherwise provided herein), all of its right, title and interest of every kind
and nature whatsoever, whether now owned and existing or hereafter acquired or
arising, in and to the Trust Estate. The transfer by the Depositor of the Home
Equity Loans set forth on the Schedule of Home Equity Loans and the other assets
in the Trust Estate to the Trustee is absolute and is intended by the Owners and
all parties hereto to be treated as a sale by the Depositor for all purposes
(including tax, reporting and accounting purposes).
It is the express intent of the parties that the transfer and
conveyance described in the immediately preceding paragraph constitute a sale of
the Home Equity Loans and other assets in the Trust Estate conveying good title
thereto free and clear of any liens and encumbrances from the Depositor to the
Trustee on behalf of the Trust and that the Home Equity Loans and other assets
in the Trust Estate not be part of the Depositor's estate in the event of
bankruptcy or insolvency. Further, it is not the intent of the parties that any
such transfer and conveyance be deemed a grant by the Depositor to the Trustee
of a security interest in the Home Equity Loans and other assets in the Trust
Estate conveyed by it hereunder in order to secure a debt or other obligation of
the Depositor. However, in the event and to the extent that, notwithstanding the
intent of the parties hereto, any or all of the Home Equity Loans and other
assets in the Trust Estate conveyed by the Depositor to the Trustee on behalf of
the Trust hereunder are held or otherwise determined to have been property of
the Depositor or not to have been conveyed to the Trustee in an absolute sale,
then (i) this Agreement shall also be deemed to be, and hereby constitutes, a
security agreement within the meaning of Article 9 of the UCC; (ii) any
conveyance hereunder by the Depositor of a Home Equity Loan or other asset in
the Trust Estate shall be deemed to be, and hereby constitutes, a grant by the
Depositor to the Trustee of a first priority security interest in all of the
Depositor's right, title and interest in and to the Home Equity Loan or other
asset; (iii) the possession by the Trustee or any of its bailees or agents of
items of property that constitute goods, instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the UCC; (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law; and
(v) the obligations secured by the first priority security interest described in
clause (iii) above shall be deemed to include any and all obligations of the
Depositor to the Trustee and any and all obligations of the Trustee to the
Owners and other Persons pursuant to this Agreement and the other Operative
Documents, including any obligation to pay the principal of and interest on the
Certificates to the related Owners as and when due and any obligation to
distribute or pay any other fees, costs, expenses and other amounts required to
be distributed or paid under this Agreement or any of the other Operative
Documents. Any assignment or other transfer of the rights of the Trustee under
any provision hereof shall also be deemed to be an assignment of any security
interest created hereby. The Depositor covenants
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that, to the extent consistent with this Agreement, it will take such actions as
may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Home Equity Loans, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and would be maintained as such throughout the terms of this Agreement and
the other Operative Documents. The Depositor also covenants not to pledge,
assign or grant a security interest in any of the Home Equity Loans to any third
party.
In connection with the transfer and conveyance described above from the
Depositor to the Trustee, the Depositor has filed, in the appropriate office or
offices in the States of New York, Nevada and Delaware, UCC-1 financing
statements executed by the Depositor as debtor, naming the Trustee as secured
party and listing the Home Equity Loans and the other property described above
as collateral. The characterization of the Depositor as debtor and the Trustee
as secured party in such financing statements is solely for protective purposes
and shall in no way be construed as being contrary to the intent of the parties
that this transaction be treated as a sale of the Depositor's entire right,
title and interest in and to the Trust Estate. In connection with such filing,
the Depositor agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's, the
Certificate Insurer's and the Owners' interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Home Equity
Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the Startup Day
with respect to each Home Equity Loan (A) the original Notes
endorsed in blank or to the order of the Trustee, (B) the
original title insurance policy or a copy certified by the
issuer of the title insurance policy, or the attorney's
opinion of title, (C) originals or certified copies of all
intervening assignments, showing a complete chain of title
from origination to the Trustee, if any, including
warehousing assignments, with evidence of recording thereon,
(D) originals of all assumption and modification agreements,
if any and (E) either: (1) the original Mortgage, with
evidence of recording thereon (if such original Mortgage has
been returned to the related Seller from the applicable
recording office or a certified copy thereof if such
original Mortgage has not been returned to the related
Seller from the applicable recording office), or (2) a copy
of the Mortgage certified by the public recording office in
those instances where the original recorded Mortgage has
been lost;
(ii) cause, within 60 days following the Startup Day or 15 days
following the receipt from the relevant state authorities,
assignments of the Mortgages to "Manufacturers and Traders
Trust Company, as Trustee of ContiMortgage Home Equity Loan
Trust 1999-3 under the Pooling and Servicing Agreement dated
as of June 1, 1999" 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
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furnishes to the Trustee and the Certificate Insurer, on or
before the Startup Day, at the Depositor's expense an
opinion of counsel with respect to the relevant jurisdiction
that such recording is not necessary to perfect the
Trustee's interest in the related Home Equity Loans (in form
and substance and from counsel satisfactory to the Rating
Agencies and the Certificate Insurer); notwithstanding the
furnishing of such opinion of counsel, however, the
Certificate Insurer may, in its reasonable discretion after
consultation with the Depositor prior to the date on which
all assignments of Mortgages are required to be filed
hereunder, require the filing of assignments of Mortgages in
any state that is the subject of such opinions; and
(iii) deliver the title insurance policy or title searches, the
original Mortgages and such recorded assignments, together
with originals or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt
thereof by the Depositor (but in any event, with respect to
any Mortgage as to which original recording information has
been made available to the Depositor, within one year after
the Startup Day).
Notwithstanding the delivery of opinions specified in clause (i) above
the Trustee shall cause to be recorded each assignment of a Mortgage upon the
earliest to occur of (a) the reasonable direction of the Certificate Insurer,
(b) the removal of the Servicer pursuant to Section 8.20 hereof or (c)
notification to the Trustee of the occurrence of a bankruptcy or insolvency
relating to the Mortgagor.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the second preceding paragraph, each Seller shall deliver to
the Trustee a list of all Mortgages with respect to Home Equity Loans delivered
by such Seller for which no Mortgage assignment has yet been submitted for
recording by such Seller, which list shall state the reason why such Seller has
not yet submitted such Mortgage assignments for recording. With respect to any
Mortgage assignment disclosed on such list as not yet submitted for recording
for a reason other than a lack of original recording information, the Trustee
shall make an immediate demand on such Seller to prepare such Mortgage
assignments, and shall inform the Certificate Insurer of such Seller's failure
to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in
executing any documents prepared by the Certificate Insurer and submitted to the
Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (ii) of the second preceding paragraph, each
Seller shall promptly prepare a Mortgage assignment for any Mortgage with
respect to Home Equity Loans delivered by such Seller for which original
recording information is subsequently received by such Seller, and shall
promptly
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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
Certificate Insurer. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation contained
in clause (xxiii) of Section 3.04(b) hereof; provided, however, that if as of
the end of such 20th calendar month either Seller then required to deliver such
a completed assignment demonstrates to the satisfaction of the Certificate
Insurer that it is exercising its best efforts to obtain such completed
assignment and, during each month thereafter until such completed assignment is
delivered to the Trustee, such Seller continues to demonstrate to the
satisfaction of the Certificate Insurer that it is exercising its best efforts
to obtain such completed assignment, the related Home Equity Loan will not be
deemed to have breached such representation. The requirement to deliver a
completed assignment with evidence of recording thereon will be deemed satisfied
upon delivery of a copy of the completed assignment certified by the applicable
public recording office.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 with respect to
one or more Home Equity Loans shall be accomplished at the expense of the Seller
delivering such Home Equity Loan.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing documents, 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 for the benefit of the Owners of the
Certificates and of the Certificate Insurer 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 principal and interest payments received on such
Qualified Replacement Mortgage on or prior to the applicable Replacement Cut-Off
Date.
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(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 for the benefit of the Owners of the
Certificates and the Certificate Insurer, 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.
(i) The parties acknowledge and agree that, after the transfers
described in subsections (a)(i) and (a)(ii) of this Section 3.05, ownership of
the entire Trust Estate (including all of the Home Equity Loans and other assets
included therein) shall be vested solely and exclusively in the Trustee on
behalf of the Trust. Accordingly, each of the Sellers and the Depositor hereby
agree that it shall take no action inconsistent with the Trustee's ownership, on
behalf of the Trust, of the Trust Estate and shall indicate or shall cause to be
indicated in its books and records (including any books and records held on its
behalf) that ownership of the Trust Estate (including all of the Home Equity
Loans and other assets included therein) is held by the Trustee on behalf of the
Trust. In addition, each of the Sellers and the Depositor hereby agree that it
shall respond to any inquiries from third parties with respect to ownership of
such assets
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by stating that it is not the owner of such assets and that ownership of such
assets is held by the Trustee on behalf of the Trust.
.6 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee agrees, for the
benefit of the Owners, to review such items within 45 days after the Startup Day
(or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Qualified Replacement Mortgage, within
45 days after the assignment thereof) and to deliver to the Depositor, each of
the Sellers, the Certificate Insurer and the Servicer a certification in the
form attached hereto as Exhibit F (a "Pool Certification") to the effect that,
as to each Home Equity Loan listed in the Schedule of Home Equity Loans (other
than any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it pursuant to
Section 3.05(b)(i) of this Agreement are in its possession, (ii) such documents
have been reviewed by it and have not been mutilated, damaged or torn and relate
to such Home Equity Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Schedule of Home Equity
Loans accurately reflects the information set forth in the File. The Trustee
shall have no responsibility for reviewing any File except as expressly provided
in this subsection 3.06(a). Without limiting the effect of the preceding
sentence, in reviewing any File, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face, nor shall the Trustee
be under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any Home
Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers, the Certificate Insurer and the
Owners. In performing any such review, the Trustee may conclusively rely as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of
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the Trustee's review of the items delivered by each of the Sellers pursuant to
Section 3.05(b)(i) is limited solely to confirming that the documents listed in
Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. Each Seller agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File delivered by such Seller of which it is so notified by the Trustee.
If, however, within 60 days after the Trustee's notice to it respecting such
defect the related Seller has not remedied the defect and the defect materially
and adversely affects the interest of the Owners or the Certificate Insurer in
the related Home Equity Loan such Seller will (or will cause an affiliate of
such Seller to) on the next succeeding Monthly Remittance Date (i) if such
Monthly Remittance Date is within two years following the Startup Day,
substitute in lieu of such Home Equity Loan a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest Account.
However, such substitution or purchase must occur within 90 days of the
Trustee's notice of the defect if the defect would prevent the Home Equity Loan
from being a Qualified Mortgage, and no substitution or purchase of a Home
Equity Loan that is not in default or for which no default is imminent shall be
made unless such Seller obtains for the Trustee and Certificate Insurer a REMIC
Opinion, addressed to and acceptable to the Trustee and Certificate Insurer.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the [6]th month after the Startup Day indicating the current
status of the exceptions previously indicated on the Pool Certification (the
"Final Certification"). After delivery of the Final Certification, the Trustee
and the Servicer shall monitor and upon request from the Certificate Insurer
provide no less frequently than monthly, updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
END OF ARTICLE III
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Article IV
ISSUANCE AND SALE OF CERTIFICATES
.1 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall execute, authenticate and deliver the Certificates on behalf of the Trust.
.2 Sale of Certificates.
At 11:00 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Xxxxx Xxxxxxxxxx LLP, 1301 Sixth Avenue, New York, New York (or
at such other location acceptable to the Seller), the Sellers will sell and
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters the Class A
Certificates and the Class B Certificates with an aggregate Percentage Interest
in each Class equal to 100%, registered in the name of Cede & Co., or in such
other names as the Underwriters shall direct, against payment of the purchase
price thereof by wire transfer of immediately available funds to the Trust, (ii)
to ContiSecurities Holding Corporation, the Class C Certificates with a
Percentage Interest equal to 100%, (iii) to ContiSecurities Holding Corporation,
a Residual Certificate of each Class, each with a Percentage Interest equal to
99.999%, and (iv) to ContiFunding Corporation, a Residual Certificate of each
Class, each with a Percentage Interest equal to 0.001%.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
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Article V
CERTIFICATES AND TRANSFER OF INTERESTS
.1 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law) and except for the rights of
the Trustee on behalf of the Owners of the Class A Certificates with respect to
the Certificate Insurance Policies. The Certificates are payable solely from
payments received on or with respect to the Home Equity Loans (other than the
Servicing Fees), moneys in the Principal and Interest Account, earnings on
moneys and the proceeds of property held as a part of the Trust Estate. Each
Certificate entitles the Owner thereof to receive monthly on each Payment Date,
in order of priority of distributions with respect to such Class of Certificates
as set forth in Section 7.03, a specified portion of such payments with respect
to the Home Equity Loans, pro rata in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
.2 Forms.
The Class A-1, the Class A-2, the Class A-3, the Class A-4, the Class
A-5, the Class A-6, the Class A-7, the Class A-8, the Class A-9-IO, Class B,
Class C and the Class R, Class R-I, Class R-II 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, A-9-IO, B, C and R, R-I, R-II 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.
.3 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated by the manual or
facsimile signature of one of the Trustee's Authorized Officers. Upon proper
authentication by the Trustee, the Certificates shall bind the Trust.
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The initial Certificates shall be dated as of the day
following the Cut-Off Date (except in the case of the Class A-8 Certificates,
which will 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.
.4 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners, the Certificate Insurer and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates and the Class B Certificates then Outstanding with the
consent of the Certificate Insurer, or if there are no longer any Class A
Certificates or Class B Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class C Certificates, the Trustee will
give the Owners and the Certificate Insurer prompt written notice of the
appointment of such Registrar and of the location, and any change in the
location, of the Register. In connection with any such appointment the annual
fees of the bank then serving as Trustee and Registrar shall thenceforth be
reduced by the amount to be agreed upon by the Trustee and the Depositor at such
time and the reasonable fees of the Registrar shall be paid, as expenses of the
Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount or percentage interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
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(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 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-9IO Certificates) shall be issued in denominations of no less than $1,000 and
integral multiples thereof. On the Startup Day, the Class A-9IO Certificates
shall be issued in denominations of no less than $1,000 (based on the Class
A-9IO Notional Principal Amounts thereof) and integral multiples 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, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Offered Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Offered Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of an 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
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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.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the 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.
.5 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 and the Certificate Insurer harmless, then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, and the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Class, tenor and aggregate
principal amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental
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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.
.6 Persons Deemed Owners.
The Trustee and the Certificate Insurer and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever and the Trustee and the
Certificate Insurer or any agent of the Trustee shall not be affected by notice
to the contrary.
.7 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
.8 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Residual Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Residual Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Residual Certificate nor authenticate and make
available any new Residual Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Residual Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
The Residual Certificates are not transferable except that the Owner of the Tax
Matters
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Person Residual Interest 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 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 and the Certificate
Insurer 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, the Certificate Insurer 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, the Certificate Insurer and each of
the Sellers and the Certificate Insurer the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee, the Trust
Estate, the Certificate Insurer or either of the Sellers. The Owner of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Certificate Insurer and each of the
Sellers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(c) No transfer of a Retained Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Retained Certificate, acceptable to and in form and substance satisfactory to
the Trustee to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 406 of ERISA nor a plan or other arrangement subject to Section 4975 of
the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor using
the assets of any Plan to effect such transfer. By its acceptance or acquisition
of a Class B, the transferee shall be deemed to have represented that it either
(i) is not a Plan and is not acquiring its interest in such Class B with assets
of a Plan or (ii) is an insurance company acquiring its interest as permitted in
accordance with Prohibited Transaction Exemption 95-60. Notwithstanding anything
else to the contrary herein, any purported transfer of a Certificate to or on
behalf of any Plan without the delivery to the Trustee a representation letter
as described above shall be null and void and of no effect.
(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 and the Certificate Insurer shall have been furnished with an opinion of
counsel acceptable to the Trustee and the Certificate Insurer experienced in
federal bankruptcy matters to the effect that such sale or transfer would not
adversely affect the character of the conveyance of the Home Equity Loans to the
Trust as a sale. No sale or other transfer of the Residual 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.
.9 Assignment of Rights.
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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
.1 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 the
Class A-9IO Certificates) having an original principal balance of not less than
$1,000,000, (B) a Class A-9IO Certificate having an original Notional Amount of
not less than $1,000,000 or (C) Class C or Residual 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.
.2 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.
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(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 C Certificates; and the Owner of such Offered Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class C Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class C Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent before being
required to make any such payment, may, at the expense of the Trust, cause to be
published once, in the eastern edition of The Wall Street Journal, notice that
such money remains unclaimed and that, after a date specified therein, which
shall be not fewer than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be paid to the Owners of the Class C
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).
.3 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of
all Persons and parties.
The Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement and the
obligations of the Certificate Insurer under each Certificate Insurance Policy;
in addition, the Certificate Insurer or the Owners, by action, suit or
proceeding at law or equity, shall also have the power to enjoin, by action or
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suit in equity, any acts or occurrences which may be unlawful or in violation of
the rights of the Certificate Insurer and/or the Owners as such rights are set
forth in this Agreement; provided, however, that nothing in this Section shall
require any action by the Trustee unless the Trustee shall first (i) have been
furnished indemnity satisfactory to it and (ii) when required by this Agreement,
have been requested by the Certificate Insurer or Owners of a majority of the
Percentage Interests represented by the Offered Certificates then Outstanding
with the consent of the Certificate Insurer or, if there are no longer any
Offered Certificates then outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates; provided, further, however,
that if there is a dispute with respect to payments under a Certificate
Insurance Policy, the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
.4 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).
.5 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
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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.
.6 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.
.7 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, the Insurance and Indemnity
Agreement, the Indemnification Agreement or the Certificate Insurance Policy or
for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Depositor,
the Certificate Insurer and the Trustee of such Owner's intention
to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates and Class B Certificates
then Outstanding or, if there are no Class A or Class B
Certificates then Outstanding, by such percentage of the Percentage
Interests represented by the Class C Certificates, shall have made
written request to the Trustee to institute such proceeding in its
own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amount remains unpaid, the Certificate Insurer
consented in writing thereto (unless the Certificate Insurer is the
party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Owners of a
majority of the Percentage Interests represented by the Class A and
Class B Certificates or, if there are no Class A or Class B
Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class C 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,
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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 Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed).
.8 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.
.9 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or the Owners
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect to
any event described in Section 8.20(a) or (b) shall impair any such right or
remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer or the
Owners, as the case may be.
.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Offered Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A or
Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class C 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
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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:
(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.
.12 Indemnification.
The Depositor agrees to indemnify and hold the Trustee, the Master
Servicer, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the Master
Servicer, the Certificate Insurer and any Owner may sustain in any way related
to the failure of the Depositor to perform its duties in compliance with the
terms of this Agreement. The Depositor shall immediately notify the Trustee, the
Master Servicer, the Certificate Insurer and each Owner if such a claim is made
by a third party with respect to this Agreement, and the Depositor shall assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, either of the Sellers, the Trustee, the Master Servicer,
the Certificate Insurer and/or any Owner in respect of such claim. The Trustee
may, if necessary, reimburse the Depositor from amounts otherwise distributable
on the Class C Certificates for all amounts advanced by it pursuant to the
preceding sentence, except when the claim relates directly to the failure of the
Depositor to perform its duties in compliance with the terms of this Agreement.
In addition to the foregoing, ContiMortgage agrees to indemnify and hold the
Trustee, the Master Servicer, the Certificate Insurer and each Owner harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and other costs, fees and expenses that the
Trustee, the Master Servicer, the Certificate Insurer and any Owner may sustain
in any way related to the breach by ContiMortgage of its representations and
warranties set forth in Section 3.04(b)(xiii) or (xv) hereof with respect to a
Home Equity Loan if such Home Equity Loan qualifies as a "high cost mortgage"
pursuant to Section 226.32 of the Truth-in-Lending Act, as amended. The
provisions of this Section 6.12 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
.13 Access to Names and Addresses of Owners of Certificates.
(a) If any Owner (for purposes of this Section 6.13, an "Applicant")
applies in writing to the Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their rights
under this Agreement or under the Certificates and is accompanied by a copy of
the communication which such Applicant proposes to transmit, then the Trustee
shall, at the expense of such Applicant, within ten (10) Business Days after the
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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
.1 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policy,
including all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer. The Trustee
shall hold all such money and property received by it, other than pursuant to or
as contemplated by Section 6.02(e) hereof, as part of the Trust Estate and shall
apply it as provided in this Agreement.
.2 Establishment of Accounts.
The Depositor shall cause to be established on the Startup Day, and the
Trustee shall maintain, at the Corporate Trust Office the Certificate Account,
which is to be held by the Trustee on behalf of the Owners of the Certificates,
the Certificate Insurer and the Trustee.
.3 Flow of Funds.
(a) The Trustee shall deposit to the Certificate Account, without
duplication, upon receipt, any Insured Payments, the proceeds of any liquidation
of the assets of the Trust, all remittances made to the Trustee pursuant to
Section 8.08(d)(ii) and the Monthly Remittance Amount.
(b) On each Payment Date, the Monthly Remittance Amount plus amounts
described in Section 7.03(a) which are then on deposit in the Certificate
Account (such amount, the "Available Funds") will be applied in the following
order of priority:
(i) First, for the payment of certain fees, concurrently, to the
Trustee, the Trustee Fee, to the Certificate Insurer, the
Premium Amount and to the Master Servicer, the Master Servicing
Fee, (as long as the Master Servicer is engaged under this
Agreement);
(ii) Second, for the payment of Class A Certificate interest, to the
extent of the Available Funds then remaining in the Certificate
Account, plus the interest component of any related Insured
Payment, (such amount, the "Interest Amount Available"), to the
Owners of the Class A Certificates, the related Current Interest
plus the Interest Carry Forward Amount with respect to each such
Class of related 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, then such amount
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will be distributed among the outstanding Classes of related
Class A Certificates pro rata based on the aggregate amount of
interest due on each such Class, and any shortfall will be
carried forward with accrued interest;
(iii) Third, for the payment of Class B Certificate interest, to the
extent of the Available Funds then remaining in the Certificate
Account, to the Owners of the Class B Certificates, an amount
equal to the Current Interest for the Class B Certificates;
(iv) Fourth, for the payment of the Reimbursement Amount, if any,
then due to the Certificate Insurer, to the extent of the
Available Funds then remaining in the Certificate Account the
lesser of (x) the Reimbursement Amount then owed to the
Certificate Insurer and (y) the Maximum Certificate Insurer
Current Reimbursement Amount with respect to such Payment Date;
(v) Fifth, for the payment of the Class A Certificate principal, to
the extent of the Available Funds then remaining in the
Certificate Account plus the principal component of an Insured
Payment, to the Owners of the Class A Certificates, an amount
necessary to reduce the Aggregate Class A Certificate Principal
Balance (determined prior to payment of any such amount) to the
Class A Optimal Balance for such Payment Date;
(vi) Sixth, to fund the Interest Carry Forward Amount, if any, with
respect to the Class B Certificates, to the extent of the
Available Funds then remaining in the Certificate Account;
(vii) Seventh, for the payment of Class B Certificate principal, to
the extent of the amount then remaining in the Certificate
Account, an amount necessary to reduce the Class B Certificate
Principal Balance to the Class B Optimal Balance for such
Payment Date;
(viii) Eighth, the remaining amount, if any, on deposit in the
Certificate Account with respect to both Loan Groups is the
"Monthly Excess Cashflow Amount", which shall be applied in the
following order of priority:
(a) to fund the Class B Realized Loss Amortization Amount for
such Payment Date;
(b) to the Master Servicer, to the extent of (i) any
unreimbursed Delinquency Advances, (ii) any servicing
transition expenses incurred by the Master Servicer or its
designee in assuming the direct servicing of the Home Equity
Loans and (iii) any other documented costs and expenses
incurred by the Master Servicer;
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(c) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances and any other
costs and expenses incurred by the Servicer; and
(d) to fund a distribution to Owners of the Class C Certificates
in an amount equal to the Class C Distribution Amount.
(e) to fund a distribution of the Owners of the Class R
Certificates.
(c) The Class A Principal Distribution Amount shall be distributed on
each Payment Date, pari passu, to (i) the Group I Class A Certificates, in an
amount equal to the Group I Principal Distribution Amount and (ii) the Class A-8
Certificates, in an amount equal to the Group II Class A Principal Distribution
Amount.
(d) The Group I Class A Principal Distribution Amount shall be
distributed on each Payment Date in the following order of priority:
(i) first, to the Class A-7 Certificates, in an amount equal to the
lesser of (a) the Class A-7 Principal Distribution Amount for
such Payment Date and (b) the Class A-7 Certificate Principal
Balance immediately prior to such Payment Date;
(ii) second, to the to the Class A-1 through the Class A-6
Certificates, sequentially, in the amounts necessary to reduce
their respective Certificate Principal Balances to zero; and
(iii) third, to the Class A-7 Certificates, without regard to the Class
A-7 Principal Distribution Amount, any remaining amount of the
Group I Principal Distribution Amount for such Payment Date,
until the Class A-7 Certificate Principal Balance has been
reduced to zero.
(e) The Group II Class A Principal Distribution Amount is required to
be distributed on each Payment Date to the Class A-8 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(f) Notwithstanding the foregoing, on any Payment Date on which the
Class B Certificate Principal Balance and the Overcollateralization Amount is
zero and a Certificate Insurer Default has occurred and is continuing, any
amounts of principal payable to the Owners of the Class A Certificates shall be
distributed pro rata without regard to order of priority.
(g) [RESERVED]
(h) On each Payment Date, if the Class B Certificate Principal Balance
has not been reduced to zero, the Trustee shall allocate the excess of the
Aggregate Certificate Principal Balance over the Combined Loan Balance as of the
end of the related Remittance Period to reduce such Class B Certificate
Principal Balance, but not below zero.
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(i) [Reserved];
(j) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
shall not exceed the original Certificate Principal Balance of the related
Certificates.
(k) On any Payment Date during the continuance of any Certificate
Insurer Default any amounts otherwise payable to the Certificate Insurer as
Premium Amounts shall be retained in the Certificate Account.
(l) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Certificate Account and shall distribute such Insured
Payments, or the proceeds thereof as provided in paragraph (b) above.
(m) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with monies received pursuant to the terms of the Certificate Insurance
Policy shall not be considered payment of such Certificates from the Trust and
shall not result in the payment of or the provision for the payment of the
principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner by
its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee or the Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on any
Class A Certificates to the Owners of such Certificates, the Certificate Insurer
will be fully subrogated to the rights of such Owners to receive such principal
and interest together with any interest thereon of the applicable Pass-Through
Rate for such Class from the Trust and (b) the Certificate Insurer shall be paid
such principal and interest only from the sources and in the manner provided
herein for the payment of such principal and interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it unless on such Payment Date the Owners of
the Class A Certificates shall also have received the full amount of the related
Class A Distribution Amounts for such Payment Date.
The Trustee or Paying Agent shall (i) receive as attorney-in-fact of
each Owner of Class A Certificates any Insured Payment from the Certificate
Insurer and (ii) disburse the same to the Owners of the related Class A
Certificates as set forth in this Section 7.03. Insured Payments disbursed by
the Trustee or Paying Agent from proceeds of a Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such payments discharge
the obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to Section 7.03(b)(v) hereof.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Residual Certificates to receive
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distributions in respect of Residual Certificates, and all ownership interests
of the Owners of the Residual 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
Residual 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
Residual Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Owners
of the Residual Certificates shall not be required to refund any amount properly
distributed on the Residual Certificates pursuant to this Section 7.03.
.4 [Reserved].
.5 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Trustee in the name
of the Trustee for the benefit of the Owners and the Certificate Insurer, as
directed in writing by the Depositor, in one or more Eligible Investments
bearing interest or sold at a discount (provided, that the proceeds of the
Certificate Insurance Policy shall not be so invested). The bank serving as
Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next Payment
Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest in money market funds described in Section
7.07(h); to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Trustee shall be for the account of the Owners of the Class R-I Certificates
and distributed to the
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Owners of the Class R-I Certificates immediately prior to any distribution under
Section 7.03 hereof on any Payment Date, and any loss resulting from such
investments shall be for the account of the Servicer and promptly upon the
realization of such loss the Servicer shall contribute funds in an amount equal
to such loss to such Account.
.6 Payment of Trust Expenses.
(a) The Trustee shall make demand on ContiMortgage to pay the amount of
the expenses of the Trust (other than payments of premiums to the Certificate
Insurer) (including Trustee's fees and expenses not covered by Section
7.03(b)(i)) and ContiMortgage shall promptly pay such expenses directly to the
Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Trustee.
.7 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated (or
have an implied rating) in one of the two highest ratings categories by each
Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated as
follows by at least Moody's and Standard & Poor's: A-1 or better by Standard &
Poor's and P-1 by Moody's and F-1 or better, if rated by Fitch;
(d) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is rated as follows by at least Moody's and Standard &
Poor's: Baa3 or better by Moody's and A by each of Standard & Poor's and by
Fitch, if rated by Fitch), which has combined capital, surplus and undivided
profits of at least $50,000,000 which deposits are insured by the FDIC and held
up to the limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
(i) The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations
rated as follows by at
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least Moody's and Standard & Poor's: Aa2 or better by Moody's and
AA or better by Standard & Poor's and by Fitch, if rated by
Fitch, and
(ii) Moneys invested thereunder may be withdrawn without any penalty,
premium or charge upon not more than one day's notice (provided
such notice may be amended or canceled at any time prior to the
withdrawal date), and
(iii) The agreement is not subordinated to any other obligations of
such insurance company or bank, and
(iv) The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
(v) The Trustee receives an opinion of counsel that such agreement is
an enforceable obligation of such insurance company or bank;
(f) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated, as follows by at least Moody's and
Standard & Poor's: P-1 or Aa2, respectively, or better by Moody's, A-1 or AA,
respectively or better by Standard & Poor's and F-1 or AA, respectively, or
better by Fitch, if rated by Fitch, provided:
(i) A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
(ii) The securities are held free and clear of any lien by the Trustee
or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank or
(b) a bank which is a member of the FDIC and which has combined
capital, surplus and undivided profits of not less than $125
million, or (c) a bank approved in writing for such purpose by
the Certificate Insurer and the Trustee shall have received
written confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the Trustee,
and
(iii) A perfected first security interest under the UCC, or book entry
procedures prescribed at 31 CFR 306.1 et seq. or 31 CFR 350.0 et
seq., in such securities is created for the benefit of the
Trustee, and
(iv) The repurchase agreement has a term of thirty days or less and
the Trustee will value the collateral securities no less
frequently than weekly and will liquidate the collateral
securities if any deficiency in the required collateral
percentage is not restored within two business days of such
valuation, and
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(v) The fair market value of the collateral securities in relation to
the amount of the repurchase obligation, including principal and
interest, is equal to at least 104% and such collateral
securities must be valued weekly and market-to-market at current
market price plus accrued interest.
(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each of Moody's and
Standard & Poor's and Fitch, if rated by Fitch; and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated as follows by at least Moody's and Standard & Poor's: AAAm or
AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
.8 Accounting and Directions by Trustee.
(a) Trustee shall determine whether an Insured Payment will be required
to be made by the Certificate Insurer on the following Payment Date and if so
then no later than 12:00 noon on the second Business Day immediately preceding
the related Payment Date the Trustee shall furnish the Certificate Insurer and
the Depositor with a completed Notice in the form set forth as Exhibit A to the
Certificate Insurance Policy Agreement. The Notice shall specify the amount of
the Insured Payment and shall constitute a claim for an Insured Payment pursuant
to the Certificate Insurance Policy.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and the
Trustee), the Trustee shall notify (subject to the terms of Section 10.03(j)
hereof, based solely on information provided to the Trustee by the Servicer) the
Depositor, each of the Sellers, the Master Servicer, the Certificate Insurer and
each Owner of the following information with respect to the next Payment Date
(which notification may be given by facsimile or by telephone promptly confirmed
in writing):
(i) The aggregate amount then on deposit in the Certificate Account;
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(ii) 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 and the related Class B
Distribution Amount;
(iii) The amount of any Insured Payment to be made by the Certificate
Insurer on such Payment Date;
(iv) The application of the amounts described in clause (i) preceding
to the allocation and distribution of the Class A Distribution
Amounts, and the Class B Distribution Amount, on such Payment
Date in accordance with Section 7.03 hereof;
(v) The Certificate Principal Balance of each Class of the Class A
and Class B Certificates, the Class A-9IO 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-9IO Notional Principal
Amount) of each Class of Certificates following any such payment;
(vi) The amount, if any, of any Realized Losses for the related
Remittance Period in the aggregate and for each of the Loan Group
I and Loan Group II and the amount of Cumulative Realized Losses
as of the last day of the related Remittance Period; and
(vii) The Six-Month Rolling Average Excess Spread and the Six-Month
Rolling Average 90+ Day Delinquency Rate.
.9 Reports by Trustee to Owners and the Certificate Insurer.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Certificate Insurer, the Master Servicer, the
Underwriters and the Rating Agencies:
(i) the amount of the distribution with respect to the each Class of
Certificates (based on a Certificate in the original principal
amount of $1,000;
(ii) the amount of such distribution allocable to principal on the
Home Equity Loans in both Loan Groups, separately identifying the
aggregate amount of any Prepayments, Loan Purchase Price amounts
or other recoveries of principal included therein and any
Aggregate Group Extra Principal Distribution Amount;
(iii) the amount of such distribution allocable to interest on the Home
Equity Loans in each Loan Group (based on a Certificate in the
original principal amount of $1,000);
(iv) the Interest Carry Forward Amount for each Class;
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(v) the principal amount and the Planned Principal Balance, if any,
of each Class of the 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 in both Loan
Groups and in each Loan Group, as of the last day of the related
Remittance Period;
(vii) based upon information furnished by the Seller such information
as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the Owners in
computing their market discount;
(viii) the total of any Substitution Amounts or Loan Purchase Price
amounts included in such distribution with respect to both Loan
Groups and in each Loan Group;
(ix) the weighted average Coupon Rate of the Home Equity Loans;
(x) the weighted average Coupon Rate of both Loan Groups and of each
Loan Group;
(xi) the weighted average remaining term of both Loan Groups and of
each of Loan Group;
(xii) whether a Cumulative Realized Loss Trigger Event and/or
Cumulative Realized Loss Termination Trigger Event has occurred;
(xiii) the Targeted Overcollateralization Amount, Overcollateralization
Amount, Class A Optimal Balance and Class B Optimal Balance;
(xiv) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for the
Class B Certificates as of the close of such Payment Date;
(xv) the Pass-Through Rate for the Class A-8 Certificates applicable
to the related Accrual Period and if the Pass-Through Rate was
based on the applicable Available Funds Cap, that such
Pass-Through Rate would have been in the absence thereof;
(xvi) the Available Funds Cap for each Offered Certificate for such
Payment Date, if any applies;
(xvii) the amount of any Insured Payment included in the distribution
to Owners of Class A Certificates;
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(xviii) any Reimbursement Amount paid on such Payment Date and any
Reimbursement Amount remaining unpaid;
(xix) such other information as the Certificate Insurer may
reasonably request with respect to Home Equity Loans that are
Delinquent in Loan Group I and Loan Group II; and
(xx) the three largest Home Equity Loan Balances outstanding.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (vii), (viii), (ix), (xi), (xii),
(xiii) and (xiv) shall be based solely upon information contained in the monthly
servicing report provided by the Servicer to the Trustee pursuant to Section
8.01 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, the Certificate Insurer, the Master Servicer, each Owner, the
Underwriters and the Rating Agencies, together with the information described in
Subsection (a) preceding, the following information with respect to the Home
Equity Loans which is hereby required to be prepared by the Servicer and
furnished to the Trustee for such purpose on or prior to the related Monthly
Remittance Date:
(i) the number and aggregate principal balances of all Home Equity
Loans in each Loan Group that are: (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 the Payment Date and the
aggregate number and aggregate Loan Balance of such Loans;
(ii) the status and the number and dollar amounts of all Home
Equity Loans in each Loan Group that are in foreclosure
proceedings as of the close of business on the last business
day of the calendar month next preceding such Payment Date;
(iii) the number of Mortgagors and the Loan Balances of the related
Mortgages for all Home Equity Loans, and in each Loan Group
involved in bankruptcy proceedings as of the close of business
on the last business day of the calendar month next preceding
such Payment Date;
(iv) the existence and status of any Properties for all Home Equity
Loans, and in each Loan Group as to which title has been taken
in the name of, or on behalf of the Trustee, as of the close
of business of the last business day of the month next
preceding the Payment Date;
(v) the book value of any real estate acquired through foreclosure
or grant of a deed in lieu of foreclosure for all Home Equity
Loans, and in each Loan
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Group as of the close of business on the last business day of
the calendar month next preceding the Payment Date;
(vi) the amount of Cumulative Realized Losses for all Home Equity
Loans, and for the Home Equity Loans in each Loan Group;
(vii) the aggregate Loan Balance of 90+ Day Delinquent Loans for all
Home Equity Loans and the Home Equity Loans in Loan Group I
and Loan Group II;
(viii) the Three-Month Rolling Average 90+ Day Delinquency Rate for
all Home Equity Loans and the Home Equity Loans in Loan Group
I and Loan Group II, the Six-Month Rolling Average Excess
Spread and whether a Cumulative Realized Loss Trigger Event is
in effect; and
(ix) the aggregate Loan Balance of Optional Buyout Loans with
respect to Loan Group I and Loan Group II.
(c) In addition, on each Payment Date the Trustee will distribute to
the Depositor, together with the information described in Subsection (a) and (b)
preceding, the following information with respect to all the Home Equity Loans
by each product type: Fixed Rate Loans, 6 Month LIBOR Loans, 2/28 Mortgage
Loans, 3/27 Loans, Balloon Loans, which information is hereby required to be
prepared by the Servicer and furnished to the trustee on or prior to the related
Monthly Remittance Date:
(i) the number and aggregate principal balances of all Home Equity
Loans with respect to each product type as of the close of
business on the last business day of the calendar month next
preceding the Payment Date;
(ii) the amount received from scheduled principal payments with
respect to each product type as of the close of business on
the last business day of the calendar month next preceding the
Payment Date;
(iii) the amount of Prepayments received from all Home Equity Loans
separately identifying the aggregate amount received from:
a. Curtailments (or partial prepayments)
b. Voluntary Payoffs
c. Involuntary Payoffs (the amount of Net Liquidation Proceeds
applicable to the unpaid principal balance from the loan)
d. loans purchased from the Trust
with respect to each product type as of the close of business on the last
business day of the calendar month next preceding the Payment Date;
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(iv) the number and principal balance with respect to each product
type of all Home Equity Loans that are a. 30 - 59 days
delinquent, b. 60-89 days delinquent, c. 90 or more days
delinquent as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(v) the number and principal balance with respect to each product
type of all Home Equity Loans that are in foreclosure
proceedings as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(vi) the number and principal balance with respect to each product
type of all Home Equity Loans that are in bankruptcy
proceedings as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(vii) the number and principal balance with respect to each product
type of all Home Equity Loans that were acquired through
foreclosure or grant of a deed in lieu of foreclosure as of
the close of business on the last business day of the calendar
month next preceding the Payment Date;
(viii) the number and principal balance with respect to each product
type of all Home Equity Loans that are in bankruptcy
proceedings as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(ix) the number and principal balance with respect to each product
type of all Home Equity Loans that are subject to loss
mitigation as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(x) the amount of current and cumulative realized losses
(separately identifying principal and interest losses) from
following resolution types:
a. REO Property sold,
b. Short Sale,
c. Deed in Lieu,
d. No Equity Second Mortgages, and
e. Other
as of the close of business on the last business day of the calendar month next
preceding the Payment Date;
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(xi) the number and principal amount with respect to each product
type of all Home Equity Loans of Chapter 13 Loans separately
identifying:
a. those Chapter 13 Loans that are currently meeting their
payment plan;
b. those Chapter 13 Loans that are 1 to 2 payments behind
their payment plan;
c. those Chapter 13 Loans that are 2 to 3 payments behind
their payment plan;
d. and, those Chapter 13 Loans that are greater than 3
payments behind their payment plan;
(xii) the weighted average remaining term to maturity with respect
to each product type of all Home Equity Loans as of the close
of business on the last Business Day of the calendar month
next preceding the Payment Date; and
(xiii) the weighted average Coupon Rate with respect to each product
type of all Home Equity Loans as of the close of business on
the last Business Day of the calendar month next preceding the
Payment Date;
(d) The Servicer shall furnish to the Trustee, to each Owner of a Class
B Certificate and to the Certificate Insurer, in each case during the term of
this Agreement, such periodic, special, or other reports or information not
specifically provided for herein, as may be necessary, reasonable, or
appropriate with respect to the Trustee or the Certificate Insurer, as the case
may be, or otherwise with respect to the purposes of this Agreement, all such
reports or information to be provided by and in accordance with such applicable
instructions and directions as the Trustee or the Certificate Insurer may
reasonably require; provided, that the Servicer shall be entitled to be
reimbursed by the requesting party for the fees and actual expenses associated
with providing such reports, if such reports are not generally produced in the
ordinary course of business.
.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, each of the Sellers, the
Underwriters, the Certificate Insurer and each Owner, with respect to the amount
on deposit in the Certificate Account and the identity of the investments
included therein, as the Depositor, the Certificate Insurer or the Seller may
from time to time request. Without limiting the generality of the foregoing, the
Trustee shall, at the request of the Depositor, the Certificate Insurer or
either of the Sellers transmit promptly to the Depositor, the Certificate
Insurer and each of the Sellers copies of all accounting of receipts in respect
of the Home Equity Loans furnished to it by the Servicer and shall notify the
Certificate Insurer and each of the Sellers if any Monthly Remittance Amount has
not been received by the Trustee when due.
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(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
.11 Preference Payments.
As provided by the Certificate Insurance Policy, the Certificate
Insurer will pay any amount payable thereunder no later than 12:00 noon, New
York City time, on the later of the Payment Date on which the related Insured
Amount is due or the Business Day following receipt in New York, New York on a
Business Day by the Certificate Insurer of a notice in the form attached to the
Certificate Insurance Policy; provided that, if such notice is received after
12:00 noon, New York City time, on such Business Day, it will be deemed to be
received on the following Business Day. If any such notice is not in proper form
or is otherwise insufficient for the purpose of making a claim under the
Certificate Insurance Policy, it shall be deemed not to have been received for
purposes of this paragraph, and the Certificate Insurer shall promptly so advise
the Trustee and the Trustee may submit an amended notice.
The Certificate Insurer shall pay any Preference Amount when due to be
paid pursuant to the Order referred to below, but in any event no earlier than
the third Business Day following receipt by the Certificate Insurer of (i) a
certified copy of a final, non-appealable order of a court or other body
exercising jurisdiction in such insolvency proceeding to the effect that the
Owner is required to return such Preference Amount paid during the term of the
Certificate Insurance Policy because such payments were avoided as a
preferential transfer or otherwise rescinded or required to be restored by the
Owner (the "Order"), (ii) a certificate by or on behalf of the Owner that the
Order has been entered and is not subject to any stay, (iii) an assignment, in
form and substance satisfactory to the Certificate Insurer, duly executed and
delivered by the Owner, irrevocably assigning to the Certificate Insurer all
rights and claims of the Owner relating to or arising under the Indenture
against the estate of the Indenture Trustee or otherwise with respect to such
Preference Amount and (iv) a Notice of Nonpayment (attached as an Exhibit to the
Certificate Insurance Policy) appropriately completed and executed by the Owner.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, and not to the
Owner directly, unless the Owner has made a payment of the Preference Amount to
the court or such receiver, conservator, debtor-in possession or trustee in
bankruptcy named in the Order, in which case the Certificate Insurer will pay
the Owner, subject to the delivery of (a) the items referred to in clauses (i),
(ii), (iii) and (iv) above to the Certificate Insurer and (b) evidence
satisfactory to the Certificate Insurer that payment has been made to such court
or receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order.
Each Owner of a Class A Certificate, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer may at any time during the continuation of any proceeding relating to a
preference claim direct all matters relating to such preference claim,
including, without limitation, the direction of any appeal of any order relating
to such preference claim and the posting of any surety or performance bond
pending any such appeal. In addition and without limitation of the foregoing,
the Certificate Insurer shall be
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subrogated to the rights of the Servicer, the Master Servicer, the Trustee and
the Owner of each Class A Certificate in the conduct of any such preference
claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such preference claim.
END OF ARTICLE VII
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Article VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
.1 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 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.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer; and provided further, however, that Section
8.14(a) shall constitute an authorization from the Trustee to the Servicer to
execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Home Equity Loan paid in full (or with respect to
which payment in full has been escrowed). The Trustee shall execute any
documentation furnished to it by the Servicer for recordation by the Servicer in
the appropriate jurisdictions as shall be necessary to effectuate the foregoing.
Subject to Sections 8.13 and 8.14, 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.
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The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
.2 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FannieMae Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation, or which the Sellers are
entitled to receive hereunder. 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.
.3 Sub-Servicing Agreements Between Servicer and Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Home Equity Loans with any institution that is
acceptable to the Certificate Insurer and the Master Servicer and that is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and (x) has (i) been designated
an approved seller-servicer by FHLMC or FannieMae for second mortgage loans and
(ii) has equity of at least $5,000,000, as determined in accordance with
generally accepted accounting principles or (y) is a Servicer Affiliate. The
Servicer shall give notice to the Trustee, the Certificate Insurer, the Master
Servicer 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 the Master Servicer or other
successor Servicer shall have the option to terminate such agreement without
payment of any fees if the original Servicer is terminated or resigns.
(b) The Servicer and the Trust shall execute, by joinder with the prior
written consent of the Certificate Insurer, the Sub-Servicing Agreement dated as
of November 1, 1998
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among the Servicer, the Trustee, Continental Grain Company and the other trusts
listed therein (such Sub-Servicing Agreement, the "Liquidity Agreement").
Without limitation upon any of the Servicer's or the Master Servicer's
obligations hereunder, the Master Servicer hereby consents to the foregoing
arrangement.
.4 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.
.5 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Trustee, the Master Servicer, the Certificate Insurer and each Owner harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Trustee, the Certificate Insurer, the Master Servicer and any Owner may sustain
in any way related to the failure of the Servicer to perform its duties and
service the Home Equity Loans in compliance with the terms of this Agreement.
The Servicer shall immediately notify the Trustee, the Certificate Insurer, the
Master Servicer 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 Master Servicer and the Certificate Insurer) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Certificate Insurer,
the Master Servicer and/or Owner in respect of such claim. The Trustee may, if
necessary, reimburse the Servicer from amounts otherwise distributable on the
Class C 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.
.6 No Contractual Relationship Between Sub-Servicer, Trustee,
Certificate Insurer or the Owners.
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Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee, the Certificate
Insurer, the Master Servicer and the Owners shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to any Sub-Servicer except as set forth in Section 8.07.
Notwithstanding the foregoing, the Trust and the Trustee shall be
parties to, and have the rights set forth in, the Liquidity Agreement, as set
forth therein.
.7 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 Master Servicer, the Trustee or other successor Servicer 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 Master Servicer, the Trustee
other successor Servicer without act or deed on the part of such Person;
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 Master Servicer,
the Trustee or other successor Servicer, 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.
.8 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
June 1, 1999." If the institution at any time holding the Principal and Interest
Account ceases to be eligible as a Designated Depository Institution hereunder,
then the Servicer shall, within 30 days, be required to name a successor
institution meeting the requirements for a Designated Depository Institution
hereunder. If the Servicer fails to name such a successor institution, then the
Principal and Interest Account shall thenceforth be held as a trust account with
a qualifying Designated Depository Institution. The Servicer shall notify the
Trustee, the Master Servicer, the Certificate Insurer and the Owners if there is
a change in the name, account number or institution holding the Principal and
Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(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
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of funds in the Principal and Interest Account shall mature or be withdrawable
at par on or prior to the immediately succeeding Monthly Remittance Date. The
Principal and Interest Account shall be held in trust in the name of the Trustee
for the benefit of the Owners and the Certificate Insurer. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Monthly Excess Interest Amount included
therein) by the Servicer. Any investment losses on funds held in the Principal
and Interest Account shall be for the account of the Servicer and promptly upon
the realization of such loss shall be contributed by the Servicer to the
Principal and Interest Account. Any references herein to amounts on deposit in
the Principal and Interest Account shall refer to amounts net of such investment
earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal collections on the Home Equity
Loans received, and interest collections on the Home Equity Loans due and
received 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 due and received on or prior to the Cut-Off Date, (iii) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of (A) the
Loan Balance of the related Home Equity Loan immediately prior to liquidation,
(B) accrued and unpaid interest on such Home Equity Loan (net of the Servicing
Fee) to the date of such liquidation, and (C) 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 amounts being herein referred to as the "Daily
Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Principal and Interest Account, with respect to the
Home Equity Loans, only in the following priority and for the following
purposes:
(A) to withdraw interest paid with respect to any Home Equity Loans
that had accrued for periods prior to the Cut-Off Date;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for unrecovered
Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the Principal and
Interest Account in error; and
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(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds
available in immediately available funds, without duplication,
the Daily Collections allocable to a Remittance Period not later
than the related Monthly Remittance Date and Loan Purchase Prices
and Substitution Amounts two Business Days following the related
purchase or substitution, and (b) on each Monthly Report Date,
deliver to the Master Servicer, the Trustee and the Certificate
Insurer a monthly servicing report, with respect to the Home
Equity Loans, containing the following information: principal and
interest collected, scheduled interest, Liquidated Loans, summary
and detailed delinquency reports, Liquidation Proceeds and other
similar information concerning the servicing of the Home Equity
Loans as may reasonably be requested by the Master Servicer. In
addition, the Servicer shall inform the Master Servicer, the
Trustee and the Certificate Insurer on each Monthly Remittance
Date with respect to the Home Equity Loans of the amounts of any
Loan Purchase Prices or Substitution Amounts so remitted during
the related Remittance Period.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(c) to
enable the Trustee to perform its reporting requirements under
Section 7.09 and the Trustee shall forward such information to
the Underwriters within five Business Days of receipt thereof.
.9 Delinquency Advances and Servicing Advances.
(a) If, on any Monthly Remittance Date, the interest component (net of
the Servicing Fee) of any Mortgagor payment due during the preceding Remittance
Period has not yet been received, the Servicer or the Master Servicer, to the
extent described in Section 12.01(c) hereof, shall make an advance of such
amount to the Certificate Account, but only to the extent that the Servicer, or
Master Servicer, as applicable, reasonably believes that the amount of such
advance will be recoverable from subsequent collections on the related Home
Equity Loan or from Liquidation Proceeds in the event that such Home Equity Loan
is liquidated. Such amounts of the Servicer's or Master Servicer's, as
applicable, own funds so advanced are "Delinquency Advances," and include but
are 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, or Master Servicer, as applicable, 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 previously
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reimbursed therefor, the Servicer shall recover Delinquency Advances pursuant to
Section 7.03(b)(viii)(c) hereof, and the Master Servicer shall recover
Delinquency Advances pursuant to Section 7.03(b) (viii) (b) hereof.
(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(b)(iii)(c). The Servicer shall be entitled to
recover the Servicing Advances from the aforesaid Liquidation Proceeds prior to
the payment of the Liquidation Proceeds to any other party to this Agreement.
Except as provided in the previous sentence, in no case may the Servicer recover
Servicing Advances from the principal and interest payments on any Home Equity
Loan or from any amounts relating to any other Home Equity Loan, except as
provided in Section 7.03(b)(viii)(c).
.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If the prepayment of a Home Equity Loan occurs during any calendar
month and the interest received in connection therewith represents less than a
full month's interest, any difference between the interest collected from the
Mortgagor and the full month's interest at the Coupon Rate less the Servicing
Fee ("Compensating Interest") that is due shall be deposited by the Servicer
(but not in excess of the aggregate Servicing Fee for the related Remittance
Period) to the Principal and Interest Account on the next succeeding Monthly
Remittance Date and shall be included in the Monthly Remittance to be made
available to the Trustee on such Monthly Remittance Date. The Servicer shall not
be entitled to reimbursement for amounts paid as Compensating Interest.
(b) The Servicer, and in the absence of exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, for administrative convenience, to purchase for its own account any
Home Equity Loan which becomes Delinquent, in whole or in part, as to four
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 8.13;
provided, however, that the Servicer or the Certificate Insurer, as the case may
be, may not purchase any such Home Equity Loan unless the Servicer or the
Certificate Insurer, as the case may be, has delivered to the Trustee an opinion
of counsel experienced in federal income tax matters acceptable to the Trustee
and the Certificate Insurer to the effect that such a purchase would not
constitute a Prohibited Transaction for the Trust or otherwise subject the Trust
to tax and would not jeopardize the status any REMIC therein as a REMIC. Any
such Loan so purchased shall be purchased by the Servicer or the Certificate
Insurer, as the case may be, on a
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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.
.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage, and which provides for a recovery by
the Trust of insurance proceeds relating to such Home Equity Loan in an amount
not less than the least of (i) the outstanding principal balance of the Home
Equity Loan (plus the related senior lien loan, if any), (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis and (iii)
the full insurable value of the premises. The Servicer shall maintain the
insurance policies required hereunder in the name of the mortgagee, its
successors and assigns, as loss payee. The policies shall require the insurer to
provide the mortgagee with 30 days' notice prior to any cancellation or as
otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by each Rating Agency. Upon the request of the Master
Servicer, the Trustee or the Certificate Insurer, the Servicer will cause to be
delivered to such requesting Person a certified true copy of such blanket
policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable carrier in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
.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
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shall conclusively establish the reasonableness of such belief. In such event,
the Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage Documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, the Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as Mortgagor and becomes liable under the Note; provided,
however, that to the extent any such substitution of liability agreement would
be delivered by the Servicer outside of its usual procedures for mortgage loans
held in its own portfolio the Servicer shall, prior to executing and delivering
such agreement, obtain the prior written consent of the Certificate Insurer. The
Home Equity Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The Servicer shall notify the
Trustee that any such assumption or substitution agreement has been completed by
forwarding to the Trustee the original copy of such assumption or substitution
agreement (indicating the File to which it relates) which copy shall be added by
the Trustee to the related File and which shall, for all purposes, be considered
a part of such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording any
such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the required monthly payment on the
related Home Equity Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Home Equity Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer or the Sub-Servicer for consenting
to any such conveyance or entering into an assumption or substitution agreement
shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
.13 Realization Upon Defaulted Home Equity Loans; Modification.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FannieMae Guide, including, but not limited
to, advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. The Servicer may engage in Short Sales of Home
Equity Loans if so doing would maximize Net Liquidation Proceeds. Any
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amounts so advanced shall constitute "Servicing Advances" within the meaning of
Section 8.09(b) hereof. The Servicer shall sell any REO Property before the
start of the 12th month of the 3rd taxable year following the taxable year in
which the Trust acquired such property, at such price as the Servicer deems
necessary to comply with this covenant unless the Seller which delivered the
related Home Equity Loan obtains for the Trustee, the Certificate Insurer and
the Servicer an opinion of counsel experienced in federal income tax matters
acceptable to the Trustee and the Certificate Insurer, addressed to the Trustee,
the Certificate Insurer, and the Servicer, to the effect that the holding by the
Trust of such REO Property for any greater period will not result in the
imposition of taxes on "Prohibited Transactions" of the Trust or any REMIC
therein as defined in Section 860F of the Code or cause any REMIC therein to
fail to qualify as a REMIC under the REMIC Provisions at any time that any
Certificates are outstanding. Notwithstanding the generality of the foregoing
provisions, the Servicer shall manage, conserve, protect and operate each REO
Property for the Owners solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any REMIC of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Owners, rent the same, or
any part thereof, as the Servicer deems to be in the best interest of the Owners
for the period prior to the sale of such REO Property. The Servicer shall take
into account the existence of any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and Recovery
Act of 1976, or other federal, state or local environmental legislation, on a
Property in determining whether to foreclose upon or otherwise comparably
convert the ownership of such Property. The Servicer shall not take any such
action with respect to any Property known by the Servicer to contain such wastes
or substances, without the prior written consent of the Certificate Insurer.
With respect to any Home Equity Loan secured by a mixed use Property, the
Servicer shall, prior to foreclosing upon or otherwise comparably effecting the
ownership in the name of the Servicer on behalf of the Trust, either (x) perform
a "phase one environmental study" of such Property or (y) repurchase such
Property at the Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the FannieMae
Guide, when it has recovered, whether through trustee's sale, foreclosure sale,
Short Sale or otherwise, all amounts it expects to recover from or on account of
such defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan." After a Home Equity Loan has become a Liquidated Loan, the
Servicer shall promptly prepare and forward to the Depositor, the Certificate
Insurer and the Trustee a report detailing the Liquidation Proceeds received
from the Liquidated Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
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(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; provided, however, that no such
modification, waiver or amendment shall extend the maturity date of such Home
Equity Loan beyond the Remittance Period related to the Final Scheduled Payment
Date of the latest Class of Certificates remaining in the Trust. Notwithstanding
anything set out in this Section 8.13(c) or elsewhere in this Agreement to the
contrary, the Servicer shall be permitted to modify, waive or amend any
provision of a Home Equity Loan if required by statute or a court of competent
jurisdiction to do so.
(d) The Servicer shall deliver to the Trustee for deposit in the
related File, an original counterpart of any agreement relating to such
modification, waiver or amendment, promptly following the execution thereof.
.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee the FannieMae "Request for Release of Documents" (FannieMae Form 2009).
Upon receipt of such Request for Release of Documents, the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer is authorized to give,
as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File 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
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to the Servicer and shall execute such documents as shall be necessary to the
prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Servicer; provided
that there shall not be released and unreturned at any one time more than 10% of
the entire number of Files. Such receipt shall obligate the Servicer to return
the File to the Trustee when the need therefor by the Servicer no longer exists
unless the Home Equity Loan shall be liquidated, in which case, upon receipt of
the FannieMae "Liquidation Schedule" relating to such liquidation, the receipt
shall be released by the Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio after any release does not exceed the Loan-to-Value Ratio of
such Home Equity Loan as of the date of origination thereof and any increase in
the Loan-to-Value Ratio shall not exceed 15% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of a particular Home Equity Loan and certifying that the criteria set forth in
the immediately preceding sentence have been satisfied, the Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above without
approval in writing by the Certificate Insurer.
.15 Servicing Compensation; Amounts to be paid to Sellers the Owners of
the Class R Certificates.
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 release fees, bad
check charges, assumption fees, late payment charges, or any other
servicing-related fees (which shall not include collections from prepayment
charges or prepayment penalties), 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.
The Servicer and each successor Servicer shall remit to ContiMortgage
the Owners of the Class R Certificates on each Monthly Remittance Date all
prepayment charges and penalties received with respect to the Home Equity Loans
during the prior Remittance Period. ContiMortgage will remit any applicable
amounts due to ContiWest to ContiWest.
.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Master Servicer, the Certificate Insurer, any Owner of a Class B
Certificate and the Rating Agencies, on or before March 31 of each year,
commencing in 2000, an Officer's Certificate
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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.
.17 Annual Independent Certified Public Accountants' Reports.
On or before June 30 of any year, commencing in 2000, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Depositor, which in no event shall exceed $1,000 per annum), shall cause to
be delivered to the Trustee, the Master Servicer, the Certificate Insurer, any
Owner of a Class B Certificate and the Rating Agencies a letter or letters of a
firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Certificate Insurer, dated as of the date of the
Servicer's fiscal audit for subsequent letters, stating that such firm has
examined the Servicer's overall servicing operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
.18 Access to Certain Documentation and Information Regarding the Home
Equity Loans.
The Servicer shall provide to the Trustee, the Master Servicer, the
Certificate Insurer, any Owner of a Class B Certificate, 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.
.19 Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Trustee and the Certificate Insurer, which consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.20(i) hereof for a successor servicer.
.20 Removal of Servicer; Resignation of Servicer.
(a) The Certificate Insurer (or Trustee with the consent of the
Certificate Insurer and acting upon the request of a majority of the Percentage
Interests of the Offered Certificates then Outstanding), may remove the Servicer
upon the occurrence of any of the following events:
(i) The Servicer shall (A) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (B) admit in
writing its inability to pay its debts generally as they
become due, (C) make a general assignment for the
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benefit of creditors, (D) be adjudicated a bankrupt or
insolvent, (E) 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 insolvency proceeding
or (F) take corporate action for the purpose of effecting any
of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in
respect of the Servicer an order for relief or an adjudication
in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or
other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by
the Servicer in good faith, the same shall (A) result in the
entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days;
or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business Day in the
case of a delay in making a required payment to the Trustee
under Section 8.08(d)(ii)(a)) after the earlier of (a) actual
knowledge of an officer of the Servicer or (b) receipt of
notice from the Trustee or the Certificate Insurer of said
failure; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of
the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 which
materially and adversely affects the interests of the Owners
or the Certificate Insurer for a period of sixty (60) days
after the earlier of the Servicer's discovery or receipt of
notice thereof; provided however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of
the Certificate Insurer; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, unless (1) the Servicer is the
surviving entity of such
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combination or (2) the surviving entity is a corporation or a
state-chartered or national bank acceptable to the Certificate
Insurer (acceptable to the Owners of the Class R Certificates
as provided below but if such Owners and the Certificate
Insurer cannot agree, the Certificate Insurer shall control)
organized and doing business under the laws of any state or
the United States.
(b) The Certificate Insurer may remove the Servicer upon the occurrence
of any of the following events, if the Certificate Insurer has delivered written
notice to the Servicer, the Master Servicer and the Trustee so removing the
Servicer:
(i) an Insured Payment is made by the Certificate Insurer;
provided, however, that in the event that the Trustee shall
become the Servicer hereunder, if the Servicer can demonstrate
to the reasonable satisfaction of the Certificate Insurer that
such event was due to circumstances beyond the control of the
Servicer, the right of removal hereunder shall not be
considered a default by the Servicer;
(ii) the failure by the Servicer to make any required Servicing
Advance when due;
(iii) the occurrence of a Servicer Termination Delinquency Rate
Trigger or a Servicer Termination Loss Trigger (each as
defined in the Insurance and Indemnity Agreement); or
(iv) the failure by the Servicer to make any required Delinquency
Advance or to pay any Compensating Interest, in each case two
Business Days following the Servicer's receipt of a written
notice from the Master Servicer, the Trustee or the
Certificate Insurer demanding that the Servicer pay such
amount;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate Insurer
and by registered or certified mail, notice of the occurrence of one or more of
the events set forth in clause (iii) above and the Servicer shall not have
remedied, or shall not have taken actions satisfactory to the Certificate
Insurer to remedy, such event or events within 60 days after the Servicer's
receipt of such notice and (y) upon the Trustee's determination that a required
Delinquency Advance or payment of Compensating Interest has not been made by the
Servicer, the Trustee shall so notify an Authorized Officer of the Servicer, the
Owners, if any, and the Certificate Insurer as soon as is reasonably practical.
(c) The Master Servicer may remove the Servicer upon the failure of the
Servicer to make any required Delinquency Advance or to pay any Compensating
Interest, which failure causes the Master Servicer to remit any such amount to
the Trust, in each case if the Servicer's failure has continued for two Business
Days following the Servicer's receipt of a written notice demanding that the
Servicer pay such amount.
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(d) If any event described in sections (a) above occurs and is
continuing, the Certificate Insurer shall notify the Owners of the Class C
Certificates in writing if the Certificate Insurer intends to terminate the
Servicer in its capacity as Servicer under this Agreement. During the 30 day
period following receipt of such notice by the Owners of the Class C
Certificates, such Owners and the Certificate Insurer shall cooperate with each
other to determine if the occurrence of such event is more likely than not the
result of the acts or omissions of the Servicer or more likely than not the
result of events beyond the control of the Servicer. If the Owners of the Class
C Certificates and the Certificate Insurer conclude that the event is the result
of the latter, the Servicer may not be terminated. If the Owners of the Class C
Certificates and the Certificate Insurer conclude that the event is the result
of the former, or if the Owner of the Class C Certificates and the Certificate
Insurer cannot agree as to the cause of the event, the Certificate Insurer may
terminate the Servicer in accordance with this Section, and the provisions of
Section 8.21 hereof shall apply.
(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 Master Servicer, the Trustee and the
Certificate Insurer, which opinion shall be at the Servicer's expense.
(f) No removal or resignation of the Servicer shall become effective
until the Master Servicer, the Trustee or other successor Servicer shall have
assumed the Servicer's responsibilities and obligations in accordance with this
Section.
(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to the Master
Servicer, the Trustee or other successor Servicer all Records and Home Equity
Loan Documents.
(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 Master Servicer, if it is then
acting, or otherwise to the Trustee and remitted directly and immediately to the
Trustee or the successor Servicer.
(i) The Master Servicer, the Trustee, or any successor servicer, shall
be reimbursed for all reasonable costs and expenses incurred in connection with
the appointment of the successor servicer and the replacement of the servicer,
which reimbursement shall be paid (1) first, by the predecessor Servicer, and
(2) second, to the extent that any such costs and expenses are not promptly
reimbursed by the predecessor Servicer, as an expense from amounts in the
Certificate Account, as provided in Section 7.03(b)(viii)(b).
(j) ContiMortgage hereby covenants and agrees to act as the Servicer
under the Agreement for an initial term from the Closing Date to July 31, 1999,
which term shall be renewable by the Certificate Insurer by notice (each, a
"Servicer Extension Notice") to the
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Servicer, the Master Servicer and to the Trustee for successive terms of two (2)
calendar months each, until either June 30, 2000 or, if earlier, such time as
the Certificate Insurer authorizes ContiMortgage's term as servicer to extend
through to the termination of the Trust pursuant to Article IX hereof, subject
only to removal pursuant to the other paragraphs of this Section 8.20.
ContiMortgage hereby agrees that, upon its receipt of any such Servicer
Extension Notice, ContiMortgage shall become bound for the duration of the term
covered by such Servicer Extension Notice to continue as the Servicer subject to
and in accordance with the other provisions of this Agreement. The Trustee
agrees that if as of the fifteenth (15th) day prior to the last day of any term
of ContiMortgage the Trustee shall not have received any Servicer Extension
Notice from the Certificate Insurer, the Trustee will, within five (5) days
thereafter, given written notice of such non-receipt to the Certificate Insurer,
the Master Servicer and, upon expiration of ContiMortgage's term as Servicer,
the Servicer and the provisions of Section 8.21 shall apply.
In the event that ContiMortgage's term as Servicer has not ended prior
to July 1, 2000, then this paragraph (i) shall no longer apply, and
ContiMortgage shall remain as Servicer for the term of the Trust, subject only
to removal pursuant to the other paragraphs of this Section 8.20.
(k) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, the Certificate Insurer and the Rating Agencies of the
transfer of the servicing to the successor Servicer.
The Trustee shall give notice to the Owners, the Trustee, the Seller,
the Certificate Insurer and the Rating Agencies of the occurrence of any event
described in paragraphs (a) or (b) above of which the Trustee is aware.
.21 Successor Servicers.
(a) Appointment of Successor. On and after the occurrence of a Servicer
Termination Event, or the failure of ContiMortgage to be renewed as Servicer
pursuant to Section 8.20(j) hereof, , or a resignation of the Servicer as
evidenced by an opinion of counsel as described in Section 8.20(e) hereof, then
the Master Servicer if it is then acting, within 60 days of the occurrence of
such event, shall have a successor servicer in place to be the successor in all
respects to the Servicer in its capacity as Servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof; provided, however, that the
successor servicer shall not be liable for any actions of any servicer prior to
it. If a successor servicer cannot be retained in a timely manner, then the
Master Servicer shall act as the successor Servicer, or if the Master Servicer
is not then acting or cannot act as the successor servicer (as evidenced by an
opinion of counsel delivered by the Master Servicer to the Trustee and the
Certificate Insurer), then the Trustee (x) may solicit bids for a successor
servicer as described in clause (b) below, and (y) pending the appointment of a
successor servicer as a result of soliciting such bids, shall serve as Servicer
. Notwithstanding the foregoing, the parties hereto agree that the Master
Servicer, in its capacity as successor servicer, immediately will assume all of
the obligations of the Servicer to make Delinquency Advances, Servicing Advances
and to pay Compensating Interest and the Master Servicer will assume the other
duties of the Servicer as
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soon as practicable, but in no event later than 60 days after the Servicer
Termination Date. If the Master Servicer or the Trustee, as applicable, assumes
the responsibilities of the Servicer pursuant to this Section 8.21, then the
Master Servicer or the Trustee, as applicable, will make reasonable efforts
consistent with applicable law to become licensed, qualified and in good
standing in each state the laws of which require licensing or qualification in
order to perform its obligations as Servicer hereunder or, alternatively, shall
retain an agent that is so licensed, qualified and in good standing in any such
state. Notwithstanding the foregoing, the Master Servicer, in its capacity as
successor Servicer shall not be responsible for the lack of information and/or
documents that it cannot obtain through reasonable efforts.
If the Master Servicer or the Trustee, as applicable, serves as
successor servicer, then the Master Servicer or the Trustee, as applicable, in
such capacity shall not be liable for any servicing of the Home Equity Loans
prior to its date of appointment and shall not be subject to any obligations to
repurchase any Home Equity Loans.
Any successor servicer, the Master Servicer or the Trustee shall be
reimbursed for all reasonable costs and expenses incurred in connection with the
appointment of the successor servicer and the replacement of the Servicer which
reimbursement shall be paid (1) first, by the predecessor Servicer, and (2)
second, to the extent that any such costs and expenses are not promptly
reimbursed by the predecessor servicer, as described in Section 7.03(b)(viii)(b)
hereof.
(b) (i) If the Trustee is required to act as the successor servicer it
shall, if it is unable to obtain a qualifying bid and is prevented by law from
acting as Servicer, appoint, or petition a court of competent jurisdiction to
appoint, any housing and home finance institution, bank or mortgage servicing
institution which has been designated as an approved seller-servicer by
FannieMae or Xxxxxxx Mac for first and second mortgage loans and having equity
of not less than $10,000,000 (or such lower level as may be acceptable to the
Certificate Insurer), as determined in accordance with generally accepted
accounting principles and acceptable to the Certificate Insurer and the Owners
of the Class C Certificates (provided that if the Certificate Insurer and such
Owners cannot agree as to the acceptability of such successor Servicer, the
decision of the Certificate Insurer shall control) as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. 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.
(ii) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement at least once in The American
Banker and such other publications as directed by the Certificate Insurer, 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
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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 approved by the Certificate Insurer 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.
(iii) The Trustee 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 (b)(iii))
if, in the Trustee's reasonable good faith judgment, such Delinquency Advances
will ultimately be recoverable from the Home Equity Loans.
(c) Successor Servicer Compensation. The compensation of any successor
servicer (including, without limitation, the Master Servicer or 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. If the Master Servicer becomes
the successor servicer, the separate Master Servicing Fee will no longer be
payable and shall be returned in the Certificate Account as part of the
Available Funds.
(d) Termination Fee to Prior Servicer. The Master Servicer shall deduct
from any sum received by the Master Servicer from the successor servicer to the
Servicer in respect of the sale, transfer and assignment of the servicing rights
for the Home Equity Loans the sum of (i) all costs and expenses of any public
announcement and of any sale, transfer and assignment of such servicing rights,
(ii) the amount of any unpaid Servicing Fees and unreimbursed Delinquency
Advances or Servicing Advances made by the Master Servicer and (iii) all costs
and expenses of the Master Servicer incurred in connection with the appointment
of the successor servicer. After such deductions, the remainder of such sum
shall be paid by the Master Servicer to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor. The Servicer shall not be
entitled to any termination fee, if it is terminated pursuant to Section 8.20
hereof but shall be entitled to any accrued and unpaid Servicing Fees to the
date of termination.
(e) Cooperation of Prior Servicer with Succession. The Master Servicer,
the Trustee, the Servicer and any such successor servicer shall take such
action, consistent with this Agreement, as shall be necessary to effect any such
succession. Any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee, and remitted directly to the
Trustee or, at the direction of the Trustee, to the successor servicer. The
Servicer agrees to cooperate with the Master Servicer, the Trustee and any
successor Servicer, as applicable, in effecting the termination of the
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Master Servicer, the Trustee or such successor Servicer, as
applicable,
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all documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Trustee,
or such successor Servicer, as applicable, all amounts which then have been or
should have been deposited in any Account maintained by the Servicer or which
are thereafter received with respect to the Home Equity Loans.
(f) Effectiveness of Appointment. Neither the Master Servicer, the
Trustee nor any other successor Servicer, as applicable, shall be held liable by
reason of any failure to make, or any delay in making, any payment or
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 hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until (A) the Depositor, the Trustee, the
Certificate Insurer and the Master Servicer shall have consented thereto, except
in the case of the appointment of the Master Servicer or the Trustee as
successor to the Servicer (when no consent shall be required), and (B) written
notice of such proposed appointment shall have been provided by the Master
Servicer or the Trustee, as applicable, to the Trustee, the Certificate Insurer
and the Depositor.
.22 Inspections by Certificate Insurer; Errors and Omissions Insurance.
At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, the Master Servicer, any Owner of a Class
B Certificate 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;
The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FannieMae Guide or any successor provision thereof; provided, however, that
if the Trustee shall become the Servicer, any customary insurance coverage that
the Trustee maintains shall be deemed sufficient hereunder; provided, further,
that in the event that the fidelity bond or the errors and omissions coverage is
no longer in effect, the Trustee shall promptly give such notice to the
Certificate Insurer and the Owners. Upon the request of the Trustee or the
Certificate Insurer, the Servicer shall cause to be delivered to such requesting
Person a certified true copy of such fidelity bond or errors and omission
policy.
END OF ARTICLE VIII
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Article IX
TERMINATION OF TRUST
.1 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance Policy,
of all amounts held by the Trustee and required to be paid to such Owners
pursuant to this Agreement upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate, (c) at any time
when a Qualified Liquidation of the Home Equity Loans included within the Trust
is effected as described below and (d) the final payment to the Certificate
Insurer of all amounts then owing to it. To effect a termination of this
Agreement pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of the REMIC to
adopt a plan of complete liquidation as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee either shall sell the Home Equity Loans and distribute the
proceeds of the liquidation of the Trust Estate, or shall distribute equitably
in kind all of the assets of the Trust Estate to the remaining Owners of the
Certificates each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of twenty-one
(21) years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of Saint Xxxxx,
living on the date hereof. The Trustee shall give written notice of termination
of the Agreement to each Owner in the manner set forth in Section 11.05.
.2 Termination Upon Option of Owners of Class R-I Certificates.
On any Monthly Remittance Date on or after the Clean-Up Call Date, the
Owners of a majority of the Percentage Interests represented by the Class R-I
Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R-I Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's
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interest on such amount computed at the Termination Date Pass-Through Rate, plus
all accrued and unpaid Servicing Fees and unpaid Master Servicing Fees, if any,
plus the aggregate amount of any unreimbursed Delinquency Advances and Servicing
Advances and any Delinquency Advances which the Servicer has theretofore failed
to remit plus any amounts due and owing to the Certificate Insurer under the
Insurance and Indemnity Agreement, provided that any such purchase price
pursuant to clause (i) or (ii) shall be sufficient to pay the Outstanding
Certificate Principal Balance of and accrued and unpaid interest on all Classes
of outstanding Class A and Class B Certificates, plus the Class B Unpaid
Realized Loss Amount, plus any amounts due and owing the Certificate Insurer
under the Insurance and Indemnity Agreement. If any such termination would
result in a draw on the Certificate Insurance Policy, then the prior consent of
the Certificate Insurer is required. In connection with such purchase, the
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
In connection with any such purchase, such Owners of the Class R-I
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to each REMIC, a plan of complete liquidation of all Home Equity as
contemplated by Section 860F(a)(4) of the Code and shall provide to the Trustee
and the Certificate Insurer an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee and the Certificate Insurer to the effect
that such purchase and liquidations constitutes, as to the REMIC, a Qualified
Liquidation. In addition, such Owners of the Class R-I Certificates shall
provide to the Trustee and the Certificate Insurer an opinion of counsel
acceptable to the Trustee and the Certificate Insurer to the effect that such
purchase and liquidation does not constitute a preference payment pursuant to
the United States Bankruptcy Code.
The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates may be exercised
by the Certificate Insurer if (i) not exercised by such owners and (ii) the
Servicer as of the Closing Date is no longer the Servicer hereunder.
Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R-I Certificates or
the Certificate Insurers, as the case may be, or otherwise upon their order, in
a manner similar to that described in Section 8.14 hereof.
.3 Termination Upon Loss of REMIC Status.
Following a final determination by the Internal Revenue Service or by a
court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal or, if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that any REMIC in the Trust does not and will no longer qualify as
a REMIC pursuant to Section 860D of the Code (the "Final Determination"), at any
time on or after the date which is 30 calendar days following such Final
Determination (i) the Certificate Insurer or (with the consent of the
Certificate Insurer) the Owners of a majority in Percentage Interests
represented by the Class A and Class B Certificates then Outstanding may
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direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code and (ii) the
Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise then remaining in the Trust Estate at a price equal
to the sum of (x) the greater of (i) 100% of the aggregate Loan Balances of the
Home Equity Loans as of the day of purchase minus amounts remitted from the
Principal and Interest Account representing collections of principal on the Home
Equity Loans during the current Remittance Period, and (ii) the fair market
value of such Home Equity Loans (disregarding accrued interest), as reasonably
determined by the Servicer based upon at least three market quotes (or such
fewer number of quotes as are reasonably obtainable), (y) one month's interest
on such amount computed at the Termination Date Pass-Through Rate and (z) the
aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances
and any Delinquency Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R-I Certificates of such election
to liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount at the Termination
Date Pass-Through Rate, (b) the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and (c) any Delinquency Advances which the
Servicer has theretofore failed to remit. If, during the Purchase Option Period,
the Owners of the Class R Certificates have not exercised the option described
in the immediately preceding sentence, then upon the expiration of the Purchase
Option Period in the event that the Certificate Insurer or the Owners of the
Class A and Class B Certificates with the consent of the Certificate Insurer
have given the Trustee the direction described in clause (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 Certificate Insurer or the Owners of the Class A and Class B Certificates
with the consent of the Certificate Insurer shall permit or direct in writing,
after the expiration of the Purchase Option Period and (ii) in the event that
the Certificate Insurer has given the Trustee notice of the Certificate
Insurer's determination to purchase the Trust Estate described in clause (a)(ii)
above the Certificate Insurer shall, within 60 days, purchase all (but not fewer
than all) Home Equity Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure or otherwise then remaining in the
Trust Estate. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
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Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R-I Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer selected by the Owners of the Class R-I Certificates, which opinion
shall be reasonably satisfactory in form and substance to the Certificate
Insurer, to the effect that the effect of the Final Determination is to increase
substantially the probability that the gross income of the Trust will be subject
to federal taxation, purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise then remaining in the Trust Estate at a purchase
price equal to the aggregate Loan Balances of all Home Equity Loans as of the
date of such purchase, plus (a) one month's interest on such amount computed at
the Termination Date Pass-Through Rate, (b) the aggregate amount of unreimbursed
Delinquency Advances and (c) any Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase. The foregoing
opinion shall be deemed satisfactory unless the Certificate Insurer gives the
Owners of a majority of the Percentage Interests of the Class R-I 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.
.4 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 (i) any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
or Master Servicer from the Servicer's or Master Servicer's own funds shall be
paid by the Trustee to the Servicer or Master Servicer, as applicable, from the
proceeds of the Trust Estate and (ii) the amount of any Class B Unpaid Realized
Loss Amount shall be paid to the Owners of the Class B Certificates.
END OF ARTICLE IX
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Article X
THE TRUSTEE
.1 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 Master Servicer,
the Trustee or any other successor servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee if it shall
become the successor servicer have the power and duty during its performance as
successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
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(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance
with the direction of the Certificate Insurer or the Owners of
a majority in Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer relating
to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement
relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
.2 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(i) the Trustee shall fail to distribute to the Owners entitled
hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; (provided, however, that
any such failure which is due to circumstances beyond the
control of the Trustee shall not be a cause for removal
hereunder); or
(ii) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if
any representation or warranty of the Trustee made in this
Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall prove to be
incorrect in any material respect as of the time when the same
shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the
Trustee by the Sellers, the Certificate Insurer or by the
Owners of at least 25% of the aggregate Percentage Interests
in the Trust Estate represented by the Offered Certificates
then Outstanding, or, if there are no Offered Certificates
then Outstanding, by such Percentage Interests represented by
the Class C Certificates, a written notice specifying such
failure or breach and requiring it to be remedied; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Trustee, and
such decree or order shall have remained in force undischarged
or unstayed for a period of 75 days; or
(iv) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the
Trustee or relating to all or substantially all of its
property; or
(v) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due,
file or consent to the filing of a petition to take advantage
of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations, or take corporate action
for the purpose of any of the foregoing.
The Depositor shall give notice to the Certificate Insurer and the Rating
Agencies of the occurrence of any such event of which the Depositor is aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be
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unreasonably withheld) of the Certificate Insurer, 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 Class R Certificates,
may, whether or not the Trustee resigns pursuant to Section 10.09(b) hereof,
immediately, concurrently with the giving of notice to the Trustee, and 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.
.3 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, either of the Sellers,
the Certificate Insurer or the Owners of any Class of Certificates mentioned
herein shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
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(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.
.4 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, either of the Sellers or the
Servicer in respect of the Home Equity Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by the Depositor,
the Servicer or either of the Sellers, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
.5 May Hold Certificates.
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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.
.6 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.
.7 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(b)(i) and Section 7.06 hereof.
The Trustee shall have no lien on the Trust Estate for the payment of such fees
and expenses.
.8 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A2 by Moody's (or such lower rating as may be acceptable to Moody's), and
deposit rating of A (and a short-term rating of A-1 or better) by Standard &
Poor's (or such lower rating as may be acceptable to Standard & Poor's) and, if
rated by Fitch, having a rating of at least A from Fitch (or such lower rating
as may be acceptable to Fitch). If such Trustee publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
ContiMortgage with the consent of the Certificate Insurer (which consent shall
not be unreasonably withheld) or of the Certificate Insurer, resign immediately
in the manner and with the effect hereinafter specified in this Article X.
.9 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
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by first-class mail, postage prepaid, to the Certificate Insurer and the Owners
at their addresses appearing on the Register; provided, that the Trustee cannot
resign solely for the failure to receive the Trustee Fee. A copy of such notice
shall be sent by the resigning Trustee to the Rating Agencies. Upon receiving
notice of resignation, the Depositor shall promptly appoint a successor trustee
or trustees acceptable to the Certificate Insurer (or, if no Class A
Certificates are then outstanding, to the Owners of a majority in Percentage
Interest of the Class B Certificates then Outstanding) by written instrument, in
duplicate, executed on behalf of the Trust by an Authorized Officer of
ContiMortgage, one copy of which instrument shall be delivered to the Trustee so
resigning and one copy to the successor trustee or trustees. If no successor
trustee shall have been appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Owner may, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or the Certificate Insurer, the Certificate Insurer or the Depositor
with the consent of the Certificate Insurer may remove the Trustee and appoint a
successor trustee acceptable to the Certificate Insurer by written instrument,
in duplicate, executed on behalf of the Trust by an Authorized Officer of the
Depositor, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A Certificates with the consent of the Certificate Insurer or, if
there are no Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class B Certificates, may at any time
remove the Trustee and appoint a successor trustee acceptable to the Certificate
Insurer by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor, to the Certificate Insurer and to the Servicer
copies of the record of the act taken by the Owners, as provided for in Section
11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
ContiMortgage shall promptly appoint a successor trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, or, if there are no Class A
Certificates then Outstanding, by such majority of
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the Percentage Interests represented by the Class B Certificates, 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
Certificate Insurer, the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
.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,
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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.
.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with respect to
such allocation of expenses. The Trustee shall, upon request of the Depositor,
collect any forms or reports from the Owners determined by the Depositor to be
required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Depositor, either of the Sellers, the Servicer, the Certificate
Insurer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such
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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.
.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate
Trustee or co-Trustee jointly (it being understood that such
separate Trustee or co-Trustee is not authorized to act
separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the
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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, the Certificate Insurer and the Trustee acting
jointly may at any time accept the resignation of or remove
any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
END OF ARTICLE X
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Article XI
MISCELLANEOUS
.1 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, either of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
.2 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
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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 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.
.3 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
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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.
.4 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Depositor, the Certificate Insurer or either of the Sellers shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at the Corporate Trust Office.
.5 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
.6 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
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.7 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.
.8 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.
.9 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer, the
Underwriters and the parties hereto and their successors hereunder, any benefit
or any legal or equitable right, remedy or claim under this Agreement.
.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
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agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, the Sellers and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful attorney
and duly authorized agent for acceptance of service of legal process with
respect to any action, suit or proceeding set forth in paragraph (b) hereof.
Each of the Sellers and the Servicer agrees that service of such process upon
the Trustee shall constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Certificate Insurer or the Servicer or any
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
.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.
.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
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.14 Amendment.
(a) The Trustee, the Depositor, either of the Sellers and the Servicer
may, at any time and from time to time, and without notice to or the consent of
the Owners but with the consent of the Certificate Insurer amend this Agreement,
subject to the provisions of Section 11.16 and 11.17 and the Trustee shall
consent to such amendment, for the purpose of (i) curing any ambiguity,
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or adding provisions hereto which are not
inconsistent with the provisions hereof; (ii) upon receipt of an opinion of
counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the Trust or upon the transferor of a
Residual Certificate as a result of the ownership of any Residual Certificate by
a Disqualified Organization, removing the restriction on transfer set forth in
Section 5.08(b) hereof or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder including any amendments
necessary to maintain REMIC status or (iv) for any other purpose, provided that
in the case of this clause (iv) such amendment shall not adversely affect in any
material respect any Owner. Any such amendment shall be deemed not to adversely
affect in any material respect any Owner if there is delivered to the Trustee
written notification from each Rating Agency that such amendment will not cause
such Rating Agency to reduce its then current rating assigned to (x) the Class A
Certificates without regard to the Certificate Insurance Policy or (y) to the
Class B Certificates. Notwithstanding anything to the contrary herein, no such
amendment shall (a) change in any manner the amount of, or change the timing of,
payments which are required to be distributed to any Owner without the consent
of the Owner of such Certificate, or (b) which affects in any manner the terms
or provisions of the Certificate Insurance Policies.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to the
Certificate Insurer and each Owner in the manner set forth in Section 11.05, and
to the Rating Agencies; provided, that any Owner of a Class B Certificate shall
receive a full copy of any such amendment, together with all opinions delivered
in connection therewith.
(c) The Rating Agencies shall be provided with copies of any amendments
to this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
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Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to such Owners or otherwise disposed of as
herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
.16 REMIC Status.
(a) The parties hereto intend that each REMIC shall constitute, and
that the affairs of each REMIC shall be conducted so as to qualify it as a REMIC
in accordance with the REMIC Provisions. In furtherance of such intention,
ContiFunding Corporation or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as "tax matters person" (as
defined in the REMIC Provisions) for the Trust and in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely manner, annual tax
returns and any other tax return required to be filed by each REMIC established
hereunder using a calendar year as the taxable year for each 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
each 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 each REMIC as, when and in the form required to
be provided to the Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the REMIC Provisions
and any other applicable federal, state or local laws, including without
limitation information reports relating to "original issue discount" as defined
in the Code based upon the prepayment assumption and calculated by using the
"issue price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or omit to take any
action that would cause the termination of the REMIC status of a
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REMIC, except as provided under this Agreement; (v) represent the Trust or a
REMIC in any administrative or judicial proceedings relating to an examination
or audit by any governmental taxing authority, request an administrative
adjustment as to a taxable year of the Trust or a REMIC, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Trust or a REMIC, and otherwise act
on behalf of the Trust or a REMIC therein in relation to any tax matter
involving the Trust or the REMIC therein; (vi) comply with all statutory or
regulatory requirements with regard to its conduct of activities pursuant to the
foregoing clauses of this Section 11.16, including, without limitation,
providing all notices and other information to the Internal Revenue Service and
Owners of Residual Certificates required of a "tax matters person" pursuant to
subtitle F of the Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax imposed (A) on
transferors of residual interests to certain Disqualified Organizations or (B)
on pass-through entities, any interest in which is held by or treated as held by
a Disqualified Organization; and (viii) acquire and hold the Tax Matters Person
Residual Interest. The obligations of ContiFunding Corporation or such other
designated Tax Matters Person pursuant to this Section 11.16 shall survive the
termination or discharge of this Agreement.
(b) Each of the Sellers, the Depositor, the Trustee and the Servicer
covenant and agree for the benefit of the Owners and the Certificate Insurer (i)
to take no action which would result in the termination of "REMIC" status for a
REMIC, (ii) not to engage in any "prohibited transaction," as such term is
defined in Section 860F(a)(2) of the Code, (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes under
the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent the Sellers are aware of any such proposed action by the
Servicer.
(c) Each REMIC shall, for federal income tax purposes, maintain books
on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee shall
enter into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither the
Trustee nor either of the Sellers may engage in any of the transactions
prohibited by such clauses, unless the Trustee shall have received an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that such transaction does not result in a
tax imposed on the Trustee or cause a termination of REMIC status for a REMIC;
provided, however, that such transaction is otherwise permitted under this
Agreement.
(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or a REMIC as a result of their negligence.
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.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer to the effect
that such transaction does not result in a tax imposed on the Trust or a REMIC
or cause a termination of REMIC status for a REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of a REMIC and use such income, to the extent necessary, to pay
such tax; provided that, to the extent that any such income is paid to the
Internal Revenue Service, the Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of 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).
.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for each 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 each REMIC shall be ContiFunding Corporation as long as it owns a
Class R-I, Class R-II or Class R Certificate. If ContiFunding Corporation does
not own a Class R-I, Class R-II or Class R Certificate, as the case may be, the
Tax Matters Person may be any other entity that owns such a Class R-I, Class
R-II or 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.
.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policies. At such time as the Class A Certificates and any
Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
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.20 Reserved.
.21 Third Party Rights.
The Trustee, each of the Sellers, the Depositor and the Owners agree
that the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Manufacturers and Traders Trust Company
Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Corporate Trust Administration
The Depositor: ContiSecurities Asset Funding Corp.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
The Sellers: ContiMortgage Corporation
One Xxxxx Park
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: President and Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
ContiWest Corporation
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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The Servicer: ContiMortgage Corporation
One Xxxxx Park
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Senior Vice President and
Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
The Master Servicer: Norwest Bank Minnesota, N.A.
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Master Servicing Department
Tel: (000) 000-0000
Fax: (000) 000-0000
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The Certificate Insurer: Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Tel:
Fax:
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Home Equity Monitoring
Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Fitch: Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Standard & Poor's: Standard & Poor's
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Residential Mortgage
Surveillance Group
Underwriters: Credit Suisse First Boston
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Finance - Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Securities
Group
Tel: (000) 000-0000
Fax: (000) 000-0000
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Greenwich Capital Markets, Inc.
000 Xxxxxxxxx Xx.
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx &
Xxxxx, Inc.
26th Floor
World Financial Center, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Xxxxxxx & Co., Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 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
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Article XII
THE MASTER SERVICER
.1 Appointment and Duties of the Master Servicer.
(a) Appointment and Compensation of Master Servicer. The Depositor, the
Servicer and the Trustee hereby assign and appoint the Master Servicer to act as
the Master Servicer for the Home Equity Loans (including all of the duties,
obligations and rights of the Master Servicer) under this Agreement. The Master
Servicer hereby accepts its appointment as the Master Servicer hereunder. The
Master Servicer shall not consent to any material amendment, modification or
waiver of the servicing provisions of this Agreement, without the consent of the
Certificate Insurer, and without having received written confirmation from
Standard & Poor's and Fitch that such action would not cause a downgrade,
withdrawal or qualification of the then current ratings on any Class of
Certificates (in the Class A Certificates, without regard to the Certificate
Insurance Policy).
As compensation for its services hereunder, the Master Servicer shall
be entitled to receive the Master Servicing Fee on each Payment Date from the
Certificate Account. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its Master Servicer duties and activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for herein.
(b) Master Servicer Assumes Servicing Responsibility. If the Servicer
Termination Date occurs, or if ContiMortgage's term as Servicer is not extended
pursuant to Section 8.20(i) hereof, then the Master Servicer shall be obligated
(1) to select a successor servicer subject to Section 8.21 hereof, that is
reasonably acceptable to the Certificate Insurer and the appointment of which
would not cause either Standard & Poor's or Fitch to downgrade, withdraw or
qualify the then current ratings on any Class of Certificates, or (2) to act as
the successor servicer hereunder (in the case of the Class A Certificates,
without regard to the Certificate Insurance Policy).
(c) Monitoring of Servicing. The Master Servicer shall: (i) review the
servicing reports, loan level information or other relevant information prepared
by the Servicer (A) to determine whether such reports are inaccurate or
incomplete, in any material respect, (B) to ascertain whether the Servicer is in
compliance, in all material respects, with its duties and obligations with
respect to such reports under this Agreement and (C) in the event that any
servicing report is inaccurate or incomplete, to prepare and deliver an
exception report to the Trustee, the Certificate Insurer and the Servicer, which
describes such inaccuracy or incompleteness; (ii) otherwise monitor the
performance by the Servicer of its duties and obligations hereunder (other than
the provisions of Section 8.13) and notify the Trustee, the Certificate Insurer,
and the Rating Agencies of any Servicer Termination Event of which it has
received notice or has actual knowledge; and (iii) be obligated to verify that
the Servicer, has or has caused to be deposited all amounts required to be
deposited into the Certificate Account as reflected on the reports of the
Servicer; provided, that, with respect to any Home Equity Loans
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with respect to which interest accrues on the basis of simple interest, the
Master Servicer's obligation to monitor the Servicer's performance with respect
to such Home Equity Loans shall be limited to a review of a sampling of such
loans as selected by the Master Servicer. Within two Business Days following
each Monthly Remittance Date the Master Servicer, assuming that it has received
the related monthly servicing report from the Servicer not later than the
Monthly Report Date, shall review such report and determine whether the Servicer
has made all required Delinquency Advances and paid all required Compensating
Interest for the related Payment Date. If the Master Servicer determines that
the Servicer has not done so, the Master Servicer shall make a written demand on
the Servicer to deposit any shortfall in such required amounts in the
Certificate Account. If, by the end of the second Business Day following such
notice the Servicer has not so deposited such shortfall, the Master Servicer
shall deposit such shortfall into the Certificate Account, provided that the
Master Servicer's obligation to fund any shortfall in respect of Compensating
Interest in any one month shall be limited to the Master Servicing Fee for such
month. Pursuant to Section 8.20(c) the Master Servicer may, but shall not be
obligated to, remove the Servicer for any failure of the Servicer to make any
required Delinquency Advance or to pay any required Compensating Interest.
(d) Successor Servicer. The Master Servicer agrees that it shall at all
times be prepared, to perform the duties and obligations of the Servicer and
become the successor servicer, if the Servicer fails to perform its duties and
obligations hereunder.
(e) Servicer Cooperation. The Servicer shall act, in a good faith and
reasonable manner, to assist and cooperate with the Master Servicer in
performing its duties and obligations under this Section 12.01. On a monthly
basis pursuant to Section 8.08(d)(ii) hereof, the Servicer, shall provide the
Master Servicer with its monthly servicing report in a compatible computer
readable format.
(f) Termination and Removal of Master Servicer. (i) the Certificate
Insurer, at any time prior to May 31, 2000, may renew the Master Servicer's
contractual obligations hereunder following the end of the June 2000 Remittance
Period. If the Certificate Insurer does renew the Master Servicer, the Master
Servicer shall remain as Master Servicer after the June 2000 Remittance Period,
until such time, if it occurs, as the Certificate Insurer may dismiss the Master
Servicer. Notwithstanding the foregoing, no dismissal of the Master Servicer
shall occur unless the Trustee has received written confirmation from Standard &
Poor's and from Fitch that such dismissal would not cause (in the case of the
Class A Certificates, without regard to the Certificate Insurance Policy) a
downgrade, withdrawal or qualification of the then current ratings of any Class
of Certificates.
(ii) If the Master Servicer is material default of any of its
obligations hereunder, or is in breach of any of its representations and
warranties set forth below, and such default or breach continues for a period of
30 days following the Master Servicer's receipt of notice of such failure or
such breach from the Trustee or from the Certificate Insurer, then the
Certificate Insurer may remove the Master Servicer. If the Master Servicer is so
removed, the Certificate Insurer will attempt to name a replacement, if the
failure so to name a replacement would cause either Standard & Poor's or Fitch
(in the case of the Class A Certificates, without
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regard to the Certificate Insurance Policy) to downgrade, withdraw or qualify
the then current ratings on any Class of Certificates.
(g) Resignation of Master Servicer. The Master Servicer may resign on
60 days' prior written notice to all parties or immediately if the Master
Servicer determines 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 and cannot be cured, provided that such
determination shall be evidenced by an opinion of counsel to such effect
delivered to the Servicer, the Certificate Insurer and the Trustee. No
resignation of the Master Servicer shall become effective until a successor
master servicer reasonably acceptable to the Certificate Insurer, Standard &
Poor's and to Fitch shall have assumed the obligations of the Master Servicer
hereunder.
(h) Limitation on Liability of Master Servicer. Neither the Master
Servicer nor any director, officer, employee or agent of the Master Servicer
shall be under any liability to the Trustee, the Servicer, the Certificate
Insurer, the Owners or any other Person 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
Master Servicer or any such Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
.2 Representations, Warranties and Covenants of the Master Servicer.
The Master Servicer hereby represents and warrants to the Servicer, the Trustee,
the Owners, the Depositor, and the Certificate Insurer that as of the Closing
Date (except as otherwise specifically provided herein):
(a) The Master Servicer is a national banking association duly
organized, validly existing, and in good standing under the laws of the United
States of America.
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance of and compliance with the terms of this Agreement will not
violate the Master Servicer's articles of association or by-laws 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 or acceleration of, any
material contract, agreement or other instrument to which the Master Servicer is
a party or which may be applicable to the Master Servicer or any of its assets.
(c) The Master Servicer has the full power and authority to enter into
and consummate all transactions contemplated by this Agreement to be consummated
by it, has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement. This Agreement,
assuming due authorization, execution and delivery by the Trustee, the Servicer,
each Seller, and the Depositor, constitutes a valid, legal and binding
obligation of the Master Servicer, enforceable against it in accordance with the
terms hereof,
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except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
(d) The Master Servicer is not in violation of, and the execution and
delivery of this Agreement by the Master Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of the Master Servicer or its properties or materially
and adversely affect the performance of its duties hereunder.
(e) There are no actions or proceedings against, or investigations of,
the Master Servicer currently pending with regard to which the Master Servicer
has received service of process and no action or proceeding against, or
investigation of, the Master Servicer is, to the knowledge of the Master
Servicer, threatened or otherwise pending, before any court, administrative
agency or other tribunal that (i) if determined adversely, would prohibit its
entering into this Agreement or render the Certificates invalid, (ii) seek to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or (iii) if determined adversely,
would prohibit or materially and adversely affect the sale of the Home Equity
Loans to the Depositor, the performance by the Master Servicer of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (i) the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the Notes, or (ii) the consummation of the transactions
required of it by this Agreement, except such as shall have been obtained before
the Closing Date.
(g) The statements set forth in the section of Prospectus Supplement
under the caption "THE MASTER SERVICER" do not contain an untrue statement of a
material fact and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
END OF ARTICLE XII
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IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: Authorized Signatory
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION,
as Seller and Servicer
By: /s/ Xxxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Senior Vice President
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
Title: Senior Vice President
CONTIWEST CORPORATION,
as Seller
By: /s/ Xxx Xxxxxxx
-------------------------------------
Name: Xxx Xxxxxxx
Title: Vice President
By: /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: Assistant Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx X.Xxxxxx
Title: Assistant Vice President
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NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Master Servicer
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
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STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 17th day of June 1999, before me personally came Xxxx Xxxx and
Xxxx Xxxxxxxx, to me known, who, being by me duly sworn, did depose and say that
he resides at 00 Xxxxxxxx Xxxx, Xxxxxx, XX 00000 and she resides at 000 XXX, Xxx
Xxxx, Xxx Xxxx 00000; that he and she are Authorized Signatories, respectively,
of ContiSecurities Asset Funding Corp., a Delaware Corporation; and that he and
she have signed their names 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
-157-
STATE OF PENNSYLVANIA )
): ss
COUNTY OF XXXXXXXXXX )
On the 17th day of June 1999, before me personally came Xxxxxx Xxxx, to
me known, who, being by me duly sworn, did depose and say that he/she resides at
Xxxxxxxxxx County; that he/she is a Senior Vice President of ContiMortgage
Corporation, a Delaware Corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-158-
STATE OF PENNSYLVANIA )
): ss
COUNTY OF XXXXXXXXXX )
On the 17th day of June 1999, before me personally came Xxxxxxxx Xxxxx,
to me known, who, being by me duly sworn, did depose and say that she resides at
Xxxxxxxxxx County; that she is a Senior Vice President of ContiMortgage
Corporation, a Delaware corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-159-
STATE OF NEVADA )
): ss.:
COUNTY OF XXXXX )
On the 17th day of June 1999, before me personally came Xxx Xxxxxxx and
Xxxx Xxxx, to me known, who, being by me duly sworn, did depose and say that he
resides at 0000 Xxxxxx Xx., Xxx Xxxxx, Xxxxxx 00000 and 0000 X. Xxxxxxxxxx #000,
Xxx Xxxxx, Xxxxxx 00000 respectively; that he is a Vice President and Assistant
Secretary, respectively, of ContiWest Corporation, a Nevada corporation; and
that he signed his name thereto by order of the respective Boards of Directors
of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-160-
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 17th day of June 1999, 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
-161-
SCHEDULE I-A
SCHEDULE OF FIXED RATE 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 I-B
SCHEDULE OF GROUP II 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
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 III
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE IV
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
