EXHIBIT 4.1
POOLING AND SERVICING AGREEMENT
Relating to
__________ HOME EQUITY LOAN TRUST 199_-_
Among
CONTISECURITIES ASSET FUNDING CORP.,
as the Depositor
------------------------------,
as the Servicer,
------------------------------,
as the Seller
and
------------------------------,
as the Trustee
Dated as of __________ 1, 199_
CONTENTS
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CONVEYANCE...................................................................................................... 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION...................................... 2
Section 1.01 Definitions.......................................................................... 2
Section 1.02 Use of Words and Phrases............................................................. 29
Section 1.03 Captions; Table of Contents.......................................................... 29
Section 1.04 Opinions............................................................................. 29
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST................................. 30
Section 2.01 Establishment of the Trust........................................................... 30
Section 2.02 Office............................................................................... 30
Section 2.03 Purposes and Powers.................................................................. 30
Section 2.04 Appointment of the Trustee; Declaration of Trust..................................... 30
Section 2.05 Expenses of the Trust................................................................ 30
Section 2.06 Ownership of the Trust............................................................... 31
Section 2.07 Situs of the Trust................................................................... 31
Section 2.08 Miscellaneous REMIC Provisions....................................................... 31
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS............................. 33
Section 3.01 Representations and Warranties of the Depositor...................................... 33
Section 3.02 Representations and Warranties of the Servicer....................................... 35
Section 3.03 Representations and Warranties of the Sellers........................................ 37
Section 3.04 Covenants of the Sellers to Take Certain Actions with Respect to the
Home Equity Loans In Certain Situations.............................................. 39
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement
Mortgages............................................................................ 47
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee............................................................. 50
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES...................................... 52
Section 4.01 Issuance of Certificates............................................................. 52
Section 4.02 Sale of Certificates................................................................. 52
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.................................... 53
Section 5.01 Terms................................................................................ 53
Section 5.02 Forms................................................................................ 53
Section 5.03 Execution, Authentication and Delivery............................................... 53
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Section 5.04 Registration and Transfer of Certificates............................................ 54
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.................................... 56
Section 5.06 Persons Deemed Owners................................................................ 56
Section 5.07 Cancellation......................................................................... 57
Section 5.08 Limitation on Transfer of Ownership Rights........................................... 57
Section 5.09 Assignment of Rights................................................................. 58
ARTICLE VI
COVENANTS.................................................. 59
Section 6.01 Distributions........................................................................ 59
Section 6.02 Money for Distributions to be Held in Trust; Withholding............................. 59
Section 6.03 Protection of Trust Estate........................................................... 60
Section 6.04 Performance of Obligations........................................................... 61
Section 6.05 Negative Covenants................................................................... 61
Section 6.06 No Other Powers...................................................................... 61
Section 6.07 Limitation of Suits.................................................................. 61
Section 6.08 Unconditional Rights of Owners to Receive Distributions.............................. 62
Section 6.09 Rights and Remedies Cumulative....................................................... 62
Section 6.10 Delay or Omission Not Waiver......................................................... 63
Section 6.11 Control by Owners.................................................................... 63
Section 6.12 Indemnification...................................................................... 63
Section 6.13 Access to Owners of Certificates' Names and Addresses................................ 64
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES..................................... 65
Section 7.01 Collection of Money.................................................................. 65
Section 7.02 Establishment of Accounts Total Available Funds;..................................... 65
Section 7.03 Flow of Funds........................................................................ 66
Section 7.04 Reserved............................................................................. 70
Section 7.05 Investment of Accounts............................................................... 70
Section 7.06 Payment of Trust Expenses............................................................ 71
Section 7.07 Eligible Investments................................................................. 71
Section 7.08 Accounting and Directions by Trustee................................................. 73
Section 7.09 Reports by Trustee to Owners and Certificate Insurer................................. 73
Section 7.10 Reports by Trustee. ................................................................ 76
Section 7.11 Preference Payments.................................................................. 76
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS............................................. 77
Section 8.01 Servicer and Sub-Servicers........................................................... 77
Section 8.02 Collection of Certain Home Equity Loan Payments...................................... 78
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers.......................... 78
Section 8.04 Successor Sub-Servicers.............................................................. 78
Section 8.05 Liability of Servicer; Indemnification .............................................. 78
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the
Owners............................................................................... 79
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee...................... 79
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Section 8.08 Principal and Interest Account....................................................... 79
Section 8.09 Delinquency Advances and Servicing Advances.......................................... 81
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans............................... 82
Section 8.11 Maintenance of Insurance............................................................. 83
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.......................... 83
Section 8.13 Realization Upon Defaulted Home Equity Loans; Inspection............................. 84
Section 8.14 Trustee to Cooperate; Release of Files............................................... 85
Section 8.15 Servicing Compensation............................................................... 86
Section 8.16 Annual Statement as to Compliance.................................................... 86
Section 8.17 Annual Independent Certified Public Accountants' Reports............................. 86
Section 8.18 Access to Certain Documentation and Information Regarding the Home
Equity Loans......................................................................... 87
Section 8.19 Assignment of Agreement.............................................................. 87
Section 8.20 Removal of Servicer; Resignation of Servicer......................................... 87
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance................... 91
ARTICLE IX
TERMINATION OF TRUST............................................. 92
Section 9.01 Termination of Trust................................................................. 92
Section 9.02 Termination Upon Option of Owners of Class R Certificates............................ 92
Section 9.03 Termination Upon Loss of REMIC Status................................................ 93
Section 9.04 Disposition of Proceeds.............................................................. 94
ARTICLE X
THE TRUSTEE................................................. 95
Section 10.01 Certain Duties and Responsibilities.................................................. 95
Section 10.02 Removal of Trustee for Cause......................................................... 96
Section 10.03 Certain Rights of the Trustee........................................................ 97
Section 10.04 Not Responsible for Recitals or Issuance of Certificates............................. 98
Section 10.05 May Hold Certificates................................................................ 99
Section 10.06 Money Held in Trust.................................................................. 99
Section 10.07 Compensation and Reimbursement; No Lien for Fees..................................... 99
Section 10.08 Corporate Trustee Required; Eligibility.............................................. 99
Section 10.09 Resignation and Removal; Appointment of Successor....................................100
Section 10.10 Acceptance of Appointment by Successor Trustee.......................................101
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
Trustee..............................................................................101
Section 10.12 Reporting; Withholding...............................................................102
Section 10.13 Liability of the Trustee.............................................................102
Section 10.14 Appointment of Co-Trustee or Separate Trustee........................................103
ARTICLE XI
MISCELLANEOUS................................................105
Section 11.01 Compliance Certificates and Opinions.................................................105
Section 11.02 Form of Documents Delivered to the Trustee...........................................105
Section 11.03 Acts of Owners.......................................................................106
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Section 11.04 Notices, etc. to Trustee.............................................................106
Section 11.05 Notices and Reports to Owners; Waiver of Notices.....................................106
Section 11.06 Rules by Trustee.....................................................................107
Section 11.07 Successors and Assigns...............................................................107
Section 11.08 Severability.........................................................................107
Section 11.09 Benefits of Agreement................................................................107
Section 11.10 Legal Holidays.......................................................................107
Section 11.11 Governing Law; Submission to Jurisdiction............................................108
Section 11.12 Counterparts.........................................................................108
Section 11.13 Usury................................................................................109
Section 11.14 Amendment............................................................................109
Section 11.15 Paying Agent; Appointment and Acceptance of Duties...................................110
Section 11.16 REMIC Status.........................................................................110
Section 11.17 Additional Limitation on Action and Imposition of Tax................................112
Section 11.18 Appointment of Tax Matters Person....................................................112
Section 11.19 The Certificate Insurer..............................................................112
Section 11.20 Reserved.............................................................................112
Section 11.21 Third Party Rights...................................................................113
Section 11.22 Notices..............................................................................113
SCHEDULE I-A SCHEDULE OF FIXED RATE GROUP HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF ADJUSTABLE RATE GROUP HOME EQUITY LOANS
SCHEDULE II RESERVED
SCHEDULE III HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
SCHEDULE IV HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
SCHEDULE V HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7IO FORM OF CLASS A-7IO CERTIFICATE
EXHIBIT A-8IO FORM OF CLASS A-8IO CERTIFICATE
EXHIBIT B FORM OF CLASS R CERTIFICATE
EXHIBIT B-IO FORM OF CLASS B-IO CERTIFICATE
EXHIBIT C RESERVED
EXHIBIT D FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H [RESERVED]
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
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POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY
LOAN TRUST 199_-_, dated as of __________ __, 199_ by and among CONTISECURITIES
ASSET FUNDING CORP., a Delaware corporation, in its capacity as Depositor (the
"Depositor"), ______________________________, a __________ corporation in its
capacities as a Seller (in such capacity, a "Seller") and as Servicer (in such
capacity, the "Servicer"), ______________________________, a __________
corporation, in its capacity as a Seller (a "Seller" and together with
____________________, the "Sellers") and ______________________________, a
__________ banking corporation, in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish the Trust with two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee, valid instruments, and to
make this Agreement a valid agreement, in accordance with their and its terms,
have been done;
WHEREAS, ____________________ is willing to serve in the capacity of
Trustee hereunder; and
WHEREAS, ____________________ is intended to be a third-party
beneficiary of this Agreement and is hereby recognized by the parties hereto to
be a third-party beneficiary of this Agreement.
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 Class A Certificates, the Class B-IO Certificates and the Class R
Certificates in accordance with their terms, all of the sums distributable under
this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, each Seller hereby bargains, sells,
conveys, assigns and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trust, without recourse
and for the exclusive benefit of the Owners of the Certificates, all of its
respective right, title and interest in and to any and all benefits accruing to
it from (a) the Home Equity Loans (other than any principal and interest
payments received thereon on or prior to the Cut-Off Date) listed in 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
herewith (and all substitutions therefor as provided by Sections 3.03, 3.04 and
3.06), together with the related Home Equity Loan documents and each Seller's
interest in any Property which secured a Home Equity Loan but which has been
acquired by foreclosure or deed in lieu of foreclosure, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts as may be held by the Trustee in the Certificate Account, the
Upper-Tier Fixed Rate Group Distribution Account and the Upper-Tier Adjustable
Rate Group Distribution Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided herein), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Insurance Agreement; (d) the Certificate Insurance Policies
issued thereunder and (e) proceeds of all the foregoing (including, but not by
way of limitation, all proceeds of any mortgage insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part
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of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified herein ((a)-(e) above shall be collectively referred
to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Class A Certificates (other than
the Class A-6 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which the Payment Date occurs; provided, that in the case
of the first Payment Date, the Accrual Period shall be the period from
__________ __, 199_ through and including __________ __, 199_. A "calendar
month" shall be deemed to be 30 days. With respect to the Class A-6 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 Class A Certificates (other than the Class A-6 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-6 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 Group": The pool of Home Equity Loans identified in
the related Schedule of Home Equity Loans as having been assigned to the
Adjustable Rate Group in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof.
"Adjustable Rate Group Available Funds": As defined in Section 7.02(d)
hereof.
"Adjustable Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Adjustable Rate Group Certificate Insurance Policy": The certificate
guaranty insurance policy (number _____) dated __________ __, 199_ issued by the
Certificate Insurer for the benefit of the Owners of the Class A-6 Certificates
and the Class A-8IO Certificates pursuant to which the Certificate Insurer
guarantees Insured Payments.
"Adjustable Rate Group Initial Specified Subordinated Amount": As
defined in the Insurance Agreement.
"Adjustable Rate Group Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all interest due during
the related Remittance Period with respect to the Home Equity Loans in the
Adjustable Rate Group (less the Servicing Fee on such Home Equity Loans), (ii)
all Compensating Interest paid by the Servicer on such Monthly Remittance Date
with respect to the Adjustable Rate Group and (iii) the portion of the
Substitution Amount relating to interest on the Home Equity Loans in the
Adjustable Rate Group.
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"Adjustable Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Adjustable Rate Group Interest Remittance
Amount and (ii) the Adjustable Rate Group Principal Remittance Amount for such
Monthly Remittance Date.
"Adjustable Rate Group Net Weighted Average Coupon Rate": With respect
to any Payment Date, the weighted average of the Coupon Rates of the Home Equity
Loans in the Adjustable Rate Group (weighted by the Loan Balances of such Home
Equity Loans), less the Expense Rate.
"Adjustable Rate Group Principal Distribution Amount": With respect to
the Class A-6 Certificates for any Payment Date, the lesser of:
(a) the Adjustable Rate Group Total Available Funds plus any Insured
Payment with respect to the Class A-6 Certificates minus the Class A-6 Current
Interest and Class A-8IO Current Interest; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the
Class A-6 Certificates as such amounts relate to principal
previously distributed on the Class A-6 Certificates,
(B) the principal actually collected by the Servicer
with respect to Home Equity Loans in the Adjustable Rate Group
during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan in the
Adjustable Rate Group that was repurchased by either Seller or
purchased by the Servicer on or prior to the related Monthly
Remittance Date, to the extent such Loan Balance is actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(D) any Substitution Amounts delivered by either
Seller on the related Monthly Remittance Date in connection
with a substitution of a Home Equity Loan in the Adjustable
Rate Group (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to Home Equity Loans in the
Adjustable Rate Group during the related Remittance Period (to
the extent such Net Liquidation Proceeds relate to principal)
to the extent such Net Liquidation Proceeds are actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(F) the amount of any Subordination Deficit with
respect to the Adjustable Rate Group for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to the Adjustable Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal),
(H) the amount of any Subordination Increase Amount
with respect to the Adjustable Rate Group for such Payment
Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose, and
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(I) the portion of any Carry-Forward Amount relating
to principal with respect to the Adjustable Rate Group for
such Payment Date.
over
----
(ii) the amount of any Subordination Reduction Amount with
respect to the Adjustable Rate Group for such Payment Date.
"Adjustable Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Adjustable
Rate Group during the related Remittance Period, (ii) the Loan Balance of each
Home Equity Loan in the Adjustable Rate Group that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the extent such Loan
Balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by either Seller in
connection with a substitution of a Home Equity Loan in the Adjustable Rate
Group, to the extent such Substitution Amounts were actually deposited in the
Principal and Interest Account on or prior to such Monthly Remittance Date, and
(iv) all Net Liquidation Proceeds actually collected by the Servicer with
respect to the Home Equity Loans in the Adjustable Rate Group during the related
Remittance Period (to the extent such Net Liquidation Proceeds related to
principal).
"Adjustable Rate Group Specified Subordinated Amount": As defined in
the Insurance Agreement.
"Adjustable Rate Group Subordinated Amount": As of any Payment Date,
the excess, if any, of (x) the aggregate Loan Balances of the Home Equity Loans
in the Adjustable Rate Group as of the close of business on the last day of the
related Remittance Period over (y) the Class A-6 Certificate Principal Balance
as of such Payment Date (after taking into account the payment of the Class A-6
Distribution Amount thereon (except for any Subordination Deficit with respect
to the Adjustable Rate Group and Subordination Increase Amount with respect to
the Adjustable Rate Group) on such Payment Date).
"Adjustable Rate Group Total Available Funds: As defined in Section
7.02(d) hereof.
"Adjustable Rate Group Total Monthly Excess Spread": With respect to
the Adjustable Rate Group and any Payment Date, the excess, if any, of (i) the
sum of (x) the interest which is collected on the Home Equity Loans in such
Group during the related Remittance Period less the Servicing Fee with respect
to Home Equity Loans in the Adjustable Rate Group, (y) any Delinquency Advances
and (z) Compensating Interest paid by the Servicer with respect to the
Adjustable Rate Group for such Remittance Period over (ii) the interest due on
the Class A-6 Certificates and the Class A-8IO Certificates on such Payment
Date.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) the
Weighted Average Pass- Through Rate, (b) the Class A-7IO Pass-Through Rate, (c)
the Class A-8IO Pass-Through Rate, and (d) any portion of the Premium Amount and
the Trustee Fee (calculated as a percentage of the outstanding principal amount
of the Certificates) then accrued and outstanding.
"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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"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": The Fixed Rate Group Available Funds or the
Adjustable Rate Group Available Funds, as the case may be.
"Available Funds Shortfall": A Fixed Rate Group Available Funds
Shortfall or Adjustable Rate Group Available Funds Shortfall, as the case may
be.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in The City of New York, or in the city in
which the principal corporate trust office of either the Trustee or the
Certificate Insurer is located, are authorized or obligated by law or executive
order to be closed.
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates (other than either Class of the Class A-IO Certificates) for any
Payment Date, the sum of (x) the amount, if any, by which (i) the portion of the
Class A Distribution Amount related to such Class as of the immediately
preceding Payment Date exceeded (ii) the amount of the actual distribution made
to the Owners of such Class of the Class A Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the
Pass-Through Rate in effect with respect to such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, Class B-IO
Certificates or Class R Certificates, each representing the interests and the
rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Insurance Policies": The Adjustable Rate Group Certificate
Insurance Policy and the Fixed Rate Group Certificate Insurance Policy.
"Certificate Insurer": ____________________, a New York insurance
company, or any successor thereto, as issuer of the Certificate Insurance
Policies.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under the
Certificate Insurance Policies in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable
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United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (B) a 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 Class A Certificates, the Certificate Principal
Balances thereof, as follows:
Class A-1 Certificates - $
Class A-2 Certificates - $
Class A-3 Certificates - $
Class A-4 Certificates - $
Class A-5 Certificates - $
Class A-6 Certificates - $
The Class A-IO Certificates, Class B-IO Certificates and the
Class R Certificates do not have a Certificate Principal Balance.
"Class": Any Class of the Class A Certificates, the B-IO Certificates
or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class
A-5 Certificates, Class A-6 Certificates, Class A-7IO Certificates or Class
A-8IO Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates (other than the Class A-IO Certificates) less any amounts
actually distributed on such Class A Certificates with respect to the Class A
Distribution Amount pursuant to Section 7.03(c)(iii)(D) and (H) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount,
6
the Class A-5 Distribution Amount, the Class A-6 Distribution Amount, the Class
A-7IO Current Interest and the Class A-8IO Current Interest.
"Class A-IO Certificate": Any one of the Class A-7IO Certificates or
Class A-8IO Certificates.
"Class A-1 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-1 Certificate, substantially in the
form annexed hereto as Exhibit A-1, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to the
Class A-1 Distribution Amount pursuant to Section 7.03(c)(iii)(D)(1) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-1 Certificates.
"Class A-1 Distribution Amount": The sum of (x) Class A-1 Current
Interest and (y) the Fixed Rate Group Principal Distribution Amount payable to
the Class A-1 Distribution Account pursuant to Section 7.03(c)(iii)(D)(1)
hereof.
"Class A-1 Pass-Through Rate": _____% per annum.
"Class A-2 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Certificate, substantially in the
form annexed hereto as Exhibit A-2, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed with respect to the
Class A-2 Distribution Amount pursuant to Section 7.03(c)(iii)(D)(2) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-2 Certificates as it relates to interest previously paid on the
Class A-2 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-2 Certificates.
7
"Class A-2 Distribution Amount": The sum of (x) Class A-2 Current
Interest and (y) the Fixed Rate Group Principal Distribution Amount payable to
the Owners of Class A-2 Certificates pursuant to Section 7.03(c)(iii)(D)(2)
hereof.
"Class A-2 Pass-Through Rate": _____% per annum.
"Class A-3 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-3 Certificate, substantially in the
form annexed hereto as Exhibit A-3, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed with respect to the
Class A-3 Distribution Amount pursuant to Section 7.03(c)(iii)(D)(3) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-3 Certificates as it relates to interest previously paid on the Class
A-3 Certificates plus the interest portion of the Carry-Forward Amount, if any,
with respect to the Class A-3 Certificates.
"Class A-3 Distribution Amount": The sum of (x) Class A-3
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-3 Certificates pursuant to Section
7.03(c)(iii)(D)(3) hereof.
"Class A-3 Pass-Through Rate": _____% 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, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed with respect to the
Class A-4 Distribution Amount pursuant to Section 7.03(c)(iii)(D)(4) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-4 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-4 Certificates as it relates to interest previously paid on the
Class A-4 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-4 Certificates.
8
"Class A-4 Distribution Amount": The sum of (x) Class A-4
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-4 Certificates pursuant to Section
7.03(c)(iii)(D)(4) hereof.
"Class A-4 Pass-Through Rate": _____% per annum.
"Class A-5 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-5 Certificate, substantially in the
form annexed hereto as Exhibit A-5, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed with respect to the
Class A-5 Distribution Amount pursuant to Section 7.03(c)(iii)(D)(5) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-5 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-5 Certificates as it relates to interest previously paid on the
Class A-5 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-5 Certificates.
"Class A-5 Distribution Amount": The sum of (x) Class A-5
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(c)(iii)(D)(5) hereof.
"Class A-5 Pass-Through Rate": _____% per annum.
"Class A-6 Available Funds Cap Rate": On any Payment Date on
or prior to the Payment Date in __________ 199_, the weighted average of the
Coupon Rates of the Home Equity Loans in the Adjustable Rate Group less the sum
of (x) the Expense Rate and (y) _____% and on any Payment Date thereafter, the
weighted average of the Coupon Rates of the Home Equity Loans in the Adjustable
Rate Group less the sum of (x) the Expense Rate and (y) _____% per annum.
"Class A-6 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-6 Certificate, substantially in the
form annexed hereto as Exhibit A-6, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed with respect to the
Class A-6 Distribution Amount pursuant to Section 7.03(c)(iii)(H) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
9
"Class A-6 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-6 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-6 Certificates.
"Class A-6 Distribution Amount": The sum of (x) Class A-6
Current Interest and (y) the Adjustable Rate Group Principal Distribution Amount
payable to the Owners of the Class A-6 Certificates pursuant to Section
7.03(c)(iii)(H) hereof.
"Class A-6 Pass-Through Rate": For any Payment Date, in any
month up to and including the month in which the Clean-Up Call Date occurs, the
lesser of (i) LIBOR plus _____% per annum and (ii) the Class A-6 Available Funds
Cap Rate for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus _____% per annum and
(ii) the Class A-6 Available Funds Cap Rate for such Payment Date.
"Class A-7IO Available Funds Cap Rate": As of any Payment
Date, the excess of (i) the weighted average Coupon Rate of the Home Equity
Loans in the Fixed Rate Group over (ii) the Fixed Rate Group Weighted Average
Pass-Through Rate plus the Expense Rate.
"Class A-7IO Carry-Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the Class A-7IO
Current Interest as of the immediately preceding Payment Date exceeds (ii) the
amount of the actual distribution made to Owners of the Class A-7IO Certificates
on such immediately preceding Payment Date and (y) 30 days' interest on such
amount at the Class A-7IO Pass-Through Rate.
"Class A-7IO Certificate": Any one of the Certificates
designated on the face thereof as a Class A-7IO Certificate, substantially in
the form annexed hereto as Exhibit A-7IO, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"Class A-7IO Certificate Termination Date": The Payment Date on which
the Class X- 0XX Notional Principal Amount is reduced to zero.
"Class A-7IO Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-7IO Notional Principal
Amount immediately prior to such Payment Date during the related Accrual Period
at the Class A-7IO Pass-Through Rate plus the Preference Amount owed to the
Owners of the Class A-7IO Certificates as it relates to interest previously paid
on the Class A-7IO Certificates plus the Class A-7IO Carry-Forward Amount.
"Class A-7IO Notional Principal Amount": As of any date of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Group Certificates.
"Class A-7IO Pass-Through Rate: The lesser of (x) _____% per annum and
(y) the Class A-7IO Available Funds Cap Rate.
"Class A-8IO Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the Class A-8IO
Current Interest as of the immediately preceding Payment Date exceeded (ii) the
amount of the actual distribution made to Owners of the Class A-8IO Certificates
on such immediately preceding Payment Date and (y) 30 days' interest on such
amount at the Class A-8IO Pass-Through Rate.
10
"Class A-8IO Certificate": Any one of the Certificates
designated on the face thereof as a Class A-8IO Certificate, substantially in
the form annexed hereto as Exhibit A-8IO, authenticated and delivered by the
Trustee representing the right to distributions as set forth herein.
"Class A-8IO Certificate Termination Date": The Payment Date on which
the Class X- 0XX Notional Principal Amount is reduced to zero.
"Class A-8IO Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-8IO Notional Principal
Amount immediately prior to such Payment Date at the Class A-8IO Pass-Through
Rate plus the Preference Amount owed to the Owners of the Class A-8IO
Certificates as it relates to interest previously paid on the Class A-8IO
Certificates plus the Class A-8IO Carry-Forward Amount.
"Class A-8IO Notional Principal Amount": As of any time of
determination, the aggregate outstanding Class A-6 Certificate Principal
Balance.
"Class A-8IO Pass-Through Rate": _____% per annum.
"Class B-IO Certificate": Any one of the Certificates
designated on the face thereof as a Class B-IO Certificate, substantially in the
form annexed hereto as Exhibit B-IO, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein. The Class B-IO
Certificates represent a class of "regular interests" in the Upper-Tier REMIC.
"Class B-IO Distribution Amount": With respect to any Payment Date, the
sum of:
(a) the excess of (x) the interest payable at the Fixed Rate
Group Net Weighted Average Coupon Rate on the Class A-1
Certificate Principal Balance over (y) interest payable at the
Class A-1 Pass-Through Rate, plus _____% on the Class A-1
Certificate Principal Balance; and
(b) the excess of (x) the interest payable at the Fixed Rate
Group Net Weighted Average Coupon Rate on the Class A-2
Certificate Principal Balance over (y) the Class A-2 Pass-
Through Rate, subject to a cap of _____%; and
(c) the excess of (x) the interest payable at the Fixed Rate
Group Net Weighted Average Coupon Rate on the Class A-3
Certificate Principal Balance over (y) the Class A-3 Pass-
Through Rate, subject to a cap of _____%; and
(d) the excess of (x) the interest payable at the Fixed Rate
Group Net Weighted Average Coupon Rate on the Class A-4
Certificate Principal Balance over (y) the Class A-4 Pass-
Through Rate, subject to a cap of _____%; and
(e) the excess of (x) the interest payable at the Fixed Rate
Group Net Weighted Average Coupon Rate on the Class A-5
Certificate Principal Balance over (y) the Class A-5 Pass-
Through Rate, subject to a cap of _____%; and
(f) the excess of (x) the interest payable at the Adjustable
Rate Group Net Weighted Average Coupon Rate on Class A-6
Certificate Principal Balance over (y) the Class A-6
Pass-Through Rate, subject to a cap equal to the Class A-6
Available Funds Cap Rate.
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"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 B, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Lower-Tier REMIC for the purposes
of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on
which the aggregate Loan Balances of the Home Equity Loans has declined to
$__________ or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal office of the Trustee
at ____________________, New York, New York _____.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Losses": As of any date of determination,
the aggregate amount of Realized Losses with respect to the Home Equity Loans
since the Cut-Off Date.
"Current Interest": With respect to any Payment Date, the sum
of the Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7IO Current Interest and
the Class A-8IO Current Interest.
"Cut-Off Date": As of the close of business on __________ __,
199_.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which,
pursuant to the Note relating thereto, interest is computed and charged to the
Mortgagor at the Coupon Rate on the outstanding principal balance of such Note
based on the number of days elapsed between receipt of the Mortgagor's last
payment through receipt of the Mortgagor's most current payment.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any
payment due thereon is not made by the close of business on the day such payment
is scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such
payment has not been received by the close of business on the corresponding day
of the month immediately succeeding the month in which such payment was due, or,
if there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Delivery Order": Each delivery order in the form set forth as
Exhibit G hereto and delivered by each Seller to the Trustee on the Startup Day
pursuant to Section 4.01 hereof.
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"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 "A" by Standard &
Poor's and "A2" by Moody's and (ii) if such Principal and Interest Account is
moved to a new institution, the Servicer shall provide the Trustee, 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.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"Disqualified Organization": Shall have the meaning set forth
from time to time in the definition thereof at Section 860E(e)(5) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated
pursuant to Section 7.07 hereof.
"Excess Subordinated Amount": With respect to any Home Equity
Loan Group and Payment Date, the excess, if any, of (x) the Subordinated Amount
that would apply to the related Home Equity Loan Group on such Payment Date
after taking into account the payment of the related Class A Distribution
Amounts on such Payment Date (except for any distributions of related
Subordination Reduction Amounts on such Payment Date), over (y) the related
Specified Subordinated Amount for such Payment Date.
"Expense Rate": For any Payment Date, the sum of the rates at
which the Servicing Fee, the Premium Amount and the Trustee Fee are calculated.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to
Section 3.05 hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
13
"Final Scheduled Payment Date": For each Class of Class A
Certificates, as set out in Section 2.08(k).
"First Mortgage Loan": A Home Equity Loan which constitutes a
first priority mortgage lien with respect to the related Property.
"Fiscal Agent": ______________________________, as Fiscal
Agent for the Certificate Insurer under the Certificate Insurance Policies or
any successor fiscal agent appointed by the Certificate Insurer.
"Fitch": Fitch Investors Service, L.P.
"Fixed Rate Group": The pool of Home Equity Loans identified
in the related Schedule of Home Equity Loans as having been assigned to the
Fixed Rate Group in Schedule I-A hereto, including any Qualified Replacement
Mortgages delivered in replacement thereof.
"Fixed Rate Group Available Funds": As defined in Section
7.02(c) hereof.
"Fixed Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Fixed Rate Group Certificate Insurance Policy": The
certificate guaranty insurance policy (number _____) dated __________ __, 199_
issued by the Certificate Insurer for the benefit of the owners of the Fixed
Rate Group Certificates and the Class A-7IO Certificate pursuant to which the
Certificate Insurer guarantees Insured Payments.
"Fixed Rate Group Certificates": Collectively, the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates and the Class A-6 Certificates.
"Fixed Rate Group Initial Specified Subordinated Amount": As
defined in the Insurance Agreement.
"Fixed Rate Group Interest Remittance Amount": As of any
Monthly Remittance Date, the sum, without duplication, of (i) all interest due
during the related Remittance Period with respect to the Home Equity Loans in
the Fixed Rate Group (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 the Fixed Rate Group and (iii) the portion of
the Substitution Amount relating to interest on the Home Equity Loans in the
Fixed Rate Group.
"Fixed Rate Group Monthly Remittance Amount": As of any
Monthly Remittance Date, the sum of (i) the Fixed Rate Group Interest Remittance
Amount and (ii) the Fixed Rate Group Principal Remittance Amount for such
Monthly Remittance Date.
"Fixed Rate Group Net Weighted Average Coupon Rate": With
respect to any Payment Date, the weighted average of the Coupon Rates of the
Home Equity Loans in the Fixed Rate Group (weighted by the Loan Balances of such
Home Equity Loans), less the Expense Rate.
"Fixed Rate Group Principal Distribution Amount": With respect
to the Fixed Rate Group Certificates for any Payment Date, the lesser of:
14
(a) the Fixed Rate Group Total Available Funds plus any Insured Payment
with respect to the Fixed Rate Group Certificates minus the Current Interest
with respect to the Fixed Rate Group Certificates and the Class A-7IO
Certificates; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the
Fixed Rate Group Certificates as such amounts relate to
principal previously distributed on the Fixed Rate Group
Certificates,
(B) the principal actually collected by the Servicer
with respect to Home Equity Loans in the Fixed Rate Group
during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan in the
Fixed Rate Group that was repurchased by either Seller or
purchased by the Servicer on or prior to the related Monthly
Remittance Date, to the extent such Loan Balance is actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(D) any Substitution Amounts delivered by either
Seller on the related Monthly Remittance Date in connection
with a substitution of a Home Equity Loan in the Fixed Rate
Group (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to Home Equity Loans in the Fixed
Rate Group during the related Remittance Period (to the extent
such Net Liquidation Proceeds relate to principal) to the
extent such Net Liquidation Proceeds are actually received by
the Trustee on or prior to the related Monthly Remittance
Date,
(F) the amount of any Subordination Deficit with
respect to the Fixed Rate Group for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to the Fixed Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal),
(H) the amount of any Subordination Increase Amount
with respect to the Fixed Rate Group for such Payment Date, to
the extent of any Net Monthly Excess Cashflow available for
such purpose; and
(I) the portion of any Carry-Forward Amount relating
to principal with respect to the Fixed Rate Group for such
Payment Date,
over
----
(ii) the amount of any Subordination Reduction Amount with
respect to the Fixed Rate Group for such Payment Date.
15
"Fixed Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Fixed Rate
Group during the related Remittance Period, (ii) the Loan Balance of each Home
Equity Loan in the Fixed Rate Group that was purchased from the Trustee on or
prior to such Monthly Remittance Date, to the extent such Loan Balance was
actually deposited in the Principal and Interest Account, (iii) any Substitution
Amounts relating to principal delivered by the Seller in connection with a
substitution of a Home Equity Loan in the Fixed Rate Group, to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, and (iv) all Net
Liquidation Proceeds actually collected by the Servicer with respect to the Home
Equity Loans in the Fixed Rate Group during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal).
"Fixed Rate Group Specified Subordinated Amount": As defined in the
Insurance Agreement.
"Fixed Rate Group Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the aggregate Loan Balances of the Home Equity Loans in
the Fixed Rate Group as of the close of business on the last day of the related
Remittance Period over (y) the Certificate Principal Balance of the Fixed Rate
Group Certificates as of such Payment Date (after taking into account the
payment of the Fixed Rate Group Principal Distribution Amount thereon (except
for any Subordination Deficit with respect to the Fixed Rate Group and
Subordination Increase Amount with respect to the Fixed Rate Group) on such
Payment Date).
"Fixed Rate Group Total Available Funds": As defined in Section 7.02(c)
hereof.
"Fixed Rate Group Total Monthly Excess Spread": With respect to the
Fixed Rate Group and any Payment Date, the excess, if any, of (i) the sum of (x)
the interest which is collected on the Home Equity Loans in such Group during
the related Remittance Period less the Servicing Fee with respect to Home Equity
Loans in the Fixed Rate Group, (y) any Delinquency Advances and (z) Compensating
Interest paid by the Servicer with respect to the Fixed Rate Group for such
Remittance Period over (ii) the sum of the interest due on the Fixed Rate Group
Certificates and the Class A-7IO Certificates on such Payment Date.
"Fixed Rate Group Weighted Average Pass-Through Rate": As to the Fixed
Rate Group Certificates and any Payment Date, the weighted average of the Class
A-1 Pass-Through Rate, the Class A-2 Pass-Through Rate, the Class A-3
Pass-Through Rate, the Class A-4 Pass-Through Rate and the Class A-5
Pass-Through Rate weighted by the respective Certificate Principal Balance of
the related Class as of such Payment Date before taking into account any
distributions to be made on such Payment Date.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by
FNMA from time to time, and the Servicer shall elect to apply such amendments in
accordance with Section 8.01 hereof.
"Highest Lawful Rate": As defined in Section 11.13.
"Home Equity Loan Group" or "Group": The Fixed Rate Group or the
Adjustable Rate Group, as the case may be. References herein to the related
Class(es) of Class A Certificates, when used with respect to a Home Equity Loan
Group, shall mean (A) in the case of the Fixed Rate Group, the Fixed
16
Rate Group Certificates and the Class A-7IO Certificates and (B) in the case of
the Adjustable Rate Group, the Class A-6 Certificates and the Class A-8IO
Certificates.
"Home Equity Loans": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
__________ __, 199_ among the Certificate Insurer, the Depositor and the
Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Insurance Agreement": The Insurance Agreement dated as of __________
__, 199_, among the Depositor, the Sellers, the 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.
"Insured Payment": With respect to either Home Equity Loan Group and as
to any Payment Date, without duplication, (A) the excess, if any, of (i) the sum
of the related Current Interest and the then existing related Subordination
Deficit for the related Home Equity Loan Group, if any, over (ii) the Total
Available Funds with respect to such Group (net of the Premium Amount allocable
to such Group) after taking into account (x) the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment Date
without regard to any related Insured Payment to be made with respect to such
Payment Date and (y) the crosscollateralization provisions of Sections
7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) hereof plus (B) an amount equal
to the Preference Amount with respect to the related Class of Class A
Certificates.
"Interest Remittance Amount": The sum of the Fixed Rate Group Interest
Remittance Amount and the Adjustable Rate Group Interest Remittance Amount.
"Late Payment Rate": For any Payment Date, the fluctuating rate of
interest, as it is published from time to time in the New York, New York edition
of The Wall Street Journal under the caption "Money Rates" as the "prime rate,"
to change when and as such published prime rate changes plus 2%. The Late
Payment Rate shall be computed on the basis of a year of 360 days calculating
the actual number of days elapsed. In no event shall the Late Payment Rate
exceed the maximum rate permissible under any applicable law limiting interest
rates.
17
"LIBOR": With respect to any Accrual Period for the Class A-6
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 Date": With respect to any Accrual Period for the
Class A-6 Certificates, the second London Business Day preceding the
commencement of such 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 or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such Home Equity Loan included in
previous Monthly Remittance Amounts, provided, however, that the Loan Balance
for any Home Equity Loan that has become a Liquidated Loan shall be zero as of
the first day of the Remittance Period following the Remittance Period in which
such Home Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances and Servicing Advances which the Servicer has theretofore
failed to remit with respect to such Home Equity Loan and (iii) all reimbursed
Delinquency Advances to the extent that reimbursement is not made from the
Mortgagor or from Liquidation Proceeds from the respective Home Equity Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage
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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.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Fixed
Rate Group Net Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Fixed
Rate Group Net Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Fixed
Rate Group Net Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Fixed
Rate Group Net Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Fixed
Rate Group Net Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the
Adjustable Rate Group Net Weighted Average Coupon Rate.
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"Lower-Tier Adjustable Rate Group Distribution Amount": With respect to
any Payment Date, the sum of the Lower-Tier A-6 Monthly Interest and the
Adjustable Rate Group Principal Distribution Amount, as a distribution on the
Lower-Tier Interest A-6 until the Lower-Tier Interest A-6 Termination Date;
provided that Insured Payments shall be deemed to be paid in respect of the
Lower-Tier Interests to the extent such Insured Payments relate to Class A-6
Certificates.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payments
Dates pursuant to Section 7.03(c)(iii)(D) and (H).
"Lower-Tier Fixed Rate Group Distribution Amount": With respect to any
Payment Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2
Monthly Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4
Monthly Interest, the Lower-Tier A-5 Monthly Interest, the Lower- Tier A-6
Monthly Interest and the Fixed Rate Group Principal Distribution Amount, which
such Fixed Rate Group Principal Distribution Amount is allocated as follows: as
a distribution on the Lower-Tier Interest A-1 until the Lower-Tier Interest A-1
Termination Date, the Class A-1 Distribution Amount; as a distribution on the
Lower-Tier Interest A-2 until the Lower-Tier Interest A-2 Termination Date, the
Class A-2 Distribution Amount; as a distribution on the Lower-Tier Interest A-3
until the Lower-Tier Interest A-3 Termination Date, the Class A-3 Distribution
Amount; as a distribution on the Lower-Tier Interest A-4 until the Lower-Tier
Interest A-4 Termination Date, the Class A-4 Distribution Amount; as a
distribution on the Lower-Tier Interest A-5 until the Lower-Tier Interest A-5
Termination Date, the Class A-5 Distribution Amount; provided, that Insured
Payments shall be deemed to be paid in respect of the Lower-Tier Interests to
the extent such Insured Payments relate to the related Class A Certificates.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-2 on such Payment Date.
20
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-6 on such Payment Date.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Fixed Rate Group Distribution Account
and the Upper-Tier Adjustable Rate Group Distribution Account which are assets
of the Upper-Tier REMIC.
"Monthly Remittance Amount": The sum of the Fixed Rate Group Monthly
Remittance Amount and the Adjustable Rate Group Monthly Remittance Amount.
"Monthly Remittance Date": The 10th day of each month or, if such day
is not a Business Day, the Business Day succeeding such day, commencing in the
month following the Startup Day.
"Moody's": Xxxxx'x Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(c)(ii)
hereof.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Notional Principal Amount": As of the Startup Day, as to the Class
A-7IO Certificates, $__________ and as to the Class A-8IO Certificates,
$__________.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
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"Operative Documents": Collectively, this Agreement, the Certificate
Insurance Policies, the Certificates, the Indemnification Agreement and the
Insurance Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances
of all Home Equity Loans as of the Cut-Off Date, i.e., $__________.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(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.
"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(g) hereof, respectively; provided that solely for the purposes
of determining the exercise of any voting rights hereunder, if Class A
Certificates are beneficially owned by a Seller or any affiliate thereof, such
Seller or such affiliate shall not be considered an Owner hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day.
"Percentage Interest": With respect to a Class of the Class A
Certificates (other than the Class A-IO Certificates) a fraction, expressed as a
percentage, the numerator of which is the initial Class A Certificate Principal
Balance represented by such Class A Certificate and the denominator of which is
the aggregate initial Class A Certificate Principal Balance represented by all
the Class A Certificates in such Class. With respect to a Class of the Class
A-IO Certificates a fraction, expressed as a percentage, the numerator of which
is the initial Notional Principal Amount represented by such Class A-IO
Certificate and the denominator of which is the aggregate initial Notional
Principal Amount represented by all of the Class A-IO Certificates of such
Class. With respect to a Class B-IO Certificate or a Class R Certificate, the
portion of the Class evidenced thereby, expressed as a percentage, as stated on
the face of such Certificate, all of which shall total 100% with respect to the
related Class.
22
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Class A Certificates, any
amounts of Current Interest and principal included in previous distributions of
any Class A Distribution Amounts to the Owners of the Class A Certificates which
are recovered from such Owners as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction and which
have not theretofore been repaid to such Owners and for which there has been
full compliance with the provisions of Section 7.11 (including the receipt of
payment therefor from the Certificate Insurer).
"Premium Amount": As defined in the Insurance 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, 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": The sum of the Fixed Rate Group
Principal Remittance Amount and the Adjustable Rate Group Principal Remittance
Amount.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property (including all building thereon)
securing a Home Equity Loan.
"Prospectus": The Prospectus dated __________ __, 199_ constituting
part of the Registration Statement.
"Prospectus Supplement": The ____________________ Home Equity Loan
Trust 199_-_ Prospectus Supplement dated __________ __, 199_ to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
23
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a Coupon
Rate at least equal to the Coupon Rate of the Home Equity Loan being replaced,
(ii) is of the same property type or is a single family dwelling and the same
occupancy status or is a primary residence as the replaced Home Equity Loan,
(iii) shall mature no later than __________ __, 199_, (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
____________________ credit underwriting guidelines set forth in
____________________ 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 in the Fixed Rate Group and shall be a first lien adjustable
rate Home Equity Loan if the Home Equity Loan being replaced is in the
Adjustable Rate Group and (ix) satisfies the criteria set forth from time to
time in the definition thereof at Section 860G(a)(3) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Xxxxx'x, 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.
"Record Date": With respect to the Fixed Rate Group Certificates and
Class A-IO Certificates and each 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-10 Certificates, the day immediately preceding
such Payment Date.
"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.
24
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
__________), including all amendments thereto and including the Prospectus
relating to the Class A Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, 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(c)(i)(C) and (D) hereof plus (ii) interest accrued on each such Insured
Payment not previously repaid calculated at the Reimbursement Late Payment Rate
and (y)(i) any amounts then due and owing to the Certificate Insurer under the
Insurance Agreement plus (ii) interest on such amounts at the Late Payment Rate.
The Certificate Insurer shall notify the Trustee, the Depositor and the Seller
of the amount of any Reimbursement Amount.
"Reimbursement Late Payment Rate": Means for any Payment Date, the rate
of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 2%. The Late Payment Rate shall be computed on the basis of a year of 365
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under any applicable law limiting interest rates.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the month
in which a Monthly Remittance Date occurs; provided that the initial Remittance
Period shall be the period from __________ __, 199_ through __________ __, 199_.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Net Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(c)(i), 7.03(c)(ii), 7.03(c)(iii) and 7.03(c)(iv) hereof.
"Schedule of Home Equity Loans": The schedules of Home Equity Loans,
separated by Home Equity Loan Group listing each Home Equity Loan in the related
Group to be conveyed on the Startup Day. Such Schedules of Home Equity Loans
shall identify each Home Equity Loan by the Servicer's
25
loan number and the borrower's name and address (including the state) of the
Property and shall set forth as to each Home Equity Loan the lien status
thereof, the Loan-to-Value Ratio and the Loan Balance as of the Cut-Off Date or
Subsequent Cut-Off Date, the Coupon Rate thereof (and with respect to the Home
Equity Loans in the Adjustable Rate Group the margin), the current scheduled
monthly payment of principal and interest and the maturity of the related Note,
the property type, occupancy status, Appraised Value and original
term-to-maturity thereof, whether or not such Home Equity Loan (including
related Note) has been modified and the aggregate Loan Balances of all Home
Equity Loans set forth on such Schedule of 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": ____________________ and ____________________.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Property having a first priority lien.
"Servicer": ____________________, a __________ corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to 0.50%
per annum of the then outstanding principal amount of such Home Equity Loan as
of the first day of each calendar month payable on a monthly basis.
"Specified Subordinated Amount": As applicable, the Fixed Rate Group
Specified Subordinated Amount or the Adjustable Rate Group Specified
Subordinated Amount.
"Standard & Poor's": Standard & Poor's Rating Services, a division of
The XxXxxx-Xxxx Companies, Inc.
"Startup Day": __________ __, 199_.
"Subordinate Certificates": Collectively, the Class R Certificates and
the Class B-IO Certificates.
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"Subordinated Amount": The Fixed Rate Group Subordinated Amount or the
Adjustable Rate Group Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to any Home Equity Loan
Group and Payment Date, the excess, if any, of (i) the Specified Subordinated
Amount applicable to such Home Equity Loan Group and Payment Date over (ii) the
Subordinated Amount applicable to such Home Equity Loan Group and Payment Date
prior to taking into account the payment of any related Subordination Increase
Amounts on such Payment Date.
"Subordination Deficit": With respect to any Home Equity Loan Group and
Payment Date, the amount, if any, by which (x) the aggregate of the related
Class A Certificate Principal Balances, after taking into account the payment of
the Class A Distribution Amount with respect to such Home Equity Loan Group on
such Payment Date (except for any Subordination Deficit with respect to such
Home Equity Loan Group and Subordination Increase Amount with respect to such
Home Equity Loan Group), exceeds (y) the aggregate Loan Balances of the Home
Equity Loans in the related Home Equity Loan Group as of the close of business
on the last day of the related Remittance Period.
"Subordination Increase Amount": With respect to any Home Equity Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amounts on such Payment Date (except for any
Subordination Increase Amount with respect to such Home Equity Loan Group)) and
(ii) the aggregate amount of Net Monthly Excess Cashflow allocated to such Home
Equity Loan Group pursuant to Sections 7.03(c)(ii)(A) and (B) on such Payment
Date.
"Subordination Reduction Amount": With respect to any Home Equity Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Home Equity Loan Group and Payment Date and (y) the
Principal Remittance Amount with respect to such Home Equity Loan Group for the
related Remittance Period.
"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.
"Tax Matters Certificate": The Class R Certificate initially issued to
ContiFunding Corporation as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates and the Upper-Tier Residual Class, each of which shall be
issued to and held by ContiFunding Corporation throughout the term hereof unless
another Person shall accept an assignment of such interest and the designation
of Tax Matters Person pursuant to Section 11.18 hereof.
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"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 Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": As defined in Section 7.02(d) hereof.
"Total Monthly Excess Cashflow": As defined in Section 7.03(c)(i)
hereof.
"Total Monthly Excess Spread": The Fixed Rate Group Total Monthly
Excess Spread or the Adjustable Rate Group Total Monthly Excess Spread, as the
case may be.
"Trust": __________ Home Equity Loan Trust 199_-_, one of the trusts
created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": ______________________________, a ___________ banking
corporation, the Corporate Trust Department of which is located on the date of
execution of this Agreement at _____________________________________________,
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) _____% multiplied by the
then-outstanding Class A Certificate Principal Balance and (ii) $__________.
"Underwriters": ______________________________ and
______________________________.
"Upper-Tier Adjustable Rate Group Distribution Account": The Upper-Tier
Adjustable Rate Group Distribution Account established pursuant to Section
7.02(a) hereof.
"Upper-Tier Fixed Rate Group Distribution Account": The Upper-Tier
Fixed Rate Group Distribution Account established pursuant to Section 7.02(a)
hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Class A Certificates. The assets of the Upper-Tier
REMIC shall include the Upper-Tier Fixed Rate Group Distribution Account, the
Upper-Tier Adjustable Rate Group Distribution Account and the right to receive
the distributions deposited therein with respect to each Lower-Tier Interest.
"Upper-Tier REMIC Residual Class": With respect to the Upper-Tier
REMIC, the interest therein designated as the "residual interest" therein for
the purposes of the REMIC Provisions. The Upper-Tier REMIC Residual Class shall
be uncertificated, and shall be issuable only in Percentage Interests of 99.999%
to ____________________ and 0.001% to ____________________, as Tax Matters
Person. Such interests shall be non-transferrable, except that [ContiFunding
Corporation] may assign such interest to another person who accepts such
assignment and the designation as Tax Matters Person pursuant to Section 11.18
hereof. The Upper-Tier REMIC Residual Class is entitled only to any amounts at
any time held in the Upper-Tier Fixed Rate Group Distribution Account and the
Upper-Tier Adjustable Rate Group Distribution Account and not required to be
paid to the Owners of the Class A Certificates, which is expected to be zero at
all times during the term of this Agreement.
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"Weighted Average Pass-Through Rate": As to the Class A Certificates
and any Payment Date, the weighted average of the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate and the Class A-6
Pass-Through Rate (such rate calculated for this purpose on the basis of a
360-day year assumed to consist of twelve 30 day months) weighted by the
respective Certificate Principal Balances of the related Class, as of such
Payment Date prior to taking into account any distributions to be made on such
Payment Date.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
29
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "__________ Home Equity Loan Trust 199_-_," which shall
contain two subtrusts.
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
____________________ ______________________________, Attention Corporate Trust
Department, or at such other address as the Trustee may designate by notice to
the Depositor, the Seller, the Servicer, the Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect either the Lower-Tier REMIC's or the Upper-Tier REMIC's status
as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section
7.03(c)(iv)(A) hereof), (ii) any reasonable expenses of the Trustee, and (iii)
any other expenses of the Trust that have been reviewed by
_____________________, 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 _____________________.
_____________________ shall pay directly the reasonable fees and expenses of
counsel to the Trustee. The reasonable fees and expenses of the Trustee's
counsel in connection with the review and delivery of this Agreement and related
documentation shall be paid by _____________________ on the Startup Day.
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Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in the
State of New York and payments will be received by the Trustee only in the State
of New York and payments from the Trustee will be made only from the State of
New York. The Trust's only office will be at the office of the Trustee as set
forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows:
Initial Lower- Lower-Tier Final Scheduled
Class Designation Tier Balance Pass-Through Rate Payment Dates
----------------- ------------ ----------------- -------------
Lower-Tier Interest A-1 $ (1)
Lower-Tier Interest A-2 $ (1)
Lower-Tier Interest A-3 $ (1)
Lower-Tier Interest A-4 $ (1)
Lower-Tier Interest A-5 $ (1)
Lower-Tier Interest A-6 $ (2)
Class R Certificates (3)
-------------------
(1) On any Payment Date, the Fixed Rate Group Net Weighted Average Coupon
Rate.
(2) For any Payment Date, the Adjustable Rate Group Net Weighted Average
Coupon Rate.
(3) The Class R Certificates are not issued with a Lower-Tier Balance or a
Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interest X-0, X-0, X-0, X-0, X-0 and A-6
Certificates shall be issued as non-certificated interests. The Class R
Certificates shall be issued from the Lower-Tier REMIC in fully registered
certificated form.
(c) The Depositor hereby designates Lower-Tier Interest X-0, Xxxxx-Xxxx
Xxxxxxxx X-0, Xxxxx-Xxxx Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx
Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, as "regular interests" and the Class R
Certificates as the single class of "residual interests" in the Lower- Tier
REMIC for purposes of the REMIC Provisions.
(d) The Depositor hereby designates the Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7IO, Class A-8IO, Class B-IO and the
uncertificated right of the Class A-1 Distribution Account to receive the Class
A-1 Internal Interest Distribution Amount as "regular interests," and the
Upper-Tier REMIC Residual Class as the single class of "residual interests" in
the Upper-Tier REMIC for purposes of the REMIC Provisions. The Depositor hereby
designates the Lower-Tier Interest A-1,
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the Lower-Tier Interest A-2, the Lower-Tier Interest A-3, the Lower-Tier
Interest A-4, the Lower-Tier Interest A-5, the Lower-Tier Interest A-6, the
Upper-Tier Fixed Rate Group Distribution Account and the Upper-Tier Adjustable
Rate Group Distribution Account as the only assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interests in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Lower-Tier REMIC and amounts distributed on the Upper-Tier Residual Class,
if any, shall be treated as distributions by the Upper-Tier REMIC.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
(k) For federal income tax purposes, the Final Scheduled Payment Date
for each Class of the Class A Certificates is hereby set to be the Payment Date
indicated below:
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates
Class A-2 Certificates
Class A-3 Certificates
Class A-4 Certificates
Class A-5 Certificates
Class A-6 Certificates
Class A-7IO Certificates
Class A-8IO Certificates
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
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor 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.
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(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
34
Section 3.02 Representations and Warranties of the Servicer.
----------------------------------------------
The Servicer hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of __________, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Servicer and each Sub-Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer is designated as
an approved seller-servicer by FNMA for first and second mortgage loans and has
combined equity and subordinated debt of at least $1,500,000, as determined in
accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which the Servicer is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
35
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they were
made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with relevant
FNMA guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of either Seller, the Servicer, any Sub-Servicer,
the Certificate Insurer, any Owner or the Trustee (each, for purposes of this
paragraph, a party) of a breach of any of the representations and warranties set
forth in this Section 3.02 which materially and adversely affects the interests
of the Owners 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.
36
Section 3.03 Representations and Warranties of the Seller.
--------------------------------------------
(1) The Seller hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Seller 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 Seller 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 Seller
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 Seller and will not violate
the Seller'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 Seller is a party or by which the Seller 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
Seller or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Seller 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 Seller, 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 Seller 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 Seller or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Seller is a party.
(e) No litigation is pending with respect to which the Seller
has received service of process or, to the best of the Seller's knowledge,
threatened against the Seller 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 Seller 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
Seller is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Seller 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 Seller or matters or activities for which the Seller is
responsible in accordance with the Operative Documents or which are attributable
to the Seller 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 Seller required to be stated therein or necessary to make
the statements contained therein with respect to the
37
Seller, 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 Seller that materially adversely affects or in the future may (so far as
the Seller can now reasonably foresee) materially adversely affect the Seller or
the Home Equity Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by the Seller to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) Neither the Seller nor any affiliate thereof will report
on any financial statement any part of the Servicing Fee as an adjustment to the
sales price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Seller 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
Seller 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 Seller and the performance by the Seller
of its obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(k) The origination practices used by the Seller with respect
to the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the
ordinary course of business of the Seller.
(m) The Seller is not insolvent, nor will it be made insolvent
by the transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(n) The transfer, assignment and conveyance of the Notes and
the Mortgages by the Seller hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(o) The Seller is not transferring the Home Equity Loans to
the Depositor with any intent to hinder, delay or defraud its creditors.
38
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, 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 the Certificate Insurer, the party discovering such breach shall give
prompt written notice to the other parties. The Seller 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, the Seller may (or may cause an affiliate of the Seller to)
on the Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) substitute in lieu of any Home Equity Loan not in compliance with
clause (h) a Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the applicable Replacement
Cut-Off Date is less than the Loan Balance of such Home Equity Loan as of such
Replacement Cut-Off Date, deliver an amount equal to such difference together
with the aggregate amount of (A) all Delinquency Advances and Servicing Advances
theretofore made with respect to such Home Equity Loan and (B) all Delinquency
Advances and Servicing Advances which the Servicer has theretofore failed to
remit with respect to such Home Equity Loan (a "Substitution Amount") to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Home Equity Loan from the Trust at the Loan Purchase Price, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the contrary, with
respect to any Home Equity Loan which is not in default or as to which no
default is imminent, no repurchase or substitution pursuant to Section 3.03,
3.04 or 3.06 shall be made unless the Seller 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 either of the Lower-Tier REMIC or Upper-Tier REMIC as a REMIC (a
"REMIC Opinion") addressed to the Trustee and the Certificate Insurer and
acceptable to the Certificate Insurer and the Trustee. Any Home Equity Loan as
to which repurchase or substitution was delayed pursuant to this Section shall
be repurchased or substituted for (subject to compliance with Sections 3.03,
3.04 or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of the Sellers to Take Certain Actions
with Respect to the Home Equity Loans In Certain
Situations.
(a) Upon the discovery by either Seller, the Servicer, the Certificate
Insurer, any Sub-Servicer or the Trustee (i) that any of the statements set
forth in subsection (b) below were untrue as of the Startup Day with the result
that the interests of the Owners 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) substitute in
lieu of each Home Equity Loan which has given rise to the requirement for action
by such Seller a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at a purchase price equal
39
to the Loan Purchase Price thereof, which purchase price shall be delivered to
the Servicer for deposit in the Principal and Interest Account. Other than as
specified in Section 6.12 hereof, it is understood and agreed that the
obligation of a Seller so to substitute or purchase any Home Equity Loan as to
which such a statement set forth below is untrue in any material respect and has
not been remedied shall constitute the sole remedy respecting a discovery of any
such statement which is untrue in any material respect in this Section 3.04
available to the Owners, the Trustee and the Certificate Insurer.
(b) Unless otherwise specified, the information set out below specifies
as of the Startup Day:
(i) The information with respect to each Home Equity Loan and
the aggregate Loan Balance of all Home Equity Loans set forth in the
related Schedule of Home Equity Loans is true and correct as of the
Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Home Equity Loan has been or will be delivered to
the Trustee on the Startup Day or as otherwise provided in Section
3.05;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums and
townhouses, manufactured housing or small multifamily or mixed-use
property but shall not include co-operatives or mobile homes;
provided, however, that not more than _____% and _____% of the
aggregate Loan Balance of the Home Equity Loans in the Fixed Rate
Group and Adjustable Rate Group, respectively, are secured by
condominiums with more than 4 stories and no more than _____% and
_____% are secured by condominiums of less than 4 stories;
(v) No Home Equity Loan in the Fixed Rate Group has a
Loan-to-Value Ratio in excess of _____%, except _____% of such Home
Equity Loans which have a Loan-to-Value Ratio not greater than
_____%; no Home Equity Loan in the Fixed Rate Group has a Loan-to-
Value Ratio greater than _____%; no Home Equity Loan in the
Adjustable Rate Group has a Loan-to-Value Ratio in excess of _____%,
except _____% of such Home Equity Loans which have a Loan-to-Value
Ratio not greater than _____%; no Home Equity Loan in the Adjustable
Rate Group has a Loan-to-Value Ratio greater than _____%;
(vi) Each Home Equity Loan is being serviced by the Servicer;
(vii) The Note related to each Home Equity Loan in the Fixed
Rate Group bears a fixed Coupon Rate of at least _____% per annum,
and the Note related to each Home Equity Loan in the Adjustable Rate
Group bears a current Coupon Rate of at least _____% per annum. The
weighted average Coupon Rate of the Home Equity Loans in the Fixed
Rate Group is at least _____% and the weighted average Coupon Rate
of the Home Equity Loans in the Adjustable Rate Group is at least
_____%;
(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 _____% and _____% of the
aggregate Loan Balance of the Initial Home Equity Loans in the Fixed
Rate Group and the Adjustable Rate Group, respectively,
40
which may provide for a "balloon" payment due at the end of the 5th,
14th or 15th year, which maturity date is not more than 15 years
from the date of origination);
(ix) As of the Startup Day, each Mortgage is a valid and
subsisting first or second lien of record on the Property subject in
the case of any Second Mortgage Loan only to a Senior Lien on such
Property and subject in all cases to the exceptions to title set
forth in the title insurance policy or attorney's opinion of title
with respect to the related Home Equity Loan, which exceptions are
generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by such
Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the related Seller to the Depositor and by the
Depositor to the Trust herein contemplated, such Seller and the
Depositor, as the case may be, held good and indefeasible title to,
and was the sole owner of, each Home Equity Loan (including the
related Note) conveyed by such Seller subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
clause (ix) or other liens which will be released simultaneously
with such transfer and assignment; and immediately upon the transfer
and assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity
Loan subject to no liens, charges, mortgages, encumbrances or rights
of others except as set forth in paragraph (ix) or other liens which
will be released simultaneously with such transfer and assignment;
(xi) As of the Startup Day, (a) no more than _____% and _____%
of the Home Equity Loans in the Fixed Rate Group and the Adjustable
Rate Group, respectively, as a percentage of the outstanding
aggregate Loan Balance of the Home Equity Loans in such Group, are
30-59 days Delinquent, (b) no more than _____% of the Home Equity
Loans in the Fixed Rate Group and the Adjustable Rate Group,
respectively, as a percentage of the outstanding aggregate Loan
Balance of the Home Equity Loans in such Group, are 60-89 days
Delinquent, (c) none of the Home Equity Loans in the Fixed Rate
Group, is 60 or more days Delinquent, (d) none of the Home Equity
Loans in the Adjustable Rate Group are 90 or more days Delinquent,
(e) 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 (f) 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;
41
(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 _____% of the Original Aggregate Loan
Balance of the Home Equity Loans), or (b) a lender's title insurance
policy, issued in standard American Land Title Association form by a
title insurance company authorized to transact business in the state
in which the related Property is situated, in an amount at least
equal to the original balance of such Home Equity Loan together, in
the case of a Second Mortgage Loan, with the then-current principal
balance of the mortgage note relating to the Senior Lien, insuring
the mortgagee's interest under the related Home Equity Loan as the
holder of a valid first or second mortgage lien of record on the
real property described in the related Mortgage, as the case may be,
subject only to exceptions of the character referred to in paragraph
(ix) above, was effective on the date of the origination of such
Home Equity Loan, and, as of the Startup Day, such policy is valid
and thereafter such policy shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as
defined in Section 8.03 with respect to the Home Equity Loans
serviced by it;
(xviii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Property;
(xix) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting
the requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien),
(B) the minimum amount required to compensate for damage or loss on
a replacement cost basis or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance
with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity
Loan had full legal capacity to execute all documents relating to
such Home Equity Loan and convey the estate therein purported to be
conveyed;
(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
42
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 _____% and _____%
of the aggregate Loan Balance of the Home Equity Loans in the Fixed
Rate Group and the Adjustable Rate Group, 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 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;
43
(xxxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement.
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxiv) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxv) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder
thereof adequate for the realization against the related Property of
the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Property at a trustee's
sale or the right to foreclose the related Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and neither the Servicer
nor the related Seller has waived any default, breach, violation or
event of acceleration;
(xxxviii) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement which has been approved by the primary mortgage
guaranty insurer, if any, and which has been delivered to the
Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least
twelve months prior to the maturity date of the related first
mortgage loan if such first mortgage loan provides for a balloon
payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Prospectus Supplement;
44
(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 _____% and _____% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group and the
Adjustable Rate Group, respectively, are secured by Properties that
are non-owner occupied Properties (i.e., investor-owned and
vacation);
(xlv) No more than _____% and _____% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group and the
Adjustable Rate Group, respectively, are secured by Home Equity
Loans which were originated under the Seller's non-income
verification program;
(xlvi) Neither Seller has any actual knowledge that there
exist any hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation on any Property;
(xlvii) Both Sellers were properly licensed or otherwise
authorized, to the extent required by applicable law, to originate
or purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home
Equity Loans by the Trustee as trustee of the Trust will not involve
the violation of such laws;
(xlviii) With respect to each Property subject to a ground
lease (i) the current ground lessor has been identified and all
ground rents which have previously become due and owing have been
paid; (ii) the ground lease term extends, or is automatically
renewable, for at least five years beyond the maturity date of the
related Initial 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;
45
(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; and
(li) All of the Home Equity Loans in the Adjustable Rate Group
are in a first lien position;
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $___________;
(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
$----------;
(liv) No more than _____% of the Fixed Rate Group Home Equity
Loans are in a second priority position and none of the Adjustable
Rate Group Home Equity Loans are in a second priority position; and
(lv) The weighted average margin of the Adjustable Rate Group
Home Equity Loans is _____%.
(c) In the event that any such repurchase results in a prohibited
transaction tax, the Trustee shall immediately notify the related Seller in
writing thereof and such Seller will, within 10 days of receiving notice thereof
from the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In the event that any Qualified Replacement Mortgage is delivered by
either Seller to the Trust pursuant to Section 3.03, Section 3.04 or Section
3.06 hereof, such Seller shall be obligated to take the actions described in
Section 3.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the other Seller, the Servicer, the Certificate
Insurer, any Sub-Servicer or the Trustee that the statements set forth in clause
(ix), (x), (xiii), (xxxvi), (xl) or (xli) of subsection (b) above are untrue in
any material respect on the date such Qualified Replacement Mortgage is conveyed
to the Trust or that any of the other statements set forth in subsection (b)
above are untrue on the date such Qualified Replacement Mortgage is conveyed to
the Trust such that the interests of the Owners 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.
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Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day each Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys to
the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys, without recourse,
to the Trust all of their respective right, title and interest in and to the
Trust Estate; provided, however, that each Seller reserves and retains all of
its right, title and interest in and to principal (including Prepayments)
collected and interest accrued on each Home Equity Loan on or prior to the
Cut-Off Date. The transfer by the Depositor of the Home Equity Loans set forth
on the Schedule of Home Equity Loans to the Trustee is absolute and is intended
by the Owners and all parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Home Equity Loans conveying good
title thereto free and clear of any liens and encumbrances from each Seller to
the Depositor and from the Depositor to the Trust and that the Home Equity Loans
not be part of the Depositor's or either Seller's estate in the event of
insolvency. In the event that such conveyance is deemed to be a loan, the
parties intend that each Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a first
priority perfected security interest in the Trust Estate and that this Agreement
shall constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Sellers to the Depositor, each Seller has filed, in the appropriate office
or offices in the States of __________, ___________ and __________, as the case
may be, a UCC-1 financing statement executed by such Seller as debtor, naming
the Depositor as secured party and listing the Home Equity Loans and the other
property described above as collateral. The characterization of a Seller as
debtor and the Depositor as secured party on such financing statements is solely
for protective purposes and shall in no way be construed as being contrary to
the intent of the parties that this transaction be treated as a sale of such
Seller's entire right, title and interest in and to the Trust Estate. In
connection with such filing, each Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's, the Owners' and the Certificate Insurer's interest in the Trust
Estate.
In connection with such sale, transfer, assignment, and conveyance from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of New York and Delaware, a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee as secured party and
listing the Home Equity Loans and the other property described above as
collateral. The characterization of the Depositor as debtor and the Trustee as
secured party in such financing statements is solely for protective purposes and
shall in no way be construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Depositor's entire right, title and
interest in and to the Trust Estate. In connection with such filing, the
Depositor agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's, the
Owners' and the Certificate Insurer's 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)
47
the original title insurance policy or a copy certified by the issuer
of the title insurance policy, or the attorney's opinion of title, (C)
originals or certified copies of all intervening assignments, showing a
complete chain of title from origination to the Trustee, if any,
including warehousing assignments, with evidence of recording thereon,
(D) originals of all assumption and modification agreements, if any and
(E) either: (1) the original Mortgage, with evidence of recording
thereon (if such original Mortgage has been returned to the related
Seller from the applicable recording office or a certified copy thereof
if such original Mortgage has not been returned to the related Seller
from the applicable recording office), or (2) a copy of the Mortgage
certified by the public recording office in those instances where the
original recorded Mortgage has been lost,
(ii) cause, within 60 days following the Startup Day,
assignments of the Mortgages to "[Name of Trustee], as Trustee of
__________ Home Equity Loan Trust under the Pooling and Servicing
Agreement dated as of __________ 1, 199_" to be submitted for recording
in the appropriate jurisdictions; provided, however, that the Depositor
shall not be required to record an assignment of a Mortgage if the
Depositor furnishes to the 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 Certificate Insurer and to the Rating Agencies); 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 anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the second preceding paragraph, each Seller shall deliver to
the Trustee a list of all Mortgages with respect to Home Equity Loans delivered
by such Seller for which no Mortgage assignment has yet been submitted for
recording by such Seller, which list shall state the reason why such Seller has
not yet submitted such Mortgage assignments for recording. With respect to any
Mortgage assignment disclosed on such list as not yet submitted for recording
for a reason other than a lack of original recording information, the Trustee
shall make an immediate demand on such Seller to prepare such Mortgage
assignments, and shall inform the Certificate Insurer of such Seller's failure
to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in
executing any documents prepared by the Certificate Insurer and submitted to the
Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (ii) of the second preceding paragraph, each
Seller shall promptly prepare a Mortgage assignment for any Mortgage with
respect to Home Equity Loans delivered by such Seller for which original
recording information is subsequently received by such Seller, and shall
promptly deliver a copy
48
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, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of such Seller in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by such Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all
its right, title and interest to principal and interest due on such Qualified
Replacement Mortgage after the applicable Replacement Cut-Off Date; provided,
however, that such Seller shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such Qualified Replacement
Mortgage on or prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the order of the Seller delivering such Home Equity Loan, all
of its right, title and interest in and to such released Home Equity Loan and
all the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such released Home
Equity Loan on or prior to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, each Seller agrees
to (i) deliver without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating thereto, endorsed in
49
blank or to the order of the Trustee, (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by such Seller (but in any event
within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title in the same manner required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and on
the order of the Seller delivering such Qualified Replacement Mortgage (i) the
original Note relating thereto, endorsed without recourse or representation, to
such Seller, (ii) the original Mortgage so released and all assignments relating
thereto and (iii) such other documents as constituted the File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller that delivered the corresponding Home Equity Loan shall prepare a
substitute assignment or cure such defect, as the case may be, and thereafter
cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of
Home Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and the
Corpus 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 Servicer and the Certificate Insurer 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
50
be on their face, nor shall the Trustee be under any duty to determine
independently whether there are any intervening assignments or assumption or
modification agreements with respect to any Home Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers, the Certificate Insurer and the
Owners. In performing any such review, the Trustee may conclusively rely as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the items delivered by each
of the Sellers pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. Each Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File delivered by such Seller of which it is so notified
by the Trustee. If, however, within 60 days after the Trustee's notice to it
respecting such defect the related Seller has not remedied the defect and the
defect materially and adversely affects the interest of the Owners or of 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) 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.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 12th month after the Startup Day indicating the current status
of the exceptions previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the Trustee and the
Servicer shall provide to the Certificate Insurer no less frequently than
monthly updated certifications indicating the then current status of exceptions,
until all such exceptions have been eliminated.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of __________ ____________________________________ (or at such other
location acceptable to the Seller), the Sellers will sell and convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Depositor and the Depositor will sell and convey the Home Equity Loans and
the money, instruments and other property related thereto to the Trustee, and
the Trustee will deliver (i) to the Underwriters the Class A Certificates with
an aggregate Percentage Interest in each Class equal to 100%, registered in the
name of Cede & Co., or in such other names as the Underwriters shall direct,
against payment of the purchase price thereof by wire transfer of immediately
available funds to the Trustee, and (ii) to the respective registered owners
thereof, a Class B-IO Certificate with a Percentage Interest equal to 100%,
registered in the name of ____________________, a Class R Certificate with a
Percentage Interest equal to 99.999%, registered in the name of
____________________ and a Class R Certificate with a Percentage Interest equal
to .001%, registered in the name of ____________________.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Class A Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
-----
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and except for the rights of
the Trustee on behalf of the Owners of the Class A Certificates with respect to
the Certificate Insurance Policy). The Class A 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 and the
Corpus and, with respect to the Class A Certificates upon the occurrence of
certain events, from Insured Payments. 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
(and, with respect to the Owners of the Class A Certificates, Insured Payments
deposited in the Certificate Account), pro rata in accordance with such Owner's
Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
-----
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7IO Certificates, the Class A-8IO Certificates,
the Class R Certificates and the Class B-IO Certificates shall be in
substantially the forms set forth in Exhibits X-0, X-0, X-0, X-0, X-0, X-0,
A-7IO, A-8IO, B and B-IO hereof, respectively, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement or as may in the Depositor's judgment be necessary, appropriate
or convenient to comply, or facilitate compliance, with applicable laws, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
applicable securities laws or as may, consistently herewith, be determined by
the Authorized Officer of the Depositor executing such Certificates, as
evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
--------------------------------------
Each Certificate shall be executed on behalf of the Trust, by the
manual or facsimile signature of one of the Depositor's Authorized Officers and
shall be authenticated by the manual or facsimile signature of one of the
Trustee's Authorized Officers.
53
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Depositor shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
-----------------------------------------
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer, or if there are no longer any Class A Certificates then outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, the Trustee will give the Certificate Insurer and the Owners
prompt written notice of the appointment of such Registrar and of the location,
and any change in the location, of the Register. In connection with any such
appointment the annual fees of the bank then serving as Trustee and Registrar
shall thenceforth be reduced by the amount to be agreed upon by the Trustee and
the Depositor at such time and the reasonable fees of the Registrar shall be
paid, as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or percentage interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
54
(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 Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, the Class A Certificates (other than the Class A-IO
Certificates) shall be issued in denominations of no less than $1,000 and
integral multiples thereof. On the Startup Day, the Class A-IO Certificates
shall be issued in denominations of no less than $1,000 (based on the related
Class A-7IO or Class A-8IO Notional Principal Amount thereof) and integral
multiple thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Sellers, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Depositor or the Trustee is unable to locate
55
a qualified successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Class A Certificates
shall no longer be restricted to being registered in the Register in the name of
Cede & Co. (or a successor nominee) as nominee of the Depository. At that time,
the Depositor may determine that the Class A Certificates shall be registered in
the name of and deposited with a successor depository operating a global
book-entry system, as may be acceptable to the Depositor and at the Depositor's
expense, or such depository's agent or designee but, if the Depositor does not
select such alternative global book-entry system, then the Class A Certificates
may be registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it 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, the Depositor shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
---------------------
The Certificate Insurer, the Trustee and any agent of the Trustee may
treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
56
Section 5.07 Cancellation.
------------
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
------------------------------------------
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate or assignment of an interest in the Upper-Tier REMIC
Residual Class (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate or assignment of an
interest in the Upper-Tier REMIC Residual Class (whether pursuant to a purchase,
a transfer resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be an
Owner for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Class R Certificate or Upper-Tier REMIC Residual Class.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Class R Certificate
nor authenticate and make available any new Class R Certificate unless the
Trustee has received an affidavit from the proposed transferee in the form
attached hereto as Exhibit I. Each holder of a Class R Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.08(a). The Upper-Tier REMIC Residual Class is not
transferable except that the Owner of the Tax Matters Person Residual Interest
in the Upper-Tier REMIC may assign its interest to another Person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Class B-IO Certificate or a Class R Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is made in accordance with said Act and
laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee or the Depositor shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the Depositor
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 Trust Estate or
the Certificate Insurer, 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 and the Certificate Insurer certifying to
the Trustee, the Certificate Insurer and each of the Sellers 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 B-IO Certificate or a Class R Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Certificate Insurer, the Depositor and each of the Sellers against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
(c) No transfer of a Class B-IO or Class R Certificate shall be made
unless the Trustee shall have received a representation letter from the
transferee of such Class B-IO or Class R Certificate, acceptable to and in form
and substance satisfactory to the Trustee, to the effect that such transferee is
not an employee benefit plan subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 4975 of the Code
57
(collectively, a "Plan"), nor is acting on behalf of any Plan nor using the
assets of any Plan to effect such transfer. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate to or on behalf of any
Plan without the delivery to the Trustee a representation letter as described
above shall be null and void and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor, the Sellers or the Servicer. No sale or other transfer of any
Class A 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 Certificate Insurer and the Trustee experienced in
federal bankruptcy matters to the effect that such sale or transfer would not
adversely affect the character of the conveyance of the Home Equity Loans to the
Trust as a sale. To the extent any payment to an Owner of a Class A Certificate
constitutes an Insured Payment, such payment will not be made to either of the
Sellers, the Depositor or the Servicer or any Subservicer. No sale or other
transfer of the Class R Certificate issued to ContiFunding Corporation on the
Startup Day may be transferred or sold to any Person, except to a person who
accepts the appointment of Tax Matters Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
--------------------
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
58
ARTICLE VI
COVENANTS
Section 6.01 Distributions.
-------------
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) a Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5 or Class A-6 Certificate having an original principal balance of
not less than $1,000,000, (B) a Class A-IO Certificate having an original
Notional Principal Amount of not less than $1,000,000 or (C) a Class B-IO
Certificate or Class R Certificate having a Percentage Interest of not less than
10% in writing not later than one Business Day prior to the applicable Record
Date (which request does not have to be repeated unless it has been withdrawn),
to such Owner by wire transfer to an account within the United States designated
no later than five Business Days prior to the related Record Date, made on each
Payment Date, in each case to each Owner of record on the immediately preceding
Record Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee,
and no amounts so withdrawn from the Certificate Account or the Class A-1
Distribution Account for payments of Certificates and no Insured Payment shall
be paid over to the Trustee except as provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate and remaining
unclaimed by the Owner of such Class A Certificate for the period then specified
in the escheat laws of the State of New York after such amount has become due
and payable shall be discharged from such trust and be paid to the Owners of the
Class R Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee
59
or such Paying Agent before being required to make any such payment, may, at the
expense of the Trust, cause to be published once, in the eastern edition of The
Wall Street Journal, notice that such money remains unclaimed and that, after a
date specified therein, which shall be not fewer than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
paid to the Owners of the Class R Certificates. The Trustee shall, at the
direction of the Depositor, also adopt and employ, at the expense of the Trust,
any other reasonable means of notification of such payment (including but not
limited to mailing notice of such payment to Owners whose right to or interest
in moneys due and payable but not claimed is determinable from the records of
the Registrar, the Trustee or any Paying Agent, at the last address of record
for each such Owner).
Section 6.03 Protection of Trust Estate.
--------------------------
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Depositor to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer 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 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 longer any Class A
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.
60
Section 6.04 Performance of Obligations.
--------------------------
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
------------------
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly permitted
hereby or (B) permit any lien, charge, adverse claim, security
interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
---------------
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
-------------------
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, the Insurance Agreement, the
Indemnification Agreement or the Certificate Insurance Policies, or for the
appointment of a receiver or trustee of the Trust, or for any other remedy with
respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
61
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class B-IO Certificates and the Class R Certificates, shall
have made written request to the Trustee to institute such
proceeding in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(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 Certificates or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class B-IO Certificates and the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive
Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or the Owners
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
62
Section 6.10 Delay or Omission Not Waiver.
----------------------------
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect to
any event described in Section 8.20(a) or (b) shall impair any such right or
remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or
the Owners, as the case may be.
Section 6.11 Control by Owners.
-----------------
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class B-IO Certificates and the Class R Certificates then
Outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates or the Trust Estate, including, but not limited to, those powers
set forth in Section 6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that neither of the Sellers
nor the Trustee, as the case may be, need take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
Section 6.12 Indemnification.
The Depositor agrees to indemnify and hold the Trustee, the Certificate
Insurer and each Owner harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Certificate Insurer and any Owner
may sustain in any way related to the failure of the Depositor to perform its
duties in compliance with the terms of this Agreement. The Depositor shall
immediately notify the Trustee, the Certificate Insurer and each Owner if such a
claim is made by a third party with respect to this Agreement, and the Depositor
shall assume (with the consent of the Trustee) the defense of any such claim and
pay all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, either of the Sellers, the Trustee, the Certificate
Insurer and/or any Owner in respect of such claim. The Trustee may, if
necessary, reimburse the Depositor from amounts otherwise distributable on the
Class B-IO or Class R Certificates for all amounts advanced by it pursuant to
the preceding sentence, except when the claim relates directly to the failure of
the Depositor to perform its duties in compliance with the terms of this
Agreement. The provisions of this Section 6.12 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
63
Section 6.13 Access to Owners of Certificates' Names and Addresses. (a)
If any Owner (for purposes of this Section 6.13, an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Owners with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
64
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
-------------------
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) 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 and (b) Insured
Payments. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(e) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts Total Available Funds;
-----------------------------------------------
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, the Upper-Tier Fixed Rate Group Distribution Account, and the
Upper-Tier Adjustable Rate Group Distribution Account, each of which is to be
held by the Trustee on behalf of the Owners of the Certificates, the Trustee and
the Certificate Insurer, as their interests may appear.
(b) Reserved.
--------
(c) On the Business Day after each Monthly Remittance Date the Trustee
shall determine (subject to the terms of Section 10.03(j) hereof, based solely
on information provided to it by the Servicer) with respect to the immediately
following Payment Date: the amount that is expected to be on deposit in the
Certificate Account as of such Payment Date for the Fixed Rate Group
(disregarding the amount of any Insured Payments), which amount will be equal to
the sum of (x) the amount on deposit therein with respect to such Group
excluding the amount of any Total Monthly Excess Cashflow from the Fixed Rate
Group included in such amount plus (y) any amount of Total Monthly Excess
Cashflow from the Adjustable Rate Group to be applied on such Payment Date to
the Fixed Rate Group Certificates. The amount described in clause (x) of the
preceding sentence with respect to each Payment Date is the "Fixed Rate Group
Available Funds"; the sum of the amounts described in clauses (x) and (y) of the
preceding sentence with respect to each Payment Date is the "Fixed Rate Group
Total Available Funds".
(d) On the Business Day after each Monthly Remittance Date the Trustee
shall determine (subject to the terms of Section 10.03(j) hereof, based solely
on information provided to it by the Servicer) with respect to the immediately
following Payment Date, the amount that is expected to be on deposit in the
Certificate Account as of such Payment Date for the Adjustable Rate Group
(disregarding the amount of any Insured Payments), which amount will be equal to
the sum of (x) the amount on deposit therein with respect to such Group
excluding the amount of any Total Monthly Excess Cashflow from the Adjustable
Rate Group included in such amount plus (y) any amount of Total Monthly Excess
Cashflow from the Fixed Rate Group to be applied on such Payment Date to the
Class A-6 Certificates. The amount described in clause (x) of the preceding
sentence with respect to each Payment Date is the "Adjustable Rate Group
Available Funds"; the sum of the amounts described in clauses (x) and (y) of the
preceding sentence with respect to each Payment Date is the "Adjustable Rate
Group Total Available Funds." Collectively, the Fixed Rate Group Total Available
Funds and the Adjustable Rate Group Total Available Funds is the "Total
Available Funds."
65
Section 7.03 Flow of Funds.
(a) With respect to the Fixed Rate Group, the Trustee shall deposit to
the Certificate Account, without duplication, upon receipt, any Insured Payments
relating to such Group, the proceeds of any liquidation of the assets of the
Trust insofar as such assets relate to the Fixed Rate Group, all remittances
made to the Trustee pursuant to Section 8.08(d)(ii) insofar as such assets
relate to the Fixed Rate Group, and the Fixed Rate Group Monthly Remittance
Amount remitted by the Servicer.
(b) With respect to the Adjustable Rate Group, the Trustee shall
deposit to the Certificate Account without duplication upon receipt, any Insured
Payments relating to such Group, the proceeds of any liquidation of the assets
of the Trust insofar as such assets relate to the Adjustable Rate Group, all
remittances made to the Trustee pursuant to Section 8.08(d)(ii) insofar as such
assets relate to the Adjustable Rate Group and the Adjustable Rate Group Monthly
Remittance Amount remitted by the Servicer.
(c) With respect to the Certificate Account, on each Payment Date, the
Trustee shall make the following allocations, disbursements and transfers for
each Home Equity Loan Group from amounts deposited therein pursuant to
subsections (a) and (b), respectively, in the following order of priority, and
each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements have
occurred:
(i) first, on each Payment Date, the Trustee shall allocate an amount
equal to the sum of (x) the Total Monthly Excess Spread with respect to such
Home Equity Loan Group and Payment Date (net of the related Premium Amount paid
pursuant to clause (iii)(C) or (G) below, as applicable, and the Trustee Fee
allocable to such Group then payable under clause (iv)(A) below) plus (y) any
Subordination Reduction Amount with respect to such Home Equity Loan Group and
Payment Date (such sum being the "Total Monthly Excess Cashflow" with respect to
such Home Equity Loan Group and Payment Date) with respect to such Home Equity
Loan Group in the following order of priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Group shall be allocated to the
payment of the related Class A Distribution Amount
pursuant to clauses (iii)(D) or (iii)(H), as
applicable, below on such Payment Date with respect
to the related Home Equity Loan Group in an amount
equal to the amount, if any, by which (x) the related
Class A Distribution Amount (calculated for this
purpose only by reference to clause (b) of the
definition of the Fixed Rate Group Principal
Distribution Amount or Adjustable Rate Group
Principal Distribution Amount, as the case may be,
and without any Subordination Increase Amount with
respect to the related Group) for such Payment Date
exceeds (y) the Available Funds with respect to such
Home Equity Loan Group for such Payment Date (the
amount of such difference being the "Fixed Rate Group
Available Funds Shortfall" with respect to the Fixed
Rate Group, and the "Adjustable Rate Group Available
Funds Shortfall" with respect to the Adjustable Rate
Group);
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocation described in clause
(A) above shall be allocated against any Available
Funds Shortfall with respect to the other Home Equity
Loan Group and to the payment of the related Class A
Distribution Amount with respect to the other Home
Equity Loan Groups pursuant to clause (iii) below;
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(C) third, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(A) and (B) above shall be disbursed to the
Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount with respect to
the related Home Equity Loan Group; and
(D) fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(A), (B) and (C) above shall be disbursed to the
Certificate Insurer in respect of any Reimbursement
Amount with respect to the other Home Equity Loan
Group.
(ii) second, the amount, if any, of the Total Monthly Excess
Cashflow with respect to a Home Equity Loan Group on a Payment
Date remaining after the allocations described in clause (i)
above (the "Net Monthly Excess Cashflow" for such Home Equity
Loan Group and Payment Date) is required to be allocated in
the following order of priority:
(A) first, such Net Monthly Excess Cashflow shall be used
to reduce to zero, through the allocation of a
Subordination Increase Amount to the payment of the
related Class A Distribution Amount pursuant to
clause (iii) below, any Subordination Deficiency
Amount with respect to the related Home Equity Loan
Group as of such Payment Date;
(B) second, any Net Monthly Excess Cashflow remaining
after the application described in clause (A) above
shall be used to reduce to zero, through the
allocation of a Subordination Increase Amount to the
payment of the related Class A Distribution Amount
pursuant to clause (iii) below, the Subordination
Deficiency Amount, if any, with respect to the other
Home Equity Loan Group; and
(C) third, any Net Monthly Excess Cashflow remaining
after the applications described in clauses (A) and
(B) above shall be paid to the Servicer to the extent
of any unreimbursed Delinquency Advances and
unreimbursed Servicing Advances;
(iii) third, following the making by the Trustee of all allocations,
transfers and disbursements described above under this
subsection (c) from amounts (including any related Insured
Payment) then on deposit in the Certificate Account with
respect to the related Home Equity Loan Group, the Trustee
shall distribute:
(A) with respect to the Fixed Rate Group, the Lower-Tier
Fixed Rate Group Distribution Amount (including the
proceeds of any Insured Payments made by the
Certificate Insurer) as a distribution on the related
Lower-Tier Interests to the Upper-Tier Fixed Rate
Group Distribution Account;
(B) from the Upper-Tier Fixed Rate Group Distribution
Account to the Owners of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-7IO
Certificates, the related Current Interest thereon
until the related Class A Certificate Termination
Date on a pro rata basis without any priority among
such Certificates;
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(C) from Total Monthly Excess Spread, the Premium Amount
allocable to the Fixed Rate Group for such Payment
Date to the Certificate Insurer;
(D) from the Upper-Tier Fixed Rate Group Distribution
Account as a distribution of principal to the Owners
of the Class A-1, Class X-0, Xxxxx X-0, Class A-4,
Class A-5 Certificates, the Fixed Rate Group
Principal Distribution Amount shall be distributed as
follows:
(1) first, to the Owners of the Class A-1
Certificates until the Class A-1 Certificate
Termination Date;
(2) second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Termination Date;
(3) third, to the Owners of the Class A-3
Certificates until the Class A-3 Certificate
Termination Date;
(4) fourth, to the Owners of the Class A-4
Certificates until the Class A-4 Certificate
Termination Date;
(5) fifth, to the Owners of the Class A-5
Certificates until the Class A-5 Certificate
Termination Date;
(E) with respect to the Adjustable Rate Group, the
Lower-Tier Adjustable Rate Group Distribution Amount
(including the proceeds of any Insured Payments made
by the Certificate Insurer) as a distribution of the
Lower-Tier A-6 Interest to the Upper-Tier Adjustable
Rate Group Distribution Account;
(F) from the Upper-Tier Adjustable Rate Group
Distribution Account to the Owners of the Class A-6
Certificates and the Class A-8IO Certificates, the
related Current Interest thereon on a pro rata basis
without any priority among the Class A-6 Certificates
and Class A-8IO Certificates; and
(G) from Total Monthly Excess Spread, the Premium Amount
allocable to the Adjustable Rate Group for such
Payment Date to the Certificate Insurer;
(H) from the Upper-Tier Adjustable Rate Group
Distribution Account as a distribution of principal
to the Owners of the Class A-6 Certificates, the
Adjustable Rate Group Principal Distribution Amount;
(iv) fourth, following the making by the Trustee of all
allocations, transfers and disbursements described above under
this subsection (c), from amounts then on deposit in the
Certificate Account, Upper-Tier Fixed Rate Group Distribution
Account or the Upper-Tier Adjustable Rate Group Distribution
Account, the Trustee shall distribute in the following order
of priority;
(A) to the Trustee from the Certificate Account, the
Trustee Fees then due (plus any expenses owing to the
Trustee pursuant to Section 3.02(e) of the Insurance
Agreement);
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(B) to the Owners of the Class B-IO Certificates, the
Class B-IO Distribution Amount.
(v) fifth, following the making by the Trustee of all allocations,
transfers and disbursements described above under this
subsection (c), from amounts then on deposit in the
Certificate Account, the Trustee shall distribute to the
Owners of the Class R Certificates, the Residual Net Monthly
Excess Cashflow, if any, for such Payment Date.
(d) On any Payment Date during the continuance of any Certificate
Insurer Default:
(i) Any amounts otherwise payable to the Certificate
Insurer as Premium Amounts or Reimbursement Amounts
shall be retained in the Certificate Account as Total
Available Funds; and
(ii) If there is a Subordination Deficit, then the Class A
Principal Distribution Amount for such Payment Date
shall be distributed pro rata to the Owners of any
Outstanding Class A Certificates (other than the
Class A-IO Certificates) on such Payment Date.
(e) Notwithstanding clause (c)(iii) above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Class A Certificates on
account of principal pursuant to clauses (c)(iii)(D) and (c)(iii)(H) shall not
exceed the original Certificate Principal Balance of the related Certificates.
(f) 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, (i) in the case of the Fixed Rate Group
Certificates and the Class A-IO Certificates, through the Upper-Tier Fixed Rate
Group Distribution Account to the Owners of such Certificates and (ii) in the
case of the Class A-6 Certificates and Class A-8IO Certificates, through the
Upper-Tier Adjustable Rate Group Distribution Account, to the Owners of such
Certificates.
(g) 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 moneys 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 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
Distribution Amount for such Payment Date.
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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 Section 7.03(c)(iii). 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(c)(i) hereof.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class B-IO Certificates and the Class R Certificates
to receive distributions in respect of the Class B-IO Certificates and the Class
R Certificates, and all ownership interests of the Owners of the Class B-IO
Certificates and the Class R Certificates in and to such distributions, shall be
subject and subordinate to the preferential rights of the holders of the Class A
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class B-IO Certificates
and the Class R Certificates in amounts deposited in the Accounts from time to
time shall not vest unless and until such amounts are distributed in respect of
the Class B-IO Certificates and the Class R Certificates in accordance with the
terms of this Agreement. Notwithstanding anything contained in this Agreement to
the contrary, the Owners of the Class B-IO Certificates and the Class R
Certificates shall not be required to refund any amount properly distributed on
the Class B-IO Certificates and the Class R Certificates pursuant to this
Section 7.03.
Section 7.04 Reserved.
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners shall be invested
and reinvested by the Trustee in the name of the Trustee for the benefit of the
Owners, as directed in writing by the Depositor, in one or more Eligible
Investments bearing interest or sold at a discount. The bank serving as Trustee
or any affiliate thereof may be the obligor on any investment which otherwise
qualifies as an Eligible Investment. No investment in any Account shall mature
later than the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest in money market funds described in Section
7.07(i); to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
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(e) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt, and any
loss resulting from such investments shall be charged to such Account, as
appropriate, subject to the requirement of Section 8.08(b) that the Servicer
contribute funds in an amount equal to such loss in the case of the Principal
and Interest Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on __________ 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(c)(iv)(A)) and __________ shall promptly pay such expenses directly to the
Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated in
one of the two highest ratings categories by Xxxxx'x and S&P;
(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 A-1+ or
better by Standard & Poor's and P-1 by Moody's;
(d) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) 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:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations rated Aa2
or better by Moody's and AA or better by Standard & Poor's, and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other obligations
of such insurance company or bank, and
71
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or
bank;
(f) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
Moody's and A-1+ or AA, respectively, or better by Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (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
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106% and such collateral
securities must be valued weekly and market-to-market at current market
price plus accrued interest.
(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's; 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 AAAm or AAAm-G by Standard & Poor's and Aaa by Moody's;
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
72
at par on or prior to the next succeeding Payment Date unless otherwise provided
in this Agreement and that no instrument described hereunder may be purchased at
a price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) On the Business Day after each Monthly Remittance Date occurring on
or prior to the last to occur of the Class A-5 Certificate Termination Date and
the Class A-6 Certificate Termination Date, the Trustee shall determine, no
later than 12:00 noon on such Determination Date, whether an Insured Payment
will be required to be made by the Certificate Insurer on the following Payment
Date. If the Trustee determines that an Insured Payment will be required to be
made by the Certificate Insurer on the following Payment Date 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 Insurance Agreement.
The Notice shall specify the amount of 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 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):
(1) The aggregate amount then on deposit in the Certificate
Account;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes in the aggregate, on the next
Payment Date;
(3) The amount of any Subordination Increase Amount;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1),
(3) and (4) preceding to the allocation and distribution of the related
Class A Distribution Amounts on such Payment Date in accordance with
Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class of the
Fixed Rate Group Certificates and the Class A-6 Certificates, the Class
A-7IO Notional Principal Amount and the Class A-8IO Notional Principal
Amount, the aggregate amount of the principal of each Class of Class A
Certificates to be paid on such Payment Date and the remaining
Certificate Principal Balance of each Class of Class A Certificates
following any such payment;
(7) The amount, if any, of any Realized Losses for the related
Remittance Period; and
(8) The amount of any Subordination Reduction Amount.
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.
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(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Certificate Insurer, the Underwriters and the Rating
Agencies:
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other recoveries of principal included therein, and any
Subordination Increase Amount with respect to the related Home Equity
Loan Group;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment Date
was less than the related Class A Distribution Amount on such Payment
Date, the related Carry Forward Amount and the allocation thereof to
the related Classes of the Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Payment Date;
(vi) the principal amount (or notional principal amount) of
each Class of Class A Certificate (based on a Certificate in the
original principal amount of $1,000) which will be Outstanding and the
aggregate Loan Balance of each Group, in each case after giving effect
to any payment of principal on such Payment Date;
(vii) the aggregate Loan Balance of all Home Equity Loans and
the aggregate Loan Balance of the Home Equity Loans in each Group, in
each case after giving effect to any payment of principal on such
Payment Date;
(viii) the Subordinated Amount and Subordination Deficit for
each Group, if any, remaining after giving effect to all distributions
and transfers on such Payment Date;
(ix) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(x) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Group;
(xi) the weighted average Coupon Rate of the Home Equity Loans
with respect to each Group;
(xii) such other information as the Certificate Insurer may
reasonably request with respect to Delinquent Home Equity Loans; and
(xiii) the largest Home Equity Loan balance outstanding in
each Group.
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The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) 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, each Owner, the Certificate Insurer, the Underwriters and the
Rating Agencies, together with the information described in Subsection (a)
preceding, the following information with respect to each Home Equity Loan Group
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 related Class A Certificate Principal
Balance, as of such Payment Date;
(ii) the number and aggregate principal balances of
Home Equity Loans in each Group (a) 30-59 days Delinquent, (b) 60-89
days Delinquent and (c) 90 or more days Delinquent, as of the close of
business on the last Business Day of the calendar month next preceding
such Payment Date,
(iii) the numbers and aggregate Loan Balances of all
Home Equity Loans in each Group as of such Payment Date and the
percentage that each of the amounts represented by clauses (a), (b) and
(c) of paragraph (ii) above represent as a percentage of the respective
amounts in this paragraph (iii);
(iv) the status and the number and dollar amounts of
all Home Equity Loans in each Group in foreclosure proceedings as of
the close of business on the last Business Day of the calendar month
next preceding such Payment Date, separately stating, for this purpose,
all Home Equity Loans in each Group with respect to which foreclosure
proceedings were commenced in the immediately preceding calendar month;
(v) the number of Mortgagors and the Loan Balances of
Home Equity Loans in each Group of (a) the related Mortgages involved
in bankruptcy proceedings as of the close of business on the last
Business Day of the calendar month next preceding such Payment Date and
(b) Home Equity Loans in each Group that are "balloon" loans;
(vi) the existence and status of any REO Properties
in each Group, as of the close of business of the last Business Day of
the month next preceding the Payment Date;
(vii) the book value of any REO Property in each
Group as of the close of business on the last Business Day of the
calendar month next preceding the Payment Date; and
(viii) the amount of Cumulative Realized Losses for
each Group.
(c) The Servicer shall furnish to the Trustee and to the Certificate
Insurer, during the term of this Agreement, such periodic, special, or other
reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee or the Certificate Insurer may reasonably require; provided, that the
Servicer shall be entitled
75
to be reimbursed by the requesting party for the fees and actual expenses
associated with providing such reports, if such reports are not generally
produced in the ordinary course of business.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, each of the Sellers, the
Underwriters, the Certificate Insurer and each Owner, with respect to the amount
on deposit in the Certificate Account, the amount therein relating to each Group
and the identity of the investments included therein, as the Depositor, the
Seller or the Certificate Insurer may from time to time request. Without
limiting the generality of the foregoing, the Trustee shall, at the request of
the Depositor, either of the Sellers or the Certificate Insurer transmit
promptly to the Depositor, each of the Sellers and the Certificate Insurer
copies of all accountings of receipts in respect of the Home Equity Loans
furnished to it by the Servicer and shall notify each of the Sellers and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 Preference Payments
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Fiscal Agent of (i) a certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the Certificate
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Certificate Insurer, irrevocably
assigning to the Certificate Insurer all rights and claims of the Owners
relating to or arising under the Class A Certificates against the debtor which
made such preference payment or otherwise with respect to such preference
payment and (iv) appropriate instruments to effect the appointment of the
Certificate Insurer as agent for such Owner in any legal proceeding related to
such preference payment, such instruments being in a form satisfactory to the
Certificate Insurer, provided that if such documents are received after 12:00
noon New York City time on such Business Day, they will be deemed to be received
on the following Business Day. Such payment shall be disbursed to the receiver
or trustee in bankruptcy named in the final court order of the court exercising
jurisdiction on behalf of the Owner and not to any Owner directly unless such
Owner has returned principal or interest paid on the Class A Certificates to
such receiver or trustee in bankruptcy in which case payment will be disbursed
to the Owner.
Each Owner of a Class A Certificate, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer may at any time during the continuation of any proceeding relating to a
preference claim direct all matters relating to such preference claim,
including, without limitation, the direction of any appeal of any order relating
to such preference claim and the posting of any surety or performance bond
pending any such appeal. In addition and without limitation of the foregoing,
the Certificate Insurer shall be subrogated to the rights of the Servicer, the
Trustee and the Owner of each Class A Certificate in the conduct of any such
preference claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such preference claim.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the servicing standards set forth in the FNMA
Guide and shall have full power and authority, acting alone, to do or cause to
be done any and all things in connection with such servicing and administration
which it may deem necessary or desirable. It is the intent of the parties hereto
that the Servicer shall have all of the servicing obligations hereunder which a
lender would have under the FNMA Guide (as such provisions relate to second lien
mortgages); provided, however, that to the extent that such standards, such
obligations or the FNMA Guide are amended by FNMA after the date hereof and the
effect of such amendment would be to impose upon the Servicer any material
additional costs or other burdens relating to such servicing obligations, the
Servicer may, at its option, determine not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that 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.
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.
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Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FNMA Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution that is acceptable
to the Certificate Insurer and that is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub- Servicing
Agreement and (x) has (i) been designated an approved seller-servicer by FHLMC
or FNMA for second mortgage loans and (ii) has equity of at least $5,000,000, as
determined in accordance with generally accepted accounting principles or (y) is
a Servicer Affiliate. The Servicer shall give notice to the Trustee, the
Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Equity Loans when any Sub-Servicer has received
such payments. Each Sub-Servicer shall be required to service the Home Equity
Loans in accordance with this Agreement and any such Sub-Servicing Agreement
shall be consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that a successor Servicer shall have the
option to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns.
Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for
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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 ______________________________ if it is
required to succeed the Servicer hereunder) agrees to indemnify and hold the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Home Equity Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee, the Certificate Insurer and each Owner if a claim is made by
a third party with respect to this Agreement, and the Servicer shall assume
(with the consent of the Trustee and the Certificate Insurer) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Certificate Insurer
and/or Owner in respect of such claim. The Trustee may, if necessary, reimburse
the Servicer from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence except when
the claim relates directly to the failure of the Servicer to service and
administer the Home Equity Loans in compliance with the terms of this Agreement.
The provisions of this Section 8.05 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee, the Certificate
Insurer and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on the part of the Trustee; provided, however,
that the successor Servicer may terminate the Sub-Servicer as provided in
Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: [Name of Trustee], as
Trustee under the Pooling and Servicing Agreement dated as of __________ 1,
199_. 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
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meeting the requirements for a Designated Depository Institution hereunder. If
the Servicer fails to name such a successor institution, then the Principal and
Interest Account shall thenceforth be held as a trust account with a qualifying
Designated Depository Institution. The Servicer shall notify the Trustee, the
Certificate Insurer and the Owners if there is a change in the name, account
number or institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested (up to the limits insured by the FDIC) or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trustee for the benefit of the Owners. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Total Monthly Excess Spread included therein)
by the Servicer. Any investment losses on funds held in the Principal and
Interest Account shall be for the account of the Servicer and promptly upon the
realization of such loss shall be contributed by the Servicer to the Principal
and Interest Account. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal collections on the Home Equity
Loans received, and interest collections on the Home Equity Loans accrued after
the Cut-Off Date including any Prepayments and Net Liquidation Proceeds, other
recoveries or amounts related to the Home Equity Loans received by the Servicer
and any income from REO Properties, but net of (i) the Servicing Fee with
respect to each Home Equity Loan and other servicing compensation to the
Servicer as permitted by Section 8.15 hereof, (ii) principal collected and
interest accrued on any Home Equity Loan on or prior to the Cut-Off Date, (iii)
Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the
sum of (I) the Loan Balance of the related Home Equity Loan immediately prior to
liquidation, (II) accrued and unpaid interest on such Home Equity Loan (net of
the Servicing Fee) to the date of such liquidation, and (III) any Realized
Losses incurred during the related Remittance Period, (iv) reimbursements for
Delinquency Advances and (v) reimbursements for amounts deposited in the
Principal and Interest Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amount herein referred to as
"Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Principal and Interest Account, with respect to each
Home Equity Loan Group, 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 un-
recovered Delinquency Advances and Servicing Advances;
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(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to
Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Remittance Date, deliver to the Trustee and the Certificate Insurer a monthly
servicing report, with respect to each Home Equity Loan Group, containing the
following information: principal and interest collected, scheduled interest,
Liquidated Loans, summary and detailed delinquency reports, Liquidation Proceeds
and other similar information concerning the servicing of the Home Equity Loans.
In addition, the Servicer shall inform the Trustee and the Certificate Insurer
on each Monthly Remittance Date, with respect to each Home Equity Loan Group, of
the amounts of any Loan Purchase Prices or Substitution Amounts so remitted
during the related Remittance Period, and of the Loan Balance of the Home Equity
Loan having the largest Loan Balance as of such date.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee
to perform its reporting requirements under Section 7.09 and the Trustee shall
forward such information to the Underwriters within five Business Days of
receipt thereof.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) If the amount on deposit in the Certificate Account as of any
Monthly Remittance Date is less than the sum of (I) the Interest Remittance
Amount on such Monthly Remittance Date and (II) the Principal Remittance Amount
on such Monthly Remittance Date, the Servicer shall remit to the Trustee for
deposit into the Certificate Account a sufficient amount of its own funds to
make the total amount remitted to the Trustee equal to such sum. Such amounts of
the Servicer's own funds so deposited are "Delinquency Advances", including but
not limited to any amount advanced due to the invocation by a Mortgagor of the
relief provisions provided by the Soldiers' and Sailors' Civil Relief Act of
1940.
The Servicer shall be permitted to fund its payment of Delinquency
Advances on any Business Day and to reimburse itself for any Delinquency
Advances paid from the Servicer's own funds from collections on any Home Equity
Loan in the related Home Equity Loan Group deposited to the Principal and
Interest Account subsequent to the related Remittance Period and shall deposit
into the Principal and Interest Account with respect thereto (i) collections
from the Mortgagor whose Delinquency gave rise to the shortfall which resulted
in such Delinquency Advance and (ii) Net Liquidation Proceeds recovered on
account of the related Mortgage Loan to the extent of the amount of aggregate
Delinquency Advances related thereto. If not recovered from the related
Mortgagor or the related Net Liquidation Proceeds, the Servicer shall recover
Delinquency Advances pursuant to Section 7.03(c)(ii)(C).
Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
aggregate remaining Scheduled Payments due on the Home Equity Loans, the
Servicer shall not be required to make any future Delinquency Advances, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided in the prior paragraph. The Servicer shall give written
notice of such determination to the Trustee and the Certificate Insurer; and the
Trustee shall promptly furnish a copy of such notice to the Owners of the
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Class R Certificates; provided, that the Servicer shall be entitled to recover
any unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds
prior to the payment of the Liquidation Proceeds to any other party to this
Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a "Servicing
Advance". The Servicer may recover Servicing Advances (x) from the Mortgagors to
the extent permitted by the Home Equity Loans or, if not recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(c)(ii)(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(c)(ii)(C).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment of a Home Equity Loan occurs during any calendar
month or if the amount received with respect to a date-of-payment or simple
interest Home Equity Loan represents less than a full month's interest, any
difference between the interest collected from the Mortgagor and the full
month's interest at the Coupon Rate less the Servicing Fee ("Compensating
Interest") that is due shall be deposited by the Servicer (but not in excess of
the aggregate Servicing Fee for the related Remittance Period) to the Principal
and Interest Account on the next succeeding Monthly Remittance Date and shall be
included in the Monthly Remittance to be made available to the Trustee on such
Monthly Remittance Date.
(b) The Servicer, and in the absence of the exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, 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 Certificate Insurer and the Trustee to the effect
that such a purchase would not constitute a Prohibited Transaction for the Trust
or otherwise subject the Trust to tax and would not jeopardize the status of
either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC. Any such Loan so
purchased shall be purchased by the Servicer or the Certificate Insurer as the
case may be on a Monthly Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the Principal
and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
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Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage, and which provides for a recovery by
the Trust of insurance proceeds relating to such Home Equity Loan in an amount
not less than the least of (i) the outstanding principal balance of the Home
Equity Loan (plus the related senior lien loan, if any), (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis and (iii)
the full insurable value of the premises. The Servicer shall maintain the
insurance policies required hereunder in the name of the mortgagee, its
successors and assigns, as loss payee. The policies shall require the insurer to
provide the mortgagee with 30 days' notice prior to any cancellation or as
otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by Xxxxx'x and Standard & Poor's. Upon the request of the
Certificate Insurer or the Trustee, the Servicer will cause to be delivered to
such requesting Person a certified true copy of such blanket policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable carrier in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel to the
foregoing effect shall conclusively establish the reasonableness of such belief.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; 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
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a part of such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording any
such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the required monthly payment on the
related Home Equity Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Home Equity Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer or the Sub-Servicer for consenting
to any such conveyance or entering into an assumption or substitution agreement
shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans; Inspection.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 23 months of its acquisition by the Trust, at
such price as the Servicer deems necessary to comply with this covenant unless
the Seller which delivered the related Home Equity Loan obtains for the
Certificate Insurer, Trustee and the Servicer an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer and the
Trustee, addressed to the Certificate Insurer, the Trustee and the Servicer, to
the effect that the holding by the Trust of such REO Property for any greater
period will not result in the imposition of taxes on "Prohibited Transactions"
of the Trust or any REMIC therein as defined in Section 860F of the Code or
cause either the Lower-Tier REMIC or the Upper-Tier REMIC to fail to qualify as
a REMIC under the REMIC Provisions at any time that any Certificates are
outstanding. Notwithstanding the generality of the foregoing provisions, the
Servicer shall manage, conserve, protect and operate each REO Property for the
Owners solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Lower-Tier REMIC or the Upper Tier REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions. Pursuant to its efforts to sell such REO Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Owners, rent
the same, or any part thereof, as the Servicer deems to be in the best interest
of the Owners for the period prior to the sale of such REO Property. The
Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Property in determining whether
84
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 or to be
within one mile of the site of 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 FNMA Guide,
when it has recovered, whether through trustee's sale, foreclosure sale or
otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan". After a Home Equity Loan has become a Liquidated Loan, the
Servicer shall promptly prepare and forward to the Depositor, the Trustee and
the Certificate Insurer a report detailing the Liquidation Proceeds received
from the Liquidated Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee the FNMA "Request for Release of Documents" (FNMA Form 2009). Upon
receipt of such Request for Release of Documents, the Trustee shall promptly
release the related File, in trust, in its reasonable discretion to (i) the
Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of the
Trustee. Upon any such payment in full, or the receipt of such notification that
such funds have been placed in escrow, the Servicer is authorized to give, as
attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of the Servicer and
delivery to the Trustee of a receipt signed by an Authorized Officer of the
Servicer, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer; provided that there shall not be released and
unreturned at any one time more than 10% of the entire number of Files. Such
receipt shall obligate the Servicer to return the File to the Trustee when the
need therefor by the Servicer no longer exists unless the Home Equity Loan shall
be liquidated, in which case, upon receipt of the FNMA
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"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 and debt-to- income ratio after any release does not exceed
the maximum Loan-to-Value Ratio and debt-to-income ratio established in
accordance with the underwriting standards of the Home Equity Loans as set forth
in the Prospectus Supplement under "The Sellers and Servicer - Credit and
Underwriting Guidelines" and any increase in the Loan-to-Value Ratio shall not
exceed 15% unless approved in writing by the Certificate Insurer; and (z) the
lien priority of the related Mortgage is not affected. Upon receipt by the
Trustee of an Officer's Certificate executed on behalf of the Servicer setting
forth the action proposed to be taken in respect of a particular Home Equity
Loan and certifying that the criteria set forth in the immediately preceding
sentence have been satisfied, the Trustee shall execute and deliver to the
Servicer the consent or partial release so requested by the Servicer. A proposed
form of consent or partial release, as the case may be, shall accompany any
Officer's Certificate delivered by the Servicer pursuant to this paragraph. The
Servicer shall notify the Certificate Insurer and the Rating Agencies if an
application is approved under clause (y) above without approval in writing by
the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Certificate Insurer and the Rating Agencies, on or before March
31 of each year, commencing in 199_, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants'
Reports.
On or before June 30 of any year, commencing in 199_, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Depositor, which in no event shall exceed $1,000 per annum), shall cause to
be delivered to the Trustee, the Certificate Insurer 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.
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Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans.
The Servicer shall provide to the Trustee, the Certificate Insurer, the
FDIC and the supervisory agents and examiners of each of the foregoing (which,
in the case of supervisory agents and examiners, may be required by applicable
state and federal regulations) access to the documentation regarding the Home
Equity Loans, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Servicer
designated by it.
Section 8.19 Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Trustee and the Certificate Insurer, which consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.20(i) hereof for a successor servicer.
Section 8.20 Removal of Servicer; Resignation of Servicer.
(a) The Certificate Insurer (or the Owners, with the consent of the
Certificate Insurer pursuant to Section 6.11 hereof) may remove the Servicer
upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or similar entity with
respect to the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business Day in the case of a
delay in making a required payment to the Trustee under Section
8.08(d)(ii)(a)) after the earlier of (a) actual knowledge of an officer
of the Servicer or (b) receipt of notice from the Trustee or the
Certificate Insurer of said failure; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is
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diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the Owners or
the Certificate Insurer for a period of sixty (60) days after the
earlier of the Servicer's discovery or receipt of notice thereof;
provided, however, that if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (1) the Servicer is
the surviving entity of such combination or (2) the surviving entity is
a corporation or a state-chartered or national bank acceptable to the
Certificate Insurer (and 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:
(i) a Fixed Rate Group Available Funds Shortfall, or
an Adjustable Rate Group Available Funds Shortfall; 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 re-
quired Servicing Advance when due;
(iii) the aggregate number of Home Equity Loans 90 or
more days Delinquent, in foreclosure or relating to REO Properties has
exceeded ten percent of the total number of Home Equity Loans remaining
in the Trust for four consecutive months; 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; or
(iv) the failure by the Servicer to make any
required Delinquency Advance or to pay any Compensating Interest when
due;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate Insurer
and by registered or certified mail, notice of the occurrence of one or more of
the events set forth in clause (iii) above and the Servicer shall not have
remedied, or shall not have taken actions satisfactory to the Certificate
Insurer to remedy, such event or events within 60 days after the Servicer's
receipt of such notice and (y) upon the Trustee's determination that a required
Delinquency Advance or payment of Compensating Interest has not been made by the
Servicer, the Trustee shall so notify an Authorized Officer of the Servicer, the
Owners, if any, and the Certificate Insurer as soon as is reasonably practical.
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(c) If any event described in subsection (b)(iii) above occurs and is
continuing, during the thirty (30) day period following receipt of notice, the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
shall cooperate with each other to determine if the occurrence of such event is
more likely than not the result of the acts or omissions of the Servicer or more
likely than not the result of events beyond the control of the Servicer. If the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
conclude that the event is the result of the latter, the Servicer may not be
terminated, unless and until some other event set forth in subsection (b) (i),
(ii) or (iv) has occurred and is continuing. If the Trustee, the Owners of the
Class R Certificates and the Certificate Insurer conclude that the event is the
result of the former, the Certificate Insurer may terminate the Servicer in
accordance with this Section and the Trustee shall act as successor Servicer,
provided that the Trustee shall have until the 30th day following the date of
receipt of notice of the event to become the successor Servicer or to appoint a
successor Servicer pursuant to this Section.
If the Trustee, the Owners of the Class R Certificates and the
Certificate Insurer cannot agree, and the basis for such disagreement is not
arbitrary or unreasonable, as to the cause of the event, the decision of the
Certificate Insurer shall control; provided, however, that if the Certificate
Insurer decides to terminate the Servicer, the Trustee shall be relieved of its
obligation to assume the servicing or to appoint a successor, which shall be the
exclusive obligation of the Certificate Insurer.
The Certificate Insurer agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of the Certificate Insurer from time to
time.
(d) If any event described in sections (a) and (b) above (other than
(b)(iii) for which Section 8.20(c) controls) occurs and is continuing, the
Certificate Insurer shall notify the Owners of the Class R Certificates in
writing if the Certificate Insurer intends to terminate the Servicer in its
capacity as Servicer under this Agreement. During the 30 day period following
receipt of such notice by the Owners of the Class R Certificates, such Owners
and the Certificate Insurer shall cooperate with each other to determine if the
occurrence of such event is more likely than not the result of the acts or
omissions of the Servicer or more likely than not the result of events beyond
the control of the Servicer. If the Owners of the Class R Certificates and the
Certificate Insurer conclude that the event is the result of the latter, the
Servicer may not be terminated. If the Owners of the Class R Certificates and
the Certificate Insurer conclude that the event is the result of the former, the
Certificate Insurer may terminate the Servicer in accordance with this Section
and the Trustee shall act as successor Servicer, provided that the Trustee shall
have until the 30th day following the date of receipt of notice of the event to
become the successor Servicer or to appoint a successor Servicer pursuant to
this Section. If the Owners of the Class R Certificates and the Certificate
Insurer cannot agree as to the cause of the event, the decision of the
Certificate Insurer shall control.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Trustee and the Certificate Insurer.
(f) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
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(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(i) Upon removal or resignation of the Servicer, the Trustee (x) may
solicit bids for a successor servicer as described below, and (y) pending the
appointment of a successor servicer as a result of soliciting such bids, shall
serve as Servicer. The Trustee shall, if it is unable to obtain a qualifying bid
and is prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing and home finance institution,
bank or mortgage servicing institution which has been designated as an approved
seller-servicer by FNMA or FHLMC for first and second mortgage loans and having
equity of not less than $5,000,000 (or such lower level as may be acceptable to
the Certificate Insurer), as determined in accordance with generally accepted
accounting principles and acceptable to the Certificate Insurer and the Owners
of the Class R Certificates (provided that if the Certificate Insurer and such
Owners cannot agree as to the acceptability of such successor Servicer, the
decision of the Certificate Insurer shall control) as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. The compensation of any
successor Servicer (including, without limitation, the Trustee) so appointed
shall be the aggregate Servicing Fee, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15; provided, however, that if the Trustee
acts as successor Servicer then __________ 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
__________, but shall in any event be entitled to receive, and to enforce
payment of, such fee from __________.
(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain servicing. The Trustee shall deduct from any sum received by
the Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust from the Servicer shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the successor
Servicer.
(k) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall
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promptly provide the Trustee or such successor Servicer, as applicable, all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Trustee
or such successor Servicer, as applicable, all amounts which then have been or
should have been deposited in the Principal and Interest Account by the Servicer
or which are thereafter received with respect to the Home Equity Loans. Neither
the Trustee nor any other successor Servicer shall be held liable by reason of
any failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer. If
the Servicer resigns or is replaced hereunder, the Seller agrees to reimburse
the Trust, the Owners and the Certificate Insurer for the costs and expenses
associated with the transfer of servicing to the replacement Servicer, but
subject to a maximum reimbursement to all such parties in the amount of
twenty-five dollars ($25.00) for each Home Equity Loan then included in the
Trust Estate.
(l) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately make all Delinquency Advances
and deposit them to the Principal and Interest Account which the Servicer has
theretofore failed to remit with respect to the Home Equity Loans; provided,
however, that if the Trustee is acting as successor Servicer, the Trustee shall
only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (l)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the Home Equity Loans.
(m) The Servicer which is being removed or is resigning shall give
notice to the Certificate Insurer, the Mortgagors and the Rating Agencies of the
transfer of the servicing to the successor Servicer.
(n) The Trustee shall give notice to the Certificate Insurer, the
Owners, the Trustee, the Seller, and the Rating Agencies of the occurrence of
any event described in paragraphs (a) or (b) above of which the Trustee is
aware.
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer or any agents thereof may inspect
the Servicer's servicing operations and discuss the servicing operations of the
Servicer during the Servicer's normal business hours with any of its officers or
directors; provided, however, that the costs and expenses incurred by the
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer;
(b) The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FNMA Guide or any successor provision thereof; provided, however, that if
the Trustee shall become the Servicer, any customary insurance coverage that the
Trustee maintains shall be deemed sufficient hereunder; provided, further, that
in the event that the fidelity bond or the errors and omissions coverage is no
longer in effect, the Trustee shall promptly give such notice to the 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
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance
Policies, 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 both Home Equity Loan Groups
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 Lower-Tier REMIC and the Upper-Tier REMIC to adopt a plan of complete
liquidation for each of the Home Equity Loan Groups, as contemplated by Section
860F(a)(4) of the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
and the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee either shall sell the Home Equity Loans and
distribute the proceeds of the liquidation of the Trust Estate, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to
the Court of Saint Xxxxx, living on the date hereof. The Trustee shall give
written notice of termination of the Agreement to each Owner in the manner set
forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R
Certificates.
(a) On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the Class R
Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Adjusted
Pass-Through Rate, plus all accrued and unpaid Servicing Fees plus the aggregate
amount of any unreimbursed Delinquency Advances and Servicing Advances and any
Delinquency Advances which the Servicer has theretofore failed to remit. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
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(b) In connection with any such purchase, such Owners of the Class R
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to the Lower-Tier REMIC and the Upper-Tier REMIC, a plan of complete
liquidation for all of the Home Equity Loan Groups 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 Certificate Insurer and the Trustee to the effect that such
purchase and liquidations constitutes, as to the Lower-Tier REMIC and the
Upper-Tier REMIC, a Qualified Liquidation. In addition, such Owners of the Class
R 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.
(c) The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R Certificates may be exercised by
the Certificate Insurer if (i) not exercised by such owners and (ii) the
Servicer as of the Closing Date is no longer the Servicer hereunder.
(d) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or the
Certificate Insurer, as the case may be, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal or, if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
does not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final Determination"), at any time on or after the date which is 30
calendar days following such Final Determination (i) the Certificate Insurer or
the Owners of a majority in Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate Insurer may
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code and (ii) the
Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise then remaining in the Trust 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), (y) one month's
interest on such amount computed at the Adjusted Pass-Through Rate and (z) the
aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances
and any Delinquency Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount at the Adjusted
Pass-Through Rate, (b) the aggregate amount of any unreimbursed Delinquency
Advances
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and Servicing Advances and (c) any Delinquency Advances which the Servicer has
theretofore failed to remit. If, during the Purchase Option Period, the Owners
of the Class R Certificates have not exercised the option described in the
immediately preceding paragraph, then upon the expiration of the Purchase Option
Period (i) in the event that the Certificate Insurer or the Owners of the Class
A 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 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.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the 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
Adjusted Pass-Through Rate, (b) the aggregate amount of unreimbursed Delinquency
Advances and (c) any Delinquency Advances which the Servicer has theretofore
failed to remit. In connection with such purchase, the Servicer shall remit to
the Trustee all amounts then on deposit in the Principal and Interest Account
for deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase. The foregoing opinion shall be
deemed satisfactory unless the Certificate Insurer gives the Owners of a
majority of the Percentage Interests of the Class R Certificates notice that
such opinion is not satisfactory within thirty days after receipt of such
opinion. In connection with any such purchase, such Owners shall direct the
Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer from
the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished pursuant to
and conforming to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicer, the Servicer and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer, have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or
of the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or
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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.
(h) Neither the Servicer, the Seller nor the Trustee knowingly shall
take any action that would cause the Class A Certificates to fail to qualify as
"mortgage related securities" within the meaning of the Securities Exchange Act
of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Sellers,
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the Certificate Insurer, or by the Owners of at least 25% of the
aggregate Percentage Interests in the Trust Estate represented by the
Class A Certificates then Outstanding, or, if there are no Class A
Certificates then Outstanding, by such Percentage Interests represented
by the Class R Certificates, a written notice specifying such failure
or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give notice to the Certificate Insurer and the
Rating Agencies of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Subordinate Certificates, may, whether or not the Trustee resigns pursuant to
Section 10.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, either of the Sellers,
the Certificate Insurer, or the Owners of any Class of Certificates mentioned
herein shall be sufficiently evidenced in writing;
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(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys or custodians;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and to make
various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good faith
on any such information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the Trustee has actual
knowledge, or is advised by any Owner of a Certificate (either in writing or
orally with prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
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Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, either of the Sellers or the
Servicer in respect of the Home Equity Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by the Depositor,
the Servicer or either of the Sellers, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c)(iv)(A) and Section 7.06
hereof. The Trustee shall have no lien on either the Trust Estate for the
payment of such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A- from Standard & Poor's (or such lower rating as may be acceptable to
Standard & Poor's) and A2 by Moody's (or such lower rating as may be acceptable
to Moody's). 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 the Seller
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.
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Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure to receive the
Trustee Fee. A copy of such notice shall be sent by the resigning Trustee to the
Rating Agencies. Upon receiving notice of resignation, the Depositor shall
promptly appoint a successor trustee or trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Seller, 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 by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written 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 R 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 Servicer and to the Certificate Insurer,
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,
the Seller 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, 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
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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, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
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Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with respect to
such allocation of expenses. The Trustee shall, upon request of the Depositor,
collect any forms or reports from the Owners determined by the Depositor to be
required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Insurer, the Depositor, either of the Sellers, the
Servicer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor, each of the Sellers and Servicer covenant and agree to indemnify
the Trustee, and when the Trustee is acting as Servicer, the Servicer, from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses (including legal fees and expenses) of whatsoever kind arising out of
or in connection with the performance of its duties hereunder other than those
resulting from the negligence or bad faith of the Trustee, and the Depositor
shall pay all amounts not otherwise paid pursuant to Sections 2.05 and 7.06
hereof. The Trustee and any director, officer, employee or agent of the Trustee
may rely and shall be protected in acting or refraining from acting in good
faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this
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Section 10.13 shall survive the termination of this Agreement and the payment of
the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be 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.
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Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
The Servicer and the Trustee hereby appoint
______________________________ (the "Initial Co- Trustee") as co-trustee with
respect to the Mortgage Loans secured by Mortgaged Properties situated in New
Jersey and any other part of the Trust Estate or property securing the same that
at any time may be situated in New Jersey.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, either of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matters upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, either of the Sellers or
the Servicer, stating that the information with respect to 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
105
representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to one or both of
the Sellers. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Certificate Insurer, the Depositor or either of the Sellers shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
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required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not
107
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made or mailed on the nominal date of any such
Monthly Remittance Date, such Payment Date, or such other date for the payment
of any distribution to any Owner or the mailing of such notice, as the case may
be, and no interest shall accrue for the period from and after any such nominal
date, provided such payment is made in full on such next succeeding Business
Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
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 Sellers, the Servicer or the Certificate Insurer or any
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, either of the Sellers and the Servicer
may, at any time and from time to time, and without notice to or the consent of
the Owners but with the consent of the Certificate Insurer, amend this
Agreement, subject to the provisions of Section 11.16 and 11.17 and the Trustee
shall consent to such amendment, for the purpose of (i) curing any ambiguity,
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or adding provisions hereto which are not
inconsistent with the provisions hereof; (ii) upon receipt of an opinion of
counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the Trust or upon the transferor of a Class
R Certificate as a result of the ownership of any Class R Certificate by a
Disqualified Organization, removing the restriction on transfer set forth in
Section 5.08(b) hereof or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder including any amendments
necessary to maintain REMIC status or (iv) for any other purpose, provided that
in the case of this clause (iv) the Seller deliver (A) an opinion of counsel
acceptable to the Trustee that such amendment will not adversely affect in any
material respect the interest of the Owners and (B) such amendment will not
result in a withdrawal or reduction of the rating of the Class A Certificates
without regard to the Certificate Insurance Policy. 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 the manner the terms or provisions of the Certificate Insurance
Policy.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Owner in the manner set forth in Section 11.05, and to the Rating Agencies.
(c) The Certificate Insurer, the Owners and 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.
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Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall each constitute, and that the affairs of the Lower-Tier
REMIC and the Upper-Tier REMIC shall each be conducted so as to qualify it as a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
____________________ or such other person designated pursuant to Section 11.18
hereof shall act as agent for the Trust and as "tax matters person" (as defined
in the REMIC Provisions) for the Trust and in such capacity it shall: (i)
prepare or cause to be prepared and filed, in a timely manner, annual tax
returns and any other tax return required to be filed by the Lower-Tier REMIC
and the Upper- Tier REMIC established hereunder using a calendar year as the
taxable year for the Lower-Tier REMIC and the Upper-Tier REMIC established
hereunder; (ii) in the related first such tax return, make (or cause to be made)
an election satisfying the requirements of the REMIC Provisions, on behalf of
the Lower- Tier REMIC and the Upper-Tier REMIC, for it to be treated as a REMIC;
(iii) prepare and forward, or cause to be prepared and forwarded, to the Owners
all information, reports or tax returns required with
110
respect to the Lower-Tier REMIC and the Upper-Tier REMIC as, when and in the
form required to be provided to the Owners, and to the Internal Revenue Service
and any other relevant governmental taxing authority in accordance with the
REMIC Provisions and any other applicable federal, state or local laws,
including without limitation information reports relating to "original issue
discount" as defined in the Code based upon the prepayment assumption and
calculated by using the "Issue Price" (within the meaning of Section 1273 of the
Code) of the Certificates of the related Class; (iv) not take any action or omit
to take any action that would cause the termination of the REMIC status of
either the Lower-Tier REMIC or the Upper-Tier REMIC, except as provided under
this Agreement; (v) represent the Trust of the Lower-Tier REMIC or the
Upper-Tier REMIC in any administrative or judicial proceedings relating to an
examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust or the Lower-Tier
REMIC or the Upper-Tier REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC, and
otherwise act on behalf of the Trust or any REMIC therein in relation to any tax
matter involving the Trust or any REMIC therein; (vi) comply with all statutory
or regulatory requirements with regard to its conduct of activities pursuant to
the foregoing clauses of this Section 11.16, including, without limitation,
providing all notices and other information to the Internal Revenue Service and
Owners of Class R Certificates required of a "tax matters person" pursuant to
subtitle F of the Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax imposed (A) on
transferors of residual interests to certain Disqualified Organizations or (B)
on pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of the 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
the Lower-Tier REMIC or the Upper-Tier REMIC, (ii) not to engage in any
"prohibited transaction", as such term is defined in Section 860F(a)(2) of the
Code, (iii) not to engage in any other action which may result in the imposition
on the Trust of any other taxes under the Code and (iv) to cause the Servicer
not to take or engage in any such action, to the extent the Sellers are aware of
any such proposed action by the Servicer.
(c) The Lower-Tier REMIC and the Upper-Tier REMIC shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee shall
enter into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither the
Trustee nor either of the Sellers may engage in any of the transactions
prohibited by such clauses, unless the Trustee shall have received an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer to the effect that such transaction does not result in a tax imposed on
the Trustee or cause a termination of REMIC status for the Lower-Tier REMIC or
the Upper-Tier REMIC; provided, however, that such transaction is otherwise
permitted under this Agreement.
111
(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC
as a result of their negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer to the effect
that such transaction does not result in a tax imposed on the Trust or the
Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination of REMIC status
for the Lower- Tier REMIC or the Upper-Tier REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of the Lower-Tier REMIC and the Upper-Tier REMIC and use such
income, to the extent necessary, to pay such tax; provided that, to the extent
that any such income is paid to the Internal Revenue Service, the Trustee shall
retain an equal amount from future amounts otherwise distributable to the Owners
of Class R Certificates and shall distribute such retained amounts to the Owners
of Class A Certificates to the extent they are fully reimbursed and then to the
Owners of the Class R Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC and the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC and the
Upper-Tier REMIC shall be ____________________ as long as it owns a Class R
Certificate. If ____________________ does not own a Class R Certificate, the Tax
Matters Person may be any other entity that owns a Class R Certificate and
accepts a designation hereunder as Tax Matters person by delivering an affidavit
in the form of Exhibit I. ____________________ shall notify the Trustee in
writing of the name and address of another person who accepts a designation as
Tax Matters Person hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. 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.
Section 11.20 Reserved.
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Section 11.21 Third Party Rights.
The Trustee, each of the Sellers, the Depositor and the Owners agree
that the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: ______________________________
------------------------------
Tel: (___) __________
Fax: (___) __________
Attention: ____________________
The Depositor: ContiSecurities Asset Funding Corp.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
The Sellers: ______________________________
------------------------------
Tel: (___) __________
Fax: (___) __________
------------------------------
------------------------------
Tel: (___) __________
Fax: (___) __________
The Servicer: ______________________________
------------------------------
Tel: (___) __________
Fax: (___) __________
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The Certificate
Insurer: ______________________________
------------------------------
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
Standard & Poor's: Standard & Poor's, a Division of the McGraw
Hill Companies
00 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgage Group
Tel: (000) 000-0000
Fax: (000) 000-0000
Fitch: Fitch Investors Service, L.P.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Underwriters: ______________________________
------------------------------
Tel: (___) __________
Fax: (___) __________
------------------------------
------------------------------
Tel: (___) __________
Fax: (___) __________
------------------------------
------------------------------
Tel: (___) __________
Fax: (___) __________
Owners: As set forth in the Register.
114
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
115
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: ________________________________
Title: _____________________________
By: ________________________________
Title: _____________________________
____________________, as Seller
By: ________________________________
Title: _____________________________
By: ________________________________
Title: _____________________________
____________________, as Servicer
By: ________________________________
Title: _____________________________
By: ________________________________
Title: _____________________________
-----------------------------------,
as Trustee
By: ________________________________
Title: _____________________________
SCHEDULE I-A
SCHEDULE OF FIXED RATE GROUP 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 ADJUSTABLE RATE GROUP HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE II
RESERVED
SCHEDULE III
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE IV
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
SCHEDULE V
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
EXHIBIT A-__
FORM OF CLASS A-__ CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
__________ HOME EQUITY LOAN TRUST 199_-_
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-__
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity Loans
Serviced by
--------------------
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. This Certificate represents a fractional
ownership interest in the Home Equity Loans and certain other property held by
the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("__________________ Home Equity Loan Trust 199_-_") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-__- _______
CUSIP
------------------ ------------------------------------ --------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
Registered Owner
Trustee Authentication
_______________________________________, as Trustee
By: __________________________________
Name: ________________________________
Title: _______________________________
Date of Authentication _______________
A-__-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (i) the Home Equity Loans listed in Schedule I-A to the
Pooling and Servicing Agreement which each Seller has caused to be delivered to
the Depositor and the Depositor has caused to be delivered to the Trustee (and
all substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity Loan
documents and the Sellers' interest in any Property which secured a Home Equity
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (ii) such amounts as may be held by the Trustee
in the Certificate Account and the Upper-Tier Fixed Rate Group Distribution
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); (iii) the
Insurance Agreement; (iv) the Fixed Rate Group Certificate Insurance Policy
issued thereunder; (v) proceeds of all the foregoing (including, but not by way
of limitation, all proceeds of any mortgage insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the Certificates
as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-__ Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to _________ __, 199_ (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO _________ __, 199_ (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as _________ Home Equity Loan Trust 199_-_, Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of _________ 1, 199_ (the "Pooling and
Servicing Agreement") by
A-__-2
and among ____________________, as the Servicer (the "Servicer"),
____________________, in its capacity as a Seller (the "Seller"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as _____________ Home Equity
Loan Trust 199_-_ Home Equity Loan Pass-Through Certificates, [add others],
Class B-IO (the "Class B-IO Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Class A-__ Certificates, [add others] shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class B-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing __________ __, 199_ the Owners of the Class A-__ Certificates as of
the close of business on the day immediately preceding such Payment Date (the
"Record Date") will be entitled to receive the Class A-__ Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-__ Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-__ Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-__ Certificates. The Percentage Interest of each
Class A-__ Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-__ Certificate on the Startup Day by the aggregate Class A-__
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payment" means with respect to either Home Equity Loan Group and as to any
Payment Date, without duplication, (A) the excess, if any, of (i) the sum of the
related Current Interest and the then existing related Subordination Deficit for
the related Home Equity Loan Group, if any, over (ii) Total Available Funds with
respect to such Group (net of the Premium Amount allocable to such Group) after
taking into account (x) the portion of any Fixed Rate Group Principal
Distribution Amount or Adjustable Rate Group Principal Distribution Amount, as
the case may be, to be actually distributed on such Payment Date without regard
to any related Insured Payment to be made with respect to such Payment Date) and
(y) the crosscollateralization provisions of Sections 7.03(c)(i)(B) and
7.03(c)(ii)(B) of the Pooling and Servicing Agreement, plus (B) an amount equal
to the Preference Amount with respect to the related Class of Class A
Certificates.
Upon receipt of amounts under the Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement.
A-__-3
Amounts properly withheld under the Code by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiSecurities Asset Funding Corp. or any of its affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the Certificate Insurance Policy, all as more specifically
set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-__
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-__ Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-__ Certificates and shall receive all future distributions of the Class
A-__ Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to the Owners
of all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan in the Trust Estate or
(b) the disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (ii) at any time when a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination of
the Pooling and Servicing Agreement pursuant to clause (ii) above, the Owners of
all Certificates then Outstanding shall unanimously direct the Trustee on behalf
of the Trust to adopt a plan of complete liquidation, as contemplated by Section
860F(a)(4) of the Code, and the Trustee shall either sell the Home Equity Loans
and distribute the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates, each in accordance with such plan, so that the liquidation
or distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of the Pooling and Servicing Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation.
A-__-4
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Sellers and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-__ Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-__ Certificates are exchangeable
for new Class A-__ Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-__-5
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP., as Depositor
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
A-__-6
EXHIBIT B-IO
FORM OF CLASS B-IO CERTIFICATE
__________ Home Equity Loan Trust 199_-_
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS B-IO CERTIFICATE
Representing Certain Interests Relating to a Pool
of Home Equity Loans formed by ContiSecurities Asset
Funding Corp.
and Serviced by
--------------------
as Servicer
This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. This certificate represents a fractional
ownership interest in the Home Equity Loans as described herein, moneys in
certain Accounts created pursuant to the Pooling and Servicing Agreement and
certain other rights relating thereto and is payable only from amounts received
by the Trustee relating to the Home Equity Loans held by the Trust.
No.: B-IO-1
_________________
Date
100% ________________
Percentage Interest Final Scheduled
Distribution Date
________________________________________
Registered Holder
Trustee Authentication
---------------------------------------,
as Trustee
By: ___________________________________
Name: _________________________________
Title: ________________________________
Date of Authentication: _______________
B-IO-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans listed in Schedules I-A and
I-B to the Pooling and Servicing Agreement which each Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Sellers' interest in any Property which secured a
Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Certificate Insurance Policies issued
thereunder; and (e) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-__ CERTIFICATES OF THIS
SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
B-IO-3
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF PRINCIPAL WITH RESPECT
TO THE HOME EQUITY LOANS.
This Certificate is one of a Class of duly-authorized Certificates
designated as __________ Home Equity Loan Trust 199_-_, Home Equity Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of __________ __, 199_ (the "Pooling and Servicing
Agreement") by and among ________________________________________, as the
Servicer (the "Servicer"), ________________________________________, in its
capacity as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and ____________________
____________________, a __________ banking corporation, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner of
this Certificate by virtue of acceptance hereof assents and by which such Owner
is bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as __________ Home Equity Loan Trust 199_-_ Home Equity Loan
Pass-Through Certificates, Class A-__ [list classes] (collectively, the "Class A
Certificates") and Class R (the "Class R Certificates"). The Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing __________ __, 199_, the Owners of the Class B-IO Certificates as of
the close of business on the last business day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs (the "Record
Date") will be entitled to receive the Class B-IO Distribution Amount (as
defined in the Pooling and Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least 5 business days prior to the related record date,
or by check mailed to the address of the person entitled thereto as it appears
on the Register.
Each Owner of record of a Class B-IO Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Holders of the Class B-IO Certificates. The Percentage Interest of each
Class B-IO Certificate as of any date of determination will be equal to the
percentage interest set forth on such Class B-IO Certificate.
The Trustee or any duly appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Holder shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
B-IO-4
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, the Depositor or ContiMortgage or any of their subsidiaries and
affiliates and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, or any other
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to the Owners
of all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later 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 Lower-Tier REMIC
or (b) the disposition of all property acquired in respect of any Home Equity
Loan remaining in the Lower-Tier REMIC or (ii) at any time when a Qualified
Liquidation of the Lower-Tier REMIC is effected as described below. To effect a
termination of the Pooling and Servicing Agreement pursuant to clause (ii)
above, the Owners of all Certificates then Outstanding shall unanimously direct
the Trustee on behalf of the Trust to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall either
sell the Home Equity Loans and distribute the proceeds of the liquidation of the
Trust, or shall distribute equitably in kind all of the assets of the Lower-Tier
REMIC to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Lower-Tier REMIC, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the
Lower-Tier REMIC and the Upper-Tier REMIC, and thereby effect early retirement
of the Certificates, on any Monthly Remittance Date after the Clean-Up Call Date
and (ii) under certain circumstances relating to the qualification of the
Lower-Tier REMIC and the Upper-Tier REMIC as a REMIC under the Code the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
B-IO-5
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then outstanding with the
prior written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Sellers and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and of each Account Party and not less than a majority
of the Percentage Interest represented by each affected Class of Certificates
then Outstanding, and in certain other circumstances provided for in the Pooling
and Servicing Agreement may be amended without the consent of the Owners. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class B-IO Certificates are issuable only as registered
Certificates in minimum percentage interests of all interests in the Class B-IO
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class B-IO Certificates are exchangeable
for new Class B-IO Certificates of the same percentage interest as the Class
B-IO Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-IO-6
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
B-IO-7
EXHIBIT B
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A XXXXXX'X COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES
B-1
TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN
REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
__________ HOME EQUITY LOAN TRUST 199_-_
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
--------------------
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R - 1
-----------------------
Date
Percentage Interest ______ %
--------------------------
Final Scheduled Payment Date
________________________________________
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in Schedules I-A and I-B
to the Pooling and Servicing Agreement which each Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Sellers' interest in any Property which secured a
Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account and the together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided herein), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Insurance Agreement; (d) the Fixed Rate Group Certificate
Insurance Policy and the Adjustable Rate Group Certificate Insurance Policy
issued thereunder; and (e) proceeds of all the foregoing (including, but not by
way of limitation, all proceeds of any mortgage insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the Certificates
as specified in the Pooling and Servicing Agreement.
B-2
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Date of Authentication: ___________________
B-3
This Certificate is one of a Class of duly-authorized Certificates
designated as __________ Home Equity Loan Trust 199_-_, Home Equity Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of __________ __, 199_ (the "Pooling and Servicing
Agreement") by and among ________________________________________, as the
Servicer (the "Servicer"), _________ ______________________________, in its
capacity as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and ____________________________
____________, a __________ banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as __________ Home Equity Loan Trust 199_-_ Home Equity Loan
Pass-Through Certificates, Class A-__ [list classes] (collectively, the "Class A
Certificates") and Class B-IO (the "Class B-IO Certificates"). The Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing __________ __, 199_, each Owner of a Class R Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiMortgage Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent
B-4
provided in the Pooling and Servicing Agreement with respect to such Certificate
or to institute suit for the enforcement of any such distribution, and such
right shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) 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 the Pooling and Servicing Agreement upon the
later 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 Upper-Tier REMIC
and the Lower-Tier REMIC or (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (ii) at any
time when a Qualified Liquidation of the Trust Estate is effected as described
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding shall
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Upper-Tier REMIC and the
Lower-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates, Class B-IO Certificates and
the Class R Certificates, then outstanding with the prior written consent of the
Certificate Insurer have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Lower-Tier REMIC will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Sellers and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the
B-5
Pooling and Servicing Agreement may be amended without the consent of the
Owners. Any such consent by the Owner at the time of the giving thereof, of this
Certificate shall be conclusive and binding upon such Owner and upon all future
Owners of the Certificate and of any Certificate issued upon the registration of
Transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-6
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
X-0
XXXXXXX X
[XXXXXXXX]
X-0
XXXXXXX X
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of
______________________________ ("_____________"), hereby certify that between
the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement dated as
of __________ __, 199_ among ContiSecurities Asset Funding Corp., as Depositor,
___________________, as the Servicer, _____________________, as a Seller and
______________________________, as Trustee) and the "Startup Day," the following
schedule of "Home Equity Loans" (each as defined in the Pooling and Servicing
Agreement) have been prepaid in full.
Account Original Current Date Paid
Number Name Amount Balance Off
Dated: __________ __, 199_
By: _______________________________________
Title: ____________________________________
D-1
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
________________________________________, a __________ banking
corporation, in its capacity as trustee (the "Trustee") under that certain
Pooling and Servicing Agreement dated as of __________ __, 199_ (the "Pooling
and Servicing Agreement") among ContiSecurities Asset Funding Corp., as
Depositor, ____________________, as the Servicer, ____________________, as a
Seller and ____________________, as Trustee, hereby acknowledges receipt
(subject to review as required by Section 3.06(a) of the Pooling and Servicing
Agreement) of the items delivered to it by the Sellers and the Depositor with
respect to the Home Equity Loans pursuant to Section 3.05(b)(i) of the Pooling
and Servicing Agreement.
The Schedule of Home Equity Loans is attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) of the Pooling and Servicing
Agreement as required thereby.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By: _______________________________________
Title: ____________________________________
Dated: __________ __, 199_
E-1
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of
______________________________, a __________ banking corporation, acting in its
capacity as trustee (the "Trustee") of a certain pool of mortgage loans (the
"Pool") heretofore conveyed in trust to the Trustee, pursuant to that certain
Pooling and Servicing Agreement dated as of __________ __, 199_ (the "Pooling
and Servicing Agreement") among ContiSecurities Asset Funding Corp., as
Depositor, ____________________, as the Servicer, ____________________, as a
Seller and ____________________, as Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Mortgage Files relating to the
Pool within a specified period following the Startup Day and to notify the
related Seller promptly of any defects with respect to the Pool, and such Seller
is required to remedy such defects or take certain other action, all as set
forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement
requires the Trustee to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Sellers pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Trustee makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
as Trustee
By: _______________________________________
Title: ____________________________________
Dated: __________ __, 199_
F-1
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
[Trustee's Address]
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of __________ __, 199_ (the "Pooling and Servicing Agreement") among
ContiSecurities Asset Funding Corp., as Depositor,
________________________________________, as the Servicer,
_____________________________ ___________, as the Seller, and
________________________________________, a __________ banking corporation, as
Trustee (the "Trustee"), __________ HEREBY CERTIFIES that all conditions
precedent to the issuance of the __________ Home Equity Loan Trust 199_-_, Home
Equity Loan Pass-Through Certificate, Class A, Class B-IO and Class R (the
"Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE
AND DELIVER said Certificates, and to RELEASE said Certificates to the owners
thereof, or otherwise upon their order.
Very truly yours,
CONTISECURITIES ASSET FUNDING CORP.,
By: _______________________________________
Title: ____________________________________
Dated: __________ __, 199_
G-1
EXHIBIT H
[RESERVED]
H-1
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this day of , .
[NAME OF INVESTOR]
By: ________________________________
[Name of Officer]
[Title of Officer]
I-1
[Corporate Seal]
Attest:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] of the Investor, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ________ day of ___________ , ____.
------------------------------
NOTARY PUBLIC
COUNTY OF
---------------------
STATE OF
---------------------
My commission expires the ____ day of _________________, _____.
I-2
