SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
-----------------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 23, 1999
BANC ONE ABS CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
United States 333-59845 None Available
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification Nos.)
Incorporation)
100 East Broad Street Columbus, Ohio 43271-0158
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (614) 248-5800
Not Applicable
(Former Name or Former Address if Changed Since Last Report)
Exhibit Index located at Page 2
<PAGE>
Items 1 through 4 and Items 6, 8 and 9 are not included because they are not
applicable.
Item 5. Other Events.
On June 23, 1999, Banc One ABS Corporation, as Depositor and Bank One,
N.A., as Servicer (the "Depositor" and "Servicer") entered into a Pooling and
Servicing Agreement, dated as of May 31, 1999 (the "Pooling and Servicing
Agreement"), with The Bank of New York, as trustee (the "Trustee"). Pursuant to
the Pooling and Servicing Agreement, a Trust was created into which the
Depositor deposited the Mortgage Loans listed in the Mortgage Loan Schedule
attached as Exhibit C to the Pooling and Servicing Agreement. The Trust issued
$500,000,000 HELOC Asset-Backed Certificates, Series 1999-1 (the
"Certificates"). The Underwriting Agreement between the Depositor and Banc One
Capital Markets, Inc., as representative of the several underwriters (the
"Underwriters") relating to the sales of the Certificates, the Pooling and
Servicing Agreement and the Mortgage Loan Purchase Agreement among Bank One,
N.A., Bank One, Arizona, N.A., Bank One, Colorado, N.A., Bank One Illinois,
N.A., Bank One, Indiana, N.A., Bank One, Kentucky, N.A., Bank One, Utah, N.A.,
Bank One, Wisconsin, (each a "Seller," and collectively, the "Sellers") and the
Depositor, are attached as Exhibits.
The aggregate Cut-Off Date Pool Balance of the Mortgage Loans was
approximately $510,205,197.95, as indicated in more detail in the Mortgage Loan
Schedule attached as Exhibit C to the Pooling and Servicing Agreement.
Capitalized terms used herein and not defined herein have the same meaning
ascribed to such terms in the Pooling and Servicing Agreement.
Item 7. Exhibits.
(a) Executed exhibits - The following exhibits to the Form S-3
Registration Statement of the Registrant are hereby filed:
Exhibit
Number Exhibit
------- ---------------------------------
1.1 Underwriting Agreement
4.1 Pooling and Servicing Agreement
10.1 Mortgage Loan Purchase Agreement
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANC ONE ABS CORPORATION
(Registrant)
July 2, 1999 By: /s/ Daniel A. Long, Jr.
----------------------------
Name: Daniel A. Long, Jr.
Title: Vice President
3
Exhibit 1.1
EXECUTION COPY
Banc One HELOC Trust 1999-1
$500,000,000
HELOC ASSET-BACKED CERTIFICATES, Series 1999-1
Banc One ABS Corporation
(DEPOSITOR)
UNDERWRITING AGREEMENT
June 16, 1999
BANC ONE CAPITAL MARKETS, INC.
as Representative (the
"Representative") of the
Several Underwriters named herein
One First National Plaza, Suite IL1-0596
Chicago, IL 60670
Ladies and Gentlemen:
1. Introductory. Banc One ABS Corporation, an Ohio corporation (the
"Depositor") and a wholly-owned subsidiary of BANK ONE CORPORATION, proposes to
cause Banc One HELOC Trust 1999-1 (the "Trust") to issue and sell $500,000,000
principal amount of its HELOC Asset-Backed Certificates, Series 1999-1 (the
"Certificates") to the several underwriters named in Schedule I attached hereto
(the "Underwriters"), for whom you (the "Representative") are acting as
representative. The assets of the Trust include, among other things, a pool of
adjustable rate home equity revolving credit line loans made or to be made in
the future (the "Mortgage Loans"), under certain home equity revolving credit
line loan agreements (the "Credit Line Agreements") and secured by either first
or second deeds of trust or mortgages on primarily one- to four-family
residential properties (the "Mortgaged Properties"); the collections in respect
of the Mortgage Loans received after May 31, 1999 (the "Cut-off Date"); property
that secured a Mortgage Loan which has been acquired by foreclosure or deed in
lieu of foreclosure; an irrevocable and unconditional certificate guaranty
insurance policy (the "Policy") to be issued by MBIA Insurance Corporation (the
"Insurer"); an assignment of the Depositor's rights under the Mortgage Loan
Purchase Agreement (as defined herein); rights under certain hazard insurance
policies covering the Mortgaged Properties; and certain other property.
<PAGE>
The Trust will be formed, and the Certificates will be issued, pursuant to
a Pooling and Servicing Agreement to be dated as of May 31, 1999 (the "Pooling
and Servicing Agreement") among the Depositor, Bank One, N.A., a national
banking association, as servicer (the "Servicer") and The Bank of New York, as
trustee (the "Trustee"). The Mortgage Loans and certain other assets of the
Trust Fund will be sold by each of Bank One, N.A., Bank One, Arizona, N.A., Bank
One, Wisconsin, Bank One, Indiana, N.A., Bank One, Illinois, N.A., Bank One,
Kentucky, N.A., Bank One, Colorado, N.A., and Bank One, Utah, N.A. (each, a
"Seller" and together the "Sellers") to the Depositor pursuant to the Mortgage
Loan Purchase Agreement to be dated the Closing Date (the "Mortgage Loan
Purchase Agreement") among the Depositor and the Sellers, and by the Depositor
to the Trust pursuant to the Pooling and Servicing Agreement.
This Agreement, the Pooling and Servicing Agreement, the Mortgage Loan
Purchase Agreement, the letter agreement (the "Letter Agreement") attached as
Exhibit A hereto and each agreement relating to the Certificates, the Trust or
the transactions contemplated thereby to which the Depositor and the Insurer are
parties (the "Insurance Agreements") are collectively referred to herein as the
"Basic Documents."
Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Depositor. (a) The Depositor
represents and warrants to and agrees with the Underwriters that:
(i) The Depositor has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement (No. 333-59845) on
Form S-3, including a prospectus, relating to the Certificates, which has
become effective. Such registration statement, as amended as of the date of
this Agreement, is hereinafter referred to as the "Registration Statement,"
and the prospectus included in such Registration Statement, as supplemented
to reflect the terms of the Certificates as first filed with the Commission
after the date of this Agreement pursuant to and in accordance with Rule
424(b) ("Rule 424(b)") under the Securities Act of 1933, as amended (the
"Act"), including all material incorporated by reference therein, is
hereinafter referred to as the "Prospectus." A "preliminary prospectus"
means any form of prospectus, including any prospectus supplement, relating
to the Certificates used prior to the date of this Agreement that is
subject to completion.
(ii) On September 11, 1998, the effective date of the Registration
Statement, such Registration Statement conformed in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and on the date of this Agreement the Registration
Statement conforms,
-2-
<PAGE>
and at the time of the filing of the Prospectus in accordance with Rule
424(b), the Registration Statement and the Prospectus will conform, in all
material respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents will include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except
that the foregoing does not apply to statements in or omissions from any of
such documents based upon (i) written information furnished to the
Depositor by any Underwriter through the Representative specifically for
use therein, it being understood that the only such information consists of
the Underwriters' Information (as defined in Section 2(b)) or (ii) the
Derived Information (as defined in Section 7 below) contained in the
Current Report (as defined in Section 5(n) below) or in any amendment
thereof or supplement thereto, incorporated by reference in such
Registration Statement or such Prospectus (or any amendment thereof or
supplement thereto). The Depositor acknowledges that any information
furnished by any of the Underwriters specifically for use in the
Registration Statement, any preliminary prospectus or the Prospectus is the
Underwriters' Information (as defined in Section 2(b) below).
(iii) The Certificates meet the requirements for use of Form S-3 under
the Act.
(iv) This Agreement has been duly authorized, executed and delivered
by the Depositor. The execution, delivery and performance of this Agreement
and each of the other Basic Documents to which it is a party and the
issuance and sale of the Certificates and compliance with the terms and
provisions hereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any agreement or
instrument to which the Depositor is a party or by which the Depositor is
bound or to which any of the properties of the Depositor is subject which
could reasonably be expected to have a material adverse effect on the
transactions contemplated herein. The Depositor has full corporate power
and authority to cause the Trust to (a) authorize the Trustee to execute
and deliver the Certificates to the Seller and (b) sell the Certificates to
the Underwriters, all as contemplated by this Agreement.
(v) Other than as contemplated by this Agreement or as disclosed in
the Prospectus, there is no broker, finder or other party that is entitled
to receive from or on behalf of the Depositor any brokerage or finder's fee
or other fee or commission as a result of any of the transactions
contemplated by this Agreement.
(vi) All material legal or governmental proceedings, contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required.
(vii) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed with
the Commission,
-3-
<PAGE>
complied and will comply in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
(viii) As of the Closing Date (as defined below), the representations
and warranties of (a) the Depositor herein shall be true and correct in all
material respects and (b) the Depositor, the Sellers and the Servicer in
the Basic Documents to which each is a party will be true and correct in
all material respects and each such representation and warranty is so
incorporated herein by reference.
(ix) The Certificates, when duly and validly authorized by the
Depositor, and, when executed and authenticated as specified in the Pooling
and Servicing Agreement, and delivered and paid for pursuant hereto will be
validly issued and outstanding and will be entitled to the benefits of the
Pooling and Servicing Agreement.
(x) As of the Closing Date, the Mortgage Loans and related property
will have been duly and validly assigned to the Trustee in accordance with
the Basic Documents; and when such assignment is effected, a duly and
validly perfected transfer of all such Mortgage Loans will have occurred,
subject to no prior lien, mortgage, security interest, pledge, charge or
other encumbrance created by the Depositor or the Sellers.
(xi) Neither the transfer from the Depositor to the Trustee, acting on
behalf of the Trust, of the Mortgage Loans and other Trust Assets conveyed
by it to the Trust pursuant to the Pooling and Servicing Agreement, nor the
issuance, sale and delivery of the Certificates, nor the fulfillment of the
terms of the Certificates, will conflict with, or result in a breach,
violation or acceleration of, or constitute a default under, any term or
provision of the organizational documents of the Depositor or any material
indenture or other material agreement or instrument to which the Depositor
is a party or by which it or its properties is bound or result in a
violation of or contravene the terms of any statute, order or regulation
applicable to the Depositor of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Depositor or will result in the creation of any lien upon any material
property or assets of the Depositor.
(xii) The Depositor has caused the Servicer to deliver to the
Underwriters or to counsel for the Underwriters complete and correct copies
of publicly available portions of the Consolidated Reports of Condition and
Income of the Servicer for the close of business March 31, 1999, as
submitted to the Board of Governors of the Federal Reserve System; except
as set forth in or contemplated in the Registration Statement and the
Prospectus, there has been no material adverse change in the financial
condition or results of operations of the Servicer since March 31, 1999.
-4-
<PAGE>
(xiii) Any taxes, fees and other governmental charges in connection
with the execution, delivery and performance by the Depositor of the Basic
Documents and the execution, delivery and sale of the Certificates shall
have been paid or will be paid by or on behalf of the Depositor at or prior
to the Closing Date to the extent then due.
(xiv) Reserved.
(b) The Depositor hereby agrees with the Underwriters that, for all
purposes of this Agreement, the only information furnished to the Depositor by
the Underwriters specifically for use in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus, are the paragraph immediately succeeding the table on, and the
second to last paragraph on the cover of, statements with respect to
market-making on page S-3 of, and the statements under the caption
"Underwriting" in, the Prospectus (collectively, the "Underwriters'
Information").
3. Purchase, Sale and Delivery of the Certificates. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Depositor agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Depositor, the entire principal amount of the Certificates set forth
opposite the name of such Underwriter in Schedule I hereto at a purchase price
set forth in the Prospectus. The Investor Certificate Rate for each Interest
Period shall equal one-month LIBOR for such Interest Period (determined in
accordance with the Pooling and Servicing Agreement) plus 0.26% per annum,
subject to the net funds cap set forth in the Pooling and Servicing Agreement.
The Depositor will deliver the Certificates to the Representative, for the
account of the Underwriters, against payment of the purchase price to or upon
the order of the Depositor by wire transfer or check in Federal (same day)
Funds, at the office of Orrick, Herrington & Sutcliffe, LLP, 666 Fifth Avenue,
New York, New York 10103 at 10:00 a.m., New York time on June 26, 1999, or at
such other time not later than seven full business days thereafter as the
Representative and the Depositor determine, such time being herein referred to
as the "Closing Date." The Certificates to be so delivered will be initially
represented by one or more Certificates registered in the name of Cede & Co., as
the nominee of The Depository Trust Company ("DTC") or one of the relevant
depositories. The interests of beneficial owners of the Certificates will be
represented by book entries on the records of, as directed by the
Representative, DTC in the United States or Cedelbank or the Euroclear System in
Europe, and participating members thereof. Definitive Certificates will be
available only under the limited circumstances specified in the Pooling and
Servicing Agreement.
4. Offering by the Underwriters. It is understood that, the several
Underwriters propose to offer the Certificates for sale to the public (which may
include selected dealers) on the terms set forth in the Prospectus, including
without limitation the underwriting discount applicable to the sale of the
Certificates to noninstitutional investors.
-5-
<PAGE>
5. Covenants of the Depositor. The Depositor covenants and agrees with the
several Underwriters that:
(a) The Depositor will file the Prospectus, properly completed, with the
Commission pursuant to and in accordance with subparagraph (2) (or, if
applicable and if consented to by the Representative, subparagraph (5)) of Rule
424(b) not later than the second business day following the execution and
delivery of this Agreement. The Depositor will advise the Representative
promptly of any such filing pursuant to Rule 424(b).
(b) The Depositor will advise the Representative promptly of any proposal
(on or prior to any date within 90 days of the date of the Prospectus) to amend
or supplement the Registration Statement as filed or the related prospectus or
the Registration Statement or the Prospectus and will not effect such amendment
or supplementation without the consent of the Representative, which consent
shall not be unreasonably withheld or delayed; the Depositor will also advise
the Representative promptly of any request by the Commission (on or prior to any
date within 90 days of the date of the Prospectus) for any amendment of or
supplement to the Registration Statement or the Prospectus or for any additional
information; and the Depositor will also advise the Representative promptly of
the effectiveness of the Registration Statement (if the effective time is
subsequent to the execution of this Agreement) and of any amendment or
supplement to the Registration Statement or the Prospectus and of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threat of any proceeding for that
purpose and the Depositor will use its reasonable best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the lifting of
any issued stop order.
(c) If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act, the Depositor promptly will prepare and
file with the Commission an amendment or supplement which will correct such
statement or omission, or an amendment or supplement which will effect such
compliance. Neither the consent of the Representative to, nor the delivery by
the Representative of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) The Depositor will timely prepare and file all periodic reports
required to be filed pursuant to Section 15(d) of the Exchange Act as
interpreted by the Commission through certain No-Action Letters, on behalf of
the Trust, with the Commission until no longer required to do so as permitted by
Section 15(d) of the Exchange Act.
-6-
<PAGE>
(e) The Depositor will furnish to the Representative and its counsel copies
of the Registration Statement (including all exhibits), each related preliminary
prospectus supplement, the Prospectus and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as the
Representative reasonably requests.
(f) The Depositor will take all actions which are reasonably necessary to
arrange for the qualification of the Certificates for sale under the laws of
such jurisdictions as the Representative designates and will continue such
qualifications in effect so long as required for the distribution; provided,
however, that in no event shall the Depositor be obligated to qualify as a
foreign corporation or to execute a general or unlimited consent to service of
process in any such jurisdiction.
(g) For a period from the date of this Agreement until the retirement of
the Certificates, or until such time as the Underwriters shall cease to maintain
a secondary market in the Certificates, whichever occurs first, the Depositor
will deliver to the Representative, if requested, the annual statements of
compliance and the annual independent certified public accountants' reports
furnished to the Trustee pursuant to the Pooling and Servicing Agreement, as
soon as such statements and reports are furnished to the Trustee.
(h) So long as any of the Certificates are outstanding, the Depositor will
furnish to the Representative (i) as soon as practicable after the end of the
fiscal year all documents required to be distributed to Certificateholders or
filed with the Commission on behalf of the Trust pursuant to the Exchange Act,
or any order of the Commission thereunder and (ii) from time to time, any other
information concerning the Depositor as the Representative may reasonably
request only insofar as such information reasonably relates to the Registration
Statement or the transactions contemplated by the Basic Documents.
(i) On or before the Closing Date, the Depositor shall and shall cause each
Seller to mark each of its respective books and records (including any computer
records) relating to the Mortgage Loans to show the absolute ownership by the
Trustee on behalf of the Trust of the Mortgage Loans, and from and after the
Closing Date none of the Depositor, the Sellers or the Servicer, shall take any
action inconsistent with the ownership by the Trustee on behalf of the Trust of
such Mortgage Loans, other than as permitted by the Pooling and Servicing
Agreement.
(j) To the extent, if any, that any of the ratings provided with respect to
the Certificates by the rating agency or agencies that initially rate the
Certificates are conditional upon the furnishing of documents or the taking of
any other actions by the Depositor, on or prior to the Closing Date, the
Depositor shall furnish such documents and take any such other actions. A copy
of any such document shall be provided to the Representative at the time it is
delivered to the rating agencies.
(k) For the period beginning on the date of this Agreement and ending on
the Closing Date, neither the Depositor nor any Affiliate or trust originated,
directly or indirectly, by
-7-
<PAGE>
the Depositor or any Affiliate (or any trust, partnership or other entity
sponsored by the Depositor or any Affiliate or in which the Depositor or any
Affiliate is a partner or a stockholder) will, without the prior written consent
of the Representative, offer to issue or issue notes collateralized by, or
certificates (other than the Certificates) evidencing an ownership interest in,
Mortgage Loans; provided, however, that except as otherwise provided by the
Basic Documents, this shall not be construed to prevent (i) the sale of Mortgage
Loans by any Affiliate of the Depositor to any person or (ii) any sales or
grants of participations in and to Mortgage Loans by one or more Affiliates of
the Depositor to one or more other Affiliates of the Depositor.
(l) The Depositor will apply the net proceeds of the sale of the
Certificates that it receives in the manner set forth in the Prospectus under
the caption "Use of Proceeds."
(m) The Depositor will pay or cause to be paid all costs and expenses
incident to the performance of its obligations under this Agreement, including
but not limited to (i) the printing and filing of the documents (including the
Registration Statement, preliminary prospectuses and Prospectus), (ii) the
preparation, issuance and delivery of the Certificates to the Representative,
(iii) the fees and disbursements of the Depositor's counsel and accountants,
(iv) the qualification of the Certificates under securities laws in accordance
with the provisions of Section 5(f), including filing fees and the fees and
disbursements of counsel for the Representative in connection therewith and in
connection with the preparation of any blue sky or legal investment survey, if
any is requested, (v) the printing and delivery to the Underwriters, of copies
of the Registration Statement as originally filed and of each amendment thereto,
(vi) the printing and delivery to the Underwriters of copies of any blue sky or
legal investment survey prepared in connection with the Certificates, (vii) any
fees charged by rating agencies for the rating of the Certificates, and (viii)
the fees and expenses of Orrick, Herrington & Sutcliffe, LLP.
(n) To the extent that any Underwriter (i) has provided Collateral Term
Sheets to the Depositor that such Underwriter has provided to a prospective
investor, the Depositor has filed such Collateral Term Sheets (as defined in
Section 7 below) as an Exhibit to a Current Report on Form 8-K within two
business days of its receipt thereof, (ii) has provided Structural Term Sheets
or Computational Materials to the Depositor that such Underwriter has provided
to a prospective investor, the Depositor will file or cause to be filed with the
Commission a report on a Current Report on Form 8-K containing such Structural
Term Sheets and Computational Materials, as soon as reasonably practicable after
the date of this Agreement, but in any event, not later than the date on which
the Prospectus is filed with the Commission pursuant to Rule 424 under the Act,
or (iii) has provided Series Term Sheets (as defined in Section 7 below) to the
Depositor that such Underwriter has provided to a prospective investor, the
Depositor has filed such Series Term Sheets as an Exhibit to a Current Report on
Form 8-K within two business days of its receipt thereof. The Current Reports on
Form 8-K referred to in the preceding sentence are collectively referred to
herein as the "Current Report."
-8-
<PAGE>
(o) On or prior to the date of issuance of the Certificates, the Depositor
will obtain one or more certificate insurance policies (each, a "Policy") issued
by the Insurer for the benefit of the holders of the Certificates.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Certificates will be
subject to the accuracy, as of the date hereof and as of the Closing Date, of
the representations and warranties contained or incorporated herein, to the
accuracy of the written statements of officers of the Depositor, made pursuant
to the provisions of this Section, to the performance by the Depositor, of its
obligations hereunder and to the following additional conditions precedent:
(a) The Prospectus and any supplements thereto shall have been filed with
the Commission in accordance with the Rules and Regulations and Section 5(a)
hereof. Prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Depositor or the
Representative, shall be contemplated by the Commission.
(b) The Representative shall have received a letter, on or prior to the
date of this Agreement of Arthur Andersen LLP with respect to certain
agreed-upon procedures, confirming that such accountants are independent public
accountants within the meaning of the Act and the Rules and Regulations, and
substantially in the form of the draft to which the Representative has
previously agreed and otherwise in form and substance reasonably satisfactory to
the Representative and counsel for the Underwriters.
(c) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change materially and adversely affecting (A) the property of the Trust taken as
a whole or (B) the business or properties of the Depositor, the Sellers, the
Servicer or BANK ONE CORPORATION which, in the judgment of the Representative in
the case of either (A) or (B) makes it impractical or inadvisable to market the
Certificates on the terms and in the manner contemplated in the Prospectus; (ii)
any downgrading in the rating of any debt securities of BANK ONE CORPORATION or
any of its Affiliates by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any such debt securities (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange; (iv) any suspension of trading of any
securities of BANK ONE CORPORATION on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by Federal or New York authorities;
or (vi) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress, or any other substantial
national or international calamity or emergency if, in the judgment of the
Representative, the effect of any such outbreak, escalation, declaration,
calamity or emergency
-9-
<PAGE>
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Certificates.
(d) The Representative shall have received an opinion of counsel to the
Depositor acceptable to the Representative and counsel for the Underwriters,
dated the Closing Date, satisfactory in form and substance to the Representative
and counsel for the Underwriters, to the effect that:
(i) The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Ohio, with
corporate power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
currently conducted and to enter into and perform its obligations under the
Basic Documents to which it is a party.
(ii) The Depositor has duly authorized, executed and delivered the
written order to the Trustee to execute and deliver the Certificates.
(iii) The Depositor has duly authorized, executed, and delivered the
Basic Documents to which it is a party.
(iv) Neither the transfer of the property of the Trust by the
Depositor to the Trustee on behalf of the Trust, nor the execution and
delivery by the Depositor of the Basic Documents to which it is a party,
nor the consummation by the Depositor of the transactions contemplated by
the Basic Documents to which it is a party nor the performance by the
Depositor of its obligations thereunder will (i) violate the articles of
incorporation or the by-laws, each as amended, of the Depositor or (ii)
violate the applicable provisions of statutory law or regulation.
(v) To such counsel's knowledge, there are no actions, proceedings or
investigations pending against the Depositor or threatened against the
Depositor before any court, administrative agency, or tribunal (i)
asserting the invalidity of the Trust or any of the Basic Documents, (ii)
seeking to prevent the consummation of any of the transactions contemplated
by the Basic Documents or the execution and delivery thereof, or (iii) that
could reasonably be expected to materially and adversely affect the
enforceability of the Basic Documents against the Depositor or the ability
of the Depositor to perform its obligations thereunder.
(vi) No consent, license, approval, authorization or order of, or
filing with, any court or governmental agency or body is required of the
Depositor for the consummation of the transactions contemplated in the
Basic Documents, except such consents, licenses, approvals, authorizations
or orders as have been obtained or such filings as have been made and
except where the failure to obtain the same would not have a material
adverse effect upon the rights of the Certificateholders.
-10-
<PAGE>
Such opinion may contain such assumptions, qualifications and limitations
as are customary in opinions of this type and are reasonably acceptable to
counsel to the Underwriters. In rendering such opinion, such counsel may state
that they are admitted to practice only in the State of Ohio and that they are
not admitted to the Bar in any other State, that they express no opinion as to
the laws of any jurisdiction other than the federal law of the United States of
America and the laws of the State of Ohio.
(e) The Representative shall have received the opinion of Orrick,
Herrington & Sutcliffe, special counsel to the Sellers and the Servicer, or such
other counsel acceptable to the Representative and counsel for the Underwriters,
dated the Closing Date, satisfactory in form and substance to the Representative
and counsel for the Underwriters, to the effect that:
(i) When the Certificates have been duly executed, delivered and
authenticated in accordance with the Pooling and Servicing Agreement and
delivered and paid for pursuant to the Underwriting Agreement, the
Certificates will be validly issued, outstanding and entitled to the
benefits of the Pooling and Servicing Agreement, subject as to
enforceability to the effects of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws now or
hereafter in effect relating to creditors' rights generally and subject to
general principles of equity (whether in a proceeding at law or in equity).
(ii) The Basic Documents are legal, valid, and binding obligations of
the Depositor, enforceable against the Depositor in accordance with their
respective terms, subject as to enforceability to the effects of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
and similar laws now or hereafter in effect relating to creditors' rights
generally and subject to general principles of equity (whether applied in a
proceeding at law or in equity).
(iii) The Depositor is not an "investment company" as defined in the
Investment Company Act or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act, and will not as a result
of the offer and sale of the Certificates as contemplated in the Prospectus
and the Underwriting Agreement be required to register under the Investment
Company Act.
(iv) The Pooling and Servicing Agreement need not be qualified under
the Trust Indenture Act and the Trust is not required to register under the
Investment Company Act.
(v) The statements in the Prospectus under the headings "Summary--Tax
Status," " Summary--ERISA Considerations," "Certain Federal Income Tax
Consequences," "State Taxes," "ERISA Considerations," "Summary of
Terms--Federal
-11-
<PAGE>
Income Tax Considerations," "Federal Income Tax Considerations," "State Tax
Considerations," "Summary of Terms--ERISA Considerations" and "ERISA
Considerations," to the extent that they constitute statements of matters
of law or legal conclusions with respect thereto, have been reviewed by
such counsel and accurately describe the material consequences to holders
of the Certificates under the Code and ERISA.
(vi) Such counsel shall state that they have participated in the
preparation of the Registration Statement and that nothing has come to
their attention to lead them to believe that the Registration Statement, as
of the Effective Time, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading or that the
Prospectus, as of its date, contains any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that such counsel need not express any view
with respect to the financial, statistical or computational material
contained in the Registration Statement or the Prospectus.
Such opinion may contain such assumptions, qualifications and limitations
as are customary in opinions of this type and are reasonably acceptable to
counsel to the Underwriters. In rendering such opinion, such counsel may state
that they are admitted to practice only in the State of New York and that they
are not admitted to the Bar in any other State, that they express no opinion as
to the laws of any jurisdiction other than the federal law of the United States
of America, the General Corporate Law of the State of Delaware and the laws of
the State of New York.
(f) The Representative shall have received the opinion of counsel to the
Sellers and the Servicer acceptable to the Representative and counsel for the
Underwriters, dated the Closing Date, satisfactory in form and substance to the
Representative and counsel for the Underwriters, to the effect that:
(i) Each of the Sellers and the Servicer has been duly organized and
is validly existing as a national banking association (except in the case
of Bank One, Wisconsin which is a Wisconsin state bank) in good standing
under the laws of the United States of America (or in the case of Bank One,
Wisconsin the laws of the state of Wisconsin), with corporate power to own
its properties, to conduct its business as now conducted and as proposed to
be conducted by it and to enter into and perform its obligations under the
Basic Documents to which it is a party and the Servicer has the power,
authority and legal right to service the Mortgage Loans.
(ii) The Servicer has obtained all necessary licenses and approvals in
each jurisdiction in which the failure to obtain such licenses or approvals
would materially and
-12-
<PAGE>
adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, any Basic Documents to which it is a
party.
(iii) Each of the Sellers and the Servicer has duly authorized,
executed and delivered the Basic Documents to which it is a party, and the
Basic Documents to which it is a party are the legal, valid and binding
obligations of each of the Sellers and the Servicer, as applicable,
enforceable against each of the Sellers and the Servicer, as applicable, in
accordance with the respective terms thereof, subject as to enforceability,
to the effects of applicable insolvency, receivership, conservatorship and
other similar laws affecting the rights of creditors generally or the
rights of creditors of institutions the deposits in which are insured by
the Federal Deposit Insurance Corporation ("FDIC") and subject to general
principles of equity (whether applied in a proceeding at law or in equity).
(iv) Neither the execution and delivery by any of the Sellers or the
Servicer of any Basic Documents to which it is a party nor the consummation
by any of the Sellers or the Servicer of the transactions contemplated
therein nor the fulfillment of the terms thereof by any of the Sellers or
the Servicer will conflict with, result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of
the articles of association or by-laws of any of the Sellers or the
Servicer or result in a violation of or contravene the terms of any
statute, order or regulation applicable to any of the Sellers or the
Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it.
(v) To such counsel's knowledge, there are no actions, proceedings or
investigations pending or threatened against any of the Sellers or the
Servicer before or by any governmental authority that could reasonably be
expected to materially and adversely affect the performance by any of the
Sellers or the Servicer of its obligations under, or the validity or
enforceability of, any Basic Documents to which any of the Sellers or the
Servicer is a party.
(vi) Neither the execution and delivery by any of the Sellers or the
Servicer nor the consummation by any of the Sellers or the Servicer of the
transactions contemplated therein nor the fulfillment of the terms thereof
by any of the Sellers or the Servicer will result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of
any material indenture or other agreement or instrument of which such
counsel has knowledge after due inquiry to which any of the Sellers or the
Servicer is a party or by which it is bound.
Such opinion may contain such assumptions, qualifications and limitations
as are customary in opinions of this type and are reasonably acceptable to
counsel to the Underwriters. In rendering such opinion, such counsel may state
that they express no opinion as to the laws of
-13-
<PAGE>
any jurisdiction other than the federal law of the United States of America and
the laws of the States of Wisconsin and New York.
(g) The Representative shall have received an opinion addressed to it of
Stroock & Stroock & Lavan LLP, in its capacity as special counsel to the
Underwriters, dated the Closing Date, with respect to the validity of the
Certificates and such other related matters as the Representative shall
reasonably require and the Depositor shall have furnished or caused to be
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(h) The Policy shall have been duly authorized, executed, issued and
delivered by the Insurer, all fees due and payable to the Insurer as of the
Closing Date shall have been paid in full at or prior to the Closing Date, and
the Policy shall conform in all material respects to the description thereof in
the Registration Statement and the Prospectus (and any supplements thereto).
(i) The Representative shall have received the opinion of Shaw Pittman,
counsel to the Insurer, or such other counsel acceptable to the Representative
and counsel to the Underwriters, dated the Closing Date, satisfactory in form
and substance to the Representative and counsel to the Underwriters, to the
effect that:
(i) The Insurer is a corporation validly existing under the laws of
the jurisdiction of its incorporation, is licensed to transact the business
of financial guarantee insurance under the laws of the State of New York,
and has the corporate power to take all action required of it under the
Policy and, the Insurance Agreements.
(ii) Except as have already been obtained, no authorization, consent,
approval, license, formal exemption, or declaration from, nor any
registration or filing with, any court or governmental agency or body of
the United states of America or the State of New York, which if not
obtained would affect or impair the validity or enforceability of the
Policy, the Insurance Agreements against the Insurer, is required in
connection with the execution and delivery by the Insurer of the Policy,
the Insurance Agreements or in connection with the Insurer's performance of
its obligations thereunder.
(iii) The Insurance Agreements and the Policy have been duly
authorized, executed and delivered by the Insurer, and constitute legal,
valid and binding obligations of the Insurer, enforceable against the
Insurer in accordance with their respective terms, except to the extent
that the enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, conservatorship, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights as such laws would apply
in the event of the insolvency, liquidation or reorganization or other
similar occurrence with respect to the Insurer or the event of any
moratorium or similar occurrence affecting the Insurer.
-14-
<PAGE>
(iv) The Policy is not required to be registered under the Act in
connection with the offer and sale of the Certificates in the manner
contemplated in the Prospectus.
Such opinions may be subject to such counsel's customary practices and
limitations relating to the scope of such counsel's participation in the
preparation of the Registration Statement and the Prospectus and its
investigation or verification of information contained therein.
(j) The Representative shall have received a certificate, dated the Closing
Date, of a Vice President or more senior officer of the Insurer stating that
such officer had no reason to believe that as of the Effective Date any of the
information contained in the Prospectus in (x) the paragraph titled "Certificate
Insurer" under the heading "Summary" or (y) under the heading "The Certificate
Insurer" includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(k) On or prior to the Closing Date, there has been no downgrading, nor
shall any notice have been given of (i) any intended or potential downgrading or
(ii) any review or possible change in rating, the direction of which has not
been indicated, in the rating accorded the Insurer's claims paying ability by
any "nationally recognized statistical rating organization" (as such term is
defined for purposes of the Exchange Act).
(l) The Representative shall have received from counsel an opinion or
opinions of counsel dated the Closing Date and satisfactory in form and
substance to the Representative and counsel for the Underwriters, to the effect
that, in such counsel's opinion, the characterization of the Certificates and
the Trust for Ohio franchise and income tax purposes will follow the
characterization of the Certificates and the Trust for federal income tax
purposes; provided, however, that if such opinion of counsel has previously been
obtained by the Depositor with respect to another series of certificates issued
as contemplated by the Registration Statement, no additional opinion shall be
required unless the Depositor, the Underwriters or their counsel has become
aware of any change in federal income tax law, Ohio state income or franchise
tax law or the interpretation thereof that would have the effect of changing the
conclusions of law expressed in such previous opinion.
(m) The Representative shall have received an opinion of counsel to the
Trustee acceptable to the Representative and counsel for the Underwriters, dated
the Closing Date, in form and in substance satisfactory to the Representative
and counsel for the Underwriters, to the effect that:
(i) The Certificates have been duly executed, authenticated and
delivered by the Trustee in accordance with the terms of the Pooling &
Servicing Agreement.
-15-
<PAGE>
(ii) The Trustee is a banking corporation validly existing under the
laws of the state of New York and has the full power and authority to enter
into, and to take all action required of it, under the Pooling and
Servicing Agreement.
(iii) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee and, assuming due authorization,
execution and delivery of such document by all other parties thereto,
constitutes the legal, valid and binding agreement of the Trustee, except
as enforceability thereof may be limited by bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar laws affecting the
enforcement of rights of creditors against the Trustee generally, as such
laws would apply in the event of bankruptcy, insolvency, liquidation,
receivership or reorganization or any moratorium or similar occurrence
affecting the Trustee, and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law).
(iv) To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against the Trustee
under the Pooling and Servicing Agreement before any court, administrative
agency or other tribunal (A) asserting the invalidity of the Pooling and
Servicing Agreement or the Certificates, or (B) seeking to prevent the
issuance of the Certificates or consummation of any of the transactions
contemplated by the Pooling and Servicing Agreement or the Certificates, or
(C) that might materially or adversely affect the performance by the
Trustee of its obligations under, or the validity or enforceability of the
Pooling and Servicing Agreement and the Certificates.
(v) The execution and delivery of the Pooling and Servicing Agreement
by the Trustee and the performance by the Trustee of its terms do not
conflict with or result in a violation of (a) any law or regulation of the
United States of America or the State of New York governing the banking or
trust powers of the Trustee, or (b) the articles of association and by-laws
of the Trustee.
(vi) No approval, authorization or other action by, or filing with,
any governmental authority of the United States of America or the State of
New York having jurisdiction over the banking or trust activities of the
Trustee is required for the Trustee in connection with the execution and
delivery of, performance under, or compliance with, the Pooling and
Servicing Agreement or the Certificates, except such as have been obtained,
taken or made.
(n) The Representative shall have received copies of each opinion
(including without limitation, opinions with respect to true sale, FDIA and
perfection in Mortgage Loans) of counsel delivered to either rating agency or
the Insurer, together with a letter addressed to the Representative, dated the
Closing Date, to the effect that each Underwriter may rely on each such opinion
to the same extent as though such opinion was addressed to each as of its date.
-16-
<PAGE>
(o) The Underwriters shall have received certificates dated the Closing
Date of each of the Depositor, the Sellers, and the Servicer, executed by any
one of the Chairman of the Board, the President, any Executive Vice President,
Senior Vice President or Vice President, the Treasurer, any Assistant Treasurer,
the Secretary, the principal financial officer or the principal accounting
officer of each of the Depositor, the Sellers, and the Servicer, in which such
officer of the Depositor, the Sellers, and the Servicer, as the case may be,
shall state that, (i) to the best of its knowledge after reasonable
investigation, the representations and warranties of the Depositor, the Sellers,
and the Servicer, as applicable, contained in the Basic Documents to which each
is a party, are true and correct in all material respects, (ii) that the
Depositor, the Sellers, or the Servicer, as the case may be, has complied with
all agreements and satisfied all conditions on its respective part to be
performed or satisfied under such agreements at or prior to the Closing Date,
(iii) in the case of the certificate from the Depositor only, that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or to the best of its
knowledge, are contemplated by the Commission, and (iv) since March 31, 1999 no
material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or properties of the
Depositor, the Sellers, or the Servicer, has occurred.
(p) The Underwriters shall have received evidence satisfactory to it that,
on or before the Closing Date, UCC-1 financing statements have been or are being
filed in the appropriate filing offices reflecting the transfer of the interest
in the Mortgage Loans and the proceeds thereof from the Sellers to the Depositor
and from the Depositor to the Trustee on behalf of the Trust.
(q) The Certificates shall be rated at least "AAA" or its equivalent by
Moody's Investors Services, Inc. and Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc., and neither corporation shall have
placed the Certificates under surveillance or review with possible negative
implications.
(r) The issuance of the Certificates shall not have resulted in a reduction
or withdrawal by any Rating Agency of the current rating of any outstanding
securities issued or originated by the Depositor.
(s) The Representative shall have received, upon execution hereof, the duly
executed agreement of BANK ONE CORPORATION in the form attached as Exhibit A.
(t) The Depositor will provide or cause to be provided to the
Representative such conformed copies of such of the foregoing opinions,
certificates, letters and documents as the Representative shall reasonably
request.
7. Computational Materials. Each Underwriter represents, warrants,
covenants and agrees with the Depositor that:
-17-
<PAGE>
(a) It either (A) has not provided any potential investor with a Collateral
Term Sheet (that is required to be filed with the Commission within two business
days of first use under the terms of the Public Securities Association Letter as
described below), or (B) has, substantially contemporaneously with its first
delivery of such Collateral Term Sheet to a potential investor, delivered such
Collateral Term Sheet (in hard copy and on computer disk) to the Depositor or
its counsel.
(b) It either (A) has not provided any potential investor with a Structural
Term Sheet, Series Term Sheets or Computational Materials, or (B) has promptly
provided any such Structural Term Sheet, Series Term Sheets or Computational
Materials (in hard copy and on computer disk) to the Depositor or its counsel.
(c) Each Collateral Term Sheet bears a legend indicating that the
information contained therein will be superseded by the description of the
collateral contained in the Prospectus Supplement and, except in the case of the
initial Collateral Term Sheet, that such information supersedes the information
in all prior Collateral Term Sheets.
(d) Each Structural Term Sheet, Series Term Sheet and all Computational
Materials bear a legend substantially as follows (or in such form as may be
agreed prior to the date of this Agreement):
"This information has been prepared in connection with the issuance of
securities representing interest in the above trust and based in part
on information provided by Banc One ABS Corporation or BANK ONE
Consumer Lending with respect to the expected characteristics of the
pool of home equity revolving credit line loans in which the related
securities will represent undivided beneficial interests. The actual
characteristics and performance of the home equity revolving credit
line loans will differ from the assumptions used in preparing these
materials, which are hypothetical in nature. Changes in the
assumptions may have a material impact on the information set forth in
these materials. No representation is made that any performance or
return indicated herein will be achieved. For example, it is very
unlikely that the loans will prepay at a constant rate or follow a
predictable pattern. The information may not be used or otherwise
disseminated in connection with the offer or sale of these or any
other securities, except in connection with the initial offer or sale
of these securities to you to the extent set forth below. NO
REPRESENTATION IS MADE AS TO THE APPROPRIATENESS, USEFULNESS, ACCURACY
OR COMPLETENESS OF THESE MATERIALS OR THE ASSUMPTIONS ON WHICH THEY
ARE BASED. Additional information is available upon request. These
materials do not constitute an offer to buy or sell or a solicitation
of an offer to buy or sell any security or instrument or to
participate in any particular trading strategy. ANY SUCH OFFER TO BUY
OR SELL ANY SECURITY WOULD BE MADE PURSUANT TO A DEFINITIVE PROSPECTUS
AND PROSPECTUS SUPPLEMENT PREPARED BY THE ISSUER WHICH WOULD CONTAIN
MATERIAL INFORMATION NOT CONTAINED IN THESE MATERIALS. SUCH PROSPECTUS
AND PROSPECTUS SUPPLEMENT WILL CONTAIN ALL MATERIAL INFORMATION IN
RESPECT OF ANY SUCH SECURITY OFFERED THEREBY AND ANY DECISION TO
INVEST IN SUCH SECURITIES SHOULD BE MADE SOLELY IN RELIANCE UPON SUCH
PROSPECTUS AND PROSPECTUS SUPPLEMENT. ANY CAPITALIZED TERMS USED BUT
NOT DEFINED HEREIN ARE TO BE READ IN CONJUNCTION WITH SUCH PROSPECTUS
AND PROSPECTUS
-18-
<PAGE>
SUPPLEMENT. In the event of any such offering, these materials,
including any description of the loans contained herein, shall be
deemed superseded, amended and supplemented in their entirety by such
Prospectus and Prospectus Supplement. NOT FOR DISTRIBUTION TO PRIVATE
CUSTOMERS AS DEFINED BY THE U.K. SECURITIES AND FUTURES AUTHORITY."
(e) It (at its own expense) agrees to obtain and provide to the Depositor
one or more accountants' letters relating to the Collateral Term Sheets,
Structural Term Sheets, Series Term Sheets and Computational Materials, which
accountants' letters shall be addressed to the Depositor.
(f) It has provided to the Depositor any Collateral Term Sheets, Structural
Term Sheets, Series Term Sheets or Computational Materials distributed to any
potential investor in the Certificates and will not, without the prior written
consent of the Depositor provide additional Collateral Term Sheets, Structural
Term Sheets, Series Term Sheets or Computational Materials to any potential
investors.
(g) For purposes of this Agreement, "Series Term Sheets," "Collateral Term
Sheets" and "Structural Term Sheets" shall have the respective meanings assigned
to them (a) in the case of Series Term Sheets, in the no-action letter addressed
to Greenwood Trust Depositor, Discover Card Master Trust I dated April 5, 1996,
and (b) in the case of Collateral Term Sheets and Structural Term Sheets, in the
February 13, 1995 letter of Cleary, Gottlieb, Steen & Hamilton on behalf of the
Public Securities Association (which letter, and the SEC staff's response
thereto, were publicly available February 17, 1995). The term "Collateral Term
Sheet" as used herein includes any subsequent Collateral Term Sheet that
reflects a substantive change in the information presented. "Computational
Materials" has the meaning assigned to it in the no-action letter dated May 20,
1994 issued by the Division of Corporation Finance of the Commission to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation, the no-action letter dated May 27, 1994 issued by
the Division of Corporation Finance of the Commission to the Public Securities
Association and the no-action letter of February 17, 1995 issued by the
Commission to the Public Securities Association.
-19-
<PAGE>
For purposes of this Agreement, as to each Underwriter, the term "Derived
Information" means such information, if any, in the Series Term Sheets,
Collateral Term Sheets, Structural Term Sheets and/or Computational Materials
that is not contained in either (i) the final Prospectus taking into account
information incorporated therein by reference (other than information
incorporated by reference from the Series Term Sheets, Collateral Term Sheets,
Structural Term Sheets and/or Computational Materials) or (ii) any computer tape
furnished by the Depositor (the "Computer Tape") or other Depositor Provided
Information.
8. Indemnification and Contribution.
(a) The Depositor will indemnify and hold each Underwriter harmless against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained or incorporated by reference in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Depositor will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents (x) in reliance upon and in conformity with the
Underwriters' Information or (y) with respect to Derived Information included in
any Current Report or any amendment or supplement thereof, except to the extent
that any untrue statement or alleged untrue statement therein results (or is
alleged to have resulted) from an error or material omission in the information
concerning the characteristics of the Mortgage Loans furnished by or on behalf
of the Depositor to the Underwriters for use in the preparation of any
Collateral Term Sheet, Structural Term Sheet, Series Term Sheet or Computational
Materials (the "Depositor Provided Information"), which error was not superseded
or corrected by the delivery to the Underwriters of corrected written or
electronic information, or for which the Depositor provided written notice of
such error to the Underwriters prior to the confirmation of the sale of the
applicable Certificates (any such uncorrected information a "Depositor Error");
provided, further, that the Depositor shall not be liable to any Underwriter to
the extent that any such loss, claim, damage or liability of such Underwriter
arises as a result of a misstatement or omission or alleged misstatement or
omission in any related preliminary prospectus that was corrected in the
Prospectus (and copies of which Prospectus were furnished to the Underwriters)
and such Underwriter, if required by law, failed to give or send to the
purchaser, at or prior to the written confirmation of sale, a copy of the
Prospectus.
(b) (i) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Depositor against any and all losses, claims, damages or
liabilities to which the
-20-
<PAGE>
Depositor may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Depositor by
such Underwriter through the Representative specifically for use therein, and
will reimburse any legal or other expenses reasonably incurred by the Depositor
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the Underwriters' Information.
(ii) Each Underwriter severally agrees, assuming (a) all information
provided by the Depositor (including the Computer Tape and any other Depositor
Provided Information) is accurate and complete in all material respects and (b)
the Depositor's independent public accountants have determined that the Derived
Information agrees with the Computer Tape, to indemnify and hold harmless the
Depositor, against any and all losses, claims, damages or liabilities, joint or
several, to which it may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of a material fact contained
in the Derived Information prepared by such Underwriter and incorporated by
reference into the Registration Statement, or arise out of or are based upon the
omission or alleged omission to state in such Derived Information a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading
(except that no such indemnity shall be available for any losses, claims,
damages or liabilities, or actions in respect thereof to the extent any such
untrue statement or alleged untrue statement therein or omission or alleged
omission results directly from an error in the information on the Computer Tape
or in any other Depositor Provided Information and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by it in
connection with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b). In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other
-21-
<PAGE>
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by the indemnified party
of the counsel appointed by the indemnifying party, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that (i) if the indemnified party or parties reasonably determine that
there may be a conflict between the positions of the indemnifying party or
parties and of the indemnified party or parties in conducting the defense of
such action, suit, investigation, inquiry or proceeding or that there may be
legal defenses available to such indemnified party or parties different from or
in addition to those available to the indemnifying party or parties, then
counsel for the indemnified party or parties shall be entitled to conduct the
defense to the extent reasonably determined by such counsel to be necessary to
protect the interests of the indemnified party or parties, except that in no
event shall the indemnifying party be liable for the expenses of more than one
separate counsel representing the indemnified parties who are parties to such
action, suit, investigation, inquiry or proceeding and (ii) in any event, the
indemnified party or parties shall be entitled, at its or their own expense to
have counsel chosen by such indemnified party or parties participate in, but not
conduct, the defense. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability from any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnifying party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Depositor on the
one hand and the Underwriters on the other from the offering of the Certificates
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Depositor on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Depositor on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Certificates (before deducting expenses)
received by the Depositor bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Depositor or by the
Underwriters and the parties' relative intent, knowledge, access to information
and
-22-
<PAGE>
opportunity to correct or prevent such untrue statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total underwriting
discounts and or commissions received by such Underwriter exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Depositor under this Section shall be in
addition to any liability which the Depositor may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Depositor, to each officer of the
Depositor who has signed the Registration Statement and to each person, if any,
who controls the Depositor within the meaning of the Act.
9. Survival of Representations and Obligations. The respective indemnities,
agreements, representations, warranties and other statements of the Depositor or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement or contained in certificates of officers of the Depositor submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation or statement as to the results thereof, made by or on
behalf of any Underwriter, the Depositor or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If for any reason the
purchase of the Certificates by the Underwriters is not consummated, the
Depositor shall remain responsible for the expenses to be paid or reimbursed by
the Depositor pursuant to Section 5(m) hereof and the respective obligations of
the Depositor and the Underwriters pursuant to Section 8 shall remain in effect.
If for any reason the purchase of the Certificates by the Underwriters is not
consummated (other than because of a failure to satisfy the conditions set forth
in clauses (iii), (v) or (vi) of Section 6(c) or Section 6(k)), the Depositor
will reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel) reasonably incurred by them in connection with the
offering of the Certificates.
10. Failure to Purchase the Certificates. If any Underwriter or
Underwriters default in its obligations to purchase the principal amount of
Certificates opposite such Underwriter's name on Schedule I hereto, and the
aggregate principal amount that such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total principal amount
of the Certificates, the Representative may make arrangements satisfactory
-23-
<PAGE>
to the Depositor for the purchase of such Certificates by other persons,
including any of the Underwriters, but if no such arrangements are made by the
Closing Date, the nondefaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the
Certificates that such defaulting Underwriters agreed but failed to purchase. If
any Underwriter or Underwriters so default and the aggregate principal amount of
the Certificates with respect to such default or defaults exceed 10% of the
total principal amount of the Certificates, and arrangements satisfactory to the
Representative are not made by the Depositor for the purchase of such
Certificates by other persons within 48 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Depositor, except as provided in Section 9. As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter or Underwriters
from liability for its default.
11. Notices. Any written request, demand, authorization, direction, notice,
consent or waiver shall be personally delivered or mailed certified mail, return
receipt requested (or in the form of telex or facsimile notice, followed by
written notice as aforesaid) and shall be deemed to have been duly given upon
receipt, if sent to the Representative, when delivered to One First National
Plaza, Suite IL1-0596, Chicago, IL 60670, Attention: Asset Backed Finance (fax #
(312) 732-4487), and if sent to the Depositor, when delivered to 150 East Gay
Street, 20th Floor, Columbus, Ohio 43215, Attention: Dan Long (fax # (614)
248-9544).
12. Successors. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8, and no other person
will have any right or obligations hereunder.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Representation of Underwriters. The Representative will act for the
several Underwriters in connection with the transactions described in this
Agreement, and any action taken by Representative under this Agreement will be
binding upon all the Underwriters.
15. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to the choice
of law provisions thereof.
-24-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us one of the counterparts hereof, whereupon it will
become a binding agreement between the Depositor and the Underwriters in
accordance with its terms.
Very truly yours,
BANK ONE CORPORATION
By: /s/ Daniel A. Long, Jr.
-------------------------------
Name: Daniel A. Long, Jr.
Title: Vice President
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first written above.
BANC ONE CAPITAL MARKETS, INC.
By: /s/ Lisa N. Wilhelm
--------------------------------
Name: Lisa N. Wilhelm
Title: Managing Director
Acting on behalf of itself
and as Representative of
the several Underwriters
-25-
<PAGE>
SCHEDULE I
INITIAL PRINCIPAL
UNDERWRITER AMOUNT OF CERTIFICATES
----------- ----------------------
Banc One Capital Markets, Inc. $166,666,668
Morgan Stanley & Co. Incorporated $166,666,666
Bear, Stearns & Co. Inc. $166,666,666
-1-
<PAGE>
EXHIBIT A
June 16, 1999
BANC ONE CAPITAL MARKETS, INC.
as Representative (the
"Representative") of the
Several Underwriters named herein
One First National Plaza, Suite IL1-0596
Chicago, IL 60670
Re: Underwriting Agreement dated June 16, 1999 (the
"Underwriting Agreement") between Banc One ABS Corporation
(the "Company") and Banc One Capital Markets, Inc., as
representative (the "Representative") of the Several
Underwriters named therein (the "Underwriters")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, the Company has undertaken certain
financial obligations to the Underwriters. Any financial obligations of the
Company (including all fees to be paid) under the Underwriting Agreement,
whether or not specifically enumerated in this paragraph, are hereinafter
referred to as the "Joint and Several Obligations"; provided, however, that
"Joint and Several Obligations" shall mean only the financial obligations of the
Company under the Underwriting Agreement (including without limitation the
payment of money damages for a breach of any of the Company's representations,
warranties or obligations, whether financial or otherwise and liability for any
payments required to be made under any indemnity provision).
As a condition of its execution of the Underwriting Agreement, the
Representative has required the undersigned to acknowledge its joint-and-several
liability with the Company for the payment of the Joint and Several Obligations
under the Underwriting Agreement.
Now, therefore, the Representative on behalf of the Underwriters and BANK
ONE CORPORATION, do hereby agree that:
A-1
<PAGE>
(i) BANK ONE CORPORATION hereby agrees to be absolutely and
unconditionally jointly and severally liable with the Company to
the Underwriters for the payment of the Joint and Several
Obligations.
(ii) BANK ONE CORPORATION may honor its obligations hereunder either
by direct payment of any Joint and Several Obligations or by
causing any Joint and Several Obligations to be paid to the
Underwriters by the Company or another affiliate of BANK ONE
CORPORATION.
(iii) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to the
choice of law provisions thereof.
(iv) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same
Agreement.
(v) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in
Section 8 of the Underwriting Agreement, and no other person will
have any right or obligations hereunder.
(vi) The indemnities and agreements of BANK ONE CORPORATION made
pursuant to this Agreement shall remain operative and in full
force and effect, regardless of any investigation or statement as
to the results thereof, made by or on behalf of BANK ONE
CORPORATION, any Underwriter, the Depositor or any of their
respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for
the Certificates.
A-2
<PAGE>
(vii) Any written request, demand, authorization, direction, notice,
consent, or waiver shall be personally delivered or mailed
certified mail, return receipt requested (or in the form of telex
or facsimile notice, followed by written notice as aforesaid) and
shall be deemed to have been duly given upon receipt, if sent to
the Representative, when delivered to One First National Plaza,
Suite IL1-0596, Chicago, IL 60670, Attention: Asset Backed
Finance (fax # (312) 732-4487); and if sent to BANK ONE
CORPORATION, when delivered to 150 East Gay Street, 20th Floor,
Columbus, Ohio 43215, Attention: Dan Long (fax # (614) 248-9544).
A-3
<PAGE>
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Underwriting Agreement.
Very truly yours,
BANK ONE CORPORATION
By: ________________________________
Name:
Title:
Acknowledged and Agreed:
BANC ONE CAPITAL MARKETS, INC.
By: _____________________________
Name:
Title:
Acting on behalf of itself and as
Representative of the several
Underwriters.
A-4
Exhibit 4.1
EXECUTION COPY
================================================================================
BANC ONE ABS CORPORATION,
as Depositor,
BANK ONE, N.A.,
as Servicer,
and
THE BANK OF NEW YORK,
as Trustee
------------------------
POOLING AND SERVICING AGREEMENT
Dated as of May 31, 1999
------------------------
HELOC Asset-Backed Certificates
Series 1999-1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions....................................................1
Section 1.02. Interest Calculations.........................................19
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of
Investor Certificates; Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements....................19
Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans...........22
Section 2.03. Representations and Warranties Regarding the Servicer.........24
Section 2.04. Assignment of Representations and Warranties of the Sellers
Regarding the Mortgage Loans; Retransfer of Certain
Mortgage Loans................................................25
Section 2.05. Covenants of the Depositor....................................27
Section 2.06. Retransfers of Mortgage Loans at Election of the Holder of
the Transferor Interest.......................................28
Section 2.07. Execution and Authentication of Investor Certificates.........29
Section 2.08. Tax Treatment.................................................29
Section 2.09. Representations and Warranties of the Depositor...............30
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer..................................................30
Section 3.02. Collection of Certain Mortgage Loan Payments..................32
Section 3.03. Withdrawals from the Collection Account.......................34
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses.34
Section 3.05. Assumption and Modification Agreements........................35
Section 3.06. Realization Upon Defaulted Mortgage Loans.....................35
Section 3.07. Trustee to Cooperate..........................................36
Section 3.08. Servicing Compensation; Payment of Certain
Expenses by Servicer..........................................36
Section 3.09. Annual Statement as to Compliance.............................37
Section 3.10. Annual Servicing Report.......................................37
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 3.11. RESERVED......................................................37
Section 3.12. Access to Certain Documentation and Information
Regarding the Mortgage Loans..................................37
Section 3.13. Maintenance of Certain Servicing Insurance Policies...........38
Section 3.14. Reports to the Securities and Exchange Commission.............38
Section 3.15. Tax Returns...................................................38
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments
of Mortgaged Property.........................................39
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate.........................................39
Section 4.02. Claims upon the Policy; Policy Payments Account...............42
Section 4.03. Spread Account................................................43
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation........44
Section 4.05. Reallocated Investor Principal Collections....................45
ARTICLE V
Payments and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.................................................45
Section 5.02. Calculation of the Investor Certificate Rate..................47
Section 5.03. Statements to Certificateholders..............................48
Section 5.04. Rights of Certificateholders and holder of the
Transferor Interest...........................................49
ARTICLE VI
The Certificates
Section 6.01. The Certificates..............................................49
Section 6.02. Registration of Transfer and Exchange of Investor
Certificates; Appointment of Registrar........................50
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.............52
Section 6.04. Persons Deemed Owners.........................................52
Section 6.05. Restrictions on Transfer of Transferor Interest...............53
Section 6.06. Appointment of Paying Agent...................................54
Section 6.07. Acceptance of Obligations.....................................55
<PAGE>
ARTICLE VII
The Servicer, the Seller and the Depositor
Section 7.01. Liability of the Servicer and the Depositor...................55
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Depositor; Assignment of
Servicing to an Affiliate.....................................55
Section 7.03. Limitation on Liability of the Servicer and Others............55
Section 7.04. Servicer Not to Resign........................................56
Section 7.05. Delegation of Duties..........................................56
Section 7.06. Indemnification of the Trust by the Servicer..................57
Section 7.07. RESERVED......................................................57
Section 7.08. Limitation on Liability of the holder of the
Transferor Interest...........................................57
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination...............................57
Section 8.02. Trustee to Act; Appointment of Successor......................59
Section 8.03. Notification to Certificateholders............................60
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.............................................60
Section 9.02. Certain Matters Affecting the Trustee.........................62
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.........63
Section 9.04. Trustee May Own Certificates..................................64
Section 9.05. Servicer to Pay Trustee's Fees and Expenses;
Servicer to Indemnify.........................................64
Section 9.06. Eligibility Requirements for Trustee..........................64
Section 9.07. Resignation or Removal of Trustee.............................64
Section 9.08. Successor Trustee.............................................65
Section 9.09. Merger or Consolidation of Trustee............................66
Section 9.10. Appointment of Co-Trustee or Separate Trustee.................66
Section 9.11. Limitation of Liability.......................................67
Section 9.12. Trustee May Enforce Claims Without Possession
of Certificates...............................................67
Section 9.13. Suits for Enforcement.........................................67
<PAGE>
TABLE OF CONTENTS
(continued)
Page
ARTICLE X
Termination
Section 10.01. Termination...................................................68
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events.....................................70
Section 11.02. Additional Rights Upon the Occurrence of Certain Events.......71
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment.....................................................73
Section 12.02. Recordation of Agreement......................................74
Section 12.03. Limitation on Rights of Investor Certificateholders...........75
Section 12.04. Governing Law.................................................76
Section 12.05. Notices.......................................................76
Section 12.06. Severability of Provisions....................................76
Section 12.07. Assignment....................................................76
Section 12.08. Investor Certificates Nonassessable and Fully Paid............76
Section 12.09. Third-Party Beneficiaries.....................................76
Section 12.10. Counterparts..................................................77
Section 12.11. Effect of Headings and Table of Contents......................77
Section 12.12. Insurance Agreement...........................................77
<PAGE>
TABLE OF CONTENTS
(continued)
Page
EXHIBITS
Exhibit A Form of Investor Certificate A-1
Exhibit B Form of Transferor Interest B-1
Exhibit C Mortgage Loan Schedule C-1
Exhibit D Letter of Representations D-1
Exhibit E Form of Investor Letter E-1
Exhibit F Request for Release F-1
<PAGE>
This Pooling and Servicing Agreement, dated as of May 31, 1999, among Banc One
ABS Corporation, as Depositor (the "Depositor"), Bank One, N.A., as Servicer
(the "Servicer"), and The Bank of New York, as Trustee (the "Trustee"),
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accelerated Principal Distribution Amount: With respect to any Distribution
Date, the amount, if any, required to reduce the Investor Certificate Principal
Balance (after giving effect to the distribution of all other amounts actually
distributed on the Investor Certificates on such Distribution Date) so that the
Invested Amount immediately following such Distribution Date exceeds the
Investor Certificate Principal Balance (as so reduced) by the Required
Overcollateralization Amount.
Additional Balance: With respect to any Mortgage Loan and any date of
determination, the principal balance of any Draw, which is conveyed to the Trust
pursuant to Section 2.01(a).
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
Alternative Principal Payment: With respect to any Distribution Date, the
amount (but not less than zero) equal to Principal Collections for such
Distribution Date minus the aggregate Draws made during the related Collection
Period.
Appointment Day: As defined in Section 11.02.
Assignment of Mortgage: With respect to any Mortgage, an assignment, notice
of transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction in which the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Trustee, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties located
in the same jurisdiction.
<PAGE>
Authorized Newspaper: A newspaper of general circulation in the Borough of
Manhattan, The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays
and holidays.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or if at any time after the execution of this instrument the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Billing Cycle: With respect to any Mortgage Loan, the calendar month ending
on the day that is 25 days prior to the related Due Date.
Book-Entry Certificate: Any Investor Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the State of New York or Ohio are required or
authorized by law to be closed.
Certificate Owner: The Person who is the beneficial owner of a Book-Entry
Certificate.
Certificate Register and Certificate Registrar: The register maintained and
the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name an Investor
Certificate is registered in the Certificate Register, except that, solely for
the purpose of giving any consent, direction, waiver or request pursuant to this
Agreement, (x) any Investor Certificate registered in the name of the Servicer,
or any Person known to a Responsible Officer to be an Affiliate of either the
Depositor or the Servicer and (y) any Investor Certificate for which the
Servicer, or any Person known to a Responsible Officer to be an Affiliate of
either the Servicer or the Depositor is the Certificate Owner shall be deemed
not to be outstanding (unless to the knowledge of a Responsible Officer (i) the
Servicer or the Depositor or such Affiliate is acting as trustee or nominee for
a Person who is not an Affiliate of the Servicer or the Depositor and who makes
the voting decision with respect to such Investor Certificate or (ii) the
Servicer or the Depositor or such Affiliate is the Certificate Owner of all the
Investor Certificates) and the Percentage Interest evidenced thereby shall not
be taken into account in determining whether the requisite amount of Percentage
Interests necessary to effect any such consent, direction, waiver or request has
been obtained.
Closing Date: June 23, 1999.
Code: The Internal Revenue Code of 1986, as the same may be amended from
time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Investor Certificateholders and the Credit
Enhancer pursuant to Section 3.02(b).
2
<PAGE>
Collection Period: With respect to any Distribution Date (other than the
first Distribution Date) and any Mortgage Loan, the calendar month preceding
such Distribution Date. With respect to the first Distribution Date, the period
beginning on the day immediately following the Cut-Off Date and ending on June
30, 1999.
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan as of any
date of determination, the percentage equivalent of a fraction, the numerator of
which is the sum of (i) the Credit Limit as of origination and (ii) the
outstanding principal balance of any senior mortgage loan as of the origination
of such Mortgage Loan, and the denominator of which is the value for the related
Mortgaged Property determined at origination of such Mortgage Loan, based on
appraised value or other acceptable valuation method in accordance with the
applicable Seller's underwriting guidelines.
Corporate Trust Office: The principal office of the Trustee at which at any
particular time its corporate business shall be administered, which office on
the Closing Date is located at 101 Barclay Street, Floor 12E, New York, New York
10286, Attention: Franklin Austin.
Credit Enhancement Draw Amount: As to any Distribution Date, an amount
equal to the sum of (x) the amount by which the amount to be distributed to
Investor Certificateholders on such Distribution Date pursuant to Section
5.01(a)(ii) exceeds the amount of Investor Interest Collections, Reallocated
Investor Principal Collections and amounts deposited from the Spread Account on
deposit in the Collection Account on the Business Day preceding such
Distribution Date plus (y) the Guaranteed Principal Distribution Amount for such
Distribution Date plus (z) any Preference Claim for such Distribution Date.
Credit Enhancer: MBIA Insurance Corporation, a New York domiciled insurance
company, or any successor thereto.
Credit Enhancer Default: The failure by the Credit Enhancer to make a
payment required under the Policy in accordance with the terms thereof.
Credit Limit: With respect to any Mortgage Loan, the maximum Principal
Balance permitted under the terms of the related Credit Line Agreement.
Credit Limit Utilization Rate: With respect to any Mortgage Loan, the
percentage equivalent of a fraction the numerator of which is the Cut-Off Date
Principal Balance of such Mortgage Loan, and the denominator of which is the
related Credit Limit.
Credit Line Agreement: With respect to any Mortgage Loan, the related
credit line account agreement executed by the related Mortgagor and any
amendment or modification thereto.
Custodial Agreement: Any Custodial Agreement between any Custodian and the
Trustee relating to the custody of the Mortgage Loans and the Related Documents,
which is reasonably acceptable in form and substance to the Credit Enhancer.
3
<PAGE>
Custodian: Any custodian appointed by the Trustee under a Custodial
Agreement (subject to the approval of the Rating Agencies and the Credit
Enhancer) to maintain all or a portion of the Mortgage Files pursuant to Section
2.01(b).
Cut-Off Date: The close of business on May 31, 1999.
Cut-Off Date Pool Balance: The Pool Balance calculated as of the Cut-Off
Date.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date.
Cut-Off Date Weighted Average Gross Margin: 1.24%.
Defective Mortgage Loan: A Mortgage Loan subject to retransfer pursuant to
Section 2.02 or 2.04.
Definitive Certificates: As defined in Section 6.02(c).
Depositor: Banc One ABS Corporation, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of Investor
Certificates evidencing $500,000,000 in initial aggregate principal amount of
the Investor Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
Distribution Date: The twentieth day of each month, or if such day is not a
Business Day, then on the next Business Day, commencing on July 20, 1999.
Draw: With respect to any Mortgage Loan, an additional borrowing by the
Mortgagor subsequent to the Cut-Off Date in accordance with the related Mortgage
Note.
Due Date: With respect to any Mortgage Loan, the day of the month (either
the 5th, 10th, 15th, 20th or 25th) on which payments under such Mortgage Loan
are due.
Electronic Ledger: The electronic master record of home equity revolving
credit line mortgage loans maintained by the Servicer or any Seller, as
appropriate.
Eligible Account: An account that is (i) maintained with a federal or
state-chartered depository institution or trust company (a) whose commercial
paper, short-term debt obligations or other short-term deposits are rated in the
highest short-term rating category by each Rating
4
<PAGE>
Agency if the deposits are to be held in the account for less than 30 days, and
(b) whose long-term unsecured debt obligations are rated at least "Aa3" by
Moody's and at least "AA-" by Standard & Poor's if the deposits are to be held
in the account for more than 30 days, (ii) a segregated trust account maintained
with the corporate trust department of a federal depository institution or
state-chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 C.F.R. 9.10(b), that in either
case has corporate trust powers, acting in its fiduciary capacity, including the
Trustee, or an Affiliate of the Trustee in its fiduciary capacity or (iii) an
account otherwise acceptable to each Rating Agency, as evidenced as of the
Closing Date by delivery of a rating letter by each Rating Agency, and otherwise
acceptable to the Credit Enhancer, as evidenced as of the Closing Date by
delivery of the Policy by the Credit Enhancer and, thereafter, within 30 days of
receipt of notice to each Rating Agency and to the Credit Enhancer of such
deposit, by written consent of the Credit Enhancer.
Eligible Affiliate Servicer: Any Affiliate of Bank One, N.A. to whom the
Servicer assigns its rights and obligations hereunder, subject to approval by
the Rating Agencies and the Credit Enhancer.
Eligible Investment: One or more of the following:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof; provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition thereof;
provided that the short-term unsecured debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating category (which is A-l+ for
Standard & Poor's and P-1 for Moody's);
(iii) certificates of deposit, time deposits and bankers' acceptances,
each with an original maturity of not more than 90 days and, in the case of
bankers' acceptances, an original maturity of no more than 365 days, of any
U.S. depository institution or trust company incorporated under the laws of
the United States or any state thereof and subject to supervision and
examination by federal and/or state banking authorities (including Bank
One, N.A., or any Affiliate thereof), provided that the unsecured
short-term debt obligations of such depository institution or trust company
as of the date of acquisition thereof have been rated by each Rating Agency
in its highest unsecured short-term debt rating category;
(iv) commercial paper, with original maturities of not more than 270
days, of any corporation incorporated under the laws of the United States
or any state thereof (including Bank One, N.A. or any Affiliate thereof)
that as of the date of acquisition has been rated by each Rating Agency in
its highest short-term debt rating category;
(v) short-term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United
States or any state thereof
5
<PAGE>
(including Bank One, N.A., or any Affiliate thereof) that as of the date of
acquisition have been rated by each Rating Agency in its highest applicable
rating category;
(vi) interests in any money market fund that, as of the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund, has a rating of Aaa by Moody's and either
AAAm or AAAm-G by Standard & Poor's, or such lower rating as will not
result in the qualification, downgrading or withdrawal of the then-current
rating assigned to the Investor Certificates by each Rating Agency without
regard to the Policy;
(vii) other obligations or securities that, after notice by the
Trustee to the Credit Enhancer and each Rating Agency, (A) are acceptable
to the Credit Enhancer as an Eligible Investment hereunder as evidenced by
a letter to such effect from the Credit Enhancer, (B) that will not result
in a reduction in the then current rating of the Investor Certificates by
each Rating Agency without regard to the Policy and (C) with respect to
which the Servicer has received confirmation that, for tax purposes, the
investment complies with the last clause of this definition; and
(viii) in the case of amounts on deposit in the Spread Account only,
in the commercial paper or other short-term debt obligation of Bank One,
N.A. or any of its Affiliates; provided that the rating assigned to such
commercial paper or other short-term debt obligation is at least "A-2" and
"P-2" by Standard & Poor's and Moody's, respectively, and the long-term
unsecured debt of Bank One, N.A. is rated at least "Baa2" and "BBB" by
Moody's and Standard & Poor's, respectively, or such lower rating as is
agreed to by the Rating Agencies as evidenced by a letter from each such
Rating Agency;
provided that no instrument described hereunder 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 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 its stated maturity.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
applicable Seller for a Defective Mortgage Loan that, as of the date of such
substitution, (i) has an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance) approximately equal to any Transfer Deficiency
relating to such Defective Mortgage Loan; (ii) has a Loan Rate not less than the
Loan Rate of the Defective Mortgage Loan and not more than l.0% higher than the
Loan Rate of such Defective Mortgage Loan; (iii) has a Loan Rate based on the
Index and has the same Interest Rate Adjustment Date as that of the Defective
Mortgage Loan; (iv) has a Gross Margin that is not less than the Gross Margin of
the Defective Mortgage Loan and not more than l00 basis points higher than the
Gross Margin of the Defective Mortgage Loan; (v) has a Mortgage of the same or
higher level of priority as the Mortgage securing the Defective Mortgage Loan at
the time such Mortgage was transferred to the Trust; (vi) has a remaining term
to maturity not
6
<PAGE>
more than six months earlier and not more than sixty months later than the
remaining term to maturity of the Defective Mortgage Loan; (vii) complies with
each representation and warranty set forth in Section 2.04 (deemed to be made as
of the date of substitution); and (viii) has an original Combined Loan-to-Value
Ratio not greater than that of the Defective Mortgage Loan. More than one
Eligible Substitute Mortgage Loan may be substituted for a Defective Mortgage
Loan if such Eligible Substitute Mortgage Loans meet the foregoing attributes in
the aggregate and such substitution is approved in writing in advance by the
Credit Enhancer. No Mortgage Loan may be substituted for a Defective Mortgage
Loan on any date more than 120 days after the Closing Date.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Servicing Termination: As defined in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fiscal Agent: As defined in the Policy.
Foreclosure Profit: With respect to any Liquidated Mortgage Loan, any
amount by which (i) aggregate Net Liquidation Proceeds exceeds (ii) the related
Principal Balance of such Liquidated Mortgage Loan immediately prior to the
final recovery of Liquidation Proceeds, plus accrued and unpaid interest thereon
at the applicable Loan Rate from the date interest was last paid through the
date of receipt of the final Liquidation Proceeds.
Gross Margin: With respect to any Mortgage Loan (other than any Locked
Balance), the percentage set forth as the "Gross Margin" for such Mortgage Loan
on Exhibit C hereto.
Guaranteed Distribution: With respect to any Distribution Date, the sum of
the (i) the Guaranteed Principal Distribution Amount and (ii) the amount to be
distributed to Investor Certificateholders pursuant to Section 5.01(a)(ii) for
such Distribution Date.
Guaranteed Principal Distribution Amount: With respect to (i) any
Distribution Date, other than the Distribution Date in July 2020, the amount by
which the Investor Certificate Principal Balance (after giving effect to all
distributions allocable to principal on the Investor Certificates on such
Distribution Date, including without limitation any withdrawals from the Spread
Account) exceeds the Invested Amount as of such Distribution Date and (ii) the
Distribution Date in July 2020, the amount by which the outstanding Investor
Certificate Principal Balance (after giving effect to all distributions
allocable to principal on the Investor Certificates on such Distribution Date,
including without limitation any withdrawals from the Spread Account) exceeds
the aggregate amount on deposit in the Collection Account available to be
distributed to the Investor Certificateholders pursuant to Section 5.01(b).
HELOC Balance: With respect to any Mortgage Loan, the portion, if any, of
the Principal Balance thereof subject to a variable Loan Rate.
Index: With respect to each Mortgage Loan (other than any Locked Balance)
and any Interest Rate Adjustment Date, the average weekly Bank Prime Loan Rate
as published by the
7
<PAGE>
Board of Governors of the Federal Reserve System in Statistical Release H.15 for
the week that includes the 15th day of the related month.
Insolvency Event: As defined in Section 11.02.
Insurance Agreement: The insurance and reimbursement agreement dated as of
the Closing Date among the Depositor, the Servicer, the Trustee and the Credit
Enhancer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the Credit
Enhancer) pursuant to any insurance policy covering a Mortgage Loan, or amounts
required to be paid by the Servicer pursuant to the last sentence of Section
3.04, net of any component thereof (i) covering any expenses incurred by or on
behalf of the Servicer in connection with obtaining such proceeds, (ii) that is
applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to
such Mortgage Loan.
Interest Collections: With respect to any Distribution Date, (i) all
payments by or on behalf of Mortgagors and any other amounts constituting
interest (including without limitation any portion of Insurance Proceeds and Net
Liquidation Proceeds allocable to interest on the applicable Mortgage Loan)
collected by the Servicer under the Mortgage Loans (excluding any fees
(including annual fees) or late charges or similar administrative fees paid by
Mortgagors) plus (ii) any gains and investment earnings from amounts on deposit
in the Collection Account during the related Collection Period minus (iii) the
Servicing Fee payable to the Servicer with respect to the related Collection
Period. The portion of each payment with respect to a Mortgage Loan that
constitutes principal or interest shall be determined in accordance with the
terms of the related Credit Line Agreement.
Interest Period: With respect to any Distribution Date, the period
beginning on the preceding Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date) and ending on the day preceding such
Distribution Date.
Interest Rate Adjustment Date: With respect to any Mortgage Loan, the date
on which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
Invested Amount: With respect to any Distribution Date, an amount equal to
the Original Invested Amount minus the sum of (i) the amount of Investor
Principal Collections previously distributed to Investor Certificateholders and
(ii) any Investor Loss Amounts applied on prior Distribution Dates and not
reimbursed.
Investor Certificate: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A hereto.
Investor Certificate Distribution Amount: With respect to any Distribution
Date, the sum of all amounts to be distributed to the Holders of Investor
Certificates pursuant to Article V and Article XI hereof.
8
<PAGE>
Investor Certificate Interest: With respect to any Distribution Date,
interest for the related Interest Period at the applicable Investor Certificate
Rate on the Investor Certificate Principal Balance as of the first day of such
Interest Period (after giving effect to the distributions made on the first day
of such Interest Period).
Investor Certificate Principal Balance: With respect to any Distribution
Date, (a) the Original Investor Certificate Principal Balance minus (b) the
aggregate of amounts actually distributed as principal on the Investor
Certificates.
Investor Certificate Rate: With respect to each Interest Period, a per
annum rate equal to the lesser of (i) the sum of (a) LIBOR as of the second
LIBOR Business Day prior to the first day of such Interest Period plus (b) 0.26%
per annum and (ii) the Net Funds Cap Rate for such Interest Period.
Investor Certificateholder: The Holder of an Investor Certificate.
Investor Fixed Allocation Percentage: 98%.
Investor Floating Allocation Percentage: With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
Invested Amount at the close of business on the preceding Distribution Date (or
on the Closing Date, in the case of the first Distribution Date), and the
denominator of which is the Pool Balance, calculated as of the beginning of the
related Collection Period.
Investor Interest Collections: With respect to any Distribution Date, the
product of (i) the Interest Collections for such Distribution Date and (ii) the
Investor Floating Allocation Percentage for such Distribution Date.
Investor Loss Amount: With respect to any Distribution Date, an amount
equal to the product of (i) the Investor Floating Allocation Percentage for such
Distribution Date and (ii) the aggregate of any Liquidation Loss Amounts for
such Distribution Date.
Investor Loss Reduction Amount: With respect to any Distribution Date, the
portion, if any, of the Investor Loss Amount for such Distribution Date and all
prior Distribution Dates that has not been distributed to Investor
Certificateholders on such Distribution Date pursuant to Section 5.01(a)(iii) or
5.01(a)(iv) or by way of the Credit Enhancement Draw Amount.
Investor Principal Collections: With respect to any Distribution Date, the
Investor Fixed Allocation Percentage of Principal Collections in respect of such
Distribution Date.
LIBOR: With respect to any date, the rate for one month United States
dollar deposits that appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London time on such date. If such rate does not appear on such page (or such
other page as may replace that page on that service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be reasonably selected by or at the direction of the Depositor after
consultation with the Trustee), the rate will be the Reference Bank Rate. If no
such quotations can be obtained and no Reference Bank Rate is available, LIBOR
shall be LIBOR applicable to the preceding Interest Period.
9
<PAGE>
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York or in the City of
London, England are required or authorized by law to be closed.
LIBOR Interest Carryover: With respect to any Distribution Date on or prior
to the date on which the Principal Balance of the Certificates has been reduced
to zero, if the Investor Certificate Rate is equal to the Net Funds Cap Rate, an
amount equal to (i) the excess of (a) an amount equal to the Investor
Certificate Interest for such Distribution Date calculated as set forth in the
definition of Investor Certificate Rate, but without regard to the Net Funds Cap
Rate proviso thereto, over (b) the amount of Investor Certificate Interest
payable to the Investor Certificates on such Distribution Date at the Net Funds
Cap Rate, plus (ii) the portion of the amount calculated pursuant to clause (i)
remaining unpaid from prior Distribution Dates plus interest accrued thereon at
the then applicable Investor Certificate Rate.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including without
limitation any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section 7.02 shall not be deemed to
constitute a Lien.
Lifetime Rate Cap: With respect to any Mortgage Loan in respect of which
the related Mortgage Note provides for a lifetime rate cap, the maximum Loan
Rate permitted over the life of such Mortgage Loan under the terms of the
related Credit Line Agreement, as set forth on Exhibit C hereto.
Liquidated Mortgage Loan: With respect to any Distribution Date, any
Mortgage Loan with respect to which the Servicer has determined, in accordance
with the servicing procedures specified herein, that all Liquidation Proceeds
that it expects to recover with respect to the disposition of the related
Mortgaged Property or the related REO have been recovered as of the end of the
related Collection Period.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) that
are incurred by the Servicer in connection with the liquidation of any Mortgage
Loan and not recovered under any insurance policy, including, without
limitation, legal fees and expenses, any unreimbursed expenditures pursuant to
Section 3.06 (including, without limitation, amounts advanced to correct
defaults on any mortgage loan which is senior to such Mortgage Loan and amounts
advanced to keep current or pay off a mortgage loan that is senior to such
Mortgage Loan) with respect to the related Mortgage Loan and any related and
unreimbursed expenditures with respect to real estate property taxes, water or
sewer taxes, condominium association dues, property restoration or preservation
or insurance against casualty, loss or damage.
Liquidation Loss Amount: With respect to any Distribution Date and any
Mortgage Loan that becomes a Liquidated Mortgage Loan during the related
Collection Period, the unrecovered
10
<PAGE>
Principal Balance thereof at the end of such Collection Period, after giving
effect to the Net Liquidation Proceeds applied in reduction of such Principal
Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's sale,
foreclosure sale or otherwise.
Loan Rate: With respect to any Mortgage Loan and any date of determination,
the variable per annum rate of interest applicable under the related Credit Line
Agreement to the calculation of interest or, if the Lock Feature has been
exercised, the resulting fixed per annum rate for such date.
Lock Feature: An option available to a Mortgagor under a Credit Line
Agreement that permits the Mortgagor to convert either the entire outstanding
balance due or any portion thereof to a fixed rate closed-end loan.
Locked Balance: With respect to any Mortgage Loan as to which the Lock
Feature has been exercised, the portion of the Principal Balance thereof subject
to a fixed Loan Rate.
Managed Amortization Period: The period from the Closing Date to and
including the Rapid Amortization Commencement Date.
Maximum Principal Payment: With respect to any Distribution Date, the
product of the Investor Fixed Allocation Percentage and an amount equal to the
Principal Collections for such Distribution Date.
Minimum Transferor Interest: With respect to any date of determination, an
amount equal to the lesser of (a) 5% of the Pool Balance on such date and (b)
the Transferor Principal Balance as of the Closing Date.
Moody's: Moody's Investors Service, Inc., or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a first
or second lien on a fee simple interest in real property securing a Mortgage
Loan.
Mortgage File: With respect to any Mortgage Loan, the file containing the
mortgage documents listed in Section 2.01(b) pertaining to such Mortgage Loan
and any additional documents required to be added to such file pursuant to this
Agreement.
Mortgage Loan Schedule: With respect to any date of determination, the
schedule of Mortgage Loans included in the Trust on such date. The initial
schedule of Mortgage Loans as of the Cut-Off Date is the schedule set forth
herein as Exhibit C, which schedule sets forth as to each Mortgage Loan (i) the
Cut-Off Date Principal Balance, separately indicating any Locked Balance and any
HELOC Balance, (ii) the Credit Limit, (iii) the Gross Margin, (iv) the Lifetime
Rate Cap, (v) the account number, (vi) the current Loan Rate, separately
indicating the Loan Rates applicable to any Locked Balance and any HELOC
Balance, (vii) the date of origination, (viii) the original term to maturity or
maturity date, (ix) the State in which the Mortgaged
11
<PAGE>
Property is located and (x) the related Seller. The Mortgage Loan Schedule will
be deemed to be amended from time to time to reflect Additional Balances.
Mortgage Loans: The mortgage loans that are transferred and assigned to the
Trustee pursuant to Section 2.01(a), including all Additional Balances with
respect thereto, together with the Related Documents, but exclusive of Mortgage
Loans that are retransferred to the applicable Seller or the holder of the
Transferor Interest from time to time pursuant to Section 2.02, 2.04 or 2.06.
The mortgage loans originally so held are identified in the Mortgage Loan
Schedule delivered on the Closing Date. The Mortgage Loans also shall include
any Eligible Substitute Mortgage Loan substituted by the applicable Seller for a
Defective Mortgage Loan pursuant to Section 2.02 or 2.04.
Mortgage Note: With respect to a Mortgage Loan, the Credit Line Agreement
pursuant to which the related Mortgagor agrees to pay the indebtedness evidenced
thereby and secured by the related Mortgage.
Mortgaged Property: The underlying property, including any real property
and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Credit Line Agreement.
Net Funds Cap Rate: With respect to any Interest Period, a per annum rate
equal to the weighted average of the Loan Rates on the Mortgage Loans as of the
first day of the related Billing Cycle (or, in the case of the first Interest
Period, the weighted average of the Loan Rates on the Mortgage Loans as of the
Cut-Off Date), less 0.65% per annum (adjusted to an effective rate reflecting
accrued interest calculated on the basis of the actual number of days in the
Collection Period commencing in the month in which such Interest Period
commences and a year assumed to consist of 360 days).
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a Vice President, an Assistant Vice
President, the Treasurer, Assistant Treasurer, Controller or Assistant
Controller of the Depositor or the Servicer, as the case may be, and delivered
to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the Trustee,
who may be in-house counsel for the Depositor, a Seller or the Servicer (except
that any opinion pursuant to Section 2.06, Section 7.04 or relating to taxation
must be an opinion of independent outside counsel) and who, in the case of
opinions delivered to the Credit Enhancer and the Rating Agencies, is reasonably
acceptable to each such entity.
Original Invested Amount: $500,000,000.
Original Investor Certificate Principal Balance: $500,000,000.
12
<PAGE>
Overcollateralization Amount: With respect to any date of determination,
the amount, if any, by which the Invested Amount exceeds the Investor
Certificate Principal Balance on such date.
Overcollateralization Release Amount: With respect to any Distribution
Date, the amount, if any, by which the Overcollateralization Amount exceeds the
Required Overcollateralization Amount.
Paying Agent: Any paying agent appointed pursuant to Section 6.06.
Percentage Interest: With respect to any Investor Certificate, the
percentage obtained by dividing the denomination of such Investor Certificate by
the Original Investor Certificate Principal Balance.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Policy: The financial guaranty insurance policy number 29531, dated as of
the Closing Date, issued by the Credit Enhancer to the Trustee for the benefit
of the Investor Certificateholders.
Policy Payments Account: As defined in Section 4.02(b).
Pool Balance: With respect to any date of determination, the aggregate
Principal Balance of all Mortgage Loans as of such date.
Pool Factor: With respect to any Distribution Date, the decimal, carried to
seven places, obtained by dividing the Investor Certificate Principal Balance
for such Distribution Date by the Original Investor Certificate Principal
Balance.
Preference Claim: As defined in Section 4.02(d).
Premium Fee Rate: As defined in the Insurance Agreement.
Principal Balance: With respect to any Mortgage Loan (other than a
Liquidated Mortgage Loan) and any date of determination, the related Cut-Off
Date Principal Balance, plus (i) any Additional Balances in respect of such
Mortgage Loan, minus (ii) all collections credited as principal against the
Principal Balance of such Mortgage Loan in accordance with the related Credit
Line Agreement. For purposes of this definition, a Liquidated Mortgage Loan
shall be deemed to have a Principal Balance of zero.
Principal Collections: With respect to any Distribution Date, (i) all
payments of principal by or on behalf of Mortgagors and any other amounts
constituting principal (including but not limited to any portion of Insurance
Proceeds or Net Liquidation Proceeds allocable to principal of the applicable
Mortgage Loans collected by the Servicer under the Mortgage Loans during the
related Collection Period, but excluding Foreclosure Profits) and (ii) any
Transfer Deposit Amounts. The portion of each payment with respect to a Mortgage
Loan that constitutes
13
<PAGE>
principal or interest shall be determined in accordance with the terms of the
related Credit Line Agreement.
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as of the
Closing Date, among Bank One, N.A., Bank One, Arizona, N.A., Bank One, Colorado,
N.A., Bank One, Illinois, N.A., Bank One, Indiana, N.A., Bank One, Kentucky,
N.A., Bank One, Utah, N.A. and Bank One, Wisconsin, as Sellers, and the
Depositor, as purchaser, with respect to the Mortgage Loans.
Rapid Amortization Commencement Date: The earlier of (i) the date
immediately following the June 2004 Distribution Date and (ii) the Distribution
Date next succeeding the Collection Period in which a Rapid Amortization Event
is deemed to occur pursuant to Section 11.01.
Rapid Amortization Event: As defined in Section 11.01.
Rapid Amortization Period: The period following the Managed Amortization
Period until the termination of the Trust pursuant to Section 10.01.
Rating Agency: Any statistical credit rating agency, or its successor, that
rated the Investor Certificates at the request of the Depositor at the time of
the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall mean such statistical credit rating
agency or other comparable Person designated by the Depositor and the Credit
Enhancer, notice of which designation shall be given to the Trustee. References
herein to the highest short-term unsecured rating category of a Rating Agency
shall mean P-1 in the case of Moody's and A-1+ in the case of Standard & Poor's
and, in the case of any other Rating Agency, shall mean the rating such other
Rating Agency deems equivalent to the foregoing ratings. References herein to
the highest long-term rating category of a Rating Agency shall mean "Aaa" in the
case of Moody's and "AAA" in the case of Standard & Poor's and, in the case of
any other Rating Agency, shall mean the rating such other Rating Agency deems
equivalent to the foregoing ratings.
Reallocated Investor Principal Collections: With respect to any
Distribution Date, any Investor Principal Collections applied to amounts payable
pursuant to Sections 5.01(a)(i) and (ii), in an amount up to the lesser of (a)
the Overcollateralization Amount for such Distribution Date (prior to giving
effect to such Reallocated Investor Principal Collections), (b) the Scheduled
Principal Collections Distribution Amount for such Distribution Date and (c) the
excess, if any, of the aggregate amount payable pursuant to Sections 5.01(a)(i)
and (ii) over the amount of Investor Interest Collections for such Distribution
Date.
Recalculated Weighted Average Gross Margin: With respect to any date of
determination, a weighted average calculated as (I) the sum of (a) the product
of the weighted average Gross Margin of the HELOC Balances as of such date,
multiplied by the aggregate outstanding HELOC Balance, plus (b) the product of
(i) the weighted average Loan Rate on all Locked Balances as of such date minus
the Index as of such date, multiplied by (ii) the aggregate outstanding Locked
Balance, divided by (II) the Pool Balance as of such date.
14
<PAGE>
Record Date: The last day preceding the related Distribution Date;
provided, however, that following the date, if any, on which Definitive
Certificates are available pursuant to Section 6.02(c), the Record Date shall be
the last day of the calendar month preceding the month in which the related
Distribution Date occurs.
Recordation Event: The rating of the Servicer's long-term unsecured debt
obligations is reduced below Baa1 by Moody's and BBB+ by Standard & Poor's.
Reference Bank Rate: With respect to any Interest Period, the arithmetic
mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent)
of the offered rates for one month United States dollar deposits that are
offered by the Reference Banks as of 11:00 A.M., London time, on the day that is
two LIBOR Business Days prior to the immediately preceding Distribution Date to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Investor Certificate Principal Balance;
provided that at least two such Reference Banks provide such rate. If fewer than
two offered rates are provided in response to the Trustee's request to the
principal London office of each Reference Bank pursuant to Section 5.02, the
Reference Bank Rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Depositor after consultation
with the Trustee, as of 11:00 A.M., New York City time, on such date for loans
in U.S.. Dollars to leading European Banks for a period of one month in amounts
approximately equal to the outstanding Investor Certificate Principal Balance.
Reference Banks: Three major banks that are engaged in transactions in the
London interbank market, selected by the Depositor after consultation with the
Trustee.
Regular Payment: With respect to any Mortgage Loan and any month, the
amount required to be paid by the related Mortgagor in that month, which is
equal to the greatest of (i) 1.00% of the outstanding Principal Balance of such
Mortgage Loan, (ii) interest accrued on such Principal Balance for the related
Collection Period (but not including assessed fees) at the Loan Rate and (iii)
the lesser of $100 and the outstanding Principal Balance of such Mortgage Loan.
Related Documents: As defined in Section 2.01(b).
REO: A Mortgaged Property that is acquired by the Trust in foreclosure or
by deed in lieu of foreclosure.
Required Enhancement Amount: With respect to any date prior to the
thirtieth Distribution Date, an amount equal to the greater of (i)(A) 1.75% of
the Original Invested Amount; provided that (B)(I) if on any Distribution Date
the weighted average Combined Loan-to-Value Ratio of the Mortgage Loans is
greater than 81.18% but less than or equal to 82.18%, the amount calculated
pursuant to the preceding clause (A) shall be increased by 0.10% of the Original
Invested Amount, and (II) if on any Distribution Date the weighted average
Combined Loan-to-Value Ratio of the Mortgage Loans is greater than 82.18% but
less than or equal to 83.29%, the amount calculated pursuant to the preceding
clause (A) shall be increased by 0.20% of the Original Invested Amount, and (ii)
the Investor Floating Allocation Percentage multiplied by 60% of the aggregate
Principal Balance of all Mortgage Loans with respect to which any payment is, at
the end of the most recent Collection Period, 90 days or more contractually past
15
<PAGE>
due and in bankruptcy or foreclosure proceedings or REO property. With respect
to any date on or after the thirtieth Distribution Date, an amount equal to the
greater of (i) the lesser of (x)(A) 1.75% of the Original Invested Amount,
provided that (B)(I) if on any Distribution Date the weighted average Combined
Loan-to-Value Ratio of the Mortgage Loans is greater than 81.18% but less than
or equal to 82.18%, the amount calculated pursuant to the preceding clause (A)
shall be increased by 0.10% of the Original Invested Amount, and (II) if on any
Distribution Date the weighted average Combined Loan-to-Value Ratio of the
Mortgage Loans is greater than 82.18% but less than or equal to 83.29%, the
amount calculated pursuant to the preceding clause (A) shall be increased by
0.20% of the Original Invested Amount, and (y)(A) 3.50% of the Invested Amount
as of such Distribution Date, provided that (B)(I) if on any Distribution Date
the weighted average Combined Loan-to-Value Ratio of the Mortgage Loans is
greater than 81.18% but less than or equal to 82.18%, the amount calculated
pursuant to the preceding clause (A) shall be increased by 0.20% of the Invested
Amount as of such Distribution Date, and (II) if on any Distribution Date the
weighted average Combined Loan-to-Value Ratio of the Mortgage Loans is greater
than 82.18% but less than or equal to 83.29%, the amount calculated pursuant to
the preceding clause (A) shall be increased by 0.40% of the Invested Amount as
of such Distribution Date, and (ii) the Investor Floating Allocation Percentage
multiplied by 60% of the aggregate Principal Balance of all Mortgage Loans with
respect to which any payment is, at the end of the most recent Collection
Period, 90 days or more contractually past due and in bankruptcy or foreclosure
proceedings or REO property. Notwithstanding the foregoing, in no event shall
the Required Enhancement Amount be less than 0.50% of the Original Invested
Amount. The Required Enhancement Amount may be amended or modified at any time
in accordance with the requirements of the Rating Agencies, to maintain the
rating of the Investor Certificates and to maintain the rating of the
transactions contemplated herein, without giving consideration to the Policy, at
not less than investment grade, as defined by the Rating Agencies, provided that
such Rating Agencies' requirement arises out of the provision of Section 3.01 of
this Agreement pursuant to which the Servicer is permitted to enter into
modifications of the Credit Line Agreements, including consent to senior liens.
The Required Enhancement Amount also may be amended or modified at any time at
the request of the Depositor with the prior written approvals of the Credit
Enhancer and each Rating Agency.
Required Overcollateralization Amount: With respect to any date, the excess
of the Required Enhancement Amount over the aggregate amount on deposit in the
Spread Account as of such date.
Required Spread Account Amount: With respect to any date, 0.25% of the
Invested Amount as of such date.
Responsible Officer: When used with respect to the Trustee, any officer of
the Trustee with direct responsibility for the administration of this Agreement
and also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
Revolving Period: With respect to each Mortgage Loan, the period specified
for such Mortgage Loan in the related Credit Line Agreement, during which the
Mortgagor is permitted to make Draws.
16
<PAGE>
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Scheduled Principal Collections Distribution Amount: With respect to any
Distribution Date during the Managed Amortization Period and the Investor
Certificates, an amount equal to the lesser of (i) the Maximum Principal Payment
and (ii) the Alternative Principal Payment.
Securities Act: The Securities Act of 1933, as amended.
Seller: Each of Bank One, N.A., Bank One, Arizona, N.A., Bank One,
Colorado, N.A., Bank One, Illinois, N.A., Bank One, Indiana, N.A., Bank One,
Kentucky, N.A., Bank One, Utah, N.A. and Bank One, Wisconsin, and any successors
thereto.
Servicer: Bank One, N.A., a national banking association, and any successor
hereunder.
Servicing Certificate: A certificate completed and executed by a Servicing
Officer in accordance with Section 4.01.
Servicing Fee: With respect to any Distribution Date, the product of (i)
1/12th of the Servicing Fee Rate multiplied by (ii) the aggregate Principal
Balance of the Mortgage Loans on the first day of the Collection Period
preceding such Distribution Date (or on the Cut-Off Date with respect to the
first Distribution Date).
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of Servicing Officers furnished to the
Trustee (with a copy to the Credit Enhancer) by the Servicer on the Closing
Date, as such list may be amended from time to time.
Spread Account: As defined in Section 4.03.
Standard & Poor's: Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc., or its successor in interest.
Telerate Screen Page 3750: The display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
Transfer Date: As defined in Section 2.06.
Transfer Deficiency: As defined in Section 2.02.
Transfer Deposit Amount: As defined in Section 2.02.
Transfer Notice Date: As defined in Section 2.06.
17
<PAGE>
Transferor Collections: With respect to any Distribution Date, the sum of
the Transferor Interest Collections and the Transferor Principal Collections for
such Distribution Date.
Transferor Interest: The undivided interest in the Trust not represented by
the Investor Certificates, which is issued by the Trustee pursuant to Section
6.01.
Transferor Interest Collections: With respect to any Distribution Date, the
Interest Collections received during the related Collection Period minus the
Investor Interest Collections for such Distribution Date.
Transferor Principal Balance: With respect to any Distribution Date, an
amount equal to (i) the Pool Balance at the end of the related Collection Period
minus (ii) the Invested Amount as of such Distribution Date (after giving effect
to the distribution of Investor Principal Collections and the allocation of any
Investor Loss Amounts on such Distribution Date).
Transferor Principal Collections: With respect to any Distribution Date,
the Principal Collections received during the related Collection Period minus
the portion of such Principal Collections required to be distributed to Investor
Certificateholders pursuant to Section 5.01(b).
Trust: The trust created by this Agreement, the corpus of which consists of
(i) the Mortgage Loans, (ii) such other assets as shall from time to time be
deposited in the Collection Account in accordance with this Agreement, (iii)
property that secured any Mortgage Loan and that has become REO, (iv) the
interest of the Depositor in certain hazard insurance policies maintained by the
Mortgagors or the Servicer in respect of the Mortgage Loans, (v) the Policy,
(vi) amounts on deposit in the Spread Account, (vii) an assignment of the
Depositor's rights under the Purchase Agreement and (viii) all proceeds of each
of the foregoing.
Trustee: The Bank of New York or any successor Trustee appointed in
accordance with this Agreement that has accepted such appointment in accordance
with this Agreement.
Trustee Fee: The fee paid to the Trustee for its services hereunder, which
fee is separately agreed to between the Servicer and the Trustee.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Unpaid Investor Certificate Interest Shortfall: With respect to any
Distribution Date, the aggregate amount of any Investor Certificate Interest
that was due on a prior Distribution Date and has not been distributed to
Investor Certificateholders.
Valuation: With respect to any Mortgaged Property and valuation made prior
to the Closing Date, either (a) an appraisal (Uniform Residential Appraisal
Report or FHLMC 704/Single Page/Short Form/FNMA 2055) conducted by an
independent appraiser or (b) a valuation based upon any one of the following (in
order of priority): (i) HUD-1 Settlement Statement (if prepared within the
twelve months preceding the date of origination, (ii) tax assessment, (iii)
electronic valuation and (iv) any other valuation (for example, based on
comparable sales, broker's opinion, drive-by appraisal and/or interior
inspection).
18
<PAGE>
Section 1.02. Interest Calculations. All calculations of interest hereunder
that are made in respect of the Principal Balance of a Mortgage Loan shall be
made on a daily basis using a 365-day year. All calculations of interest on the
Investor Certificates shall be made on the basis of the actual number of days in
an Interest Period and a year assumed to consist of 360 days. The calculation of
the Servicing Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All dollar amounts calculated hereunder shall be rounded
to the nearest penny with one-half of one penny being rounded down.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Investor Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund
Advances Under Credit Line Agreements. (a) The Depositor, concurrently with the
execution and delivery of this Agreement, does hereby transfer, assign, set over
and otherwise convey to the Trust without recourse (subject to Sections 2.02 and
2.04) all of its right, title and interest in and to (i) each Mortgage Loan,
including its Principal Balance (including all Additional Balances) and all
collections in respect thereof received after the Cut-Off Date; (ii) property
that secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of
foreclosure; (iii) the Depositor's rights (but none of its obligations) under
the Purchase Agreement; (iv) the Depositor's rights under the hazard insurance
policies, (v) the amounts on deposit in the Spread Account and (vi) all other
assets transferred to the Depositor pursuant to the Purchase Agreement or
included or to be included in the Trust for the benefit of Investor
Certificateholders; provided, however, that neither the Trustee nor the Trust
assumes the obligation under any Credit Line Agreement that provides for the
funding of future advances to the Mortgagor thereunder, and neither the Trust
nor the Trustee shall be obligated or permitted to fund any such future
advances. All Additional Balances relating to any Draws under a Mortgage Note
shall be part of the related Principal Balance and are hereby transferred to the
Trust on the Closing Date pursuant to this Section 2.01, and therefore part of
the Trust property. In addition, on or prior to the Closing Date, the Depositor
shall cause the Credit Enhancer to deliver the Policy to the Trustee for the
benefit of the Investor Certificateholders. The foregoing transfer, assignment
and conveyance to the Trust shall be made to the Trustee on behalf of the Trust,
and each reference in this Agreement to such transfer, assignment and conveyance
shall be construed accordingly.
The Depositor agrees to take or cause to be taken such actions (including
the maintenance of possession by the Trustee of the Mortgage Loans and the
Mortgage Files) and execute such documents (including without limitation the
filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of Arizona, California, Colorado, Illinois,
Indiana, Kentucky, New York, Ohio, Utah and Wisconsin (which shall be filed
within 90 days of the Closing Date) describing the Cut-Off Date Principal
Balances and Additional Balances and naming the Depositor as debtor and the
Trustee as secured party, and any amendments to UCC-1 financing statements
required to reflect a change in the name or corporate structure of the Depositor
or the filing of any additional UCC-1 financing statements due to the change in
the
19
<PAGE>
principal office of the Depositor (within 30 days of any event necessitating
such filing) as are necessary to perfect and protect the interests of the
Trustee, the Investor Certificateholders and the Credit Enhancer in each Cut-Off
Date Principal Balance and Additional Balance and the proceeds thereof.
(b) In connection with such transfer and assignment by the Depositor, and
pursuant to Section 2.04 of the Purchase Agreement, the Depositor shall cause
each Seller to deliver or cause to be delivered within 120 days of the Closing
Date to the Trustee (or any Custodian on behalf of the Trustee) with respect to
each Mortgage Loan, the original Mortgage Note, endorsed on its face or by
allonge attached thereto in blank or to the order of the Trustee in the
following form: "Pay to the order of The Bank of New York, as trustee for the
registered holders of Banc One HELOC Trust 1999-1, HELOC Asset-Backed
Certificates, Series 1999-1, without recourse, representation or warranty,
express or implied," and an original Assignment of Mortgage endorsed in blank
prepared in recordable form (together, the "Related Documents"); provided,
however, that as to any Mortgage Loan, if (a) as evidenced by an Opinion of
Counsel delivered to and in form and substance satisfactory to the Trustee and
the Credit Enhancer, (x) an optical image or other representation of each
Related Document is enforceable in the relevant jurisdictions to the same extent
as the original of such document and (y) such optical image or other
representation does not impair the ability of an owner of such Mortgage Loan to
transfer its interest in such Mortgage Loan, and (b) the retention of the
Related Documents in such format will not result in a reduction in the then
current rating of the Investor Certificates, without regard to the Policy, then
such optical image or other representation may be delivered to the Trustee (or
any Custodian on behalf of the Trustee) or assignee in lieu of physical copies
of the Related Documents.
Within 90 days following delivery of the Mortgage Files to the Trustee (or
any Custodian on behalf of the Trustee) pursuant to the preceding paragraph, the
Trustee (or any Custodian on behalf of the Trustee) shall review each such
Mortgage File to ascertain that all Related Documents have been executed and
received, and that such Related Documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, and in so doing the Trustee (or any
Custodian on behalf of the Trustee) may rely on the purported due execution and
genuineness of any signature thereon. The Trustee shall notify the Servicer in
writing upon completion of such review. If within such 90-day period the Trustee
(or any Custodian on behalf of the Trustee) finds any Related Document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule
or, if in the course of its review, the Trustee (or any Custodian on behalf of
the Trustee) determines that such Mortgage File is otherwise defective in any
material respect, the Trustee shall promptly upon the conclusion of such review
notify the Depositor, the applicable Seller and the Credit Enhancer, and the
related Seller shall have a period of 90 days after such notice to correct or
cure any such defect pursuant to Section 2.05(b) of the Purchase Agreement.
The Trustee shall have no responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2.01. In reviewing any Mortgage
File pursuant to this Section, the Trustee shall have no responsibility for
determining the content of any document, whether any document is valid and
binding or enforceable, whether the text of any assignment or endorsement is in
proper or recordable form (except, if applicable, to determine if the Trustee is
the assignee or endorsee), whether any document has been recorded in accordance
with the
20
<PAGE>
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, 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 Depositor hereby confirms to the Trustee that it has made the
appropriate entries in its general accounting records to indicate that such
Mortgage Loans have been transferred to the Trust at its direction. The Servicer
hereby confirms to the Trustee that it has clearly and unambiguously made
appropriate entries in its general accounting records indicating that such
Mortgage Loans constitute part of the Trust and are serviced by it on behalf of
the Trust in accordance with the terms hereof.
The Servicer agrees not to notify the obligors on the Mortgage Loans of the
transfer of the Mortgage Loans to the Trust unless required to do so by the
terms of the Mortgage Loans or applicable law.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Depositor to the Trustee as provided in this Agreement be,
and be construed as, a sale of all of the Depositor's right, title and interest
in the Mortgage Loans by the Depositor to the Trustee. Further, it is not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Depositor to the Trustee to secure a debt or other obligation of
the Depositor; however, if, notwithstanding the intent of the parties, the
Mortgage Loans are held to be property of the Depositor, or if for any reason
this Agreement is held or deemed to create a security interest in the Mortgage
Loans, then, (a) this Agreement also shall be deemed to be, and hereby is, a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code in effect in the applicable state; (b) the conveyance provided
for in this Agreement shall be deemed to be, and hereby is, a grant by the
Depositor to the Trustee of a security interest in and to all of the Depositor's
right, title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit, investment property and
financial assets consisting of, arising from or relating to any of the
property described in (A) through (D) below: (A) each Mortgage Loan
identified on the Mortgage Loan Schedule, including all Eligible Substitute
Mortgage Loans, together with (a) the Mortgage Note and the related
Mortgage and (b) its Principal Balance and all Additional Balances and all
collections in respect thereof received on or after the Cut-Off Date, (B)
property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (C) the Purchase Agreement, (D) any hazard
insurance policies in respect of the Mortgage Loans; and (E) the amounts on
deposit in the Spread Account; and
(II) All proceeds of the collateral described in (I).
21
<PAGE>
(c) The possession by the Trustee or its designee of the Mortgage Notes,
Assignments of Mortgages and such other goods, letters of credit, advices of
credit, instruments, money, documents or chattel paper shall be deemed to be
"possession by the secured party," or possession by a purchaser or a person
designated by him or her, for purposes of perfecting the security interest
pursuant to the Uniform Commercial Code as in force in the relevant
jurisdiction; and notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, bailees or agents (as applicable) of the Trustee or its
designee for the purpose of perfecting such security interest under applicable
law. Subject to the provisions herein permitting the Servicer to commingle
amounts collected with respect to the Mortgage Loans with other general
collections of the Servicer, the Depositor and the Trustee at the direction of
the Depositor, to the extent consistent with this Agreement, shall take such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans and the proceeds thereof, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement. In connection herewith, the Trustee shall have all of the
rights and remedies of a secured party and creditor under the Uniform Commercial
Code as in force in the relevant jurisdiction.
Following the occurrence of a Recordation Event, the Trustee shall, as
promptly as practicable but in no event more than 90 days after receiving notice
of such event, at the Servicer's expense, record an Assignment of Mortgage for
each Mortgage Loan in favor of the Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other records
in the jurisdiction in which the Mortgaged Property is located, or the Depositor
shall deliver to the Trustee an Opinion of Counsel addressed to the Trustee and
the Credit Enhancer to the effect that recording is not required to protect the
Trustee's right, title and interest in and to the related Mortgage Loan or, in
case a court should recharacterize the sale of the Mortgage Loans as a
financing, to perfect a first priority security interest in favor of the Trustee
in the related Mortgage Loan, which Opinion of Counsel also shall be reasonably
acceptable to each of the Rating Agencies (as evidenced in writing) and the
Credit Enhancer. The Trustee is hereby appointed as the attorney-in-fact of the
Servicer with the power to prepare, execute and record Assignments of Mortgages
in the event that the Servicer fails to do so on a timely basis as provided in
this paragraph.
Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans. (a) The
Trustee hereby acknowledges its receipt of the Policy, and declares that the
Trustee will hold the Policy and the Mortgage Loans delivered to it pursuant to
Section 2.01 and all amounts received by it thereunder and hereunder, in trust,
upon the terms herein set forth, for the use and benefit of all present and
future Certificateholders and the Credit Enhancer. If the time to cure any
defect in respect of any Mortgage Loan of which the Trustee has notified the
applicable Seller and the Depositor following the review pursuant to Section
2.01 has expired, or if at any time any loss is suffered by the Trustee on
behalf of the Certificateholders or the Credit Enhancer in respect of any
Mortgage Loan as a result of (i) a defect in any Related Document constituting a
part of its Mortgage File or (ii) an Assignment of Mortgage to the Trustee not
having been recorded as required by Section 2.01(b), then on the next succeeding
Business Day upon the deposit to the Collection Account of the Transfer Deposit
Amount, if any, and upon satisfaction of the applicable conditions described
herein, all right, title and interest of the Trust in and to such
22
<PAGE>
Mortgage Loan shall be deemed to be retransferred, reassigned and otherwise
reconveyed, without recourse, representation or warranty, to the applicable
Seller on such Business Day, and the Principal Balance of such Mortgage Loan
shall be deducted from the Pool Balance; provided, however, that interest
accrued on the Principal Balance of such Mortgage Loan to the end of the related
Collection Period shall be the property of the Trust. The Trustee shall
determine if the reduction of such Principal Balance from the Pool Balance in
accordance with the preceding sentence would cause the Transferor Principal
Balance to be less than the Minimum Transferor Interest (a "Transfer
Deficiency"), in which event the Trustee shall deliver written notice of such
deficiency to the applicable Seller, and within five Business Days after the
Business Day of such retransfer the applicable Seller shall either (i)
substitute an Eligible Substitute Mortgage Loan or (ii) deposit into the
Collection Account in immediately available funds an amount (the "Transfer
Deposit Amount") equal to the Transfer Deficiency or a combination of both (i)
and (ii) above. Such reduction or substitution and the actual payment of any
Transfer Deposit Amount, if any, shall be deemed to be payment in full for such
Mortgage Loan. Upon receipt of any Eligible Substitute Mortgage Loan or of
written notification signed by a Servicing Officer to the effect that the
Transfer Deposit Amount in respect of a Defective Mortgage Loan has been
deposited into the Collection Account or, if the Transferor Principal Balance is
not reduced below the Minimum Transferor Interest as a result of the deemed
retransfer of a Defective Mortgage Loan, then as promptly as practicable
following such deemed transfer, the Trustee shall execute such documents and
instruments of transfer presented by the applicable Seller, in each case without
recourse, representation or warranty, and take such other actions as shall
reasonably be requested by the applicable Seller to effect such transfer by the
Trust of such Defective Mortgage Loan pursuant to this Section 2.02. It is
understood and agreed that the obligation of the applicable Seller to accept a
transfer of a Defective Mortgage Loan and to either convey an Eligible
Substitute Mortgage Loan or to make a deposit of any related Transfer Deposit
Amount into the Collection Account shall constitute the sole remedy respecting
such defect available to Certificateholders, the Trustee and the Credit Enhancer
against the Depositor or the applicable Seller.
The Servicer, promptly following the transfer of a Defective Mortgage Loan
from or the transfer of an Eligible Substitute Mortgage Loan to the Trust
pursuant to this Section, shall amend the Mortgage Loan Schedule and make
appropriate entries in its general account records to reflect such transfer. The
Servicer shall, following such retransfer, appropriately mark its records to
indicate that it is no longer servicing such Mortgage Loan on behalf of the
Trust. Pursuant to the Purchase Agreement, the applicable Seller, promptly
following such transfer, shall appropriately mark its Electronic Ledger and make
appropriate entries in its general account records to reflect such retransfer.
Notwithstanding any other provision of this Section, a retransfer of a
Defective Mortgage Loan to the applicable Seller pursuant to this Section and
Sections 2.05 and 3.03 of the Purchase Agreement that would cause the Transferor
Principal Balance to be less than the Minimum Transferor Interest shall not
occur if the applicable Seller fails to convey an Eligible Substitute Mortgage
Loan or to deposit into the Collection Account any related Transfer Deposit
Amount required by this Section with respect to the transfer of such Defective
Mortgage Loan.
(b) Pursuant to Section 2.05(c) of the Purchase Agreement, each Seller is
required to deliver to the Trustee such documents and agreements with respect to
any Eligible Substitute
23
<PAGE>
Mortgage Loan or Loans as are required to be held by the Trustee in accordance
with Section 2.01(b). For any Collection Period during which a Seller
substitutes one or more Eligible Substitute Mortgage Loans, the Servicer shall
determine any related Transfer Deposit Amount, which amount shall be deposited
by the applicable Seller in the Collection Account at the time of substitution.
Any amounts received in respect of any Eligible Substitute Mortgage Loan or
Loans during the Collection Period in which the circumstances giving rise to
such substitution occur shall not be an asset of the Trust and shall not be
deposited by the Servicer in the Collection Account. All amounts received by the
Servicer during the Collection Period in which the circumstances giving rise to
any substitution occur in respect of any Defective Mortgage Loan so
retransferred to the related Seller shall be deposited by the Servicer in the
Collection Account. Upon such substitution, the Eligible Substitute Mortgage
Loan or Loans shall be subject to the terms of this Agreement in all respects,
and the applicable Seller shall be deemed to have made the covenants,
representations and warranties set forth in Section 2.04 with respect to such
Eligible Substitute Mortgage Loan or Loans as of the date of substitution. The
procedures applied by a Seller in selecting an Eligible Substitute Mortgage Loan
shall not be materially adverse to the interests of the Trustee, the
Certificateholders or the Credit Enhancer.
Section 2.03. Representations and Warranties Regarding the Servicer. The
Servicer represents and warrants to the Trustee and the Credit Enhancer that as
of the Closing Date:
(i) The Servicer is duly organized and validly existing as a national
banking association and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Servicer is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or financial condition
(or other) of the Servicer;
(ii) The Servicer has the corporate power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Servicer enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency moratorium, fraudulent conveyance,
reorganization and similar laws affecting the enforcement of the rights of
creditors of national banking associations, the deposits of which are
insured by the FDIC, and subject to general principles of equity, (whether
applied in a proceeding at law or in equity or of creditors' rights
generally);
(iii) The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement (other than such consents, licenses,
approvals or authorizations from, or registrations or declarations with,
any governmental authority, bureau or agency that, individually or in the
aggregate, would not have a material adverse effect on the transactions
contemplated by this Agreement),
24
<PAGE>
except for such consent, license, approval or authorization, or
registration or declaration, as shall have been obtained or filed, as the
case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by the
Servicer will not violate any provision of any existing law or regulation
or any order or decree of any court applicable to the Servicer or any
provision of the articles of association or bylaws of the Servicer, or
constitute a material breach of any mortgage, indenture, contract or other
agreement to which the Servicer is a party or by which the Servicer may be
bound (other than violations of such laws, regulations, orders, decrees,
mortgages, contracts or other agreements that, individually or in the
aggregate, would not have a material adverse effect on the transactions
contemplated by this Agreement); and
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of
the Servicer threatened, against the Servicer or any of its properties or
with respect to this Agreement or the Investor Certificates or the
Transferor Interest, which in the opinion of the Servicer has a reasonable
likelihood of resulting in a material adverse effect on the transactions
contemplated by this Agreement.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties that materially and adversely
affects the interests of the Certificateholders or the Credit Enhancer, the
person discovering such breach shall give prompt written notice to the other
parties and to the Credit Enhancer. Within 90 days of its discovery or its
receipt of notice of breach, or, with the prior written consent of a Responsible
Officer of the Trustee, such longer period specified in such consent, the
Servicer shall cure such breach in all material respects.
Section 2.04. Assignment of Representations and Warranties of the Sellers
Regarding the Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Depositor hereby assigns to the Trustee, for the benefit of the
Investor Certificateholders and the Credit Enhancer, each representation and
warranty with respect to the Mortgage Loans made by the Sellers in Section 3.02
of the Purchase Agreement, including without limitation the Depositor's right to
require the Sellers to repurchase or substitute for any such Mortgage Loan
subject to breach of any such representation and warranty. With respect to any
representations and warranties set forth in Section 3.02 of the Purchase
Agreement that are made to the best knowledge of a Seller, if it is discovered
by such Seller, the Depositor, the Servicer or a Responsible Officer of the
Trustee that the substance of such representation and warranty is inaccurate and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan then, notwithstanding such Seller's lack of knowledge with respect
to the substance of such representation and warranty being inaccurate at the
time the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty and subject such Seller to
the obligations set forth in Section 3.03 of the Purchase Agreement.
(b) The Depositor hereby represents and warrants to the Trustee and the
Credit Enhancer that as of the Cut-Off Date, except as otherwise specified
below:
25
<PAGE>
(i) No more than 0.55% of the Mortgage Loans, by Cut-Off Date Pool
Balance, are secured by Mortgaged Properties located in one United States
postal zip code;
(ii) The weighted average remaining term to maturity of the Mortgage
Loans on a contractual basis for the Mortgage Loans is approximately 202
months and no Mortgage Loan will mature according to its terms later than
September 25, 2018. Over the term of each Mortgage Loan, the Loan Rate may
not exceed the related Loan Rate Cap, if any. The Loan Rate Caps range
between 18% and 25% per annum. The Gross Margins range between -2.00% and
11.25%. The Loan Rates on such Mortgage Loans range between 5.75% and
19.00% per annum and the weighted average Loan Rate is approximately 8.99%
per annum;
(iii) No more than 0.14% (by Cut-Off Date Pool Balance) of the
Mortgage Loans are secured by real property improved by individual
condominium units, planned development units, townhouses or two-to-four
family residences erected thereon, and at least 99.86% (by Cut-Off Date
Pool Balance) of the Mortgage Loans are secured by real property with a
detached one-family residence erected thereon;
(iv) The Credit Limits on the Mortgage Loans range between $5,000.00
and $250,000.00 with an average Credit Limit of approximately $40,273.11.
No Mortgage Loan had a principal balance in excess of approximately
$250,000.00 and the average principal balance of the Mortgage Loans is
approximately $22,297.23;
(v) Approximately 26.66%, and 73.34% of the Mortgage Loans, by
aggregate principal balance as of the Cut-Off Date for the Mortgage Loans,
are first or second liens, respectively; and
(vi) The inclusion of newly Locked Balances in any Collection Period
will not cause the aggregate amount of the Locked Balances to exceed 12.50%
of total outstanding Pool Balance as of the end of such Collection Period.
(c) It is understood and agreed that Depositor's assignment of the
representations and warranties set forth in Section 3.02 of the Purchase
Agreement and its representations and warranties set forth in Section 2.04(a)
and (b) hereof shall survive delivery of the respective Mortgage Files to the
Trustee pursuant to Section 2.01 and the termination of the rights and
obligations of the Servicer pursuant to Section 7.04 or Section 8.02. Upon
discovery by any Seller, the Depositor, the Servicer, the Credit Enhancer or a
Responsible Officer of the Trustee of (a) a breach of any of the representations
and warranties referred to in this Section 2.04(c) that materially and adversely
affects the interests of the Trust or the Investor Certificateholders or the
Credit Enhancer in the related Mortgage Loan or (b) a breach of the
representation and warranty set forth in Section 2.04(b) (vi), the party
discovering such breach shall give prompt written notice to the other parties
and the Credit Enhancer. Within 90 days of its discovery or its receipt of
notice of such breach, pursuant to Section 3.03 of the Purchase Agreement, the
applicable Seller shall use all reasonable efforts to cure such breach in all
material respects or shall, not later than the Business Day next preceding the
Distribution Date in the month following the Collection Period in which any such
cure period expired (or such later date that is acceptable to
26
<PAGE>
the Trustee and the Credit Enhancer as evidenced by their written consents),
either (a) accept a transfer of such Mortgage Loan from the Trust or (b) except
in the case of a breach of the representation and warranty set forth in Section
2.04(b)(vi), substitute an Eligible Substitute Mortgage Loan in the same manner
and subject to the same conditions as set forth in Section 2.02; provided,
however, that the cure for any breach of a representation and warranty relating
to the characteristics of the Mortgage Loans in the aggregate shall be a
repurchase of or substitution for only the Mortgage Loans necessary to cause
such characteristics to be in compliance with the related representation and
warranty. Upon accepting such transfer and making any required deposit into the
Collection Account or substitution of an Eligible Substitute Mortgage Loan, as
the case may be, the applicable Seller shall be entitled to receive an
instrument of assignment or transfer from the Trustee to the same extent as set
forth in Section 2.02 with respect to the transfer of Mortgage Loans under that
Section.
It is understood and agreed that the obligation of a Seller to accept a
transfer of a Mortgage Loan as to which a breach has occurred and is continuing
and to make any required deposit in the Collection Account or to substitute an
Eligible Substitute Mortgage Loan, as the case may be, shall constitute the sole
remedy against the Depositor or such Seller respecting such breach available to
Investor Certificateholders, the Trustee on behalf of Investor
Certificateholders and the Credit Enhancer. Notwithstanding the foregoing, with
respect to any breach of the representation and warranty set forth in Section
3.02(d) of the Purchase Agreement, the sale and assignment of the affected
Mortgage Loans to the Trust shall be deemed void and the applicable Seller shall
pay to the Trust the sum of the amount of the related Principal Balances, plus
unpaid accrued interest on each such Principal Balance at the applicable Loan
Rate to the date of payment.
Section 2.05. Covenants of the Depositor. The Depositor hereby covenants
that:
(a) Security Interests. Except for the transfer hereunder, the Depositor
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Mortgage Loan, whether now
existing or hereafter created, or any interest therein; the Depositor will
notify the Trustee of the existence of any Lien on any Mortgage Loan immediately
upon discovery thereof; and the Depositor will defend the right, title and
interest of the Trust in, to and under the Mortgage Loans, whether now existing
or hereafter created, against all claims of third parties claiming through or
under the Depositor; provided, however, that nothing in this Section 2.05(a)
shall prevent or be deemed to prohibit the Depositor from suffering to exist
upon any of the Mortgage Loans any Liens for municipal or other local taxes and
other governmental charges if such taxes or governmental charges shall not at
the time be due and payable or if the Depositor shall currently be contesting
the validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.
(b) Negative Pledge. The Depositor hereby agrees not to transfer, assign,
exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Transferor Interest except in accordance with Sections 6.05
and 7.02.
(c) Additional Indebtedness. So long as the Investor Certificates are
outstanding the Depositor shall not incur any debt other than debt that (i) is
non-recourse to the assets of the
27
<PAGE>
Depositor other than the Mortgage Loans specifically pledged as security for
such debt or (ii) is subordinated in right of payment to the rights of the
Investor Certificateholders or (iii) is assigned a rating by each of the Rating
Agencies that is the same as the then current rating of the Investor
Certificates.
(d) Downgrading. The Depositor shall not engage in an activity which would
result in a downgrading of the Investor Certificates.
(e) Amendment to Certificate of Incorporation. The Depositor shall not
amend its Certificate of Incorporation without prior written notice to the
Rating Agencies and the Credit Enhancer.
(f) Principal Place of Business. The Depositor's principal place of
business is in Ohio and it will not change its principal place of business
without prior written notice to the Rating Agencies.
Section 2.06. Retransfers of Mortgage Loans at Election of the Holder of
the Transferor Interest. Subject to the conditions set forth below, the holder
of the Transferor Interest may, but shall not be obligated to, require the
retransfer of Mortgage Loans from the Trust to the holder of the Transferor
Interest as of the close of business on a Distribution Date (the "Transfer
Date"). On the fifth Business Day (the "Transfer Notice Date") prior to the
Transfer Date designated in such notice, the holder of the Transferor Interest
shall give the Trustee and the Servicer a notice of the proposed retransfer that
contains a list of the Mortgage Loans to be retransferred. Such retransfers of
Mortgage Loans shall be permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred;
(ii) On the Transfer Notice Date the Transferor Principal Balance
(after giving effect to the removal from the Trust of the Mortgage Loans
proposed to be retransferred) is at least equal to the Minimum Transferor
Interest;
(iii) The retransfer of any Mortgage Loans on any Transfer Date during
the Managed Amortization Period shall not, in the reasonable belief of the
holder of the Transferor Interest, cause a Rapid Amortization Event to
occur or an event which with notice or lapse of time or both would
constitute a Rapid Amortization Event;
(iv) [Reserved.]
(v) On or before the Transfer Date, the holder of the Transferor
Interest shall have delivered to the Trustee a revised Mortgage Loan
Schedule, reflecting the proposed retransfer and the Transfer Date, and the
Servicer shall have marked the Electronic Ledger to show that the Mortgages
Loans transferred to the holder of the Transferor Interest are no longer
owned by the Trust;
(vi) The holder of the Transferor Interest shall represent and warrant
that no selection procedures reasonably believed by the holder of the
Transferor Interest to be adverse to the interests of the Investor
Certificateholders or the Credit Enhancer were utilized in the selection of
the Mortgage Loans to be removed from the Trust;
28
<PAGE>
(vii) In connection with the first retransfer of Mortgage Loans
pursuant to this Section, each Rating Agency shall have received on or
prior to the related Transfer Notice Date notice from the holder of the
Transferor Interest of such proposed retransfer of Mortgage Loans;
(viii) The holder of the Transferor Interest shall have delivered to
the Trustee and the Credit Enhancer an officer's certificate certifying
that the items set forth in subparagraphs (i) through (vii), inclusive,
have been performed or are true and correct, as the case may be. The
Trustee may conclusively rely on such Officer's Certificate, shall have no
duty to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying.
The holder of the Transferor Interest shall not be permitted to require the
retransfer of any Mortgage Loan (including any delinquent Mortgage Loan) except
under the conditions specified above; provided however, that the holder of the
Transferor Interest may be required to accept retransfer of certain Mortgage
Loans pursuant to Section 2.04 hereof, to the extent a Seller is the holder of
the Transferor Interest. Upon receiving the requisite information from the
holder of the Transferor Interest, the Servicer shall perform in a timely manner
those acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Trustee shall deliver, or cause to be
delivered, to the holder of the Transferor Interest a written itemization of
each Mortgage Loan being transferred, together with the Mortgage File for each
such Mortgage Loan, and the Trustee shall execute and deliver to the holder of
the Transferor Interest such other documents prepared by the holder of the
Transferor Interest as shall be reasonably necessary to transfer such Mortgage
Loans to the holder of the Transferor Interest. Any such transfer of the Trust's
right, title and interest in and to Mortgage Loans shall be without recourse,
representation or warranty by or of the Trustee or the Trust to the holder of
the Transferor Interest.
Section 2.07. Execution and Authentication of Investor Certificates. The
Trustee, on behalf of the Trust, has caused to be executed, authenticated and
delivered to or upon the order of the Depositor, in exchange for the corpus of
the Trust, concurrently with the sale, assignment and conveyance to the Trustee
of the corpus of the Trust, Investor Certificates in authorized denominations
and the Transferor Interest, together evidencing the ownership of the entire
Trust.
Section 2.08. Tax Treatment. It is the intention of the Depositor, the
holder of the Transferor Interest and the Investor Certificateholders that the
Investor Certificates will be indebtedness for federal, state and local income
and franchise tax purposes and for purposes of any other tax imposed on or
measured by income. The terms of the Agreement shall be interpreted to further
the intent of the parties hereto. The holder of the Transferor Interest, the
Depositor, the Trustee and each Investor Certificateholder (or Certificate
Owner) by acceptance of its Investor Certificate (or, in the case of a
Certificate Owner, by virtue of such Certificate Owner's acquisition of a
beneficial interest therein) agrees to treat the Investor Certificates (or
beneficial interest therein), for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness of the holder of the Transferor Interest secured by the assets of
the Trust and to report the transactions contemplated by this Agreement on all
applicable tax returns in a manner consistent with such treatment. Each Investor
Certificateholder agrees that it will cause any Certificate Owner acquiring an
interest in
29
<PAGE>
an Investor Certificate through it to comply with this Agreement as to treatment
of the Investor Certificates as indebtedness for federal, state and local income
and franchise tax purposes and for purposes of any other tax imposed on or
measured by income. The Trustee will prepare and file all tax reports required
hereunder.
Section 2.09. Representations and Warranties of the Depositor. The
Depositor represents and warrants to the Trustee on behalf of the
Certificateholders and the Credit Enhancer as follows:
(i) The Depositor has full corporate power and authority to enter into
this Agreement. The execution, delivery and performance of this Agreement
and compliance with the terms and provisions hereof will not result in a
violation of any of the terms and provisions of, or constitute a default
under, the Certificate of Incorporation or By-Laws of the Depositor.
(ii) This Agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(iii) Immediately prior to the sale and assignment by the Depositor to
the Trustee of each Mortgage Loan, the Depositor was the sole beneficial
owner of each Mortgage Loan (insofar as such title was conveyed to it by
the applicable Seller) subject to no prior lien, claim, participation
interest, mortgage, security interest, pledge, charge or other encumbrance
or other interest of any nature;
(iv) As of the Closing Date, the Depositor has transferred all right,
title and interest in the Mortgage Loans to the Trustee; and
(v) The Depositor has not transferred the Mortgage Loans to the
Trustee with any intent to hinder, delay or defraud any of its creditors.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Servicer.
(a) The Servicer shall service and administer the Mortgage Loans in a
manner consistent with the terms of this Agreement and with general industry
practice and shall have full power and authority, acting alone or through a
subservicer, to do any and all things in connection with such servicing and
administration that it may deem necessary or desirable; it being understood,
however, that the Servicer shall at all times remain responsible to the Trustee,
the
30
<PAGE>
Certificateholders, the holder of the Transferor Interest and the Credit
Enhancer for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Servicer
whether or not actually received by it. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee, or any of them, 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 Mortgage Loans and with
respect to the Mortgaged Properties. The Trustee shall, upon the written request
of a Servicing Officer, furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
(b) The Servicer in such capacity may consent to the placing of a lien
senior to that of any Mortgage on the related Mortgaged Property, provided that
(i) such Mortgage became a first lien mortgage after the related
Mortgage Loan was conveyed to the Trust and, immediately following the
placement of such senior lien, such Mortgage is a second lien mortgage and
the outstanding principal amount of the mortgage loan secured by such
senior lien is no greater than the outstanding principal amount of the
senior mortgage loan secured by the Mortgaged Property as of the date the
related Mortgage Loan was originated; or
(ii) the Mortgage relating to such Mortgage Loan was in a second lien
position as of the Cut-Off Date and the new senior lien secures a mortgage
loan that refinances an existing first mortgage loan and the outstanding
principal amount of the replacement first mortgage loan immediately
following such refinancing does not increase the new Combined Loan-to-Value
Ratio to (a) greater than 80% if the original Combined Loan-to-Value Ratio
was less than or equal to 75% or (b) a Combined Loan-to-Value Ratio 5% or
more higher than the original Combined Loan-to-Value Ratio, if the original
Combined Loan-to-Value Ratio was greater than 75%; provided, however, that
in no event shall the Combined Loan-to-Value of any Mortgage Loan exceed
100%.
The Servicer also may:
(i) increase the Credit Limits on Mortgage Loans without prior
approval from the Rating Agencies or the Credit Enhancer, provided that (i)
based upon a new valuation (if required), the Combined Loan-to-Value Ratio
of each such Mortgage Loan after giving effect to such increase is no
greater than 100%, (ii) such increases are consistent with the Servicer's
underwriting policies and (iii) the weighted average Combined Loan-to-Value
Ratio of all outstanding Mortgage Loans (including such modified Mortgage
Loans) does not exceed 83.29% as of the last day of any Collection Period;
(ii) solicit or accept requests from Mortgagors for a reduction in
Loan Rates without prior approval from the Rating Agencies and the Credit
Enhancer, provided that the aggregate of such reductions shall not cause
the difference between the Cut-Off Date Weighted Average Gross Margin and
the Recalculated Weighted Average Gross Margin to exceed 0.50%;
31
<PAGE>
(iii) permit Mortgagors representing up to 50% of the Pool
Balance to forego certain monthly payments under the "Skip-a-Pay
Program," without prior approval from the Rating Agencies and the
Credit Enhancer, on each occasion on which the "Skip-a-Pay Program" is
offered, provided that such option is not offered more than twice each
year and no Mortgagor foregoes a monthly payment under the "Skip-a-Pay
Program" more than ten times during the related Mortgage term; or
(iv) extend the Draw term of any Mortgage Loan, provided that
any such extension shall not cause the final maturity date of such
Mortgage Loan to extend beyond June 30, 2020.
Upon the prior written consent of each of the Rating Agencies and the
Credit Enhancer, each of the percentages contained in this Section 3.01(b) may
be modified.
In addition, the Servicer may agree to changes in the terms of a Mortgage
Loan at the request of the Mortgagor, or may solicit Mortgagors to change the
terms of Mortgage Loans, provided that such changes (i) do not materially and
adversely affect the interests of Certificateholders or the Credit Enhancer and
(ii) are consistent with prudent and customary business practice as evidenced by
a Certificate signed by a Servicing Officer delivered to the Trustee and the
Credit Enhancer. Nothing herein shall limit the right of the Servicer to solicit
Mortgagors with respect to new loans (including mortgage loans) that are not
Mortgage Loans.
The relationship of the Servicer (and of any successor to the Servicer as
servicer under this Agreement) to the Trustee under this Agreement is intended
by the parties to be that of an independent contractor and not that of a joint
venturer, partner or agent.
(c) If the rights, duties and obligations of the Servicer are terminated
hereunder, any successor to the Servicer in its sole discretion may, to the
extent permitted by applicable law, terminate the existing subservicer
arrangements with any subservicer or assume the terminated Servicer's rights
under such subservicing arrangements, which termination or assumption will not
violate the terms of such arrangements.
Section 3.02. Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans and shall, to
the extent such procedures shall be consistent with this Agreement, follow the
collection procedures it follows with respect to mortgage loans in its servicing
portfolio that are comparable to the Mortgage Loans. Consistent with and without
limiting the generality of the foregoing, the Servicer may in its discretion (i)
waive any late payment charge or any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loan and (ii)
arrange with a Mortgagor a schedule for the payment of interest due and unpaid;
provided that such arrangement is consistent with the Servicer's policies with
respect to the mortgage loans it owns and services; and provided, further, that
notwithstanding such arrangement such Mortgage Loans will be included in the
information regarding delinquent Mortgage Loans set forth in the Servicing
Certificate and monthly statement to Certificateholders pursuant to Section
5.03.
32
<PAGE>
(b) The Servicer shall establish and maintain a trust account (the
"Collection Account") titled "The Bank of New York, as Trustee, in trust for the
registered holders of Banc One ABS Corporation HELOC Asset-Backed Certificates,
Series 1999-1 and MBIA." The Collection Account shall be an Eligible Account. On
the Closing Date, the Servicer shall deposit any amounts representing payments
on, and any collections in respect of, the Mortgage Loans received after the
Cut-off Date and prior to the Closing Date, and thereafter the Servicer or the
Seller, as the case may be, shall deposit within two Business Days following
receipt thereof the following payments and collections received or made by it
(without duplication):
(i) all collections on and in respect of the Mortgage Loans;
(ii) Net Liquidation Proceeds net of any related Foreclosure Profit;
(iii) Insurance Proceeds (including for this purpose any amount
required to be credited by the Servicer pursuant to the last sentence of
Section 3.04 and excluding the portion thereof, if any, that has been
applied to the restoration or repair of the related Mortgaged Property or
released to the related Mortgagor in accordance with the normal servicing
procedures of the Servicer); and
(iv) any amounts required to be deposited therein pursuant to Section
10.01;
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain the Servicing Fee for such Collection Period from
payments in respect of interest on the Mortgage Loans. The foregoing
requirements with respect to deposits to the Collection Account are exclusive,
it being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees or late charge penalties payable by Mortgagors or
amounts received by the Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments, excess payoff
amounts and similar items. The Servicer shall remit all Foreclosure Profits to
the applicable Seller.
Notwithstanding the foregoing, so long as the Servicer's short-term debt
obligations are rated at least "A-1" and "P-1" by Standard & Poor's and Moody's,
respectively, all amounts collected by the Servicer may be commingled with other
general collections of the Servicer and amounts collected on the Mortgage Loans
for each Collection Period shall be deposited in same-day funds into the
Collection Account no later than one Business Day prior to the related
Distribution Date.
The Trustee shall hold amounts deposited in the Collection Account as
trustee for the Certificateholders and for the Credit Enhancer. Such funds may
be invested in Eligible Investments maturing no later than one Business Day
prior to the date on which the amount the deposit therein is required to be
deposited to the Collection Account, or on such Distribution Date if approved by
the Rating Agencies and the Credit Enhancer. In addition, the Servicer shall
notify the Trustee and the Credit Enhancer in writing on each Determination Date
of the amount of payments and collections in the Collection Account allocable to
Interest Collections and Principal Collections for the related Distribution
Date.
33
<PAGE>
All income and gain, if any, realized from any investment in Eligible
Investments of funds in the Collection Account shall be for the benefit of the
Investor Certificateholders. The amount of any losses incurred in respect of the
principal amount of any such investments shall be deemed not to be on deposit in
the Collection Account.
Section 3.03. Withdrawals from the Collection Account. From time to time,
withdrawals may be made from the Collection Account by the Servicer for the
following purposes:
(i) To pay to itself as Servicer an amount equal to its Servicing Fee
pursuant to Section 3.08;
(ii) To pay to itself as Servicer amounts on deposit in the Collection
Account that are not to be included in the distributions and payments
pursuant to Section 5.01 to the extent provided by Section 3.02(b);
(iii) To make or to permit the Paying Agent to make distributions and
payments pursuant to Section 5.01; and
(iv) Prior to the Collection Period immediately preceding the Rapid
Amortization Commencement Date, to pay to the applicable Seller an amount
equal to the Principal Balance of any Additional Balances with respect to
Mortgage Loans transferred by such Seller as and when created during the
related Collection Period; provided that the aggregate amount so paid to
such Sellers in respect of Additional Balances on any day during a
Collection Period shall not exceed the amount of Principal Collections
received for such Collection Period on or prior to such day.
Notwithstanding any provision herein to the contrary, if the Servicer
deposits in the Collection Account any amount not required to be deposited
therein or any amount in respect of payments by Mortgagors made by checks
subsequently returned for insufficient funds or other reason for non-payment, it
may at any time withdraw such amount from the Collection Account, and any such
amounts shall not be included in the amounts to be deposited in the Collection
Account pursuant to Section 3.02(b).
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall not be obligated to monitor the maintenance of
hazard insurance subsequent to the origination of a Mortgage Loan. The Servicer
shall maintain hazard insurance with extended coverage on property acquired upon
foreclosure or by deed in lieu of foreclosure, in an amount that is at least
equal to the lesser of (i) the maximum insurable value from time to time of the
improvements that are a part of such Mortgaged Property or (ii) the combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan at the time of such foreclosure or deed in lieu of
foreclosure, plus accrued interest and the good-faith estimate of the Servicer
of related Liquidation Expenses to be incurred in connection therewith. Amounts
collected by the Servicer under any such policies shall be deposited in the
Collection Account to the extent required by Section 3.02. If any Mortgaged
Property is located in a federally designated flood area, the hazard insurance
to be maintained for the related Mortgage Loan shall include flood insurance.
All such flood insurance shall be in such amounts as are
34
<PAGE>
required under applicable guidelines of the Federal Flood Emergency Act. The
Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or other additional insurance and shall be under no obligation itself
to maintain any such additional insurance on property acquired in respect of a
Mortgage Loan, other than pursuant to applicable laws and regulations in force
from time to time. The Servicer may obtain and maintain a blanket insurance
policy consistent with prudent industry standards insuring against all or
certain hazard losses on all of the Mortgage Loans in an aggregate amount
prudent under industry standards. Such blanket insurance policy may provide for
a deductible. If a loss on a Mortgage Property occurs that would have been
covered by the hazard insurance policy required pursuant to the first sentence
of this Section 3.04, the Servicer shall deposit into the Collection Account any
amount not payable under the blanket policy because of such deductible.
Section 3.05. Assumption and Modification Agreements. If a Mortgaged
Property has been or is about to be conveyed by the Mortgagor, the Servicer
shall exercise its right to accelerate the maturity of such Mortgage Loan
consistent with the then-current practice of the Servicer and without regard to
the inclusion of such Mortgage Loan in the Trust. If it elects not to enforce
its right to accelerate or if it is prevented from doing so by applicable law,
the Servicer is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Credit Line Agreement and, to the extent permitted by applicable law, the
Mortgagor remains liable thereon, so long as such action conforms with the
underwriting standards generally acceptable in the industry at the time for new
origination. The Servicer shall notify the Trustee that any assumption and
modification agreement has been completed by delivering to the Trustee an
Officer's Certificate certifying that such agreement is in compliance with this
Section 3.05 and by forwarding to the applicable Custodian, as agent for the
Trustee, the original copy of such assumption and modification agreement. Any
such assumption and modification agreement shall, for all purposes, be
considered a part of the related Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. No change in the terms of
the related Credit Line Agreement may be made by the Servicer in connection with
any such assumption to the extent that such change would not be permitted to be
made in respect of the original Credit Line Agreement pursuant to Section
3.01(b). Any fee collected by the Servicer for entering into any such agreement
shall be retained by the Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans. The Servicer shall
foreclose upon or otherwise comparably convert to ownership Mortgaged Properties
securing such of the Mortgage Loans as come into and continue in default when,
in the opinion of the Servicer based upon the practices and procedures referred
to in the following sentence, no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.02, provided that if the
Servicer has actual knowledge or reasonably believes that any Mortgaged Property
is affected by hazardous or toxic wastes or substances and that the acquisition
of such Mortgaged Property would not be commercially reasonable, then the
Servicer shall not cause the Trust to acquire title to such Mortgaged Property
in a foreclosure or similar proceeding. In connection with such foreclosure or
other conversion, the Servicer shall follow such practices (including, in the
case of any default on a related senior mortgage loan, the advancing of funds to
cure such default) and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities;
provided, however, that the Servicer shall
35
<PAGE>
not be required to expend its own funds in connection with any foreclosure or
towards curing of any default on a related senior mortgage loan or restoration
of any property unless it shall determine that such expenditure will increase
Net Liquidation Proceeds.
If title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or Certificate of sale shall be issued to the
Trustee or to its nominee on behalf of Certificateholders.
Section 3.07. Trustee to Cooperate. On or before each Distribution Date, the
Servicer shall notify the Trustee of the payment in full of the Principal
Balance of any Mortgage Loan during the preceding Collection Period, which
notification shall be by a certification of a Servicing Officer (including a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Collection Account pursuant to
Section 3.02 have been so deposited or credited). Upon any such payment in full,
if the assignments of Mortgage have been recorded as required hereunder, the
Servicer is authorized to execute an instrument of satisfaction regarding the
related Mortgage pursuant to the authorization contained in Section 3.01, which
instrument of satisfaction shall be recorded by the Servicer (if required by
applicable law) and delivered to the Person entitled thereto. It is understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account. From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan or in connection with the payment in full of
the Principal Balance of any Mortgage Loan, the Trustee shall release the
related Mortgage File to the Servicer upon request of the Servicer and delivery
to the Trustee of a Request for Release substantially in the form attached
hereto as Exhibit F signed by a Servicing Officer, and the Trustee shall execute
such documents, in the forms provided by the Servicer, as shall be necessary to
the prosecution of any such proceedings or the taking of other servicing
actions. Such trust receipt shall obligate the Servicer to return the Mortgage
File to the Trustee when it is no longer needed by the Servicer, unless the
Mortgage Loan shall be liquidated, in which case the trust receipt shall be
released by the Trustee or such Custodian to the Servicer upon receipt of a
certification of a Servicing Officer similar to the certification specified
above.
To facilitate the foreclosure of the Mortgage securing any Mortgage
Loan that is in default following recordation of the assignments of Mortgage in
accordance with the provisions hereof, the Trustee, if requested in writing by
the Servicer, shall execute an appropriate assignment in the form provided to
the Trustee by the Servicer to assign such Mortgage Loan for the purpose of
collection to the Servicer or to the related subservicer (any such assignment
unambiguously indicating that the assignment is for the purpose of collection
only) and, upon such assignment, the Servicer shall thereupon bring all required
actions in its own name and otherwise enforce the terms of the Mortgage Loan and
deposit the Net Liquidation Proceeds (exclusive of Foreclosure Profits) received
with respect thereto in the Collection Account. If all delinquent payments due
under any such Mortgage Loan are paid by the Mortgagor and any other defaults
are cured, then the Servicer shall promptly reassign such Mortgage Loan to the
Trustee and return the related Mortgage File to the location where it previously
was being maintained.
36
<PAGE>
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the Mortgage Loans. Moreover, additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account (other than Foreclosure Profits) shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the
Certificateholders), and shall not be entitled to reimbursement therefor except
as specifically provided herein. Liquidation Expenses are reimbursable to the
Servicer solely from related Liquidation Proceeds.
Section 3.09. Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Trustee, the Credit Enhancer and the
Rating Agencies, on or before May 31 of each year, beginning May 31, 2000, an
Officer's Certificate stating that (i) a review of the activities of the
Servicer during the preceding fiscal year (or such shorter period as is
applicable in the case of the first report) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
of its material obligations under this Agreement throughout such fiscal year or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
(b) The Servicer shall deliver, by means of an Officer's Certificate,
written notice of any event that with the giving of notice or the lapse of time
or both would become an Event of Servicing Termination to the Trustee, the
Credit Enhancer and each of the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter.
Section 3.10. Annual Servicing Report. On or before May 31 of each year,
beginning May 31, 2000, the Servicer, at its expense, shall cause a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer) to furnish a report to the Trustee, the Credit
Enhancer and each Rating Agency to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans during
the most recent fiscal year then ended under pooling and servicing agreements
substantially similar to this Agreement, including this Agreement, that such
examination was conducted substantially in compliance with the Uniform Single
Audit Program for Mortgage Bankers, and that such examination has disclosed no
items of noncompliance with the provisions of this Agreement that, in the
opinion of such firm, are material, except for any items of noncompliance as
shall be set forth in such report.
Section 3.11. RESERVED
Section 3.12. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
37
<PAGE>
(a) The Servicer shall provide to the Trustee, the Credit Enhancer, any
Investor Certificateholders that are federally insured savings and loan
associations, the Office of Thrift Supervision, successor to the Federal Home
Loan Bank Board, the FDIC and the supervisory agents and examiners of the office
of Thrift Supervision access to the documentation regarding the Mortgage Loans
required by applicable regulations of the Office of Thrift Supervision and the
FDIC (acting as operator of the SAIF or the BIF), such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer. Nothing in this Section 3.12 shall derogate from
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors, and the failure of the
Servicer to provide access as provided in this Section 3.12 as a result of such
obligation shall not constitute a breach of this Section 3.12.
(b) On or before the related Determination Date preceding each Distribution
Date, the Servicer shall supply such information (in such form as the Trustee
shall reasonably request) to the Trustee and the Paying Agent, as is required,
in the Trustee's reasonable judgment, to enable the Paying Agent or the Trustee,
as the case may be, to make required distributions, to furnish the required
reports to Certificateholders and to make any claim under the Policy.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. During
the term of its service as servicer, the Servicer shall maintain in force (i) a
policy or policies of insurance (which may be self-insurance) covering errors
and omissions in the performance of its obligations as Servicer hereunder and
(ii) a fidelity bond (or self-insurance) in respect of its officers, employees
or agents. Each such policy or policies and bond together shall comply with the
requirements from time to time of the Federal National Mortgage Association for
persons performing servicing for mortgage loans purchased by such Association.
Section 3.14. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Each of the
Seller, the Servicer, the Depositor and the holder of the Transferor Interest
shall cooperate with the Trustee in the preparation of any such report and shall
provide to the Trustee in a timely manner all such information or documentation
as the Trustee may reasonably request in connection with the performance of its
duties and obligations under this Section 3.14.
Section 3.15. Tax Returns. In accordance with Section 2.08, the Trustee
shall prepare and file any Federal, State or local income and franchise tax
return for the Trust, as well as any other applicable return, and apply for a
taxpayer identification number on behalf of the Trust. The holder of the
Transferor Interest shall treat the Mortgage Loans as its property for all
Federal, State or local tax purposes and shall report all income earned thereon
(including amounts payable as fees to the Servicer) as its income for income tax
purposes. If the Trust shall be required pursuant to an audit or administrative
proceeding or change in applicable regulations to file Federal, State or local
tax returns, the Trustee shall prepare and file or shall cause to be prepared
and filed any tax returns required to be filed by the Trust, the Trustee shall
promptly sign such returns and deliver such returns after signature to the
Servicer and such returns shall be filed by the Servicer. The Trustee also shall
prepare or shall cause to be prepared all tax
38
<PAGE>
information required by law to be distributed to Investor Certificateholders. In
no event shall the Trustee or the Servicer be liable for any liabilities, costs
or expenses of the Trust, the Investor Certificateholders, the holder of the
Transferor Interest or the Certificate Owners arising under any tax law,
including without limitation Federal, State or local income and franchise or
excise taxes or any other tax imposed on or measured by income (or any interest
or penalty with respect thereto or arising from a failure to comply therewith).
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Trustee shall prepare and deliver all Federal and State information reports
when and as required by all applicable State and Federal income tax laws
including without limitation those under Sections 6050M, 6050J and 6050P of the
Code. In particular, with respect to the requirement under Section 6050J of the
Code to the effect that the Servicer shall make reports of foreclosures and
abandonments of any mortgaged property for each year beginning in 2000, the
Servicer shall file reports relating to each instance occurring during the
previous calendar year in which the Servicer (i) on behalf of the Trustee
acquires an interest in any Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan or (ii)
knows or has reason to know that any Mortgaged Property has been abandoned. The
report from the Servicer shall be in form and substance sufficient to meet the
reporting requirements imposed by Section 6050J.
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Servicer shall deliver (a) to the Trustee, the Statement to
Certificateholders required to be prepared pursuant to Section 5.03, and (b) to
the Trustee, the Seller, the Depositor, the Paying Agent, the Credit Enhancer
and each Rating Agency a Servicing Certificate (in written form or the form of
computer readable media or such other form as may be agreed to by the Trustee
and the Servicer), together with an Officer's Certificate to the effect that
such Servicing Certificate is true and correct in all material respects, and
setting forth the related Collection Period, Distribution Date, the series
number of the Certificates, and the date of this Agreement, together with the
following information:
(i) the aggregate amount of collections received in respect of the
Mortgage Loans on or prior to the Determination Date for such Collection
Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for such Collection Period;
(iii) the Investor Floating Allocation Percentage and the Investor
Fixed Allocation Percentage for such Collection Period;
(iv) the Investor Interest Collections and Investor Principal
Collections for such Collection Period;
39
<PAGE>
(v) the Transferor Interest Collections and Transferor Principal
Collections for such Collection Period;
(vi) the Investor Certificate Interest and the Investor Certificate
Rate for the related Interest Period;
(vii) the amount, if any, of such Investor Certificate Interest that
is not payable on account of insufficient Investor Interest Collections;
(viii) the portion of the Unpaid Investor Certificate Interest
Shortfall, if any, and (separately stated) the amount of interest on such
shortfall at the Certificate Rate applicable from time to time to be
distributed on such Distribution Date;
(ix) the Unpaid Investor Certificate Interest Shortfall, if any,
remaining after the distribution on such Distribution Date;
(x) the Accelerated Principal Distribution Amount and the portion
thereof that will be distributed pursuant to Section 5.01(a)(viii);
(xi) the Scheduled Principal Collections Distribution Amount,
separately stating the components thereof;
(xii) the amount of any Transfer Deposit Amount paid by the Seller or
the Depositor pursuant to Section 2.02 or 2.04;
(xiii) any accrued and unpaid Servicing Fees for previous Collection
Periods and the Servicing Fee for such Collection Period;
(xiv) the Investor Loss Amount for such Collection Period;
(xv) the aggregate amount, if any, of Investor Loss Reduction Amounts
for previous Distribution Dates that have not been previously reimbursed to
Investor Certificateholders pursuant to 5.01(a)(iv);
(xvi) the aggregate Principal Balance of the Mortgage Loans as of the
end of the related Collection Period and as of the end of the Collection
Period immediately preceding the related Collection Period, separately
identifying the aggregate Locked Balances and HELOC Balances, together with
the percentage of Locked Balances as of the end of the related Collection
Period (calculated by dividing the aggregate Locked Balances by the Pool
Balance as of such date);
(xvii) the Pool Balance as of the end of the related Collection Period
and as of the end of the Collection Period preceding the related Collection
Period;
(xviii) the Invested Amount as of the end of the related Collection
Period;
40
<PAGE>
(xix) the Investor Certificate Principal Balance and Pool Factor after
giving effect to the distribution on such Distribution Date and to any
reduction on account of the Investor Loss Amount;
(xx) the Transferor Principal Balance after giving effect to the
distribution on such Distribution Date;
(xxi) the aggregate amount of Additional Balances created during the
related Collection Period;
(xxii) the number and aggregate Principal Balances of Mortgage Loans
(x) as to which the Regular Payment is delinquent for 30-59 days, 60-89
days and 90 or more days, respectively and (y) that have become REO, in
each case as of the end of the related Collection Period;
(xxiii) whether a Rapid Amortization Event has occurred since the
prior Determination Date, specifying each such Rapid Amortization Event if
any has occurred; and
(xxiv) whether an Event of Servicing Termination has occurred since
the prior Determination Date, specifying each such Event of Servicing
Termination if any has occurred;
(xxv) the amount to be distributed to the Credit Enhancer pursuant to
Section 5.01(a)(vi) and Section 5.01(a)(ix), stated separately;
(xxvi) the amount to be distributed to the Spread Account pursuant to
Section 5.01(a)(vii);
(xxvii) the Guaranteed Principal Distribution Amount for such
Distribution Date;
(xxviii) the Credit Enhancement Draw Amount, if any, for such
Distribution Date;
(xxix) the amount to be distributed to the holder of the Transferor
Interest pursuant to Section 5.01(a)(xii);
(xxx) the amount to be paid to the Servicer pursuant to Section
5.01(a)(x);
(xxxi) the weighted average Loan Rate as of the end of the related
Collection Period;
(xxxii) the total amount of funds on deposit in the Spread Account
(after giving effect to any deposit thereto and withdrawals therefrom), the
applicable Required Spread Account Amount and the aggregate amount of any
withdrawals from the Spread Account for such Distribution Date;
(xxxiii) the Overcollateralization Amount after giving effect to the
distribution to be made on such Distribution Date;
41
<PAGE>
(xxxiv) the number and Principal Balances of any Mortgage Loans
retransferred to the holder of the Transferor Interest pursuant to Section
2.06;
(xxxv) the Recalculated Weighted Average Gross Margin;
(xxxvi) the weighted Combined Loan-to-Value Ratio as of the last day
of the related Collection Period; and
(xxxvii) the number and aggregate Principal Balance of all Mortgage
Loans that did not receive a monthly payment during such Collection Period
pursuant to the "Skip-a-Pay Program".
The Trustee shall conclusively rely upon the information contained in a
Servicing Certificate for purposes of making distributions pursuant to Section
5.01, shall have no duty to inquire into such information and shall have no
liability in so relying. The format and content of the Servicing Certificate may
be modified by the mutual agreement of the Servicer, the Trustee and the Credit
Enhancer. The Servicer shall give notice of any such change to each Rating
Agency.
Section 4.02. Claims upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day prior to a
Distribution Date, the Servicer notifies the Trustee that on such Distribution
Date the sum of (i) the funds that will be on deposit in the Collection Account
for the related Collection Period that are payable to the Investor
Certificateholders pursuant to Sections 5.01(a) and (b) (after giving effect to
the distribution of the Trustee Fee and the Premium) and (ii) the amount that
will be on deposit in the Spread Account will be insufficient to pay the
Guaranteed Distribution on such Distribution Date, then the Trustee shall give
notice to the Credit Enhancer by telephone or telecopy of the applicable Credit
Enhancement Draw Amount. Such notice of such sum shall be confirmed in writing
by the Servicer to the Credit Enhancer and the Fiscal Agent, if any, in the form
set forth as Exhibit A to the Policy, at or before 10:00 a.m., New York City
time, on the second Business Day prior to such Distribution Date. Pursuant to
the Policy, following receipt by the Credit Enhancer of such notice in such
form, the Credit Enhancer or the Fiscal Agent will pay any amount payable under
the Policy on the later to occur of (i) 12:00 noon, New York City time, on the
Business Day next succeeding presentation to the Fiscal Agent and (ii) 12:00
noon, New York City time, on the Distribution Date to which such deficiency
relates.
(b) The Trustee shall establish a separate special purpose trust account,
which account shall be an Eligible Account, for the benefit of Holders of the
Investor Certificates and the Credit Enhancer referred to herein as the "Policy
Payments Account," over which the Trustee shall have exclusive control and sole
right of withdrawal. The Trustee shall deposit any amount paid under the Policy
in the Policy Payments Account and distribute such amount only for purposes of
payment to Holders of the Investor Certificates of the Guaranteed Distribution
for which a claim was made, and such amount may not be applied to satisfy any
costs, expenses or liabilities of the Servicer, the Trustee or the Trust Fund.
Amounts paid under the Policy shall be transferred to the Collection Account in
accordance with the next succeeding paragraph and disbursed by the Trustee to
Holders of Investor Certificates in accordance with Section 5.01. It shall not
be necessary for such payments to be made by checks or wire transfers separate
from the checks or
42
<PAGE>
wire transfers used to pay the Guaranteed Distribution with other funds
available to make such payment; however, the amount of any payment of principal
of or interest on the Investor Certificates to be paid from funds transferred
from the Policy Payments Account shall be noted as provided in paragraph (c)
below in the Certificate Register and in the statement to be furnished to
Holders of the Investor Certificates pursuant to Section 5.03. Funds held in the
Policy Payments Account shall not be invested.
On any Distribution Date with respect to which a claim has been made under
the Policy, the amount of any funds received by the Trustee as a result of any
claim under the Policy, to the extent required to make the Guaranteed
Distribution on such Distribution Date, shall be withdrawn from the Policy
Payments Account and deposited in the Collection Account and applied by the
Trustee, together with the other funds to be withdrawn from the Collection
Account pursuant to Section 5.01, directly to the payment in full of the
Guaranteed Distribution due on the Investor Certificates. Any funds received by
the Trustee shall be used solely for payment to the Holders of Investor
Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Trustee or the Trust. Any funds remaining in
the Policy Payments Account on the first Business Day following a Distribution
Date shall be remitted to the Credit Enhancer by the end of such Business Day
pursuant to the instructions of the Credit Enhancer.
(c) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Investor Certificate from moneys
received under the Policy. The Credit Enhancer shall have the right to inspect
such records at reasonable times during normal business hours upon one Business
Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Credit Enhancer and Fiscal Agent
of any proceeding or the institution of any action of which a Responsible
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law with respect to a proceeding against or by the Sellers, the Servicer
or the Trust (a "Preference Claim") of any distribution made with respect to the
Investor Certificates. Each Investor Certificateholder, by its purchase of
Investor Certificates, the Servicer and the Trustee hereby agree that at any
time during the continuation of any proceeding relating to a Preference Claim
the Credit Enhancer may (so long as no Credit Enhancer Default exists) direct
all matters relating to such Preference Claim, including without limitation (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersede as or performance bond pending any
such appeal. In addition and without limitation of the foregoing, the Credit
Enhancer shall be subrogated to the rights of the Servicer, the Trustee and each
Investor Certificateholder 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.
Section 4.03. Spread Account.
(a) The Trustee shall establish and maintain a separate trust account (the
"Spread Account") titled "The Bank of New York, as Trustee, in trust for the
registered holders of Banc One ABS Corporation HELOC Asset-Backed Certificates,
Series 1999-1 and MBIA." The Spread Account shall be an Eligible Account.
Amounts on deposit in the Spread Account will, at
43
<PAGE>
the direction of the holder of the Transferor Interest, be invested in Eligible
Investments maturing no later than the day before the next Distribution Date.
All income and gain realized from any investment of funds in the Spread
Account shall be for the benefit of the holder of the Transferor Interest and
shall be subject to its withdrawal from time to time. The amount of any losses
incurred in respect of the principal amount of any such investments shall be
deemed not to be on deposit in the Spread Account.
(b) On each Determination Date the Trustee shall determine (i) the extent
to which Investor Interest Collections and Reallocated Investor Principal
Collections applied in the order specified in Section 5.01(a) are insufficient
to make distributions as provided in clauses (i) and (ii) of Section 5.01(a) or
Investor Interest Collections applied in the order specified in Section 5.01(a)
are insufficient to make distributions as provided in clauses (i), (ii) and
(iii) of Section 5.01(a) and (ii) with respect to the Distribution Date in July
2020, the Guaranteed Principal Distribution Amount for the related Distribution
Date. On each Distribution Date, the Trustee shall withdraw from the Spread
Account and deposit into the Collection Account the lesser of the amount on
deposit in the Spread Account and an amount equal to the sum of the amounts, if
any, determined in clauses (i) and (ii) of the preceding sentence. In addition,
on each Distribution Date the Trustee shall withdraw the amount, if any, on
deposit in the Spread Account (after giving effect to all deposits thereto and
withdrawals therefrom on such Distribution Date) in excess of the Required
Spread Account Amount and shall deposit such funds in the Collection Account.
(c) Following the termination of the Trust pursuant to Section 10.01 or
11.02 hereof, the Trustee shall withdraw all amounts then on deposit in the
Spread Account and distribute such amounts first, to any amounts due and owing
to the Credit Enhancer and then, to the holder of the Transferor Interest. If on
any Distribution Date the amount on deposit in the Spread Account exceeds the
Required Spread Account Amount, the Trustee shall withdraw and distribute such
excess to the holder of the Transferor Interest.
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on any of the Investor Certificates that is made with
monies received pursuant to the terms of the Policy shall not be considered
payment of such Investor 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 Investor Certificates within the meaning of Section 5.01. The Depositor,
the Servicer and the Trustee acknowledge and each Holder by its acceptance of an
Investor Certificate agrees that without the need for any further action on the
part of the Credit Enhancer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (a) to the extent the Credit Enhancer makes payments,
directly or indirectly, on account of principal of or interest on any Investor
Certificates to the Holders of such Certificates, the Credit Enhancer will be
fully subrogated to the rights of such Holders to receive such principal and
interest from the Trust and (b) the Credit Enhancer shall be paid such principal
and interest but only from the sources and in the manner provided herein for the
Payment of such principal and interest.
The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Credit Enhancer for action to preserve or enforce the
Credit Enhancer's rights or interests
44
<PAGE>
under this Agreement without limiting the rights or affecting the interests of
the Holders as otherwise set forth herein.
Section 4.05. Reallocated Investor Principal Collections. On each
Determination Date the Trustee shall determine the extent to which Investor
Interest Collections applied in the order specified in Section 5.01(a) are
insufficient to make distributions as provided in clauses (i) and (ii) of
Section 5.01(a). On each Distribution Date, the Trustee shall apply any
Reallocated Investor Principal Collections to make the distribution as provided
in clauses (i) and (ii) of Section 5.01(a), and such Reallocated Investor
Principal Collections shall no longer be available for distributions of
principal as provided in Section 5.01(b).
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.
(a) Distributions of Investor Interest Collections and Investment Proceeds.
To the extent of (A) Investor Interest Collections collected during the related
Collection Period, (B) any Reallocated Investor Principal Collections as
determined pursuant to Section 4.05 and (C) any amounts transferred from the
Spread Account as determined pursuant to Section 4.03(b) and subject to Section
11.02(b), on each Distribution Date, the Trustee or the Paying Agent, as the
case may be, shall distribute from the Collection Account the following amounts
and in the following order of priority to the following Persons (based on the
information set forth in the Servicing Certificate):
(i) to the Trustee, the Trustee Fee for such Distribution Date;
(ii) to the Investor Certificateholders, the sum of (A) the Investor
Certificate Interest for such Distribution Date plus (B) any Unpaid
Investor Certificate Interest Shortfall, for such Distribution Date plus,
(C) to the extent legally permissible, interest thereon at the Investor
Certificate Rate plus 2% per annum;
(iii) to the Investor Certificateholders, any Investor Loss Amount for
such Collection Period as payment of principal in reduction of the Investor
Certificate Principal Balance;
(iv) to the Investor Certificateholders, the aggregate amount of any
Investor Loss Reduction Amounts for previous Distribution Dates that have
not been previously reimbursed to Investor Certificateholders, as payment
of principal in reduction of the Investor Certificate Principal Balance;
(v) to the Credit Enhancer, the premium pursuant to the Insurance
Agreement;
45
<PAGE>
(vi) to the Credit Enhancer, to reimburse the Credit Enhancer for
previously unreimbursed Credit Enhancement Draw Amounts together with
interest thereon, calculated as set forth in the Insurance Agreement;
(vii) to deposit into the Spread Account, until the aggregate amount
of funds therein is equal to the Required Spread Account Amount;
(viii) to the Investor Certificateholders, any Accelerated Principal
Distribution Amount for such Distribution Date,;
(ix) to the Credit Enhancer for any amounts owed to the Credit
Enhancer pursuant to the Insurance Agreement;
(x) to the Servicer for any amount required to be paid to the Servicer
pursuant to Section 7.03 that has not been previously paid to the Servicer;
(xi) to the Investor Certificateholders, any LIBOR Interest Carryover
for such Distribution Date; and
(xii) to the holder of the Transferor Interest, any remaining amount.
(b) Distribution of Principal Collections. Subject to Section 11.02(b) and
on each Distribution Date other than the Distribution Date in July 2020, the
Trustee shall distribute from the Collection Account to the Investor
Certificateholders the Investor Principal Collections (including amounts
transferred thereto from the Spread Account pursuant to Section 4.03(b) in
respect of the amount determined pursuant to Section 4.03(b)(ii)), up to the
Scheduled Principal Collections Distribution Amount (less any Reallocated
Investor Principal Collections for such Distribution Date and any
Overcollateralization Release Amount for such Distribution Date); provided,
however, that the amount distributed pursuant to this Section 5.01(b) shall not
exceed of the Investor Certificate Principal Balance. On the Distribution Date
in July 2020 the Trustee shall distribute to Investor Certificateholders the
Investor Principal Collections (including amounts transferred thereto from the
Spread Account pursuant to Section 4.03(b) in respect of the amount determined
pursuant to Section 4.03(b)(ii)), up to the Investor Certificate Principal
Balance.
(c) Distribution of Overcollateralization Release Amount. On each
Distribution Date, the Trustee shall distribute from the Collection Account to
the holder of the Transferor Interest the Overcollateralization Release Amount,
if any, for such Distribution Date.
(d) Distribution of the Credit Enhancement Draw Amount. With respect to any
Distribution Date, to the extent that Investor Interest Collections, Reallocated
Investor Principal Collections and amounts transferred from the Spread Account
on the related Distribution Date in respect of the amount determined pursuant to
Section 4.03(b)(i) (applied in the order specified in Section 5.01(a)) are
insufficient to make distributions as provided in Section 5.01(a)(ii), the
Trustee shall make such payments from the amount drawn under the Policy for such
Distribution Date pursuant to Section 4.02. With respect to any Distribution
Date as to which there is a Guaranteed Principal Distribution Amount, the
Trustee shall distribute the Guaranteed Principal
46
<PAGE>
Distribution Amount to Certificateholders from the amount drawn under the Policy
for such Distribution Date pursuant to Section 4.02.
The aggregate amount of principal distributed to the Investor
Certificateholders under this Agreement shall not exceed the Original Investor
Certificate Principal Balance.
(e) Method of Distribution. The Trustee shall make distributions on each
Distribution Date to each Investor Certificateholder of record on the related
Record Date (other than as provided in Section 10.01 with respect to the final
distribution) by check or money order mailed to such Investor Certificateholder
at the address appearing in the Certificate Register or, upon written request by
an Investor Certificateholder delivered to the Trustee at least five Business
Days prior to such Record Date, by wire transfer (but only if such
Certificateholder is the Depository or such Certificateholder owns of record one
or more Investor Certificates having principal denominations aggregating at
least $1,000,000), or by such other means of payment as such Investor
Certificateholder and the Trustee shall agree. Distributions among Investor
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Investor Certificates held by such Investor Certificateholders.
(f) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the Investor
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Credit Enhancer or the Servicer shall have any responsibility
therefor except as otherwise provided by applicable law.
(g) Distributions to holder of the Transferor Interest. On each
Distribution Date, based upon the information set forth in the Servicing
Certificate for such Distribution Date, the Trustee shall, distribute to the
holder of the Transferor Interest (i) the Transferor Interest Collections for
the related Collection Period and (ii) the portion of Transferor Principal
Collections for the related Collection Period in excess of Additional Balances
created during such Collection Period; provided that collections allocable to
the Transferor Interest shall be distributed to the holder of the Transferor
Interest only to the extent that such distribution will not reduce the amount of
the Transferor Principal Balance as of the related Distribution Date below the
Minimum Transferor Interest. Amounts not distributed to the holder of the
Transferor Interest as the result of such limitation shall be retained in the
Collection Account until the Transferor Principal Balance exceeds the Minimum
Transferor Interest, at which time such excess shall be released to the holder
of the Transferor Interest.
Section 5.02. Calculation of the Investor Certificate Rate. On the second
LIBOR Business Day immediately preceding each Distribution Date (or, in the case
of the first Interest Period, on the second LIBOR Business Day immediately
preceding the Closing Date), the
47
<PAGE>
Trustee shall determine LIBOR for the Interest Period commencing on such
Distribution Date and shall inform the Servicer (at the facsimile number given
to the Trustee in writing) of such rates. On each Determination Date, the
Trustee shall determine the applicable Investor Certificate Rate for the related
Distribution Date.
Section 5.03. Statements to Certificateholders. Concurrently with each
distribution to Investor Certificateholders, the Trustee shall forward to each
Investor Certificateholder, the Servicer and each Rating Agency a statement
prepared by the Servicer pursuant to Section 4.01 with respect to such
distribution, setting forth:
(i) the Investor Floating Allocation Percentage for the preceding
Collection Period;
(ii) the Investor Certificate Distribution Amount;
(iii) the amount of Investor Certificate Interest included in such
distribution and the related Investor Certificate Rate;
(iv) the amount, if any, of any Unpaid Investor Certificate Interest
Shortfall included in such distribution;
(v) the amount, if any, of remaining Unpaid Investor Certificate
Interest Shortfall after giving effect to such distribution;
(vi) the amount, if any, of principal included in such distribution,
separately stating the components thereof;
(vii) the amount, if any, of the reimbursement of previous Investor
Loss Reduction Amounts included in such distribution;
(viii) the aggregate amount, if any, of unreimbursed Investor Loss
Reduction Amounts after giving effect to such distribution;
(ix) the Servicing Fee for such Distribution Date;
(x) the Invested Amount, the Investor Certificate Principal Balance
and the Pool Factor, each after giving effect to such distribution;
(xi) the Pool Balance as of the end of the preceding Collection Period
and the aggregate of the Principal Balances of the Mortgage Loans at the
close of business on the last day of the related Collection Period;
(xii) the Credit Enhancement Draw Amount, if any;
(xiii) the number and aggregate Principal Balances of Mortgage Loans
as to which the Regular Payment is delinquent for 30-59 days, 60-89 days
and 90 or more days, respectively, as of the end of the preceding
Collection Period;
48
<PAGE>
(xiv) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure;
(xv) the Investor Certificate Rate applicable to the distribution on
the following Distribution Date;
(xvi) the Required Spread Account Amount and the amount of funds on
deposit in the Spread Account (after giving effect to any deposits thereto
and withdrawals therefrom) on such Distribution Date;
(xvii) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to Section 2.04 and Section 2.06;
(xviii) any LIBOR Interest Carryover for such Distribution Date; and
(xix) the Required Overcollateralization Amount for such Distribution
Date and the amount of Overcollateralization remaining after giving effect
to all distributions on such Distribution Date.
In the case of information furnished pursuant to clauses (ii), (iii) (as to
Investor Certificate Interest) (iv) and (viii) above, the amounts shall be
expressed as a dollar amount per Investor Certificate with a $1,000
denomination.
Within 60 days after the end of each calendar year, the Servicer shall
prepare or cause to be prepared and shall forward to the Trustee the information
set forth in clauses (iii) and (vi) above aggregated for such calendar year.
Such obligation of the Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer or a Paying Agent pursuant to any requirements of the Code.
The Trustee shall prepare or cause to be prepared (in a manner consistent
with the treatment of the Investor Certificates as indebtedness of the holder of
the Transferor Interest, or as may be otherwise required by Section 3.15)
Internal Revenue Service Form 1099 (or any successor form) and any other tax
forms required to be filed or furnished to Certificateholders in respect of
distributions by the Trustee (or the Paying Agent) on the Investor Certificates
and shall file and distribute such forms as required by law.
Section 5.04. Rights of Certificateholders and holder of the Transferor
Interest. The Investor Certificates shall represent fractional undivided
interests in the Trust, including the benefits of the Collection Account and the
right to receive Investor Interest Collections, Principal Collections and other
amounts at the times and in the amounts specified in this Agreement; the
Transferor Interest shall represent the remaining interest in the Trust.
49
<PAGE>
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates shall be
substantially in the form set forth in Exhibit A and shall, on original issue,
be executed, authenticated and delivered by the Trustee to or upon the order of
the Depositor concurrently with the sale and assignment to the Trustee of the
Trust. The Investor Certificates initially shall be evidenced by one or more
Certificates representing the entire original Investor Certificate Principal
Balance and shall be held in minimum dollar denominations of $1,000 and integral
dollar multiples in excess thereof, except that one Investor Certificate may be
in a different denomination of less than $1,000 so that the sum of the
denominations of all outstanding Investor Certificates shall equal the Original
Investor Certificate Principal Balance. The sum of the denominations of all
outstanding Investor Certificates shall equal the Original Investor Certificate
Principal Balance. The Transferor Interest initially shall be an uncertificated
interest issued upon the order of the Depositor to the Trustee concurrently with
the sale and assignment to the Trustee of the Trust. The Transferor Interest may
be certificated pursuant to Section 6.02(a). The Transferor Interest shall
represent the entire interest in the assets of the Trust other than that
represented by the Investor Certificates and shall initially be issued to Bank
One, N.A.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer under its seal imprinted thereon.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed shall bind the Trust,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless such Certificate shall have been manually authenticated by the Trustee
substantially in the form provided for herein, and such authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02(c), the Investor Certificates shall be Book-Entry Certificates. The
Transferor Interest shall not be a Book-Entry Certificate.
Section 6.02. Registration of Transfer and Exchange of Investor
Certificates; Appointment of Registrar.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Investor Certificates and the Transferor Interest and of
transfers and exchanges of Investor Certificates and the Transferor Interest as
herein provided. The First National Bank of Chicago shall initially serve as
Certificate Registrar for the purpose of registering Investor Certificates and
the Transferor Interest and transfers and exchanges of Investor Certificates and
the Transferor Interest as herein provided.
Upon surrender for registration of transfer of any Investor Certificate at
any office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, the Trustee on behalf of the Trust shall
execute, authenticate and deliver, in the name
50
<PAGE>
of the designated transferee or transferees, one or more new Investor
Certificates of the same aggregate Percentage Interest. Upon direction by the
holder of the Transferor Interest to the Trustee and the Certificate Registrar,
the Trustee shall issue the Transferor Interest in certificated form
substantially in the form set forth in Exhibit B. Upon notification by the
holder of the Transferor Interest to the Certificate Registrar of a transfer of
the Transferor Interest and subject to Section 6.05, the Trustee on behalf of
the Trust shall note on the Certificate Register the transfer of the Transferor
Interest.
At the option of the Investor Certificateholders, Investor Certificates
also may be exchanged for other Investor Certificates in authorized
denominations and the same aggregate Percentage Interests, upon surrender of the
Investor Certificates to be exchanged at any such office or agency of the
Certificate Registrar. Whenever any Investor Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the Investor
Certificates that the Investor Certificateholder making the exchange is entitled
to receive. If so required by the Trustee or the Certificate Registrar, each
Investor Certificate presented or surrendered for transfer or exchange shall be
duly endorsed by, or be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by, the
Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in Section 6.02(c), the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Investor Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Investor Certificates; (iii)
ownership and transfers of registration of the Investor Certificates on the
books of the Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository as representative of the Certificate Owners of the
Investor Certificates for purposes of exercising the rights of Holders under
this Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.
51
<PAGE>
(c) If (i)(x) 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 Depository, and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Servicing
Termination, the Depository, at the direction of Certificate Owners representing
Percentage Interests aggregating not less than 51%, advises the Trustee in
writing that the continuation of a book-entry system through the Depository to
the exclusion of definitive, fully registered Investor Certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Investor Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall execute and
authenticate the Definitive Certificates. Neither the Depositor nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee to the extent applicable with
respect to such Definitive Certificates, and the Trustee, the Certificate
Registrar, the Servicer and the Depositor shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Investor Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any
mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (ii) there is delivered to the Trustee, the
Depositor and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed and any other expenses
(including the fees and expenses of the Trustee and the Certificate Registrar)
in connection therewith. Any duplicate Certificate issued pursuant to this
Section 6.03 shall constitute complete and indefeasible evidence of ownership in
the Trust as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of an
Investor Certificate or the Transferor Interest for registration of transfer,
the Servicer, the Depositor,
52
<PAGE>
the Trustee, the Certificate Registrar, any Paying Agent and any agent of the
Servicer, the Depositor, the Trustee, any Paying Agent or the Certificate
Registrar may treat the Person, including a Depository, in whose name any
Certificate or the Transferor Interest is registered as the owner of such
Investor Certificate or Transferor Interest for the purpose of receiving
distributions pursuant to Section 5.01 and for all other purposes whatsoever,
and none of the Servicer, the Depositor, the Trustee the Certificate Registrar,
any Paying Agent or any agent of any of them shall be affected by notice to the
contrary.
Section 6.05. Restrictions on Transfer of Transferor Interest.
(a) The Transferor Interest shall be assigned, transferred, exchanged,
pledged, financed, hypothecated or otherwise conveyed (collectively, for
purposes of this Section 6.05 and any other Section referring to the Transferor
Interest, "transferred" or a "transfer") only in accordance with this Section
6.05 and Section 7.02.
(b) No transfer of a Transferor Interest 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 the Securities
Act and such laws. Except for the initial issuance of the Transferor Interest to
the Holder thereof, the Trustee shall require (i) the transferee to execute an
investment letter acceptable to and in form and substance satisfactory to the
Trustee certifying to the Trustee the facts surrounding such transfer, which
investment letter shall not be an expense of the Trustee or (ii) if the
investment letter is not delivered, a written Opinion of Counsel acceptable to
and in form and substance satisfactory to the Trustee and the Depositor that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the Securities Act or is being made
pursuant to the Securities Act, which Opinion of Counsel shall not be an expense
of the Trustee or the Depositor. The Holder of a Transferor Interest desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee
against any liability that may result if the transfer is not so exempt or is not
made in accordance with the Securities Act and such State laws.
(c) The Transferor Interest and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Transferor Interest shall (A) be organized and
existing under the laws of the United States of America or any State thereof or
the District of Columbia, (B) expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, the performance of every covenant
and obligation of the holder of the Transferor Interest hereunder and (C) as
part of its acquisition of a Transferor Interest, acquire all rights of the
holder of the Transferor Interest or any transferee under this Section 6.05(c)
to amounts payable to such holder of the Transferor Interest or such transferee
under Sections 5.01(a)(xii) and 5.01(g); (ii) the holder of the Transferor
Interest shall deliver to the Trustee an Officer's Certificate stating that such
transfer and such supplemental agreement comply with this Section 6.05(c) and
that all conditions precedent provided by this Section 6.05(c) have been
complied with and an Opinion of Counsel stating that all conditions precedent
provided by this Section 6.05(c) have been complied with, and the Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur no
liability in so relying; (iii) the holder of the Transferor Interest shall
deliver to the Trustee a letter indicating that each Rating Agency and the
Credit Enhancer have been notified of such transfer; (iv) the transferee of the
Transferor Interest shall deliver to the Trustee an Opinion of Counsel to the
effect that (a) such
53
<PAGE>
transfer will not adversely affect the treatment of the Investor Certificates
after such transfer as debt for federal and applicable state income tax
purposes, (b) such transfer will not result in the Trust being subject to tax at
the entity level for federal or applicable state tax purposes, (c) such transfer
will not have any material adverse impact on the federal or applicable state
income taxation of an Investor Certificateholder or any Certificate Owner and
(d) such transfer will not result in the arrangement created by this Agreement
or any "portion" of the Trust being treated as a taxable mortgage pool as
defined in Section 7701(i) of the Code and (v) all filings and other actions
necessary to continue the perfection of the interest of the Trust in the
Mortgage Loans and the other property conveyed hereunder shall have been taken
or made. Notwithstanding the foregoing, the requirement set forth in Section
6.05(c)(i)(A), shall not apply in the event the Trustee shall have received a
letter from each Rating Agency confirming that its rating of the Investor
Certificates, after giving effect to a proposed transfer to a Person that does
not meet the requirement set forth in Section 6.05(c)(i)(A), shall not be
reduced or withdrawn. Notwithstanding the foregoing, the requirements set forth
in this Section 6.05(c) shall not apply to the initial issuance of the
Transferor Interest to the Transferor.
(d) Except for the initial issuance of the Transferor Interest, no transfer
of a Transferor Interest shall be made unless the Trustee shall have received
either (1) a representation letter from the transferee of such Transferor
Interest, acceptable to and in form and substance satisfactory to the Trustee,
to the effect that (i) such transferee is not an employee benefit or other plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a Person acting
on behalf of, or with "plan assets" of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
that is purchasing such Transferor Interest with funds contained in an
"insurance company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Transferor Interest are eligible for the exemptive
relief available under PTCE 95-60 or (2) in the case of any Transferor Interest
presented for registration in the name of an employee benefit or other plan
subject to ERISA or Section 4975 of the Code (or comparable provisions of any
subsequent enactment), a trustee of any such plan or a person using "plan
assets" of any such plan, an Opinion of Counsel to the effect that the purchase
or holding of such Transferor Interest will not constitute or result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Trustee to any obligation in addition to those undertaken
in this Agreement, which Opinion of Counsel shall not be an expense of the
Trustee or the Depositor.
Section 6.06. Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the Collection Account pursuant to Section 5.01 and
shall report the amounts of such distributions to the Trustee. The duties of the
Paying Agent may include the obligation (i) to withdraw funds from the
Collection Account pursuant to Section 3.03 and for the purpose of making the
distributions referred to above and (ii) to distribute statements and provide
information to Certificateholders as required hereunder. The Paying Agent
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. The Paying Agent
shall
54
<PAGE>
initially be The First National Bank of Chicago. The Trustee may appoint a
successor to act as Paying Agent, which appointment shall be reasonably
satisfactory to the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any,
held by it for payment to the Investor Certificateholders in trust for the
benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders and shall agree that it shall comply
with all requirements of the Code regarding the withholding of payments in
respect of Federal income taxes due from Certificate Owners and otherwise comply
with the provisions of this Agreement applicable to it.
Section 6.07. Acceptance of Obligations. The holder of the Transferor
Interest, by its acceptance of the Transferor Interest, agrees to be bound by
and to perform all the duties of the holder of the Transferor Interest set forth
in this Agreement.
ARTICLE VII
The Servicer, the Seller and the Depositor
Section 7.01. Liability of the Servicer and the Depositor. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Servicer herein. The Depositor
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Depositor herein.
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Depositor; Assignment of Servicing to an Affiliate. Any
corporation into which the Servicer or the Depositor may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer or the Depositor shall be a party, or any
corporation succeeding to the business of the Servicer or the Depositor, shall
be the successor of the Servicer or the Depositor, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In addition, so long as Bank One, N.A. or an Affiliate thereof
is the Servicer, upon delivery of prior written notice to the Rating Agencies
and the Credit Enhancer, the Servicer may assign all of its rights and
obligations hereunder to any Eligible Affiliate Servicer, provided that such
Eligible Affiliate Servicer agrees to be bound by the obligations of the
Servicer under the Insurance Agreement.
Section 7.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders for
any action taken or for refraining from the taking of any action by the Servicer
in good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such Person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties of the
Servicer or by reason of reckless disregard of obligations and duties of the
Servicer hereunder. The Servicer and any director or
55
<PAGE>
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
with respect to any matters arising hereunder. The Servicer and any director or
officer or employee or agent of the Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Investor Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of its willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of its reckless
disregard of obligations and duties hereunder. The Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to duties to service the Mortgage Loans in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may in its sole discretion undertake any
such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust, and the Servicer shall only be
entitled to be reimbursed therefor pursuant to Section 5.01(a)(x). The
Servicer's right to indemnity or reimbursement pursuant to this Section 7.03
shall survive any resignation or termination of the Servicer pursuant to Section
7.04 or 8.01 with respect to any losses, expenses, costs or liabilities arising
prior to such resignation or termination (or arising from events that occurred
prior to such resignation or termination).
Section 7.04. Servicer Not to Resign. Subject to the provisions of Section
7.02, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or 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 or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement, (ii) appointment of an Eligible Affiliate Servicer pursuant to
Section 7.02 or (iii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee and the Credit
Enhancer in writing and such proposed successor servicer is reasonably
acceptable to the Trustee; (b) each Rating Agency has been notified of the
proposed appointment of such successor servicer as Servicer hereunder and has
confirmed that the appointment of such successor servicer will not result in the
reduction or withdrawal of the then current rating of the Investor Certificates
without regard to the Policy; and (c) such proposed successor servicer is
reasonably acceptable to the Credit Enhancer, as evidenced by a letter to the
Trustee; provided, however, that no such resignation by the Servicer shall
become effective until the Trustee or successor servicer designated by the
Servicer as provided above shall have assumed the Servicer's responsibilities
and obligations hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 8.02. Any such resignation shall not relieve
the Servicer of responsibility for any of the obligations specified in Sections
8.01 and 8.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Credit Enhancer. The Servicer shall have
no claim (whether by subrogation or otherwise) or
56
<PAGE>
other action against any Certificateholders or the Credit Enhancer for any
amounts paid by the Servicer pursuant to any provision of this Agreement.
Section 7.05. Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in accordance with standards comparable to
those with which the Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 7.04.
Section 7.06. Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust and the Trustee from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Servicer's activities or omissions in servicing or administering the
Mortgage Loans that are not in accordance with this Agreement, including, but
not limited to, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that a successor
Servicer shall provide such indemnification only against such loss, liability,
expense, damage or injury described in this Section 7.06 that is further caused
by the successor Servicer's willful malfeasance, bad faith or gross negligence.
Any such indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
7.06 shall survive the resignation or removal of the Servicer and termination of
this Agreement.
Section 7.07. RESERVED.
Section 7.08. Limitation on Liability of the holder of the Transferor
Interest. None of the directors or officers or employees or agents of the holder
of the Transferor Interest shall be under any liability to the Trust, the
Trustee or the Certificateholders, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and the issuance of the
Certificates; provided, however, that this provision shall not protect any such
Person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
duties hereunder. The Transferor shall not be under any liability to the Trust,
the Trustee or the Certificateholders for any action taken or for refraining
from the taking of any action in its capacity as holder of the Transferor
Interest pursuant to this Agreement, whether arising from express or implied
duties under this Agreement; provided, however, that this provision shall not
protect the Transferor against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
hereunder. The Transferor and any director or officer or employee or agent of
the Transferor may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
57
<PAGE>
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination. If any one of the following
events ("Events of Servicing Termination") shall occur and be continuing:
(i) Failure by the Servicer to deposit in the Collection Account any
deposit required to be made under the terms of this Agreement that
continues unremedied for a period of five Business Days after the date upon
which written notice of such failure shall have been given to the Servicer
by the Trustee or to the Servicer and the Trustee by the Credit Enhancer or
Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 25%; or
(ii) Failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in the Certificates or in this Agreement, which failure continues
unremedied for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such
notice is a "Notice of Default" hereunder, shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by the Credit
Enhancer or the Holders of Investor Certificates evidencing Percentage
Interests aggregating not less than 25%; or (iii) The entry against the
Servicer of a decree or order by a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(iv) The consent by the Servicer to the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Servicer or of or relating to
substantially all of its property; or the Servicer shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Trustee,
the Credit Enhancer or the Holders of Investor Certificates evidencing
Percentage Interests aggregating not less than 51% (with the consent of the
Credit Enhancer), by notice then given in writing to the Servicer (and to the
Trustee if given by the Credit Enhancer or the Holders of Investor Certificates)
may terminate all of the rights and obligations of the Servicer as servicer
under this Agreement. Any such notice to the Servicer also shall be given to
each Rating Agency and the Credit Enhancer. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise,
58
<PAGE>
shall pass to and be vested in the Trustee pursuant to and under this Section
8.01; and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of each
Mortgage Loan and Related Documents or otherwise. The Servicer agrees to
cooperate with the Trustee in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including without limitation the transfer
to the Trustee for the administration by it of all cash amounts that shall at
the time be held by the Servicer and to be deposited by it in the Collection
Account, or that have been deposited by the Servicer in the Collection Account
or thereafter received by the Servicer with respect to the Mortgage Loans. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring the Mortgage Files to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section 8.01
shall be paid by the predecessor Servicer (or if the predecessor Servicer is the
Trustee, the initial Servicer) upon presentation of reasonable documentation of
such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 8.01(i) for a period of ten Business Days or under Section 8.01(ii) for
a period of 60 Business Days, shall not constitute an Event of Servicing
Termination if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement,
and the Servicer shall provide the Trustee, the holder of the Transferor
Interest, the Credit Enhancer and the Investor Certificateholders with an
Officers' Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Servicer shall immediately notify the Trustee in writing of any Events of
Servicing Termination.
Section 8.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.04 or 8.01, the Trustee shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof. Notwithstanding the foregoing, if
the Trustee becomes the Servicer hereunder, it shall have no responsibility or
obligation (i) of repurchase or substitution with respect to any Mortgage Loan,
(ii) with respect to any representation or warranty of the Servicer or (iii) for
any act or omission of either a predecessor or successor Servicer other than the
Trustee. As compensation therefor, the Trustee shall be entitled to such
compensation as the Servicer would have been entitled to hereunder if no such
notice of termination had been given. In addition, the Trustee will be entitled
to compensation with respect to its expenses in connection with conversion of
certain information, documents and record keeping as provided in Section
7.04(b). Notwithstanding the foregoing, (i) if the Trustee is unwilling to act
as successor Servicer or (ii) if the Trustee is legally unable so to act, the
Trustee may (in the situation
59
<PAGE>
described in clause (i)) or shall (in the situation described in clause (ii))
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $15,000,000 as the
successor to the Servicer in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided that
any such successor Servicer shall be acceptable to the Credit Enhancer, as
evidenced by the Credit Enhancer's prior written consent, which consent shall
not be unreasonably withheld; and provided, further, that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates by the Rating Agencies
without regard to the Policy. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation the Servicer would otherwise have received pursuant to Section 3.08
(or such lesser compensation as the Trustee and such successor shall agree). The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor to the Servicer as servicer, including the Trustee, shall
during the term of its service as servicer (i) continue to service and
administer the Mortgage Loans for the benefit of Certificateholders and the
Credit Enhancer and (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.12. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer that may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy pursuant to Section 3.04), nor shall any successor Servicer be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of their representations or warranties contained herein.
Section 8.03. Notification to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice to thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register, to the Credit Enhancer and to each Rating Agency.
60
<PAGE>
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence of an
Event of Servicing Termination and after the curing or waiver of all Events of
Servicing Termination that may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement. If an
Event of Servicing Termination (that has not been cured or waived) has occurred
of which a Responsible Officer has knowledge, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs; provided, however, that if
the Trustee is acting as Servicer it shall use the same degree of care and skill
as is required of the Servicer under this Agreement.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement.
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; provided, however, that:
(i) prior to the occurrence of an Event of Servicing Termination of
which a Responsible Officer of the Trustee has knowledge, and after the
curing or waiver of all such Events of Servicing Termination that may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any Certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining or
investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of the Credit Enhancer or in
accordance with the direction of the Holders of Investor Certificates
evidencing Percentage Interests aggregating not less than 51% 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; and
61
<PAGE>
(iv) the Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
Section 8.01 (i) and (ii) or of the occurrence of a Rapid Amortization
Event unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Servicer, the Credit Enhancer or
Investor Certificateholders evidencing Percentage Interests aggregating not
less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. 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, and in no event shall it be required to perform or accept
responsibility for the obligations of the Depositor, the Seller or the
Transferor.
Section 9.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders or the Credit Enhancer
pursuant to the provisions of this Agreement, unless such
Certificateholders or the Credit Enhancer shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; 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 any
such act. Notwithstanding the foregoing, nothing contained herein shall
relieve the Trustee of the obligation, upon the occurrence of an Event of
Servicing Termination (that has not been cured or waived) of which a
Responsible Officer has knowledge, to exercise such of the rights and
powers vested in it by this Agreement and to use the same degree
62
<PAGE>
of care and skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs, unless it is
acting as Servicer;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) prior to the occurrence of an Event of Servicing Termination of
which a Responsible Officer has knowledge and after the curing or waiver of
all Events of Servicing Termination that may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51%;
provided, however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to such proceeding.
The reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand. Nothing in this clause (v) shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability and
makes no representation as to any acts or omissions hereunder of the
Servicer until such time as the Trustee may be required to act as Servicer
pursuant to Section 8.02; and
(vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through an Affiliate,
agents or attorneys or a custodian and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such Affiliate, agent,
attorney or custodian appointed with due care by it hereunder.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the authentication
of the Trustee on the Certificates) shall be taken as the statements of the
Depositor, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Agreement or of the Certificates (other than the signature and
authentication of the Trustee on the Certificates) or of any Mortgage Loan or
Related Document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the
63
<PAGE>
Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any hazard insurance thereon (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02); the validity of the
assignment of any Mortgage Loan to the Trustee or of any intervening assignment;
the completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 8.02); the compliance by the Depositor, the Seller or the
Servicer with any warranty or representation made under this Agreement or in any
related document or the accuracy of any such warranty or representation prior to
the Trustee's receipt of notice or other discovery of any non-compliance
therewith or any breach thereof; any investment of monies by or at the direction
of the Servicer or any loss resulting therefrom, it being understood that the
Trustee shall remain responsible for any Trust property that it may hold in its
individual capacity; the acts or omissions of any of the Depositor, the Servicer
(other than if the Trustee shall assume the duties of the Servicer pursuant to
Section 8.02), any subservicer or any Mortgagor; any action of the Servicer
(other than if the Trustee shall assume the duties of the Servicer pursuant to
Section 8.02), or any subservicer taken in the name of the Trustee; the failure
of the Servicer or any subservicer to act or perform any duties required of it
as agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Servicer (other than if the Trustee shall assume the duties
of the Servicer pursuant to Section 8.02); provided, however, that the foregoing
shall not relieve the Trustee of its obligation to perform its duties under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder (unless the Trustee shall have become the successor Servicer) or to
record this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Investor Certificates
with the same rights as it would have if it were not Trustee and may transact
any banking and trust business with the Seller, the Servicer, the Credit
Enhancer or the Depositor.
Section 9.05. Servicer to Pay Trustee's Fees and Expenses; Servicer to
Indemnify. To the extent not otherwise paid pursuant to Section 5.01(a)(i), the
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all Persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith or which is the responsibility of Certificateholders
hereunder. The Servicer covenants and agrees to indemnify the Trustee from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses other than those resulting from the gross negligence or bad faith of
the Trustee. This Section 9.05 shall survive termination of this Agreement or
the resignation or removal of any Trustee hereunder.
64
<PAGE>
Section 9.06. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation duly incorporated and validly existing under
the laws of the United States of America or any State thereof, 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
federal or state authority. If such corporation 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 9.06,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. The principal office of the Trustee (other than the initial
Trustee) shall be in a state with respect to which an Opinion of Counsel has
been delivered to such Trustee at the time such Trustee is appointed Trustee to
the effect that the Trust will not be a taxable entity under the laws of such
state. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 9.06, the Trustee shall resign immediately
in the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Transferor, the Depositor, the Servicer, the Credit
Enhancer and each Rating Agency. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor Trustee (approved in writing by
the Credit Enhancer, so long as such approval is not unreasonably withheld) by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee (who shall deliver a copy to the Servicer)
and one copy to the successor Trustee; provided, however, that any such
successor Trustee shall be subject to the prior written approval of the
Transferor. If no successor Trustee shall have been so 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.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Transferor or the Credit Enhancer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or if a
tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund is located (which tax cannot be vacated by
the appointment of a co-Trustee or separate trustee pursuant to Section 9.10),
then the Transferor or the Credit Enhancer may remove the Trustee. If the
Transferor or the Credit Enhancer removes the Trustee under the authority of the
immediately preceding sentence, the Transferor shall promptly appoint a
successor Trustee (approved in writing by the Credit Enhancer, which approval
shall not be unreasonably withheld) by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee.
The Holders of Investor Certificates evidencing Percentage Interests
aggregating more than 50% of all Investor Certificates may at any time remove
the Trustee by written instrument or instruments delivered to the Servicer, the
Transferor and the Trustee, and the Transferor shall thereupon use its best
efforts to appoint a successor trustee in accordance with this Section 9.07.
65
<PAGE>
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Transferor, the Depositor, the Servicer, the Credit Enhancer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Transferor, the Depositor, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 9.08, the successor Trustee shall mail notice of the succession of such
Trustee hereunder to all Holders of Investor Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Servicer
fails to mail such notice within 30 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any Person into which the
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 9.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, any thing herein to the contrary notwithstanding.
Section 9.10. 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 or any Mortgaged Property may at the time be located, the
Transferor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments necessary to appoint one or more Persons approved by
the Credit Enhancer to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust or any part thereof,
and, subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Transferor and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be subject
to the written approval of the Servicer and the Credit Enhancer. If the
Transferor shall not have joined in such appointment within 15 days after the
66
<PAGE>
receipt by it of a request so to do, or if an Event of Servicing Termination
shall have occurred and be continuing, the Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.06 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 9.08. The Servicer shall be
responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by law, 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
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 trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee,
provided that following the occurrence of an Event of Servicing
Termination, the Trustee acting alone may accept the resignation 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. Each instrument appointing any separate
trustee or co-trustee shall refer to this Agreement and the conditions of this
Article IX. 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 provide 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. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Transferor and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of it 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.
67
<PAGE>
Section 9.11. Limitation of Liability. The Certificates are executed by the
Trustee, not in its individual capacity but solely as Trustee of the Trust, in
the exercise of the powers and authority conferred and vested in it by the Trust
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee, but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Investor Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Investor Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in it own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit or the Certificateholders in respect of which such
judgment has been recovered.
Section 9.13. Suits for Enforcement. If an Event of Servicing Termination
or other default by the Servicer, the Transferor, the Depositor or the Seller
hereunder shall occur and be continuing, the Trustee, in its discretion, may
proceed to protect and enforce its rights and the rights of the Investor
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee and the
Investor Certificateholder.
ARTICLE X
Termination
Section 10.01. Termination.
(a) The respective obligations and responsibilities of the Servicer, the
Depositor, the Transferor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Servicer to send certain
notices as hereinafter set forth) shall terminate upon the last action required
to be taken by the Trustee on the final Distribution Date pursuant to this
Article X following the later of (A) payment in full of all amounts owing to the
Credit Enhancer and (B) the earliest of (i) the transfer, under the conditions
specified in Section 10.01(b), to the holder of the Transferor Interest of each
Mortgage Loan and all property acquired in respect of any Mortgage Loan
remaining in the Trust for an amount equal to the sum of (w) the Investor
Certificate Principal Balance, (x) accrued and unpaid Investor Certificate
Interest through the day preceding the final Distribution Date, (y) interest
accrued on any Unpaid Investor Certificate Interest Shortfall, to the extent
legally permissible and (z) any unpaid LIBOR Interest Carryover, (ii) the day
following the Distribution Date on which the distribution made to Investor
Certificateholders has reduced the Investor Certificate Principal Balance to
zero, (iii) the final
68
<PAGE>
payment or other liquidation of the last Mortgage Loan remaining in the Trust or
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (iv) the Distribution Date in July 2020;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the date of the death of the last
surviving descendant of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof. Upon termination in
accordance with Section 10.01(i) or (ii), the Trustee shall execute such
documents and instruments of transfer presented by the holder of the Transferor
Interest, in each case without recourse, representation or warranty, and take
such other actions as the holder of the Transferor Interest may reasonably
request to effect the transfer of the Mortgage Loans to the holder of the
Transferor Interest.
(b) The holder of the Transferor Interest shall have the right to exercise
the option to effect the transfer to the holder of the Transferor Interest of
each Mortgage Loan pursuant to Section 10.01(a) above on any Distribution Date
on or after the Distribution Date immediately prior to which the Investor
Certificate Principal Balance is less than 5 percent of the Original Investor
Certificate Principal Balance and all amounts due and owing to the Credit
Enhancer for unpaid premiums and unreimbursed draws on the Policy, together with
interest thereon as provided under the Insurance Agreement, have been paid.
(c) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Investor Certificateholders may surrender their Investor Certificates to the
Trustee for payment of the final distribution and cancellation, shall be given
promptly by the Trustee (upon receipt of written directions from the holder of
the Transferor Interest, if the holder of the Transferor Interest is exercising
its right to transfer of the Mortgage Loans, given not later than the first day
of the month preceding the month of such final distribution) to the Credit
Enhancer and to the Servicer by letter to Investor Certificateholders mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Distribution
Date upon which final distribution to the Investor Certificates will be made
upon presentation and surrender of Investor Certificates at the office or agency
of the Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Investor Certificates at the office or agency
of the Trustee therein specified. If written directions are delivered by the
holder of the Transferor Interest to the Trustee as described in the preceding
sentence, the holder of the Transferor Interest shall deposit in the Collection
Account on or before the Distribution Date for such final distribution in
immediately available funds an amount which, when added to the funds on deposit
in the Collection Account that are payable to the Investor Certificateholders,
will be equal to the retransfer amount for the Mortgage Loans computed as above
provided.
(d) Upon presentation and surrender of the Investor Certificates, the
Trustee shall cause to be distributed to the Holders of Investor Certificates on
the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Investor Certificates and to the extent
that funds are available for such purpose, an amount equal to (i) if such final
distribution is not being made pursuant to the transfer to the holder of the
Transferor Interest pursuant to Section 10.01(a)(i), the amount required to be
distributed to Investor Certificateholders pursuant to Section 5.01 for such
Distribution Date and (ii) if such final
69
<PAGE>
distribution is being made pursuant to such retransfer, the amount specified in
Section 10.01(a)(i). The distribution on such final Distribution Date pursuant
to a retransfer pursuant to Section 10.01(a)(i) shall be in lieu of the
distribution otherwise required to be made on such Distribution Date in respect
of the Investor Certificates. On the final Distribution Date prior to having
made the distributions called for above, based upon the information set forth in
the Servicing Certificate for such Distribution Date, the Trustee shall withdraw
from the Collection Account and remit to the Credit Enhancer the lesser of (x)
the amount available for distribution on such final Distribution Date, net of
any portion thereof necessary to pay the amounts described in Section
10.01(d)(i) and (ii) and (y) the unpaid amounts due and owing to the Credit
Enhancer for unpaid premiums and unreimbursed draws on the Policy, together with
interest thereon as provided under the Insurance Agreement.
(e) In the event that all of the Investor Certificateholders shall not
surrender their Investor Certificates for final payment and cancellation on or
before such final Distribution Date, the Trustee shall on such date cause all
funds in the Collection Account not distributed in final distribution to
Investor Certificateholders to be withdrawn therefrom and credited to the
remaining Investor Certificateholders by depositing such funds in a separate
escrow account for the benefit of such Investor Certificateholders, and the
holder of the Transferor Interest (if the holder of the Transferor Interest has
exercised its right to transfer the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Investor
Certificateholders to surrender their Investor Certificates for cancellation and
receive the final distribution with respect thereto. If within one year after
the second notice all the Investor Certificates shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Investor
Certificateholders concerning surrender of their Investor Certificates, and the
cost thereof shall be paid out of the funds on deposit in such escrow account.
(f) Upon payment of all amounts owed under the Policy and cancellation of
the Investor Certificates, the Trustee shall provide the Credit Enhancer notice
of cancellation of the Investor Certificates and surrender the Policy to the
Credit Enhancer.
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events. If any one of the following
events shall occur during the Managed Amortization Period:
(a) failure on the part of the Servicer (i) to make any payment or deposit
required by the terms of this Agreement on or before the date occurring three
Business Days after the date such payment or deposit is required to be made
herein or (ii) duly to observe or perform in any material respect the covenants
of the Servicer set forth in this Agreement, which failure, in each case,
materially and adversely affects the interests of the Certificateholders or the
Credit Enhancer and which, in the case of clause (ii), continues unremedied and
continues to affect materially and adversely the interests of the
Certificateholders for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
70
<PAGE>
given to the Seller by the Trustee, or to the Seller and the Trustee by the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51%;
(b) any representation or warranty made by the Servicer in this Agreement
or the Sellers in the Purchase Agreement shall prove to have been incorrect in
any material respect when made, as a result of which the interests of the
Investor Certificateholders or the Credit Enhancer are materially and adversely
affected, and shall continue to be incorrect in any material respect and
continue to affect materially and adversely the interests of the Investor
Certificateholders or the Credit Enhancer for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Sellers or the Servicer, as the case may be, by the
Trustee, or to the Sellers, the Servicer and the Trustee by either the Credit
Enhancer or the Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 51%; provided, however, that a Rapid Amortization
Event pursuant to this subparagraph (b) shall not be deemed to have occurred
hereunder if a Seller has accepted retransfer of the related Mortgage Loan or
Mortgage Loans during such period (or such longer period (not to exceed an
additional 60 days) as the Trustee may specify) in accordance with the
provisions hereof;
(c) any Seller or Bank One, N.A., as holder of the Transferor Interest,
shall go into liquidation, consent to the appointment of a conservator or
receiver or liquidator or similar person in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to any Seller or Bank One, N.A., as holder of the Transferor Interest,
or of or relating to all or substantially all of such Person's property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver,
liquidator or similar person 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 any
Seller or Bank One, N.A., as holder of the Transferor Interest, and such decree
or order shall have remained in force undischarged or unstayed for a period of
30 days; or any Seller or Bank One, N.A., as holder of the Transferor Interest,
shall admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations;
(d) the Trust shall become subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended; or
(e) the aggregate of all draws under the Policy exceeds 1% of the Cut-Off
Date Pool Balance;
then, in the case of any event described in subparagraph (a) or (b) after the
applicable grace period, if any, set forth in such subparagraphs, either the
Trustee, the Credit Enhancer or the Holders of Certificates evidencing
Percentage Interests aggregating more than 51%, by notice given in writing to
the holder of the Transferor Interest, the Depositor and the Servicer (and to
the Trustee if given by either the Credit Enhancer or the Certificateholders)
may declare that an early amortization event (a "Rapid Amortization Event") has
occurred as of the date of such notice, and in the case of any event described
in subparagraph (c), (d) or (e), a Rapid
71
<PAGE>
Amortization Event shall occur without any notice or other action on the part of
the Trustee, the Credit Enhancer or the Certificateholders, immediately upon the
occurrence of such event.
Section 11.02. Additional Rights Upon the Occurrence of Certain Events.
(a) If Bank One, N.A., as holder of the Transferor Interest, goes into
liquidation or consents to the appointment of a conservator or receiver or
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
Bank One, N.A., as holder of the Transferor Interest, or of or relating to all
or substantially all its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator or receiver or liquidator or similar person 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 Bank One, N.A., as holder of the Transferor Interest and
such decree shall have remained in force undischarged or unstayed for a period
of 30 days; or Bank One, N.A., as holder of the Transferor Interest, shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations (such voluntary liquidation, appointment,
entering of such decree, admission, filing, making, suspension or violation or
other event described above, an "Insolvency Event"), Bank One, N.A., as holder
of the Transferor Interest, shall on the day of such appointment, liquidation,
entering of such decree, admission, filing, making, suspension or inability, as
the case may be (the "Appointment Day"), promptly give notice to the Trustee,
the Servicer and the Credit Enhancer of such Insolvency Event. Within 15 days of
the receipt by the Trustee of Bank One's notice of an Insolvency Event, the
Trustee, upon the direction of the Credit Enhancer or of the Certificateholders
representing more than 51% of the aggregate Principal Balance of the
Certificates, with the consent of the Credit Enhancer shall (i) publish a notice
in Authorized Newspapers that an Insolvency Event has occurred and that the
Trustee intends to direct the Servicer to sell, dispose of or otherwise
liquidate the Mortgage Loans in a commercially reasonable manner and (ii) send
written notice to the Certificateholders describing the provisions of this
Section 11.02, which notice shall inform Certificateholders that unless more
than 51% of all Certificateholders advise the Trustee in writing that they wish
the Trustee to instruct the Servicer not to sell, dispose of or otherwise
liquidate the Mortgage Loans within 90 days from the day notice pursuant to
clause (i) above is first published (the "Publication Date"), the Trustee shall
instruct the Servicer to proceed to sell, dispose of, or otherwise liquidate the
Mortgage Loans in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids, and
shall proceed to consummate the sale, liquidation or disposition of the Mortgage
Loans as provided above with the highest bidder for the Mortgage Loans. Bank
One, N.A., as holder of the Transferor Interest, shall be permitted to bid for
the Mortgage Loans. The Trustee may obtain a prior determination from such
conservator or receiver that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable. The provisions of
Sections 11.01 and 11.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the Mortgage
Loans pursuant to Section 11.02(a) shall be treated as collections on the
Mortgage Loans received during the Rapid Amortization Period; provided, however,
that such proceeds will, based on amounts
72
<PAGE>
specified in writing by the Servicer to the Trustee, first be paid to the Credit
Enhancer to reimburse the Credit Enhancer for previously unreimbursed Credit
Enhancement Draw Amounts and other amounts owing under the Insurance Agreement;
and provided, further, that the Investor Fixed Allocation Percentage of such
remaining proceeds shall be paid to Certificateholders in the following amounts
and order of priority:
(i) all accrued and unpaid interest on the Certificate Principal
Balance through the Interest Period immediately preceding the Distribution
Date on which such proceeds are distributed to the Certificateholders; and
(ii) an amount of principal up to the Certificate Principal Balance.
The Policy shall cover any shortfall in the event such proceeds are insufficient
to make the distributions to Certificateholders pursuant to Section 11.02(b). On
the day following the Distribution Date on which such proceeds are distributed
to the Certificateholders, the Trust shall terminate.
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment. This Agreement may be amended from time to time
by the Servicer, the Depositor and the Trustee, in each case without the consent
of any of the Investor Certificateholders, but only with the consent of the
Credit Enhancer (which consent shall not be unreasonably withheld), (i) to cure
any ambiguity, (ii) to correct any defective provisions or to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein, (iii) to add to the duties of the Depositor or the Servicer,
(iv) to add any other provisions with respect to matters or questions arising
under this Agreement or the Policy, as the case may be, which shall not be
inconsistent with the provisions of this Agreement, (v) to add or amend any
provisions of this Agreement as required by any Rating Agency or any other
nationally recognized statistical rating organization in order to maintain or
improve any rating of the Certificates (it being understood that, after
obtaining the ratings in effect on the Closing Date, neither the Trustee, the
Depositor nor the Servicer is obligated to obtain, maintain or improve any such
rating), (vi) to add or amend any provisions of this Agreement to correct or
cure any defective provision or ambiguity as a result of a transfer of the
Transferor Interest pursuant to Section 6.05, (vii) to comply with any
requirement imposed by the Code or (viii) to add any other provisions with
respect to matters or questions arising under this Agreement that are not
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, materially and
adversely affect the interests of any Investor Certificateholder or the Credit
Enhancer; and provided, further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Investor
Certificateholders and no opinion referred to in the preceding proviso shall be
required to be delivered if the Person requesting the amendment obtains a letter
from each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates without regard to the Policy. Notwithstanding the foregoing, any
amendment pursuant to clause (viii) above shall be permissible only upon receipt
of a letter from each Rating Agency stating that the amendment would not result
in the
73
<PAGE>
downgrading or withdrawal of the respective ratings then assigned to the
Certificateholders without regard to the Policy.
This Agreement also may be amended from time to time by the Servicer, the
Seller, the Depositor and the Trustee, and the Servicer and the Credit Enhancer
may from time to time consent to the amendment of the Policy with the consent of
the Holders of the Certificates evidencing Percentage Interests aggregating not
less than 51%, and in the case of an amendment to this Agreement, with the
consent of the Credit Enhancer for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Investor Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments on the Investor Certificates or
distributions or payments under the Policy that are required to be made on any
Investor Certificate without the consent of the Holder of such Investor
Certificate or (ii) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of the Holders of all Investor Certificates
then outstanding or (iii) adversely effect in any material respect the interests
of the Credit Enhancer.
If Treasury Regulations Sections 301-7701 et. seq. are amended to permit
the Trust to qualify as other than an association taxable as a corporation (if
the Trust is not otherwise treated as a security device) and the Trustee
receives an Officer's Investor Certificate from the Servicer of such amendment,
the Trust will make an election and Section 11.02(a) shall not be given effect.
Notwithstanding the foregoing, the Agreement may not be amended unless, in
connection with such amendment, an Opinion of Counsel is furnished to the
Trustee that such amendment will not (i) adversely affect the status of the
Certificates as debt; (ii) result in the Trust being taxable at the entity
level; or (iii) result in the Trust being classified as a taxable mortgage pool
(as defined in Section 7701(i) of the Code).
Following the execution and delivery of any such amendment hereto or to the
Policy to which the Credit Enhancer was required to consent, either the holder
of the Transferor Interest, if the holder of the Transferor Interest requested
the amendment, or the Servicer, if the Servicer requested the amendment, shall
reimburse the Credit Enhancer for the reasonable out-of-pocket costs and
expenses incurred by the Credit Enhancer in connection with such amendment.
Prior to the execution of any such amendment, the party hereto requesting
any such amendment shall furnish written notification of the substance of such
amendment to each Rating Agency. In addition, promptly after the execution of
any such amendment made with the consent of the Certificateholders, the Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder and fully executed original counterparts of the instruments
effecting such amendment to the Credit Enhancer.
It shall not be necessary for the consent of Certificateholders under this
Section 12.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
74
<PAGE>
In executing any amendment permitted by this Section 12.01, the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that such amendment is authorized or permitted hereby
and that all conditions precedent to the execution and delivery of such
amendment have been satisfied. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 12.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of Certificateholders. The Certificateholders requesting
such recordation shall bear all costs and expenses of such recordation. The
Trustee shall have no obligation to ascertain whether such recordation so
affects the interests of the Investor Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counter-parts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
Section 12.03. Limitation on Rights of Investor Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Investor Certificateholder shall have any right to vote (except as
provided in Sections 8.01, 9.01, 9.02, 11.01 and 12.01) or in any manner
otherwise control the operation and management of the Trust, or the obligations
of the parties hereto, nor shall any thing herein set forth, or contained in the
terms of the Investor Certificates, be construed so as to constitute the
Investor Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
No Investor Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing Percentage Interests aggregating not
less than 51% shall have made written request to the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it
75
<PAGE>
being understood and intended, and being expressly covenanted by each Investor
Certificateholder with every other Investor Certificateholder and the Trustee,
that no one or more Holders of Investor Certificates shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Investor Certificates, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Investor Certificateholders. For the protection and
enforcement of the provisions of this Section 12.03, each and every Investor
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
By accepting its Certificate, each Certificateholder agrees that unless a
Credit Enhancer Default exists, the Credit Enhancer shall have the right to
exercise all rights of the Certificateholders under this Agreement without an
further consent of the Certificateholders.
Section 12.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 12.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Depositor, 100 East Broad Street, Columbus, OH 43271-0138,
Attention: Structured Finance, (b) in the case of the Servicer, Bank One, N.A.,
100 East Broad Street, Columbus, OH 43271-0138, (c) in the case of the Trustee,
at the Corporate Trust Office, (d) in the case of the Credit Enhancer, MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management, Structured Finance, (e) in the case of Moody's,
Residential Loan Monitoring Group, 4th Floor, 99 Church Street, New York, New
York 10007, and (f) in the case of Standard & Poor's, 55 Water Street, 40th
Floor, New York, New York 10041-0003, or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Investor
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Investor Certificate Register. Any notice
so mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Investor Certificateholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Trustee to any Rating Agency shall be given on a best efforts
basis and only as a matter of courtesy and accommodation and the Trustee shall
have no liability for failure to deliver such notice or document to any Rating
Agency.
Section 12.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Investor
Certificates or the rights of the Holders thereof.
76
<PAGE>
Section 12.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.05, 7.02 and 7.04, this
Agreement may not be assigned by the Depositor or the Servicer without the prior
written consent of the Credit Enhancer and Holders of the Certificates
evidencing Percentage Interests aggregating not less than 66%.
Section 12.08. Investor Certificates Nonassessable and Fully Paid. The
parties agree that the Certificateholders shall not be personally liable for
obligations of the Trust, that the beneficial ownership interests represented by
the Investor Certificates shall be nonassessable for any losses or expenses of
the Trust or for any reason whatsoever and that the Investor Certificates upon
execution, authentication and delivery thereof by the Trustee pursuant to
Section 2.08 or 6.02 are and shall be deemed full paid.
Section 12.09. Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, the Investor
Certificateholders, the Investor Certificate owners, the Credit Enhancer and
their respective successors and permitted assigns. Except as otherwise provided
in this Agreement, no other Person will have any right or obligation hereunder.
Section 12.10. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 12.11. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 12.12. Insurance Agreement. The Trustee is authorized and directed
to execute and deliver the Insurance Agreement and to perform the obligations of
the Trustee thereunder.
77
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.
BANC ONE ABS CORPORATION,
As Depositor
By /s/ Daniel A. Long, Jr.
----------------------------------
Name: Daniel A. Long, Jr.
Title: Vice President
BANK ONE, N.A.,
As Servicer
By /s/ Daniel A. Long, Jr.
----------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
THE BANK OF NEW YORK
As Trustee
By /s/ Franklin B. Austin
----------------------------------
Name: Franklin B. Austin
Title: Vice President
<PAGE>
State of NEW YORK )
) ss.:
County of NEW YORK )
On the 23rd day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Daniel A. Long, Jr., known to me who,
being by me duly sworn, did depose and say that he is Vice President of Banc One
ABS Corporation, an Ohio corporation, one of the parties that executed the
foregoing instrument, and acknowledged to me that such corporation executed the
within instrument.
/s/ Anita Chiu
-------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of NEW YORK )
) ss.:
County of NEW YORK )
On the 23rd day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Daniel A. Long, Jr., known to me who,
being by me duly sworn, did depose and say that he is the Assistant Vice
President - Funds Management of Bank One, N.A., a national banking association,
one of the parties that executed the foregoing instrument and acknowledged to me
that such association executed the within instrument.
/s/ Anita Chiu
-------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Franklin Austin, known to me who, being
by me duly sworn, did depose and say that he is the Vice President of The Bank
of New York, N.A., a national banking association, one of the parties that
executed the foregoing instrument, and acknowledged to me that such association
executed the within instrument.
/s/ Anita Chiu
-------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A
[FORM OF INVESTOR CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Original Investor Certificate Principal
Balance of this Investor Certificate : $________________
Certificate Rate : The lesser of a per annum
rate equal to (i) the sum of
(a) LIBOR, as determined in
accordance with the Pooling
and Servicing Agreement,
plus (b) 0.26% and (ii) the
Net Funds Cap Rate, as
determined in accordance
with the Pooling and
Servicing Agreement
Initial Aggregate Investor Certificate
Principal Balance of all Investor
Certificates : $500,000,000
Percentage Interest represented
by this Investor Certificate : _______%
CUSIP No. : 05945LAB6
Date of Pooling and Servicing
Agreement : May 31, 1999
Certificate No. : I-__
Cut-Off Date : May 31, 1999
First Distribution Date : July 20, 1999
A-1
<PAGE>
HELOC ASSET-BACKED CERTIFICATES
SERIES 1999-1
INVESTOR CERTIFICATE
evidencing a percentage interest in the distributions
allocable to the Investor Certificates evidencing
an undivided interest in a Trust consisting
primarily of a pool of adjustable rate HELOC mortgage
loans sold by
BANC ONE ABS CORPORATION
This Certificate does not represent an obligation of or interest in Banc
One ABS Corporation (the "Depositor"), Bank One, N.A. or the Trustee referred to
below or any of their affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Original
Investor Certificate Principal Balance of this Certificate by the aggregate
Original Investor Certificate Principal Balance of all Investor Certificates) in
certain monthly distributions with respect to a Trust consisting primarily of a
pool of adjustable rate home equity revolving credit line loans (the "Mortgage
Loans"), transferred by the Depositor to the Trustee and serviced by Bank One,
N.A. (in such capacity, the "Servicer," including any successor Servicer under
the Agreement referred to below). The Trust was created pursuant to a Pooling
and Servicing Agreement, dated as of May 31, 1999 (the "Agreement"), among the
Depositor, the Servicer and The Bank of New York, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
This Certificate is one of the Investor Certificates from a duly authorized
issue of Certificates designated as HELOC Asset-Backed Certificates, Series
1999-1, representing, to the extent specified in the Agreement, an undivided
interest in: (i) the Mortgage Loans and the proceeds thereof, (ii) property that
secured a Mortgage Loan and that has been acquired by foreclosure or deed in
lieu of foreclosure, (iii) an irrevocable and unconditional limited financial
guarantee insurance policy (the "Policy"), (iv) the interest of the Depositor in
certain hazard insurance policies in respect of the Mortgage Loans, (v) an
assignment of the Depositor's rights under the Mortgage Loan Purchase Agreement,
dated as of May 31, 1999, among Bank One, N.A., Bank One, Arizona, N.A., Bank
One, Colorado, N.A., Bank One, Illinois, N.A., Bank One, Indiana, N.A., Bank
One, Kentucky, N.A., Bank One, Utah, N.A., and Bank One, Wisconsin (each, a
"Seller," and collectively, the "Sellers") and the Depositor, as purchaser
(collectively, the "Trust Assets") and (vi) certain other property described in
the Agreement.
Distributions on this Certificate will be made by the Trustee, or by the
Paying Agent, if any, appointed pursuant to the Agreement, by check mailed to
the Person entitled thereto as such name and address shall appear on the
Certificate Register or, upon written request by such Person delivered to the
Paying Agent at least five business days prior to the related Record Date,
A-2
<PAGE>
by wire transfer (but only if such Person owns of record one or more Investor
Certificates having principal denominations aggregating at least $1,000,000), or
by such other means of payment as such Person and the Paying Agent shall agree.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice to the Trustee or the Paying Agent, if one has been
appointed, of the pendency of such distribution, and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose.
Pursuant to the terms of the Agreement, a distribution will be made on the
20th day of each month or if such day is not a Business Day, then on the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last day preceding such
Distribution Date for so long as this Investor Certificate is registered in the
name of Cede & Co. or another Depositary (as defined in the Agreement) (or if
Definitive Certificates (as defined in the Agreement) have been made available,
the last day of the calendar month preceding the month in which the related
Distribution Date occurs) (each such date, the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Investor Certificates on
such Distribution Date under the terms of the Agreement. Notwithstanding the
foregoing, if Definitive Certificates have become available pursuant to the
Agreement, the Record Date shall be the last day of the calendar month preceding
the month of such Distribution Date.
The Certificates are limited in right of payment to certain payments on and
collections in respect of the Mortgage Loans, all as more specifically set forth
in the Agreement. The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds on deposit in the Collection
Account for payment hereunder, and that the Trustee in its individual capacity
is not personally liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
As provided in the Agreement, withdrawals from the Collection Account may
be made from time to time for purposes other than distributions to the Investor
Certificateholders and, subject to certain conditions in the Agreement, Mortgage
Loans may be removed from the Trust and transferred to the Holder of the
Transferor Interest (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced hereby, and the rights, duties and
immunities of the Trustee.
It is the intention of the Transferor, the Depositor and the Investor
Certificateholders that the Investor Certificates will be indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income. The Depositor, the Trustee and
the Holder of this Certificate (or Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agrees to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness secured by the Trust Assets and to report
the transactions contemplated by the Agreement on all applicable tax returns in
a manner consistent with such treatment. Each Holder of this Certificate agrees
that it will cause any Certificate Owner acquiring an interest in this
Certificate through it to comply with the
A-3
<PAGE>
Agreement as to treatment as indebtedness for federal, state and local income
and franchise tax purposes and for purposes of any other tax imposed on or
measured by income.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Servicer, the Depositor and the Trustee, and the rights of the
Certificateholders under the Agreement, at any time by the Servicer, the
Depositor and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51% and
(ii) of the Credit Enhancer. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor and in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Investor Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar for such purpose, accompanied by a written instrument of transfer in
form satisfactory to the Servicer, the Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations,
if applicable, and evidencing the same aggregate Percentage Interest will be
issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of a like tenor in authorized denominations
(in the case of Investor Certificates) and evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee or the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee, the Servicer, the Depositor, the Credit Enhancer, and the
Certificate Registrar and any agent of the foregoing may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Trustee, the Servicer, the Depositor, the Credit Enhancer, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon distribution to the Certificateholders, or
provision therefor, of the amount required to be so distributed in accordance
with the Agreement upon the later of (i) payment in full of all amounts owing to
the Credit Enhancer and (ii) the earliest of (a) the transfer, under the
conditions specified in the Agreement, to the Holder of the Transferor Interest
(as defined in the Agreement) of all property acquired in respect of any
Mortgage Loan remaining in the Trust, (b) the day following the Distribution
Date on which distributions reduce the Investor Certificate Principal Balance to
zero, (c) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust or (d) the Distribution Date in July 2020. The Transferor
may effect an early retirement of the Certificates by paying the retransfer
price and accepting retransfer of the Trust Assets pursuant to the terms of the
Agreement on any
A-4
<PAGE>
Distribution Date after the Investor Certificate Principal Balance is less than
or equal to 5% of the Original Investor Certificate Principal Balance; provided,
however, that in no event shall the Trust continue beyond the expiration of 21
years from the death of certain persons named in the Agreement. Upon retirement
of the Certificates in accordance with Section 10.01 of the Agreement, the
Trustee shall execute such documents and instruments of transfer presented by
the Transferor and take such other actions as the Transferor may reasonably
request to effect the retransfer of the Mortgage Loans to the Transferor.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual or facsimile signature, this Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
not in its individual capacity, but
solely as Trustee on behalf of the
Trust
By: ________________________________
Certificate of Authentication:
This is one of the Investor Certificates
referenced in the within-mentioned
Agreement.
By: _____________________________
Authorized Officer
<PAGE>
EXHIBIT B
[FORM OF TRANSFEROR CERTIFICATE]
THIS TRANSFEROR CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. NEITHER THIS TRANSFEROR CERTIFICATE NOR ANY
INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE
EITHER: (A) A REPRESENTATION LETTER TO THE EFFECT THAT (i) SUCH TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING
ON BEHALF OF, OR WITH "PLAN ASSETS" OF, ANY SUCH PLAN, OR (ii) SUCH TRANSFEREE
IS AN INSURANCE COMPANY WHICH IS PURCHASING THIS TRANSFEROR CERTIFICATE WITH
FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS
DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60")) AND THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 95-60 OR (B) IN THE CASE OF ANY TRANSFEROR
CERTIFICATE PRESENTED FOR REGISTRATION IN THE NAME OF AN EMPLOYEE BENEFIT OR
OTHER PLAN SUBJECT TO ERISA OR SECTION 4975 OF THE CODE, A TRUSTEE OF ANY SUCH
PLAN, OR A PERSON USING "PLAN ASSETS" OF ANY SUCH PLAN, AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05(d) OF THE AGREEMENT REFERRED TO
HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT OR OTHER
PLAN SUBJECT TO ERISA OR SECTION 4975 OF THE CODE WITHOUT THE OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-1
<PAGE>
Date of Pooling and
Servicing Agreement : May 31, 1999
Certificate No. : T-1
Cut-Off Date : May 31, 1999
First Distribution Date : July 20, 1999
Percentage Interest: : 100%
HELOC ASSET-BACKED CERTIFICATES
SERIES 1999-1
TRANSFEROR CERTIFICATE
evidencing a percentage interest in the distributions
allocable to the Transferor Interest evidencing
an undivided interest in a Trust consisting
primarily of a pool of adjustable rate HELOC mortgage
loans sold by
BANC ONE ABS CORPORATION
This Transferor Certificate does not represent an obligation of or interest
in Banc One ABS Corporation (the "Depositor"), Bank One, N.A. or the Trustee
referred to below or any of their affiliates. Neither this Transferor
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that Bank One, N.A. is the registered owner of the
Percentage Interest evidenced by this Transferor Certificate in the interest
allocated to the Transferor Interest with respect to a Trust consisting
primarily of a pool of mortgage loans (the "Mortgage Loans"), transferred by the
Depositor to the Trustee and serviced by Bank One, N.A. (in such capacity, the
"Servicer," including any successor Servicer under the Agreement referred to
below). The Trust was created pursuant to a Pooling and Servicing Agreement,
dated as of May 31, 1999 (the "Agreement"), among the Depositor, the Servicer
and The Bank of New York, as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Transferor Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the holder
of this Transferor Certificate by virtue of the acceptance hereof assents and by
which such holder is bound.
This Transferor Certificate is one of the Transferor Certificates from a
duly authorized issue of Certificates designated as HELOC Asset-Backed
Certificates, Series 1999-1, representing, to the extent specified in the
Agreement, an undivided interest in: (i) the Mortgage Loans and the proceeds
thereof, (ii) such other assets as shall from time to time be deposited in
B-2
<PAGE>
the Collection Account in accordance with the Agreement, (iii) property that
secured a Mortgage Loan and that has become REO, (iv) the interest of the
Depositor in certain hazard insurance policies in respect of the Mortgage Loans,
and (v) an assignment of the Depositor's rights under the Mortgage Loan Purchase
Agreement, dated as of June 23, 1999, among Bank One, N.A., Bank One, Arizona,
N.A., Bank One, Colorado, N.A., Bank One, Illinois, N.A., Bank One, Indiana,
N.A., Bank One, Kentucky, N.A., Bank One, Utah, N.A., and Bank One, Wisconsin
(each, a "Seller," and collectively, the "Sellers") and the Depositor, as
purchaser (collectively, the "Trust Assets").
The Transferor Certificates are limited in right of payment to certain
payments on and collections in respect of the Trust Assets, all as more
specifically set forth in the Agreement. The holder of the Transferor
Certificate, by its acceptance of this Transferor Certificate, agrees that it
will look solely to the funds on deposit in the Collection Account for payment
hereunder, and that the Trustee in its individual capacity is not personally
liable to the holders of the Transferor Certificate, for any amount payable
under this Transferor Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Transferor Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Servicer, the Depositor and the Trustee, and the rights of the holders of the
Transferor Certificate under the Agreement, at any time by the Servicer, the
Depositor and the Trustee with the consent (i) of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51% and
(ii) of the Credit Enhancer. Any such consent shall be conclusive and binding on
the holder of this Transferor Certificate and upon all future holders of this
Transferor Certificate and of any Transferor Certificate issued upon the
transfer hereof or in exchange herefor and in lieu hereof whether or not
notation of such consent is made upon this Transferor Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the holders of any of the Investor Certificates.
No transfer of this Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act"), and any applicable state securities laws or is
made in accordance with said Act and laws. There shall be delivered to the
Trustee either (i) an investment letter acceptable to and in form and substance
satisfactory to the Trustee certifying to the Trustee the facts surrounding such
transfer, which investment letter shall not be an expense of the Trustee or (ii)
if such investment letter is not delivered, a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer is exempt (describing the applicable exemption and
the basis therefor) from or is being made pursuant to the registration
requirements of the Act, which Opinion of Counsel shall not be an expense of the
Trust or the Depositor. The holder hereof desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee 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.
As provided in the Agreement and subject to certain limitations set forth
herein, and subject to the restrictions set forth on the first page hereof,
neither this Transferor Certificate nor
B-3
<PAGE>
any legal or beneficial interest herein may be, directly or indirectly,
purchased, transferred, sold, pledged, assigned or otherwise disposed of, and
any proposed transferee hereof shall not become the registered holder hereof,
without the satisfaction of the conditions set forth in Section 6.05 of the
Agreement.
This Transferor Certificate and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Transferor Certificate shall (A) be organized and
existing under the laws of the United States of America or any state thereof or
the District of Columbia, (B) expressly assume, by an agreement supplemental to
the Agreement, executed and delivered to the Trustee, the performance of every
covenant and obligation of the holder of the Transferor Interest under the
Agreement and (C) as part of its acquisition of a Transferor Certificate,
acquire all rights of the holder of the Transferor Interest or any transferee
under Section 6.05(c) of the Agreement to amounts payable to such holder of the
Transferor Interest or such transferee under Sections 5.01(a)(xii) and 5.01(g)
of the Agreement; (ii) the holder of the Transferor Certificate shall deliver to
the Trustee an Officer's Certificate stating that such transfer and such
supplemental agreement comply with Section 6.05(c) of the Agreement and that all
conditions precedent provided by subsection 6.05(c) of the Agreement have been
complied with and an Opinion of Counsel stating that all conditions precedent
provided by subsection 6.05(c) of the Agreement have been complied with, and the
Trustee may conclusively rely on such Officer's Certificate, shall have no duty
to make inquiries with regard to the matters set forth therein and shall incur
no liability in so relying; (iii) the holder of the Transferor Certificate shall
deliver to the Trustee a letter indicating that each Rating Agency and the
Credit Enhancer have been notified of such transfer; (iv) the transferee of the
Transferor Certificate shall deliver to the Trustee an Opinion of Counsel to the
effect that (a) such transfer will not adversely affect the treatment of the
Investor Certificates after such transfer as debt for federal and applicable
state income tax purposes, (b) such transfer will not result in the Trust being
subject to tax at the entity level for federal or applicable state tax purposes,
(c) such transfer will not have any material adverse impact on the federal or
applicable state income taxation of an Investor Certificateholder or any
Certificate Owner and (d) such transfer will not result in the arrangement
created by the Agreement or any "portion" of the Trust, being treated as a
taxable mortgage pool as defined in Section 7701(i) of the Code; and (v) all
filings and other actions necessary to continue the perfection of the interest
of the Trust in the Mortgage Loans and the other property conveyed hereunder
shall have been taken or made. Notwithstanding the foregoing, the requirement
set forth in subclause (i)(A) of Section 6.05(c) of the Agreement shall not
apply in the event the Trustee shall have received a letter from each Rating
Agency confirming that its rating of the Investor Certificates, after giving
effect to a proposed transfer to a Person that does not meet the requirement set
forth in subclause (i)(A), shall not be reduced or withdrawn. Notwithstanding
the foregoing, the requirements set forth in this paragraph shall not apply to
the initial issuance of the Transferor Certificate to the Transferor.
No service charge shall be made for any such registration of Transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Trustee, the Servicer, the Sellers, the Depositor, the Credit Enhancer,
and the Certificate Registrar and any agent of the foregoing may treat the
Person in whose name this Transferor Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Servicer, the Sellers, the
Depositor, the Credit Enhancer, the Certificate Registrar nor any such agent
shall be affected by any notice to the contrary.
B-4
<PAGE>
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon distribution to the Certificateholders, or
provision therefor, of the amount required to be so distributed in accordance
with the Agreement upon the later of (i) payment in full of all amounts owing to
the Credit Enhancer and (ii) the earliest of (a) the transfer, under the
conditions specified in the Agreement, to the holder of the Transferor Interest
of all property acquired in respect of any Mortgage Loan remaining in the Trust,
(b) the day following the Distribution Date on which distributions reduce the
Investor Certificate Principal Balance to zero, (c) the final payment or other
liquidation of the last Mortgage Loan remaining in the Trust or (d) the
Distribution Date in July 2020. The holder of the Transferor Interest may effect
an early retirement of the Investor Certificates by paying the retransfer price
and accepting retransfer of the Trust Assets pursuant to the terms of the
Agreement on any Distribution Date after the Investor Certificate Principal
Balance is less than or equal to 5% of the Original Investor Certificate
Principal Balance; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of certain persons named in the
Agreement. Upon retirement of the Certificates in accordance with Section 10.01
of the Agreement, the Trustee shall execute such documents and instruments of
transfer presented by the holder of the Transferor Certificate and take such
other actions as the holder of the Transferor Interest may reasonably request to
effect the retransfer of the Mortgage Loans to it.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual or facsimile signature, this Transferor
Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
B-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
not in its individual capacity, but
solely as Trustee on behalf of the
Trust
By: ____________________________
Certificate of Authentication:
This is one of the Transferor Certificates
referenced in the within-mentioned
Agreement.
By: _____________________________
Authorized Officer
<PAGE>
EXHIBIT C
MORTGAGE LOAN SCHEDULE
C-1
<PAGE>
EXHIBIT D
[LETTER OF REPRESENTATIONS]
D-1
<PAGE>
EXHIBIT E
FORM OF INVESTMENT LETTER [NON-RULE 144A]
FOR TRANSFEROR INTEREST
Date:
Banc One ABS Corporation,
as Depositor
[Address]
The Bank of New York,
as Trustee
101 Barclay Street, 12th Floor
New York, New York 10286
Re: Banc One ABS Corporation;
Banc One HELOC Trust 1999-1
HELOC Asset-Backed Certificates, Series 1999-1, Transferor Interest
-------------------------------------------------------------------
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by the undersigned (the
"Transferee") pursuant to the Pooling and Servicing Agreement, dated as of May
31, 1999 (the "Pooling and Servicing Agreement"), among Banc One ABS
Corporation, as Depositor, Bank One, N.A., as Servicer, and The Bank of New
York, as Trustee. Capitalized terms used herein without definition shall have
the meanings set forth in the Pooling and Servicing Agreement. The Transferee
represents to the Depositor as follows:
(i) The Transferee is authorized to enter into the supplemental agreement
delivered pursuant to Section 6.05(c) of the Pooling and Servicing Agreement,
and to perform its obligations thereunder and to consummate the transactions
contemplated thereby;
(ii) The Transferee has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Transferor Interest and the Transferee is able to bear the
economic risk of such investment;
(iii) The Transferee has reviewed the Pooling and Servicing Agreement
(including the exhibits thereto) and related documents and has had the
opportunity to perform due diligence with respect thereto and to ask questions
of and receive answers from the Depositor and its representatives concerning,
among other things, the Transferor Interest;
(iv) The Transferee is the sole party in interest and is not acquiring the
Transferor Interest as an agent or otherwise for any other person;
E-1
<PAGE>
(v) The Transferee is an "accredited investor" as defined in Rule 501,
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). The Transferee understands
that the Transferor Interest has not been and will not be registered under the
Act, and has not and will not be registered or qualified under any applicable
"blue sky" law, and that the offering and sale of the Transferor Interest has
not been reviewed by, passed on or submitted to any federal or state agency or
commission, securities exchange or other regulatory body;
(vi) The Transferee is acquiring the Transferor Interest without a view to
any distribution, resale or other transfer thereof. The Transferee will not
resell, transfer or otherwise dispose of the Transferor Interest or any portion
thereof, except (A) with a letter from the buyer or transferee thereof in
substantially the form hereof and (B) (i) pursuant to an effective registration
statement under the Act; (ii) in a transaction exempt from the registration
requirements of the Act; (iii) to any affiliate of the Depositor; (iv) to a
person whom the Transferee reasonably believes is a qualified institutional
buyer (within the meaning thereof in Rule 144A under the Act) that is aware that
the sale or other transfer is being made in reliance upon Rule 144A; or (v)
pursuant to Regulation S under the Act. In connection therewith, the Transferee
hereby agrees that it will not resell, transfer or otherwise dispose of the
Transferor Interest or any portion thereof except as provided herein, unless the
purchaser thereof provides to the addressees hereof an opinion of counsel to the
effect that such purchase is in compliance with the registration provisions of
the federal securities laws and any applicable provisions under state securities
law or pursuant to an available exemption from such provisions;
(vii) This Investment Letter has been duly authorized, executed and
delivered and constitutes the legal, valid and binding obligations of the
Transferee, enforceable against the Transferee in accordance with its terms,
except as such enforceability may be limited by receivership, conservatorship,
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity;
(viii) Notwithstanding anything to the contrary contained herein, in no
event shall any interest in the Transferor Interest be sold or transferred to an
employee benefit or other plan subject to Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986 (the "Code"), or to a person acting on behalf of,
or with "plan assets" of, any such plan. The Transferee hereby covenants with
you that by its acceptance thereof, it represents and warrants that:
(A) the Transferee is not an employee benefit or other plan subject to
Section 406 of ERISA or Section 4975 of the Code or a person acting on
behalf of, or with "plan assets" of, any such plan; or
(B) if the Transferee is an insurance company, it is purchasing the
Transferor Interest with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")), and the purchase and holding of the
Transferor Interest are eligible for the exemptive relief available under
PTCE 95-60; or
(C) if the Transferee is an employee benefit or other plan subject to
ERISA or Section 4975 of the Code or a trustee of any such plan, the
Transferee has provided to the Trustee an Opinion of Counsel to the effect
that such purchase
E-2
<PAGE>
or holding of the Transferor Interest will not constitute or result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code
and will not subject the Trustee to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement; and
(ix) The Transferee understands that each Transferor Certificate will bear
a legend to substantially the following effect:
THIS TRANSFEROR CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS
WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE
STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 6.05 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS TRANSFEROR CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER: (A) A
REPRESENTATION LETTER TO THE EFFECT THAT (i) SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), OR A PERSON ACTING ON BEHALF OF, OR WITH "PLAN ASSETS" OF, ANY
SUCH PLAN, OR (ii) SUCH TRANSFEREE IS AN INSURANCE COMPANY WHICH IS
PURCHASING THIS TRANSFEROR CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION
V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"))
AND THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 95-60 OR (B) IN THE CASE OF ANY
TRANSFEROR CERTIFICATE PRESENTED FOR REGISTRATION IN THE NAME OF AN
EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO ERISA OR SECTION 4975 OF THE
CODE, A TRUSTEE OF ANY SUCH PLAN, OR A PERSON USING "PLAN ASSETS" OF
ANY SUCH PLAN, AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 6.05(d) OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS
CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT OR OTHER PLAN
SUBJECT TO ERISA OR SECTION 4975 OF THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.
E-3
<PAGE>
(x) The Transferee agrees that in selling the Transferor Interest or any
portion thereof purchased pursuant hereto as permitted under clause (v) above,
it will comply with the applicable requirements of the Act, and of the
Securities and Exchange Act of 1934, as amended, and with the requirements set
forth by the National Association of Securities Dealers.
Very truly yours,
_______________________________,
as Transferee
By: ________________________________
Name:
Title:
E-4
<PAGE>
FORM OF INVESTMENT LETTER RULE 144A
FOR TRANSFEROR INTEREST
Date:
Banc One ABS Corporation,
as Depositor
[Address]
The Bank of New York,
as Trustee
101 Barclay Street, 12th Floor
New York, New York 10286
Re: Banc One ABS Corporation;
Banc One HELOC Trust 1999-1
HELOC Asset-Backed Certificates, Series 1999-1, Transferor Interest
-------------------------------------------------------------------
Ladies and Gentlemen:
This letter (the "Investment Letter") is delivered by the undersigned (the
"Transferee") pursuant to the Pooling and Servicing Agreement, dated as of May
31, 1999 (the "Pooling and Servicing Agreement"), among Banc One ABS
Corporation, as Depositor, Bank One, N.A., as Servicer, and The Bank of New
York, as Trustee. Capitalized terms used herein without definition shall have
the meanings set forth in the Pooling and Servicing Agreement. The Transferee
represents to the Depositor as follows:
(i) The Transferee is authorized to enter into the supplemental agreement
delivered pursuant to Section 6.05(c) of the Pooling and Servicing Agreement and
to perform its obligations thereunder and to consummate the transactions
contemplated thereby;
(ii) The Transferee has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Transferor Interest and the Transferee is able to bear the
economic risk of such investment;
(iii) The Transferee has reviewed the Pooling and Servicing Agreement
(including the exhibits thereto) and related documents and has had the
opportunity to perform due diligence with respect thereto and to ask questions
of and receive answers from the Depositor and its representatives concerning,
among other things, the Transferor Interest;
(iv) The Transferee is the sole party in interest and is not acquiring the
Transferor Interest as an agent or otherwise for any other person;
(v) The Transferee represents and warrants that it understands that the
Transferor Interest (i) has not been and will not be registered under the
Securities Act of 1933, as amended (the "Act"), or any state or other applicable
securities laws, and (ii) is being offered only in a transaction not involving a
public offering within the meaning of the Act and may not be offered, sold or
otherwise transferred unless registered pursuant to, or exempt from registration
under, the Act and any other applicable securities law;
E-5
<PAGE>
(vi) The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A of the Act. The Transferee is aware that the sale to it of
the Transferor Interest is being made in reliance on Rule 144A, and the
Transferee is acquiring the Transferor Interest for its own account or for
resale pursuant to Rule 144A. The Transferee represents, warrants and covenants
that it will not offer, sell, convey, assign, hypothecate, pledge, participate
or otherwise transfer (each, a "Transfer") the Transferor Interest or any
portion thereof at any time except (i) to the Depositor or (ii) pursuant to Rule
144A to a person whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A purchasing for its own
account, in accordance with Rule 144A, whom the seller has informed that the
Transfer is being made in reliance on Rule 144A;
(vii) This Investment Letter has been duly authorized, executed and
delivered and constitutes the legal, valid and binding obligations of the
Transferee, enforceable against the Transferee in accordance with its terms,
except as such enforceability may be limited by receivership, conservatorship,
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity;
(viii) Notwithstanding anything to the contrary contained herein, in no
event shall any interest in the Transferor Interest be sold or transferred to an
employee benefit or other plan subject to Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986 (the "Code"), or to a person acting on behalf of,
or with "plan assets" of, any such plan. The Transferee hereby covenants with
you that by its acceptance thereof, it represents and warrants that:
(A) the Transferee is not an employee benefit or other plan subject to
Section 406 of ERISA or Section 4975 of the Code or a person acting on
behalf of, or with "plan assets" of, any such plan; or
(B) if the Transferee is an insurance company, it is purchasing the
Transferor Interest with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")), and the purchase and holding of the
Transferor Interest are eligible for the exemptive relief available under
PTCE 95-60; or
(C) if the Transferee is an employee benefit or other plan subject to
ERISA or Section 4975 of the Code or a trustee of any such plan, the
Transferee has provided to the Trustee an Opinion of Counsel to the effect
that such purchase or holding of the Transferor Interest will not
constitute or result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Trustee to any obligation
in addition to those undertaken in the Pooling and Servicing Agreement;
(ix) The Transferee understands that each Transferor Certificate will bear
a legend to substantially the following effect:
THIS TRANSFEROR CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE
E-6
<PAGE>
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.05
OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. NEITHER
THIS TRANSFEROR CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED
UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER: (A) A
REPRESENTATION LETTER TO THE EFFECT THAT (i) SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), OR A PERSON ACTING ON BEHALF OF, OR WITH "PLAN ASSETS" OF,
ANY SUCH PLAN, OR (ii) SUCH TRANSFEREE IS AN INSURANCE COMPANY WHICH
IS PURCHASING THIS TRANSFEROR CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN
SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60")) AND THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE ELIGIBLE
FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 95-60 OR (B) IN THE CASE
OF ANY TRANSFEROR CERTIFICATE PRESENTED FOR REGISTRATION IN THE NAME
OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO ERISA OR SECTION 4975
OF THE CODE, A TRUSTEE OF ANY SUCH PLAN, OR A PERSON USING "PLAN
ASSETS" OF ANY SUCH PLAN, AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 6.05(d) OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT OR
OTHER PLAN SUBJECT TO ERISA OR SECTION 4975 OF THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.
(x) The Transferee agrees that in selling the Transferor Interest or any
portion thereof purchased pursuant hereto as permitted under clause (v) above,
it will comply with the applicable requirements of the Act, and of the
Securities and Exchange Act of 1934, as amended, and with the requirements set
forth by the National Association of Securities Dealers.
Very truly yours,
_______________________________,
as Transferee
By: ________________________________
Name:
Title:
E-7
<PAGE>
EXHIBIT F
REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
The Bank of New York,
as Trustee
101 Barclay Street, 12th Floor
New York, New York 10286
Re: Banc One ABS Corporation
Banc One HELOC Trust 1999-1
HELOC Asset-Backed Certificates, Series 1999-1
----------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Trustee under the Pooling and Servicing Agreement, dated as of May 31, 1999,
among Banc One ABS Corporation, as Depositor, Bank One, N.A., as Servicer, and
you, as Trustee (the "Agreement"), we hereby request a release of the Mortgage
File held by you as Trustee with respect to the following described Mortgage
Loan for the reason indicated below.
Loan No.:
Reason for Requesting File:
_____________ 1. Mortgage Loan paid in full. (The Servicer hereby
certifies that all amounts received in connection with
the payment in full of the Mortgage Loan which are
required to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement have been so
deposited.)
_____________ 2. Retransfer of the Mortgage Loan. (The Servicer hereby
certifies that the Transfer Deposit Amount has been
deposited in the Collection Account pursuant to the
Agreement.)
_____________ 3. The Mortgage Loan is being foreclosed.
_____________ 4. The Home Equity Loan is being re-financed by another
depository institution. (The Servicer hereby certifies
that all amounts received in connection with the
payment in full of the Mortgage Loan which are required
to be deposited in the
F-1
<PAGE>
Collection Account pursuant to Section 3.02 of the
Agreement have been so deposited.)
_____________ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Trustee when the need therefore by the Servicer no
longer exists unless the Mortgage Loan has been liquidated.
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
BANK ONE, N.A.
By: ______________________
Name:
Title: Servicing Officer
F-2
Exhibit 10.1
EXECUTION COPY
================================================================================
MORTGAGE LOAN PURCHASE AGREEMENT
AMONG
BANK ONE, N.A.
BANK ONE, ARIZONA, N.A.
BANK ONE, COLORADO, N.A.
BANK ONE, ILLINOIS, N.A.
BANK ONE, INDIANA, N.A.
BANK ONE, KENTUCKY, N.A.
BANK ONE, UTAH, N.A.
BANK ONE, WISCONSIN
SELLERS
AND
BANC ONE ABS CORPORATION
PURCHASER
DATED AS OF JUNE 23, 1999
BANC ONE HELOC TRUST 1999-1
================================================================================
<PAGE>
ARTICLE I CERTAIN DEFINITIONS..............................................2
ARTICLE II CONVEYANCE OF THE MORTGAGE LOANS; SECURITY INTEREST..............2
Section 2.01. Conveyance of Mortgage Loans; Security Interest........2
Section 2.02. Possession of Mortgage Files...........................4
Section 2.03. Books and Records......................................4
Section 2.04. Delivery of Mortgage Loan Documents....................4
Section 2.05. Acceptance by Purchaser of the Mortgage Loans;
Certain Substitutions; Certification by the
Trustee................................................5
Section 2.06. Acceptance by the Purchaser............................7
Section 2.07. The Closing............................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................7
Section 3.01. Representations and Warranties of the Sellers..........7
Section 3.02. Representations and Warranties as to the
Mortgage Loans.........................................8
Section 3.03. Purchase and Substitution.............................12
ARTICLE IV CONDITIONS......................................................13
Section 4.01. Conditions to Obligation of the Purchaser.............13
Section 4.02. Conditions To Obligation of each Seller...............13
ARTICLE V THE SELLERS.....................................................13
Section 5.01. [Reserved]............................................13
Section 5.02. Enforceability; Merger or Consolidation
of the Sellers........................................14
Section 5.03. Mandatory Sale; Grant of Security Interest............14
ARTICLE VI ADDITIONAL AGREEMENTS...........................................14
Section 6.01. Conflicts With Pooling and Servicing Agreement........14
Section 6.02. Protection of Title to Trust..........................15
Section 6.03. Other Liens or Interests..............................15
Section 6.04. Purchase Events.......................................15
Section 6.05. Indemnification.......................................15
Section 6.06. Trust.................................................16
ARTICLE VII MISCELLANEOUS PROVISIONS........................................16
Section 7.01. Amendment.............................................16
Section 7.02. Waivers...............................................16
Section 7.03. Costs and Expenses....................................16
Section 7.04. Survival..............................................16
Section 7.05. Confidential Information..............................16
Section 7.06. Severability Clause...................................16
<PAGE>
Section 7.07. Headings and Cross-References.........................17
Section 7.08. Recordation of Agreement..............................17
Section 7.09. Governing Law.........................................17
Section 7.10. Notices...............................................17
Section 7.11. Counterparts..........................................17
Section 7.12. The Credit Enhancer...................................17
EXHIBIT A [RESERVED].....................................................A-1
EXHIBIT B-1 MORTGAGE LOANS TRANSFERRED BY Bank One, N.A....................B-1
EXHIBIT B-2 MORTGAGE LOANS TRANSFERRED BY Bank One, Arizona, N.A...........B-2
EXHIBIT B-3 MORTGAGE LOANS TRANSFERRED BY Bank One, Colorado, N.A..........B-3
EXHIBIT B-4 MORTGAGE LOANS TRANSFERRED BY Bank One, Illinois, N.A..........B-4
EXHIBIT B-5 MORTGAGE LOANS TRANSFERRED BY Bank One, Indiana, N.A...........B-5
EXHIBIT B-6 MORTGAGE LOANS TRANSFERRED BY Bank One, Kentucky, N.A..........B-6
EXHIBIT B-7 MORTGAGE LOANS TRANSFERRED BY Bank One, Utah, N.A..............B-7
EXHIBIT B-8 MORTGAGE LOANS TRANSFERRED BY Bank One, Wisconsin..............B-8
EXHIBIT C ACKNOWLEDGEMENT OF TRUSTEE AS TO RECEIPT OF MORTGAGE LOANS.....C-1
<PAGE>
THIS MORTGAGE LOAN PURCHASE AGREEMENT is made as of June 23, 1999, by and
among THE SELLERS LISTED ON THE SIGNATURE PAGE HERETO (the "Sellers") and BANC
ONE ABS CORPORATION, its successors and assigns (the "Purchaser").
WHEREAS, the Sellers and the Purchaser wish to set forth the terms pursuant
to which the Mortgage Loans are to be sold by the Sellers to the Purchaser and
purchased by the Purchaser from the Sellers;
NOW, THEREFORE, in consideration of the foregoing, the other good and
valuable consideration and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01. Certain capitalized terms used in this Agreement are defined
in and shall have the respective meanings assigned them in Article I to the
Pooling and Servicing Agreement, dated as of May 31, 1999, among the Purchaser,
as Depositor, Bank One, N.A., as Servicer and The Bank of New York, as Trustee
(the "Trustee") (the "Pooling and Servicing Agreement"). All references herein
to "the Agreement" or "this Agreement" are to this Mortgage Loan Purchase
Agreement, and all references herein to Articles, Sections and subsections are
to Articles, Sections or subsections of this Mortgage Loan Purchase Agreement
unless otherwise specified.
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS; SECURITY INTEREST
Section 2.01. Conveyance of Mortgage Loans; Security Interest
(a) Immediately prior to consummation on the Closing Date of the
transactions contemplated by the Pooling and Servicing Agreement, in
consideration of the Purchaser's delivery of cash in the amount of $498,720,000
(which is net of underwriting commission), the Transferor Interest and other
consideration, each Seller does hereby transfer, assign, set over and convey to
the Purchaser without recourse, all of the right, title and interest of such
Seller in and to each Mortgage Loan, including its Principal Balance (including
all Additional Balances) set forth in the applicable Mortgage Loan Schedules
attached hereto as Exhibits B-1, B-2, B-3, B-4, B-5, B-6, B-7 and B-8, together
with the Mortgage Files relating thereto and all proceeds thereof received after
the Cut-Off Date.
(b) It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Sellers to the Purchaser as provided in this Agreement
be, and be construed as, a sale of all of the Sellers' right, title and interest
in the Mortgage Loans by the Sellers to the Purchaser and to the Trustee, as its
successor and assignee hereunder. Further, it is not the intention of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Sellers to the Purchaser to secure a debt or other obligation of the Sellers;
however, in the event that, notwithstanding the intent of the parties, the
Mortgage Loans are held to be property of the Sellers, or if for any reason this
Agreement is held or deemed to create a security interest
1
<PAGE>
in the Mortgage Loans, then, (a) this Agreement also shall be deemed to be, and
hereby is, a security agreement within the meaning of Articles 8 and 9 of the
Uniform Commercial Code in effect in the applicable state; (b) the conveyance
provided for in this Agreement shall be deemed to be, and hereby is, a grant by
the Sellers to the Purchaser and to the Trustee as its successor and assignee
hereunder of a security interest in and to all of the Sellers' right, title, and
interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit, investment property and
financial assets consisting of, arising from or relating to any of the
property described in (A) through (D) below: (A) each Mortgage Loan
identified on the Mortgage Loan Schedule, including all Eligible Substitute
Mortgage Loans, together with (a) the Mortgage Note and the related
Mortgage and (b) its Principal Balance and all Additional Balances and all
collections in respect thereof received on or after the Cut-Off Date, (B)
property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (C) the Purchase Agreement, (D) any hazard
insurance policies in respect of the Mortgage Loans; and (E) the amounts on
deposit in the Spread Account; and
(II) All proceeds of the collateral described in (I).
(c) The possession by the Purchaser and the Trustee or its designee as the
Purchaser's successor and assignee hereunder of the Mortgage Notes, Assignments
of Mortgages and such other goods, letters of credit, advices of credit,
instruments, money, documents, or chattel paper shall be deemed to be
"possession by the secured party," or possession by a purchaser or a person
designated by him or her, for purposes of perfecting the security interest
pursuant to the Uniform Commercial Code as in force in the relevant
jurisdiction; and notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, bailees or agents (as applicable) of the Trustee or its
designee for the purpose of perfecting such security interest under applicable
law. Subject to the provisions of the Pooling and Servicing Agreement permitting
the Servicer to commingle amounts collected with respect to the Mortgage Loans
with other general collections of the Servicer, the Sellers and the Trustee at
the direction of the Purchaser to the extent consistent with this Agreement,
shall take such actions as may be necessary to ensure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans and the proceeds
thereof, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of the Agreement; provided, however, that any security
interest in favor of the Purchaser shall be and hereby is expressly subordinate
and subject to the security interest granted in favor of the Trustee for the
benefit of the Investor Certificateholders. In connection herewith, the
Purchaser and the Trustee shall have all of the rights and remedies of a secured
party and creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
(d) The Sellers acknowledge and agree that the Purchaser absolutely has
transferred, conveyed and assigned to the Trustee for the benefit of the
Investor Certificateholders its rights under this Agreement and the Mortgage
Loans. To the extent that any transfer of the Mortgage Loans or other property
by any of the Sellers to the Purchaser
2
<PAGE>
pursuant to this Agreement is determined to be other than an absolute assignment
of the Mortgage Loans and other property described in this Agreement and the
Mortgage Loan Schedule, then the Sellers hereby grant directly to the Trustee,
for the benefit of the holders of the Investor Certificates, as security for the
Sellers' obligations under this Agreement (which obligations have been
absolutely assigned to the Trustee for the benefit of the Investor
Certificateholders), a security interest consisting of all of the Sellers'
right, title and interest, in, to and under the following: (1) All accounts,
contract rights, general intangibles, chattel paper, instruments, documents,
money, deposit accounts, certificates of deposit, goods, letters of credit,
advices of credit, investment property and financial assets consisting of,
arising from or relating to any of the property described in (A) through (D)
below: (A) each Mortgage Loan identified on the Mortgage Loan Schedule,
including all Eligible Substitute Mortgage Loans, together with (a) the Mortgage
Note and the related Mortgage and (b) its Principal Balance and all Additional
Balances and all collections in respect thereof received on or after the Cut-Off
Date, (B) property that secured a Mortgage Loan that is acquired by foreclosure
or deed in lieu of foreclosure; (C) the Purchase Agreement, (D) any hazard
insurance policies in respect of the Mortgage Loans; and (E) the amounts on
deposit in the Spread Account and (2) all proceeds of the collateral described
in (1).
Section 2.02. Possession of Mortgage Files
(a) Upon the delivery to each Seller of the consideration set forth in
Section 2.01, the ownership of each Seller's Mortgage Notes, related Mortgages
and the contents of the related Mortgage Files are vested in the Purchaser.
(b) Pursuant to Section 2.04, each Seller has delivered or caused to be
delivered each Mortgage File with respect to the Mortgage Loans transferred by
it to the Purchaser.
Section 2.03. Books and Records
(a) The transfer of each Mortgage Loan to the Purchaser shall be reflected
on the related Seller's balance sheets and other financial statements as a sale
of assets by such Seller. Each Seller shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Mortgage Loan that
shall be clearly marked to reflect the ownership of each Mortgage Loan by the
Purchaser.
(b) Each Seller hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledgers relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to or at the direction of the Purchaser.
(c) In connection with the security interest granted pursuant to Section
2.01(d), the Sellers shall, at their own expense, cause their books and records
to be marked to show that a security interest in such assets has been granted to
the Trustee pursuant to this Agreement.
3
<PAGE>
Section 2.04. Delivery of Mortgage Loan Documents
Each Seller shall deliver or cause to be delivered within 120 days of the
Closing Date to the Purchaser or its designee, in accordance with the
instructions of the Purchaser and pursuant to Section 2.01(b) of the Pooling and
Servicing Agreement, each original Mortgage Note, endorsed at the direction of
the Purchaser by the applicable Seller, on its face or by allonge attached
thereto, without recourse, in blank or to the order of the Trustee in the
following form: "Pay to the order of The Bank of New York, as trustee for the
registered holders of Banc One HELOC Trust 1999-1, HELOC Asset-Backed
Certificates, Series 1999-1, without recourse, representation or warranty,
express or implied," and an original Assignment of Mortgage endorsed in blank
prepared in recordable form (together, the "Related Documents"); provided,
however, that as to any Mortgage Loan, if (a) as evidenced by an Opinion of
Counsel delivered to and in form and substance satisfactory to the Trustee and
the Credit Enhancer, (x) an optical image or other representation of each
Related Document is enforceable in the relevant jurisdictions to the same extent
as the original of such document and (y) such optical image or other
representation does not impair the ability of an owner of such Mortgage Loan to
transfer its interest in such Mortgage Loan, and (b) the retention of the
Related Documents in such format will not result in a reduction in the then
current rating of the Investor Certificates, without regard to the Policy, then
such optical image or other representation may be delivered to the Trustee (or
any Custodian on behalf of the Trustee) or assignee in lieu of physical copies
of the Related Documents.
Each Seller agrees not to notify the obligors on the Mortgage Loans of the
transfer of the Mortgage Loans to the Purchaser, unless required by the terms of
the Mortgage Loans or applicable law.
Section 2.05. Acceptance by Purchaser of the Mortgage Loans; Certain
Substitutions; Certification by the Trustee
(a) The Purchaser agrees to execute and deliver on the Closing Date for
each Mortgage Loan an acknowledgment of receipt of the Mortgage Loans, in the
form attached as Exhibit C hereto, and declares that it will hold the documents
delivered to it pursuant to Section 2.04 and any amendments, replacements or
supplements thereto, as well as any other assets transferred pursuant to the
terms hereof. Pursuant to the Pooling and Servicing Agreement, any Custodial
Agreement and this Agreement, the Trustee (or any Custodian on behalf of the
Trustee) will, for the benefit of the Purchaser and the Credit Enhancer, review
(or cause to be reviewed) each of the documents set forth in Section 2.04 within
90 days following delivery to ascertain that all Related Documents have been
executed and received and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule, and in so doing the Trustee may rely
on the purported due execution and genuineness of any signature thereon.
(b) If the Trustee (or any Custodian on behalf of the Trustee) during the
process of reviewing the Mortgage Files finds any document constituting a part
of a Mortgage File not to have been executed or received or to be unrelated to
the Mortgage Loan identified in the Mortgage Loan Schedule, or, if in the course
of its review, the Trustee (or any Custodian on behalf of the Trustee)
determines that such Mortgage File is otherwise defective in any material
respect, the Trustee is required by the Pooling and Servicing Agreement promptly
upon the conclusion of such review to give notice of the same to the Purchaser,
the applicable Seller and the Credit Enhancer to correct or cure such defect. It
is understood that the scope of the Trustee's
4
<PAGE>
review of the Mortgage Files is limited solely to confirming that the Related
Documents have been executed and received and relate to the Mortgage Files
identified in the Mortgage Loan Schedule. The applicable Seller agrees to use
its reasonable efforts to cause to be remedied any material defect in a document
constituting part of a Mortgage File of which such Seller is so notified by the
Purchaser, the Trustee or the Credit Enhancer. If within 90 days after notice to
it respecting such defect the applicable Seller has not caused the defect to be
remedied, or if at any time any loss is suffered by the Trustee on behalf of the
Certificateholders or the Credit Enhancer in respect of any Mortgage Loan as a
result of a defect in any document constituting a part of its Mortgage File,
then on the next succeeding Business Day upon the deposit to the Collection
Account of the Transfer Deposit Amount, if any, and upon satisfaction of the
applicable conditions described herein, all right, title and interest of the
Trust in and to such Mortgage Loan shall be deemed to be retransferred,
reassigned and otherwise reconveyed, without recourse, representation or
warranty, to the Seller on such Business Day, and the Principal Balance of such
Mortgage Loan shall be deducted from the Pool Balance; provided, however, that
interest accrued on the Principal Balance of such Mortgage Loan to the end of
the related Collection Period shall be the property of the Trust. If the Trustee
determines pursuant to the Pooling and Servicing Agreement that the reduction of
such Principal Balance from the Pool Balance in accordance with the preceding
sentence would cause the Transferor Principal Balance to be less than the
Minimum Transferor Interest (a "Transfer Deficiency") and delivers written
notice of such deficiency to the applicable Seller, then within five Business
Days after the Business Day of such retransfer the applicable Seller shall
substitute one or more Eligible Substitute Mortgage Loans and/or deposit
immediately available funds into the Collection Account in an aggregate amount
determined by the Servicer pursuant to the Pooling and Servicing Agreement (the
"Transfer Deposit Amount") such that the sum of the outstanding Principal
Balances of any Eligible Substitute Mortgage Loans and the Transfer Deposit
Amount is equal to the Transfer Deficiency. Such reduction or substitution and
the actual payment of any Transfer Deposit Amount shall be deemed to be payment
in full for such Defective Mortgage Loan. It is understood and agreed that the
obligation of a Seller to accept a transfer of a Defective Mortgage Loan and to
convey one or more Eligible Substitute Mortgage Loans and/or to make a deposit
of any related Transfer Deposit Amount into the Collection Account shall
constitute the sole remedy with respect to such defect available to
Certificateholders, the Trustee and the Credit Enhancer against such Seller.
Each Seller, promptly following the retransfer of a Defective Mortgage Loan
or the transfer of an Eligible Substitute Mortgage Loan pursuant to this Section
2.05(b), shall appropriately mark its Electronic Ledger and make appropriate
entries in its general account records to reflect such retransfer.
Notwithstanding any other provision of this Section 2.05(b), a retransfer
of a Defective Mortgage Loan to a Seller pursuant to this Section 2.05(b) that
would cause the Transferor Principal Balance to be less than the Minimum
Transferor Interest shall not occur if such Seller either fails to convey an
Eligible Substitute Mortgage Loan or to deposit into the Collection Account any
related Transfer Deposit Amount required by this Section 2.05(b) with respect to
the transfer of such Defective Mortgage Loan.
(c) The related Seller shall deliver to the Trustee such documents and
agreements with respect to any Eligible Substitute Mortgage Loan or Loans as are
required to be held by the Trustee in accordance with Section 2.04. For any
Collection Period during which a
5
<PAGE>
Seller substitutes one or more Eligible Substitute Mortgage Loans, any Transfer
Deposit Amount shall be deposited by such Seller in the Collection Account at
the time of substitution. Any amounts received in respect of an Eligible
Substitute Mortgage Loan or Loans during the Collection Period in which the
circumstances giving rise to such substitution occur shall not be an asset of
the Trust and shall not be deposited by the Seller in the Collection Account.
All amounts received by the Servicer in respect of any Defective Mortgage Loan
retransferred to a Seller during the Collection Period in which the
circumstances giving rise to such substitution occur shall be deposited by the
Servicer in the Collection Account. Upon any such substitution, the applicable
Eligible Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the applicable Seller shall be deemed to have
made the covenants, representations and warranties set forth in Section 3.02
with respect to such Eligible Substitute Mortgage Loan or Loans as of the date
of substitution. The procedures applied by a Seller in selecting an Eligible
Substitute Mortgage Loan shall not be materially adverse to the interests of the
Trustee, the Certificateholders or the Credit Enhancer.
Section 2.06. Acceptance by the Purchaser
The Purchaser acknowledges the assignment to it of the Mortgage Loans being
transferred hereby by the Sellers and the delivery of the Mortgage Files to it
or upon its order and has delivered cash and other consideration as set forth in
Section 2.01 to or upon the order of the related Sellers in exchange for such
Mortgage Loans and the related Mortgage Files concurrently with such delivery.
Section 2.07. The Closing
The conveyance of the Mortgage Loans shall take place at the offices of
Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York 10103,
on the Closing Date, immediately prior to the closing of the transactions
contemplated by the Pooling and Servicing Agreement and the Underwriting
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Sellers
Each Seller hereby represents and warrants to the Purchaser as of the Closing
Date:
(a) Such Seller is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each State in which a Mortgaged Property is
located if the laws of such state require licensing or qualification in order to
conduct business of the type conducted by such Seller and to perform its
obligations as a Seller hereunder; such Seller has the power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by such Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action; this Agreement is the valid, binding and
enforceable obligation of such Seller; and all requisite action has been taken
by such Seller to
6
<PAGE>
make this Agreement valid, binding and enforceable against such Seller in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors rights generally or the application of equitable principles in any
proceeding, whether at law or in equity;
(b) 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 such Seller makes no such representation or warranty),
that are necessary in connection with the origination of the Mortgage Loans and
the execution and delivery by such Seller of this Agreement, have been duly
taken, given or obtained, as the case may be, are in full force and effect, 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 documents on the part
of such Seller and the performance by such Seller of its obligations as a Seller
under this Agreement;
(c) The consummation of the transactions contemplated by this Agreement
will not result in the breach of any terms or provisions of the bylaws of such
Seller or result in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any obligation
under, any material agreement, indenture or loan or credit agreement or other
material instrument to which such Seller or its property is subject, or result
in the violation of any law, rule, regulation, order, judgment or decree to
which such Seller or its property is subject;
(d) There is no action, suit, proceeding or investigation pending or, to
the best of such Seller's knowledge, threatened against such Seller that, either
in any one instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or assets of
such Seller or in any material impairment of the right or ability of such Seller
to carry on its business substantially as now conducted, or in any material
liability on the part of such Seller or that would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to be
taken in connection with the obligations of such Seller contemplated herein, or
which would be likely to impair materially the ability of the Seller to perform
under the terms of this Agreement;
(e) Such 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 might have consequences that would materially
and adversely affect the condition (financial or other) or operations of such
Seller or its properties or might have consequences that would materially and
adversely affect its performance hereunder;
(f) The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by such Seller pursuant to this Agreement are not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction;
7
<PAGE>
(g) Such Seller is solvent and such Seller will not be rendered insolvent
as a result of the transfer of the Mortgage Loans to the Purchaser; and
(h) The origination and collection practices used by such Seller with
respect to each Mortgage Note and Mortgage have been in all material respects
legal, proper, prudent and customary in the home equity line of credit loan
origination and servicing business.
Section 3.02. Representations and Warranties as to the Mortgage Loans
Each Seller hereby represents and warrants to the Purchaser, with respect
to each Mortgage Loan sold by it pursuant to this Agreement, that:
(a) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
this Agreement constitutes a valid transfer and assignment to the Purchaser of
all right, title and interest of such Seller in and to each related Mortgage
Loan (including its Cut-Off Date Principal Balance and any Additional Balances),
all monies due or to become due with respect thereto, and all proceeds of such
Cut-Off Date Principal Balances with respect to the Mortgage Loans and such
funds as are from time to time deposited in the Collection Account (excluding
any investment earnings thereon) and all other property specified in Section
2.01 of this Agreement as being conveyed to the Purchaser by such Seller, and
(upon payment for any Additional Balances) will constitute a valid transfer and
assignment to the Trustee of all right, title and interest of the Seller in and
to the Additional Balances, all monies due or to become due with respect
thereto, and all proceeds of such Additional Balances and all other property
specified in Section 2.01 of this Agreement relating to the Additional Balances.
(b) As of the Closing Date with respect to the Mortgage Loans, as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan
and as of the date any Additional Balance is created, the information set forth
in the Mortgage Loan Schedule for such Mortgage Loans is true and correct in all
material respects;
(c) The applicable Cut-Off Date Principal Balance has not been assigned or
pledged, and such Seller is the sole owner and holder of such Cut-Off Date
Principal Balance free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests of any
nature, and has full right and authority to sell, assign or transfer the same
pursuant to this Agreement;
(d) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
the related Mortgage Note and the Mortgage with respect to each Mortgage Loan
have not been assigned or pledged, and such Seller is the sole owner and holder
of the Mortgage Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests of any
nature, and has full right and authority, under all governmental and regulatory
bodies having jurisdiction over the ownership of the applicable Mortgage Loans,
to sell, assign or transfer the same pursuant to this Agreement;
(e) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
the related Mortgage is a valid and subsisting first or second lien (as set
forth on the Mortgage Loan
8
<PAGE>
Schedule), on the Mortgaged Property described in the Mortgage Loan Schedule,
and as of the applicable Cut-off Date such related Mortgaged Property is free
and clear of all encumbrances and liens having priority over the first or second
lien (as applicable) of such Mortgage except for liens for (i) real estate taxes
and special assessments not yet delinquent; (ii) income taxes, (iii) any first
or similar mortgage loan secured by such Mortgaged Property and specified on the
Mortgage Loan Schedule; (iv) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
that are acceptable to mortgage lending institutions generally; and (v) other
matters to which like properties are commonly subject that do not materially
interfere with the benefits of the security intended to be provided by such
Mortgage;
(f) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
there is no valid offset, defense or counterclaim of any obligor under any
Credit Line Agreement or Mortgage that has been asserted or threatened;
(g) To the best knowledge of such Seller, as of the Closing Date with
respect to the Mortgage Loans and as of the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, there are no delinquent
recordings or other tax or fee or assessment liens against any related Mortgaged
Property;
(h) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
there is no proceeding pending, nor has the Seller received notice of such
proceeding being threatened, for the total or partial condemnation of the
related Mortgaged Property and, to the best knowledge of the Seller, such
property is free of material damage;
(i) To the best knowledge of such Seller, as of the Closing Date with
respect to the Mortgage Loans and as of the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, there are no mechanics' or
similar liens or claims that have been filed for work, labor or material
affecting the related Mortgaged Property that are, or may be, liens prior or
equal to the lien of the related Mortgage, except liens that are fully insured
against by the title insurance policy;
(j) No Regular Payment is more than 29 days delinquent (measured on a
contractual basis);
(k) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
the related Mortgage File for each Mortgage Loan contains each of the documents
and instruments specified to be included therein;
(l) To the best knowledge of such Seller, the related Mortgage at
origination complied in all material respects with applicable State and Federal
laws, including without limitation usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan;
(m) To the best knowledge of such Seller, either a lender's title insurance
policy or binder was issued on the date of origination of the Mortgage Loan, and
each such
9
<PAGE>
policy is valid and remains in full force and effect, or a title search or
guaranty of title customary in the relevant jurisdiction was obtained with
respect to the Mortgage Loan and no title insurance policy or binder was issued;
(n) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
none of the Mortgaged Properties is a mobile home or a manufactured housing unit
that is not considered or classified as part of the real estate under the laws
of the jurisdiction in which it is located;
(o) The Combined Loan-to-Value Ratio for each Mortgage Loan was not in
excess of 100%;
(p) No selection procedure reasonably believed by such Seller to be adverse
to the interests of the Certificateholders or the Credit Enhancer was utilized
in selecting the Mortgage Loans;
(q) Such Seller has not transferred the Mortgage Loans to the Trust with
any intent to hinder, delay or defraud any of its creditors;
(r) The Regular Payment with respect to any Mortgage Loan is not less than
the interest accrued at the applicable Loan Rate on the daily Principal Balance
during the interest period relating to the date on which such Regular Payment is
due;
(s) Within 30 days of the Closing Date with respect to the Mortgage Loans
and within 30 days of the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, to the extent not already included in such filing with
respect to the Mortgage Loans, such Seller will file UCC-1 financing statements
with respect to the Mortgage Loans;
(t) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
each Credit Line Agreement and each Mortgage Loan is an enforceable obligation
of the related Mortgagor, except as the enforceability thereof may be limited by
the bankruptcy, insolvency or similar laws affecting creditors' rights
generally;
(u) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
such Seller has not received a notice of default of any senior mortgage loan
related to a Mortgaged Property that has not been cured by a party other than
the Servicer;
(v) The definition of the applicable index in each Credit Line Agreement
relating to each Mortgage Loan does not differ materially from the Index as set
forth on Exhibit B;
(w) As of the Closing Date with respect to the Mortgage Loans and as of the
applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan,
each Mortgaged Property consists of a single parcel of real property with a
one-to-four unit single family residence erected thereon, an individual
condominium unit, planned unit development unit or townhouse; and
10
<PAGE>
(x) At the time of origination of each Mortgage Loan, the Seller caused
hazard insurance to be obtained for such Mortgage Loan, naming the Servicer or
the related subservicer as loss payee thereunder and providing extended coverage
in an amount that is at least equal to the lesser of (i) the replacement value
of the improvements securing such Mortgage Loan from time to time or (ii) the
combined principal balance owing on such Mortgage Loan and any mortgage loan
senior to such Mortgage Loan from time to time.
With respect to the representations and warranties set forth in this
Section 3.02 that are made to the best knowledge of a Seller, if it is
discovered by such Seller, the Purchaser, the Servicer or a Responsible Officer
of the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan, then notwithstanding such Seller's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty and subject such
Seller to the obligations set forth in Section 3.03.
Section 3.03. Purchase and Substitution
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive delivery of the Mortgage Loans to
the Purchaser. It is understood and agreed that the Purchaser is making certain
representations and warranties with respect to the Mortgage Loans in the Pooling
and Servicing Agreement and that the Sellers have agreed to cure any breach of
such representations and warranties or to repurchase or substitute for any
affected Mortgage Loan as set forth herein. Upon discovery by a Seller, the
Purchaser, the Servicer or a Responsible Officer of the Trustee of (i) any
breach of the representation and warranty set forth in Section 2.04(b)(vi) of
the Pooling and Servicing Agreement or (ii) a breach of any of the
representations and warranties in Sections 3.01 and 3.02 or the representations
and warranties of the Purchaser with respect to the Mortgage Loans in Section
2.04 of the Pooling and Servicing Agreement that materially and adversely
affects the interests of the Trust or the Investor Certificateholders or the
Credit Enhancer in the related Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties and the Credit Enhancer.
Within 90 days of the earlier of its discovery or its receipt of notice of any
breach of a representation or warranty, the applicable Seller shall cure such
breach in all material respects or shall, not later than the Business Day next
preceding the Distribution Date in the month following the Collection Period in
which any such cure period expired (or such later date that is acceptable to the
Trustee and the Credit Enhancer as evidenced by their written consents), either
(a) accept a retransfer of such Mortgage Loan from the Trust or (b) substitute
one or more Eligible Substitute Mortgage Loans in the same manner and subject to
the same conditions as set forth in Section 2.05; provided, however, that the
cure for any breach of a representation and warranty of the Purchaser in Section
2.04 of the Pooling and Servicing Agreement relating to the characteristics of
the Mortgage Loans in the aggregate shall be a repurchase of or substitution for
only the Mortgage Loans necessary to cause such characteristics to be in
compliance with the related representation and warranty; and provided, further,
that in the event of such a breach relating to the characteristics of the
Mortgage Loans in the aggregate, each Seller shall contribute proportionally to
the repurchase or substitution of such Mortgage Loans, allocated according to
the proportion of Mortgage Loans contributed by each such Seller to the Trust.
Upon accepting such transfer and making any required deposit into the Collection
Account and/or substitution of
11
<PAGE>
one or more Eligible Substitute Mortgage Loans, each Seller shall be entitled to
receive an instrument of assignment or transfer from the Trustee to the same
extent as set forth in Section 2.05 with respect to the retransfer of Mortgage
Loans under that Section.
It is understood and agreed that the obligations of any Seller to accept a
retransfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account and/or to
substitute one or more Eligible Substitute Mortgage Loans, shall constitute the
sole remedy against such Seller with respect to such breach available to
Investor Certificateholders, the Trustee on behalf of Investor
Certificateholders and the Credit Enhancer. Notwithstanding the foregoing, with
respect to any breach of the representation and warranty set forth in Section
3.02(d), the sale and assignment of the affected Mortgage Loans to the Trust
shall be deemed void and the applicable Seller shall pay to the Trust an amount
equal to the aggregate of the related Principal Balances, plus unpaid accrued
interest on each such Principal Balance at the applicable Loan Rate to the date
of payment.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the Purchaser The obligation of
the Purchaser to purchase the Mortgage Loans is subject to the satisfaction of
the following conditions:
(a) Representations and Warranties True. The representations and warranties
of the Sellers hereunder shall be true and correct on the Closing Date with the
same effect as if then made, and the Sellers shall have performed all
obligations to be performed by them hereunder on or prior to the Closing Date.
(b) Documents to be Delivered By the Sellers at the Closing.
(i) The Mortgage Loan Schedule specifying the Mortgage Loans to be
transferred hereunder, one copy to be attached to each counterpart of the
Pooling and Servicing Agreement as the Mortgage Loan Schedule thereto;
(ii) An Officer's Certificate with respect to each Seller, dated as of the
Closing Date, with the resolutions of such Seller authorizing the transactions
contemplated by this Agreement attached thereto, together with copies of the
charter, by-laws and a Certificate of Good Standing dated as of recent date
(acceptable to the Purchaser and its counsel) of such Seller;
(iii) An Opinion of Counsel to the Sellers dated as of the Closing Date in
the form attached to the Underwriting Agreement and any Opinion of Counsel
required to be delivered to any Rating Agency or the Credit Enhancer;
(c) Other Documents. On the Closing Date, each Seller shall provide such
other documents as the Purchaser may reasonably request.
(d) Other Transactions. The transactions contemplated by the Pooling and
Servicing Agreement shall be consummated on the Closing Date.
12
<PAGE>
Section 4.02. Conditions To Obligation of each Seller
The obligation of the Sellers to transfer the Mortgage Loans to the
Purchaser is subject to the satisfaction of the condition that on the Closing
Date the Purchaser shall deliver to each Seller the consideration set forth on
Exhibit A hereto, as provided in Section 2.01.
ARTICLE V
THE SELLERS
Section 5.01. [Reserved]
Section 5.02. Enforceability; Merger or Consolidation of the Sellers
(a) Each Seller (other than Bank One, Wisconsin, which is a Wisconsin State
bank) shall keep in full effect its respective existence, rights and franchises
as a national bank (or State bank, in the case of Bank One, Wisconsin), and
shall obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Pooling and Servicing Agreement and any of the Mortgage Loans and to perform its
duties under such agreements.
(b) Any Person into which any Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which any
Seller shall be a party, or any Person succeeding to the business of any Seller,
shall be the successor of any Seller hereunder without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 5.03. Mandatory Sale; Grant of Security Interest
The sale on the Closing Date by each Seller of its Mortgage Loans is
mandatory, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the loss and damages
incurred by the Purchaser (including damages to prospective purchasers of the
Certificates) in the event of such Seller's failure to deliver the Mortgage
Loans on or before the Closing Date. Each Seller hereby grants to the Purchaser
and to the Trustee as its successor and assignee a lien on and continuing
security interest in each Mortgage Loan and each document and instrument
evidencing such Mortgage Loan to secure the performance by such Seller of its
obligations hereunder. All rights and remedies of the Purchaser under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under this Agreement or afforded by law or equity, and all such rights and
remedies may be exercised concurrently, independently or successively.
13
<PAGE>
ADDITIONAL AGREEMENTS
The Sellers agree with the Purchaser as follows:
Section 5.04. Conflicts With Pooling and Servicing Agreement
To the extent that any provision of Sections 6.02 through 6.04 of this
Agreement conflicts with any provision of the Pooling and Servicing Agreement,
the Pooling and Servicing Agreement shall govern.
Section 5.05. Protection of Title to Trust
(a) The Sellers shall from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and shall take such other action necessary or advisable to:
(i) maintain or preserve the transfer evidenced by this Agreement or
carry out more effectively the purposes hereof; or
(ii) preserve and defend the Purchaser's title to the Mortgage Loans
and the rights of the Purchaser in such assets against the claims of all
persons and parties, and the Sellers hereby designate the Purchaser its
agent and attorney-in-fact to execute any financing statement, continuation
statement or other instrument required by the Purchaser pursuant to this
Section 6.02.
Section 5.06. Other Liens or Interests
Except for the conveyances hereunder and pursuant to this Agreement, the
Sellers shall not sell, pledge, assign or transfer the Mortgage Loans to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
interest therein, and the Sellers shall defend the right, title and interest of
the Purchaser in, to and under such Mortgage Loans against all claims of third
parties claiming through or under the Sellers.
Section 5.07. Purchase Events
The Sellers acknowledge that the Purchaser has assigned all of its right,
title and interest in, to and under this Agreement (including the Purchaser's
right to cause the Sellers to repurchase the Mortgage Loans from the Purchaser
under certain circumstances) to the Trust pursuant to Section 2.01 of the
Pooling and Servicing Agreement and has assigned to the Trustee its right, title
and interest in this Agreement; provided, however, that neither the Trustee nor
the Trust assumes the obligation under any Credit Line Agreement that provides
for the funding of future advances to the Mortgagor thereunder, and neither the
Trust nor the Trustee shall be obligated or permitted to fund any such future
advances. The Sellers hereby covenant and agree with the Purchaser for the
benefit of the Purchaser, the Trustee, the Certificateholders and the Credit
Enhancer that the occurrence of a breach of any of the Sellers' representations
and warranties contained in Section 3.02 hereof shall constitute events
obligating the Seller to repurchase the applicable Mortgage Loan from the
Trustee, to the extent specified in Section 2.04 of the Pooling and Servicing
Agreement and without further notice from the Purchaser
14
<PAGE>
hereunder. It is understood and agreed that the obligation of any Seller to
repurchase any Mortgage Loan as to which a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against such
Seller for such breach available to the Trustee, the Certificateholders or the
Credit Enhancer.
Section 5.08. Indemnification
The Sellers shall indemnify the Purchaser for any liability as a result of
the failure of a Mortgage Loan to be originated in compliance with all
requirements of law. This indemnity obligation shall be in addition to any
obligation that the Sellers may otherwise have.
Section 5.09. Trust
The Sellers acknowledge that the Purchaser will transfer the Mortgage Loans
to the Trustee (for the benefit of the Certificateholders) pursuant to the
Pooling and Servicing Agreement, and the Purchaser shall assign its rights
hereunder to the Trustee (for the benefit of the Certificateholders) as set
forth in the Pooling and Servicing Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01. Amendment
This Agreement may be amended from time to time (upon prior notice to each
of the Rating Agencies and with the prior written consent of the Credit
Enhancer) by a written amendment duly executed and delivered by the Sellers and
the Purchaser; provided, however, that any such amendment that materially
adversely affects the rights of the Certificateholders under the Pooling and
Servicing Agreement must be consented to by a majority of the
Certificateholders.
Section 6.02. Waivers
No failure or delay on the part of the Purchaser in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or further exercise thereof or the exercise of any other power, right
or remedy.
Section 6.03. Costs and Expenses
The Sellers agree to pay all reasonable out-of-pocket costs and expenses of
the Purchaser, including fees and expenses of counsel, in connection with the
perfection as against third parties of the Purchaser's right, title and interest
in, to and under the Mortgage Loans and the enforcement of any obligation of the
Sellers hereunder.
Section 6.04. Survival
The representations, warranties and covenants of the Seller set forth in
Sections 3.01 and 3.02 and Article V of this Agreement shall remain in full
force and effect and shall survive the closing under Section 2.07 and the
transfers contemplated by Sections 6.04 and 6.06.
15
<PAGE>
Section 6.05. Confidential Information
The Purchaser agrees that it shall neither use nor disclose to any person
the names and addresses of the Mortgagors, except in connection with the
enforcement of the Purchaser's rights hereunder, or unenforceable under the
Mortgage Loans or as required by law.
Section 6.06. Severability Clause
Any part, provision, representation or warranty of this Agreement that is
prohibited or unenforceable or is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement that is prohibited or unenforceable
or is held to be void or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 6.07. Headings and Cross-References
The various headings in this Agreement are included for convenience only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
Section 6.08. Recordation of Agreement
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Sellers at the Sellers' expense on direction of the Purchaser accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Purchaser.
Section 6.09. Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAWS PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6.10. Notices
All demands, notices and communications under this Agreement shall be in
writing, personally delivered or mailed by certified mail with return receipt
requested, and shall be deemed to have been duly given upon receipt at the
appropriate address set forth in the Pooling and Servicing Agreement.
16
<PAGE>
Section 6.11. Counterparts
This Agreement may be executed in two or more counterparts and by different
parties on separate counterparts, each of which shall be an original, but all of
which together shall constitute one and the same instrument.
Section 6.12. The Credit Enhancer
Any right conferred to the Credit Enhancer hereunder shall be suspended
during any period in which the Credit Enhancer is in default in its payment
obligations under the Policy. At such time as the Certificates are no longer
outstanding under the Pooling and Servicing Agreement and no amounts owed to the
Credit Enhancer with respect to the Certificates remain unpaid, the Credit
Enhancer's rights hereunder shall terminate. The Credit Enhancer is an intended
third-party beneficiary of this Agreement.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
PURCHASER
Banc One ABS Corporation
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Vice President
SELLERS
Bank One, N.A.
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
Bank One, Arizona, N.A.
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
Bank One, Colorado, N.A.
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
Bank One, Illinois, N.A.
By: /s/ Daniel A. Long
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
[Signature Page to Mortgage Loan Purchase Agreement]
<PAGE>
Bank One, Indiana, N.A.
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
Bank One, Kentucky, N.A.
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
Bank One, Utah, N.A.
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
Bank One, Wisconsin
By: /s/ Daniel A. Long, Jr.
---------------------------------------
Name: Daniel A. Long, Jr.
Title: Assistant Vice President -
Funds Management
[Signature Page to Mortgage Loan Purchase Agreement]
<PAGE>
Accepted and acknowledged for purposes of the grant of security interest set
forth in Section 2.01(d) by:
THE BANK OF NEW YORK,
as Trustee
Date: June 23rd, 1999
By: /s/ Franklin B. Austin
------------------------------------
Name: Franklin B. Austin
Title: Vice President
[Signature Page to Mortgage Loan Purchase Agreement]
<PAGE>
EXHIBIT A
[RESERVED]
A-1
<PAGE>
EXHIBIT B-1
MORTGAGE LOANS TRANSFERRED BY
Bank One, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-1
<PAGE>
EXHIBIT B-2
MORTGAGE LOANS TRANSFERRED BY
Bank One, Arizona, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-2
<PAGE>
EXHIBIT B-3
MORTGAGE LOANS TRANSFERRED BY
Bank One, Colorado, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-3
<PAGE>
EXHIBIT B-4
MORTGAGE LOANS TRANSFERRED BY
Bank One, Illinois, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-4
<PAGE>
EXHIBIT B-5
MORTGAGE LOANS TRANSFERRED BY
Bank One, Indiana, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-5
<PAGE>
EXHIBIT B-6
MORTGAGE LOANS TRANSFERRED BY
Bank One, Kentucky, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-6
<PAGE>
EXHIBIT B-7
MORTGAGE LOANS TRANSFERRED BY
Bank One, Utah, N.A.
Delivered to Trustee Only
[Deemed Incorporated]
B-7
<PAGE>
EXHIBIT B-8
MORTGAGE LOANS TRANSFERRED BY
Bank One, Wisconsin
Delivered to Trustee Only
[Deemed Incorporated]
B-8
<PAGE>
EXHIBIT C
ACKNOWLEDGEMENT OF TRUSTEE AS TO RECEIPT OF MORTGAGE LOANS
THE BANK OF NEW YORK, as Trustee (the "Trustee") under the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of May 31,
1999, among Banc One ABS Corporation, as Depositor (the "Depositor"), Bank One,
N.A. ("Bank One"), as Servicer, and the Trustee, hereby acknowledges receipt of
the Mortgage Loans, and further declares that it will hold the documents
delivered to it pursuant to Section 2.01 of the Pooling and Servicing Agreement
and Section 2.04 of the Mortgage Loan Purchase Agreement, dated as of June 23,
1999 (the "Purchase Agreement"), among Bank One, Bank One, Arizona, N.A., Bank
One, Colorado, N.A., Bank One, Illinois, N.A., Bank One, Indiana, N.A., Bank
One, Kentucky, N.A., Bank One, Utah, N.A. and Bank One, Wisconsin (each, a
"Seller" and, collectively, the "Sellers") and the Depositor, and any
amendments, replacements or supplements thereto, as well as any other assets
transferred pursuant to the terms of the Purchase Agreement.
The Trustee hereby also acknowledges the grant of security interest in the
Mortgage Loans by the Sellers to the Depositor and to the Trustee as its
successor and assignee under the Purchase Agreement.
THE BANK OF NEW YORK
By: __________________________
Name:
Title:
Dated: June 23, 1999
C-1
