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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 11, 1996
ContiSecurities Asset Funding Corp.
(on behalf of ContiMortgage Home Equity Loan Trust 1996-2)
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 33-99340 16-1502484 (Lower Tier REMIC)
-------- -------- -----------------------------
(State or Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o Manufacturers & Traders Trust Company
One M&T Plaza
Buffalo, NY 14240
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (716) 842-4217
No Change
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
ContiSecurities Asset Funding Corp. registered issuances of up to
$3,500,000,000 principal amount of Asset Backed Certificates on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 33-99340) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, ContiMortgage Home Equity Loan Trust 1996-2 (the
"Registrant" or the "Trust") issued $505,000,000 in aggregate principal amount
of its Home Equity Pass-Through Certificates, Series 1996-2 (the
"Certificates"), on June 11, 1996. This Current Report on Form 8-K is being
filed to satisfy an undertaking to file copies of certain agreements executed in
connection with the issuance of the Certificates, the forms of which were filed
as Exhibits to the Registration Statement.
The Certificates were issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") attached hereto as Exhibit
4.1, dated as of June 1, 1996, among ContiSecurities Asset Funding Corp. (the
"Depositor"), ContiMortgage Corporation (the "Company"), as seller and servicer
(the "Servicer") and Manufacturers and Traders Trust Company, in its capacity as
trustee (the "Trustee"). The Certificates consist of the following classes: the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9 and Class A-10IO Certificates (the "Class A Certificates"),
the Class B-IO Certificates (the "Class B-IO Certificates") and the Class R
Certificates (the "Class R Certificates" and, together with the Class A
Certificates and the Class B-IO Certificates, the "Certificates"). Only the
Class A Certificates were offered pursuant to the Registration Statement. The
Certificates evidence, in the aggregate, 100% of the undivided beneficial
ownership interests in the Trust.
The assets of the Trust initially include a pool of closed-end home
equity loans (the "Home Equity Loans") secured by mortgages or deeds of trust
primarily on one-to-four family residential properties. Interest distributions
on the Class A Certificates are based on the Certificate Principal Balance (or,
in the case of the Class A-10IO Certificates, the Notional Principal Amount)
thereof and the applicable Pass-Through Rate thereof. The Pass-Through Rates for
the Class A Certificates are as follows: Class A-1, 5.90%; Class A-2, 6.50%;
Class A-3, 6.70%; Class A-4, 6.85%; Class A-5, 7.05%; Class A-6, 7.25%; Class
A-7, 7.60%; Class A-8, 7.90%, Class A-9, as defined in the Pooling and Servicing
Agreement attached hereto as Exhibit 4.1 and Class A-10IO, as defined in the
Pooling and Servicing Agreement. The Class A Certificates have initial aggregate
principal amounts as follows: Class A-1, $29,000,000; Class A-2, $118,000,000;
Class A-3, $54,000,000; Class A-4, $82,500,000; Class A-5, $21,500,000; Class
A-6, $62,500,000; Class A-7, $43,000,000; Class A-8, $39,500,000; and Class A-9,
$55,000,000. The Class A-10IO Certificates are interest only Certificates and
have no Certificate Principal Balance.
As of the Cut-Off Date, the Home Equity Loans possessed the
characteristics described in the Prospectus dated April 17, 1996 and the
Prospectus Supplement dated May 15, 1996 filed pursuant to Rule 424(b)(5) of the
Act on June 6, 1996. In such Prospectus Supplement, the Depositor committed to
provide a description of the pool of Home Equity Loans, including loans acquired
between the Cut-Off Date and the Closing Date in a current report on Form 8-K.
Such description is attached hereto as Exhibit 99.1.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated May 15, 1996, between
ContiSecurities Asset Funding Corp. and CS First Boston, as
Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of June 1, 1996,
among ContiSecurities Asset Funding Corp., ContiMortgage
Corporation, as seller and servicer, and Manufacturers and
Traders Trust Company, as trustee.
8.1 Tax Opinion of Arter & Hadden.
99.1 Description of the Home Equity Loans as of the Closing Date
(June 11, 1996).
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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.
CONTISECURITIES ASSET FUNDING CORP., as
Depositor
By: /s/ James E. Moore
---------------------------------------
Name: James E. Moore
Title: President
By: /s/ Jerome M. Perelson
---------------------------------------
Name: Jerome M. Perelson
Title: Vice President
Dated: June 26, 1996
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
<S> <C> <C>
1.1 Underwriting Agreement dated May 15, 1996, between
ContiSecurities Asset Funding Corp. and CS First Boston
Corporation, as Representative of the Several Underwriters. _________
4.1 Pooling and Servicing Agreement dated as of June 1, 1996,
among ContiSecurities Asset Funding Corp., ContiMortgage
Corporation, as seller and servicer, and Manufacturers and
Traders Trust Company, as trustee. _________
8.1 Tax Opinion of Arter & Hadden. _________
99.1 Description of the Home Equity Loans as of the Closing
Date (June 11, 1996). _________
</TABLE>
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$505,000,000
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
Home Equity Loan Pass-Through Certificates,
Series 1996-2
UNDERWRITING AGREEMENT
----------------------
May 15, 1996
CS First Boston Corporation
As Representative of the Several Underwriters
55 E. 52nd Street
New York, New York 10055-0186
Dear Ladies and Gentlemen:
ContiSecurities Asset Funding Corp. (the "Depositor"), a Delaware
corporation, has authorized the issuance and sale of Home Equity Loan
Pass-Through Certificates, Series 1996-2, Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 and Class A-10IO (the
"Offered Certificates") and the Class B-IO and the Class R Certificates (the
"Subordinated Certificates," and collectively with the Offered Certificates, the
"Certificates"), evidencing interests in a pool of fixed and adjustable rate
home equity loans (the "Home Equity Loans"). The Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A- 6, Class A-7 and Class A-8 Certificates are
collectively referred to as the "Fixed Rate Certificates." The Home Equity Loans
are secured primarily by first and second deeds of trust or mortgages on one- to
four-family residential properties.
Only the Offered Certificates are being purchased by the Underwriters
named in Schedule A hereto, and the Underwriters are purchasing, severally, only
the Offered Certificates set forth opposite their names in Schedule A, except
that the amounts purchased by the Underwriters may change in accordance with
Section X of this Agreement. CS First Boston Corporation ("CS First Boston") is
acting as representative of the Several Underwriters and in such capacity is
hereinafter referred to as the "Representative."
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of June 1, 1996 among the
Depositor, ContiMortgage Corporation ("ContiMortgage"), as seller and as
servicer (in such capacity, the "Servicer" or the "Seller," as the case may be)
and Manufacturers and Traders Trust Company, as trustee (the "Trustee"). The
Certificates will evidence fractional undivided interests in the trust (the
"Trust"). The assets of the Trust will initially include, among other things, a
pool of fixed and adjustable rate home equity loans having a Cut-Off Date (as
defined herein) of May 31, 1996 (the "Home Equity Loans"), and such amounts as
may be held by the Trustee in any accounts held by the Trustee for the Trust.
The pool of Home Equity Loans will be divided into two groups (each, a "Group"),
with all fixed rate Home Equity Loans assigned to the "Fixed Rate Group" and all
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adjustable rate Home Equity Loans assigned to the "Adjustable Rate Group." The
Offered Certificates will also have the benefit of a Certificate Insurance
Policy (the "Certificate Insurance Policy") issued by MBIA Insurance Corp., a
New York stock insurance company (the "Certificate Insurer"). The Certificate
Insurance Policy will be issued pursuant to the insurance agreement (the
"Insurance Agreement") dated as of June 1, 1996 among the Certificate Insurer,
the Depositor, ContiMortgage and the Trustee. A form of the Pooling and
Servicing Agreement has been filed as an exhibit to the Registration Statement
(hereinafter defined).
The Certificates are more fully described in a Registration Statement
which the Depositor has furnished to the Underwriters. Capitalized terms used
but not defined herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
Pursuant to Section 3.05 of the Pooling and Servicing Agreement and
concurrently with the execution thereof, ContiMortgage will transfer to the
Depositor all of its right, title and interest in and to the unpaid principal
balances of the Home Equity Loans as of the Cut-Off Date and the collateral
securing each Home Equity Loan.
SECTION I. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 33-99340), has (i) been
prepared by the Depositor in conformity with the requirements of the Securities
Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies of
such Registration Statement have been delivered by the Depositor to the
Underwriters. As used in this Agreement, "Effective Time" means the date and the
time as of which such Registration Statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Registration Statement" means such
registration statement, at the Effective Time, including any documents
incorporated by reference therein at such time; "Basic Prospectus" means such
final prospectus dated April 17, 1996; and "Prospectus Supplement" means the
final prospectus supplement relating to the Offered Certificates, to be filed
with the Commission pursuant to paragraphs (2), (3) or (5) of Rule 424(b) of the
Rules and Regulations. "Prospectus" means the Basic Prospectus together with the
Prospectus Supplement. Reference made herein to the Prospectus shall be deemed
to refer to and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of the
Prospectus and any reference to any amendment or supplement to the Prospectus
shall be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of the Prospectus, and
incorporated by reference in the Prospectus and any reference to any amendment
to the Registration Statement shall be deemed to include any report of the
Depositor filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order preventing or
suspending the use of the Prospectus. There are no contracts or documents of the
Depositor which are required to be filed as exhibits to the Registration
Statement pursuant to the Securities Act or the Rules and Regulations which have
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not been so filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statement other than such documents or
materials, if any, as any Underwriter delivers to the Depositor pursuant to
Section VIII D hereof for filing on Form 8-K. The conditions for use of Form
S-3, as set forth in the General Instructions thereto, have been satisfied.
To the extent that any Underwriter has provided to the Company
Computational Materials that such Underwriter has provided to a prospective
investor, the Company will file or cause to be filed with the Commission a
report on Form 8-K containing such 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 of the Rules and Regulations.
B. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations. The Registration Statement, as of the
Effective Date thereof and of any amendment thereto, did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus as of its date, and as amended or supplemented as of the Closing Date
does not and will not contain any untrue statement of a material fact or omit 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; provided
that no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the Depositor in writing by
the Underwriters expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
is made as to documents deemed to be incorporated by reference in the Prospectus
as the result of filing a Form 8-K at the request of the Underwriters except to
the extent such documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the general
affairs, management, financial
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condition, or results of operations of the Depositor, otherwise than as set
forth or contemplated in the Prospectus as supplemented or amended as of the
Closing Date.
E. The Depositor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the conduct of its
business so requires such standing. The Depositor has all power and authority
necessary to own or hold its properties, to conduct the business in which it is
engaged and to enter into and perform its obligations under this Agreement, the
Pooling and Servicing Agreement and the Insurance Agreement and to cause the
Certificates to be issued.
F. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or
threatened by any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject (a) which
if determined adversely to the Depositor would have a material adverse effect on
the business or financial condition of the Depositor, (b) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement or the Certificates (c) seeking to prevent the issuance of the
Certificates or the consummation by the Depositor of any of the transactions
contemplated by the Pooling and Servicing Agreement, the Insurance Agreement or
this Agreement, as the case may be, or (d) which might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, the Pooling and Servicing Agreement, this
Agreement, and the Insurance Agreement or the Certificates.
G. This Agreement has been, and the Pooling and Servicing Agreement and
the Insurance Agreement when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered by the
Depositor, and this Agreement constitutes, and the Pooling and Servicing
Agreement and the Insurance Agreement when executed and delivered as
contemplated herein will constitute, legal, valid and binding instruments
enforceable against the Depositor in accordance with their respective terms,
subject as to enforceability to (x) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, (y) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law), and (z) with respect to rights
of indemnity under this Agreement and the Insurance Agreement, limitations of
public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement and the Insurance Agreement by the Depositor and
the consummation of the transactions contemplated hereby and thereby, and the
issuance and delivery of the Certificates do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a party, by
which the Depositor is bound or to which any of the properties or assets of the
Depositor or any of its subsidiaries is subject, which breach or violation would
have a material adverse effect on the business, operations or financial
condition of the Depositor or its ability to perform its obligations under this
Agreement, the Pooling and Servicing Agreement and the Insurance
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Agreement, nor will such actions result in any violation of the provisions of
the articles of incorporation or by-laws of the Depositor or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets, which breach
or violation would have a material adverse effect on thebusiness, operations or
financial condition of the Depositor or its ability to perform its obligations
under this Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement.
I. The Depositor has no reason to know that Arthur Andersen & Co. are
not independent public accountants with respect to the Depositor as required by
the Securities Act and the Rules and Regulations.
J. The execution of the Certificates by the Depositor and the direction
by the Depositor to the Trustee to authenticate, issue and deliver the
Certificates has been duly authorized by the Depositor, and, assuming the
Trustee has been duly authorized to do so, when executed by the Depositor, and
authenticated, issued and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement, the Pooling and
Servicing Agreement and the Insurance Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under State securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus, and the Depositor has not received notice
of any proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which if decided adversely to the
Depositor would, singly or in the aggregate, materially and adversely affect the
conduct of its business, operations or financial condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Home Equity Loans
conveyed by the Seller, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any person any of its right or title in the Home
Equity Loans in the Pooling and Servicing Agreement or in the Certificates being
issued pursuant thereto; and (iii) have the power and authority to sell its
interest in the Home Equity Loans to the Trustee and to sell the Offered
Certificates to the Underwriters. Upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Trustee will have acquired beneficial
ownership of all of the Depositor's right, title and interest in and to
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the Home Equity Loans. Upon delivery to the Underwriters of the Offered
Certificates, the Underwriters will have good title to the Offered Certificates,
free of any Liens.
N. Reserved.
O. As of the Cut-Off Date, each of the Home Equity Loans will meet the
eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
P. Reserved.
Q. Neither the Depositor nor the Trust created by the Pooling and
Servicing Agreement is an "investment company" within the meaning of such term
under the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
R. At the Closing Date, the Offered Certificates and the Pooling and
Servicing Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
S. At the Closing Date, the Offered Certificates shall have been rated
in the highest rating category by at least two nationally recognized rating
agencies.
T. Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement and the Certificates have been paid
or will be paid at or prior to the Closing Date.
U. At the Closing Date, each of the representations and warranties of
the Depositor set forth in the Pooling and Servicing Agreement and the Insurance
Agreement will be true and correct in all material respects.
Any certificate signed by an officer of the Depositor and delivered to
the Representative or counsel for the Representative in connection with an
offering of the Offered Certificates shall be deemed, and shall state that it
is, a representation and warranty as to the matters covered thereby to each
person to whom the representations and warranties in this Section I are made.
SECTION II. Purchase and Sale. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered Certificates and
agrees to sell to the Underwriters, and the Underwriters agree (except as
provided in Sections X and XI hereof) to purchase from the Depositor, the
aggregate initial principal amounts or percentage interests of the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9 and Class A-10IO Certificates set forth opposite their names on
Schedule A, at the purchase price or prices set forth on Schedule A;
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provided, that in no event shall any Underwriter other than Greenwich Capital
Markets, Inc. be obligated to purchase any Class A-10IO Certificates.
SECTION III. Delivery and Payment. Delivery of and payment for the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 Class A-7,
Class A-8, Class A-9 and Class A-10IO Certificates shall be made at the offices
of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York 10019, or
at such other place as shall be agreed upon by the Representative and the
Depositor at 10:00 A.M. New York City time on June 11, 1996 or at such other
time or date as shall be agreed upon in writing by the Representative and the
Depositor (such date being referred to as the "Closing Date"). Payment shall be
made to the Depositor by wire transfer of same day funds payable to the account
of the Depositor. Delivery of the Offered Certificates shall be made to the
Representative for the accounts of the Underwriters against payment of the
purchase price thereof. The Certificates shall be in such authorized
denominations and registered in such names as the Representative may request in
writing at least two business days prior to the Closing Date. The Offered
Certificates will be made available for examination by the Representative no
later than 2:00 p.m. New York City time on the first business day prior to the
Closing Date.
SECTION IV. Offering by the Underwriters. It is understood that,
subject to the terms and conditions hereof, the Underwriters propose to offer
the Offered Certificates for sale to the public as set forth in the Prospectus.
SECTION V. Covenants of the Depositor. The Depositor and, to the extent
the provisions of Section H. below relate to ContiMortgage Corporation,
ContiMortgage Corporation agree as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and
to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business day
following the availability of the Prospectus to the Underwriters; to make no
further amendment or any supplement to the Registration Statement or to the
Prospectus prior to the Closing Date except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective
prior to the Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the Closing Date and to furnish the
Underwriters with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Depositor
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and, for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Offered Certificates; to promptly advise the Underwriters of its receipt of
notice of the issuance by the Commission of any stop order or of: (i) any order
preventing or suspending the use of the Prospectus; (ii) the suspension of the
qualification of the Offered Certificates for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; or (iv) any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional information.
In the event of the issuance of any stop order or of any order preventing or
suspending the use of
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the Prospectus or suspending any such qualification, the Depositor promptly
shall use its best efforts to obtain the withdrawal of such order by the
Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Depositor shall notify the Underwriters
and, upon any Underwriters' request, shall file such document and prepare and
furnish without charge to the Underwriters and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case the Underwriters
are required to deliver a Prospectus in connection with sales of any of the
Offered Certificates at any time nine months or more after the Effective Time,
upon the request of the Underwriters but at their expense, the Depositor shall
prepare and deliver to the Underwriters as many copies as the Underwriters may
reasonably request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Securities Act.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Depositor or the Underwriters, be required by
the Securities Act or requested by the Commission. Neither the Underwriters
consent to nor their distribution of any amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section VI.
E. To furnish the Underwriters and counsel for the Underwriters, prior
to filing with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Certificates: (i) any
Post-Effective Amendment to the Registration Statement or supplement to the
Prospectus, or document incorporated by reference in the Prospectus, or (ii)
Prospectus pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered Certificates
as soon as practicable, but in any event not later than 90 days after the close
of the period covered thereby,
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a statement of earnings of the Trust (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Depositor, Rule 158) and covering a period of at least twelve
consecutive months beginning not later than the first day of the first fiscal
quarter following the Closing Date.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for the
distribution of the Offered Certificates. The Depositor will file or cause the
filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Offered Certificates have been so qualified.
H. Unless the Underwriters shall otherwise have given their written
consent, no collateralized mortgage obligations or other similar securities
representing interests in or secured by other mortgage-related assets originated
or owned by ContiMortgage Corporation shall be publicly offered or sold, nor
shall ContiMortgage Corporation enter into any contractual arrangements that
contemplate the public offering or sale of such securities, until the earlier to
occur of the termination of the syndicate or the Closing Date.
I. So long as the Offered Certificates shall be outstanding the
Depositor shall cause the Trustee, pursuant to the Pooling and Servicing
Agreement, to deliver to the Underwriters as soon as such statements are
furnished to the Trustee: (i) the annual statement as to compliance delivered to
the Trustee pursuant to Section 8.16 of the Pooling and Servicing Agreement;
(ii) the annual statement of a firm of independent public accountants furnished
to the Trustee pursuant to Section 8.17 of the Pooling and Servicing Agreement;
(iii) the monthly servicing report furnished to the Trustee pursuant to Section
7.08 of the Pooling and Servicing Agreement; and (iv) the monthly reports
furnished to the Certificateholders pursuant to Section 7.09 of the Pooling and
Servicing Agreement.
J. To apply the net proceeds from the sale of the Offered Certificates
in the manner set forth in the Prospectus.
SECTION VI. Conditions to the Underwriters' Obligations. The
obligations of the Underwriters hereunder to purchase the Offered Certificates
pursuant to the Agreement are subject to: (i) the accuracy on and as of the
Closing Date of the representations and warranties on the part of the Depositor
herein contained; (ii) the performance by the Depositor of all of its
obligations hereunder; and (iii) the following conditions as of the Closing
Date:
A. The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission. Any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus shall
have been complied with.
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B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Dewey Ballantine,
counsel for the Underwriters, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and Servicing
Agreement, the Insurance Agreement, the Certificates, the Registration Statement
and the Prospectus, and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be satisfactory in all respects to
counsel for the Underwriters, and the Depositor shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
D. Arter & Hadden shall have furnished to the Underwriters their
written opinion, as counsel to the Depositor, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
1. The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the Registration
Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have become
effective under the 1933 Act; to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has been issued
and not withdrawn and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement, the Prospectus
and each amendment or supplement thereto, as of their respective effective or
issue dates (other than the financial and statistical information contained
therein, as to which such counsel need express no opinion), complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the rules and regulations thereunder.
3. To the best of such counsel's knowledge, there are no material
contracts, indentures or other documents of a character required to be described
or referred to in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus under the captions
"Description of The Certificates" and "The Pooling and Servicing Agreement" and
in the Prospectus Supplement under the captions "Description of The Class A
Certificates" and "The Pooling and Servicing Agreement," to the extent such
statements purport to summarize certain provisions of the Certificates or of the
Pooling and Servicing Agreement, are fair and accurate in all material respects.
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5. The statements set forth in the Prospectus and the Prospectus
Supplement under the captions "ERISA Considerations" and "Certain Federal Income
Tax Considerations" to the extent that they constitute matters of federal law,
provide a fair and accurate summary of such law or conclusions.
6. The Pooling and Servicing Agreement conforms in all material
respects to the description thereof contained in the Prospectus and is not
required to be qualified under the Trust Indenture Act of 1939, as amended, and
the Trust is not required to be registered under the Investment Company Act of
1940, as amended.
7. Neither the Depositor nor the Trust is an "investment company" or
under the "control" of an "investment company" as such terms are defined in the
1940 Act.
8. Assuming that (a) the Trustee causes certain assets of the Trust
Estate, as the Trustee has covenanted to do in the Pooling and Servicing
Agreement, to be treated as a "real estate mortgage investment conduit"
("REMIC"), as such term is defined in the Internal Revenue Code of 1986, as
amended (the "Code"), and (b) the parties to the Pooling and Servicing Agreement
comply with the terms thereof, the Lower-Tier REMIC and the Upper-Tier REMIC
will each be treated as a REMIC, the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 and Class A-10IO
Certificates will be treated as the "regular interests" in the Upper-Tier REMIC
and the Upper-Tier REMIC Residual Class will be treated as the sole "residual
interest" in the Upper-Tier REMIC. The Lower-Tier Interests A-1, A-2, A-3, A-4,
A-5, A-6, A-7, A-8, A-9 and the Lower-Tier B-1O Interest and Lower-Tier B-2
Interest will be treated as the "regular interests" in the Lower-Tier REMIC and
the Class R Certificates will be treated as the sole "residual interest" in the
Lower-Tier REMIC. The Trust is not subject to tax upon its income or assets by
any taxing authority of the State of New York.
9. Assuming that the Class A-9 Certificates are rated at the time of
issuance in one of the two highest rating categories by a nationally recognized
statistical rating organization, each such Class A-9 Certificate at such time
will be a "mortgage related security" as such term is defined in Section
3(a)(41) of the Securities Exchange Act of 1934, as amended.
10. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending that would adversely affect the status of
the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC.
11. As a consequence of the qualification of the Lower-Tier REMIC and
the Upper- Tier REMIC as a REMIC, the Offered Certificates will be treated as
"qualifying real property loans" under Section 593(d) of the Code, "regular . .
. interest(s) in a REMIC" under Section 7701(a)(19)(C) of the Code and "real
estate assets" under Section 856(c) of the Code in the same proportion that the
assets in the Trust consist of qualifying assets under such Sections. In
addition, as a consequence of the qualification of the Lower-Tier REMIC and the
Upper-Tier REMIC as a REMIC, interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real property" under
Section 856(c) of the Code to the
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extent that such Offered Certificates are treated as "real estate assets" under
Section 856(c) of the Code.
12. The Certificates will, when issued, conform to the description
thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a written statement,
addressed to the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters to the effect that nothing has come to the
attention of such counsel which lead them to believe that: (a) the Registration
Statement, at the time such Registration Statement became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained in the
Registration Statement); (b) the Prospectus, as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except as to
statements set forth in the Prospectus Supplement under the Captions "Credit
Enhancement" and "The Certificate Insurer"); or (c) any document incorporated by
reference in the Prospectus or any further amendment or supplement to any such
incorporated document made by the Depositor prior to the Closing Date (other
than any document filed at the request of an Underwriter to the extent such
document relates to Computational Materials) contained, as of the time it became
effective or was filed with the Commission, as the case may be, 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, in the
light of the circumstances under which they were made, not misleading.
E. The Underwriters shall have received the favorable opinion, dated
the Closing Date, of Arter & Hadden, special counsel to the Depositor, addressed
to the Depositor and satisfactory to the Certificate Insurer, Standard & Poor's
Ratings Services, Moody's Investors Service and the Underwriters, with respect
to certain matters relating to the transfer of the Home Equity Loans to the
Depositor and from the Depositor to the Trust, and such counsel shall have
consented to reliance on such opinion by the Certificate Insurer, Standard &
Poor's Ratings Services, Moody's Investors Service and the Underwriters as
though such opinion had been addressed to each such party.
F. Arter & Hadden, counsel for ContiMortgage in its capacity as both
Seller and Servicer, shall have furnished to the Underwriters their written
opinion, as counsel to the Seller and Servicer, addressed to the Underwriters
and the Depositor and dated the Closing Date, in form and substance satisfactory
to the Underwriters, to the effect that:
1. ContiMortgage is validly existing in good standing as a corporation
under the laws of the State of Delaware.
2. ContiMortgage has full corporate power and authority to serve in the
capacity of seller and servicer of the Home Equity Loans as contemplated in the
Pooling and Servicing
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Agreement and to transfer the Home Equity Loans to the Depositor as contemplated
in the Pooling and Servicing Agreement.
3. The Pooling and Servicing Agreement and the Insurance Agreement have
been duly authorized, executed and delivered by ContiMortgage, and, assuming the
due authorization, execution and delivery of such agreements by the other
parties thereto, constitute the legal, valid and binding agreements of
ContiMortgage, enforceable against ContiMortgage in accordance with their terms,
subject as to enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium, receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (y) the qualification that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion, with respect
to such remedies, of the court before which any proceedings with respect thereto
may be brought.
4. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body having
jurisdiction over ContiMortgage is required for the consummation by
ContiMortgage of the transactions contemplated by the Pooling and Servicing
Agreement and the Insurance Agreement, except such consents, approvals,
authorizations, registrations and qualifications as have been obtained.
5. Neither the transfer of the Home Equity Loans to the Depositor, nor
the execution, delivery or performance by ContiMortgage of the Pooling and
Servicing Agreement or the Insurance Agreement and the transactions contemplated
thereby (A) conflict with or result in a breach of, or constitute a default
under, (i) any term or provision of the Certificate of Incorporation or By-Laws
of ContiMortgage; (ii) any term or provision of any material agreement, deed of
trust, mortgage loan agreement, contract, instrument or indenture, or other
agreement to which ContiMortgage is a party or is bound or to which any of the
property or assets of ContiMortgage or any of its subsidiaries is subject; (iii)
to the best of such firm's knowledge without independent investigation any
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over ContiMortgage; or (iv) any law, rule or
regulation, applicable to ContiMortgage; or (B) to the best of such firm's
knowledge without independent investigation, results in the creation or
imposition of any lien, charge or encumbrance upon the Trust Estate or upon the
Certificates.
6. The execution of the Pooling and Servicing Agreement is sufficient
to convey all of ContiMortgage's right, title and interest in the Home Equity
Loans to the Depositor and following the consummation of the transaction
contemplated by Section 3.05 of the Pooling and Servicing Agreement, the
transfer of the Home Equity Loans by ContiMortgage to the Depositor is a sale
thereof.
7. There are, to the best of such counsel's knowledge without
independent investigation, no actions, proceedings or investigations pending
with respect to which ContiMortgage has received service of process or
threatened against ContiMortgage before any court, administrative agency or
other tribunal (a) asserting the invalidity of the Pooling and Servicing
Agreement, the Underwriting Agreement, the Insurance Agreement or the
Certificates, (b) seeking to prevent the consummation of any of the transactions
contemplated by the Pooling
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and Servicing Agreement or (c) which would materially and adversely affect the
performance by ContiMortgage of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, the Underwriting
Agreement, or the Insurance Agreement.
G. Alan L. Langus, Esq., Chief Counsel for the Depositor, shall have
furnished to the Underwriters his written opinion, addressed to the Underwriters
and dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is in
good standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business so requires such
standing. The Depositor has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged and to enter into
and perform its obligations under this Agreement, the Pooling and Servicing
Agreement and the Insurance Agreement, and to cause the Certificates to be
issued.
2. The Depositor is not in violation of its articles of incorporation
or by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Depositor is a party or by which it or
its properties may be bound, which default might result in any material adverse
changes in the financial condition, earnings, affairs or business of the
Depositor or which might materially and adversely affect the properties or
assets, taken as a whole, of the Depositor.
3. This Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement have been duly authorized,
executed and delivered by the Depositor and, assuming the due authorization,
execution and delivery of such agreements by the other parties thereto, such
agreements constitute valid and binding obligations, enforceable against the
Depositor in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (y) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law) and (z) with respect to rights of
indemnity under this Agreement and the Insurance Agreement, limitations of
public policy under applicable securities laws.
4. The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement and the Insurance Agreement by the Depositor,
the consummation of the transactions contemplated hereby and thereby, and the
issuance and delivery of the Certificates do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a party or
by which the Depositor is bound or to which any of the property or assets of the
Depositor or any of its subsidiaries is subject, which breach or violation would
have a material adverse effect on the business, operations or financial
condition of the Depositor or its ability to perform its obligations under this
Agreement, the Pooling and Servicing Agreement and the Insurance Agreement, nor
will such actions result in a violation of the provisions of the articles of
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incorporation or by-laws of the Depositor or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Depositor or any of its properties or assets, which breach or violation
would have a material adverse effect on the business, operations or financial
condition of the Depositor or its ability to perform its obligations under this
Agreement, the Pooling and Servicing Agreement and the Insurance Agreement.
5. The execution of the Certificates by the Depositor and the
direction by the Depositor to the Trustee to issue, authenticate and deliver the
Certificates has been duly authorized by the Depositor and, assuming that the
Trustee has been duly authorized to do so, when executed by the Depositor and
authenticated and delivered by the Trustee in accordance with the Pooling and
Servicing Agreement, the Certificates will be validly issued and outstanding and
will be entitled to the benefits of the Pooling and Servicing Agreement.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates, and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement, the Pooling and
Servicing Agreement and the Insurance Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under the 1933 Act or State securities or Blue Sky laws in connection with the
purchase and distribution of the Offered Certificates by the Underwriters or as
have been previously obtained.
7. There are not, to the best of his knowledge without independent
investigation, any actions, proceedings or investigations pending with respect
to which the Depositor has received service of process before or threatened by
any court, administrative agency or other tribunal to which the Depositor is a
party or of which any of its properties is the subject: (a) which if determined
adversely to the Depositor would have a material adverse effect on the business,
results of operations or financial condition of the Depositor; (b) asserting the
invalidity of the Pooling and Servicing Agreement, the Insurance Agreement or
the Certificates; (c) seeking to prevent the issuance of the Certificates or the
consummation by the Depositor of any of the transactions contemplated by the
Pooling and Servicing Agreement, the Insurance Agreement or this Agreement, as
the case may be; or (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, the Insurance Agreement,
this Agreement or the Certificates.
8. The Certificates have been duly and validly authorized and issued
and, immediately prior to the sale of the Offered Certificates to the
Underwriters, such Certificates are owned by the Depositor, free and clear of
all Liens.
H. The Underwriters shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to counsel to the Underwriters, to the effect
that:
1. The Trustee is a banking corporation duly incorporated and validly
existing under the law of the State of New York.
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2. The Trustee has the full corporate trust power to execute, deliver
and perform its obligations under the Pooling and Servicing Agreement.
3. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement and the performance by the Trustee of its obligations under
the Pooling and Servicing Agreement have been duly authorized by all necessary
corporate action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and legally binding
obligation of the Trustee enforceable against the Trustee.
5. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement do not (a) violate the Organization Certificate of the
Trustee or the By-laws of the Trustee, (b) to such counsel's knowledge, violate
any judgment, decree or order of any New York or United States federal court or
other New York or United States federal governmental authority by which the
Trustee is bound or (c) assuming the non-existence of any judgment, decree or
order of any court or other governmental authority that would be violated by
such execution and delivery, violate any New York or United States federal
statute, rule or regulation or require any consent, approval or authorization of
any New York or United States federal court or other New York or United States
federal governmental authority.
6. The Certificates have been duly authenticated, executed and
delivered by the Trustee.
7. If the Trustee were acting as Servicer under the Pooling and
Servicing Agreement as of the date of such opinion, the Trustee would have the
full corporate trust power to perform the obligations of the Servicer under the
Pooling and Servicing Agreement; and
8. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting the
Trustee before or by any court, arbitrator, administrative agency or other
governmental authority which, if decided adversely to the Trustee, would
materially and adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable opinion or
opinions, dated the Closing Date, of counsel for the Underwriters, with respect
to the issue and sale of the Offered Certificates, the Registration Statement,
this Agreement, the Prospectus and such other related matters as the
Underwriters may reasonably require.
J. The Underwriters shall have received the favorable opinion dated the
Closing Date, Kutak Rock, counsel for the Certificate Insurer in form and scope
satisfactory to counsel for the Underwriters, substantially to the effect that:
1. The Certificate Insurer is a stock insurance corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of New York. The Certificate Insurer is validly licensed and authorized to issue
the Certificate Insurance Policy and perform its
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obligations under the Insurance Agreement in accordance with the terms thereof,
under the laws of the State of New York;
2. The Certificate Insurer has the corporate power to execute and
deliver, and to take all action required of it under, the Insurance Agreement
and the Certificate Insurance Policy;
3. The execution, delivery and performance by the Certificate Insurer
of the Certificate Insurance Policy and Insurance Agreement do not require the
consent or approval of, the giving of notice to, the prior registration with, or
the taking of any other action in respect of any state or other governmental
agency or authority which has not previously been obtained or effected;
4. The Certificate Insurance Policy and Insurance Agreement have been
duly authorized, executed and delivered by the Certificate Insurer and
constitute the legal, valid and binding agreement of the Certificate Insurer,
enforceable against the Certificate Insurer in accordance with their terms
subject, as to enforcement, to (x) bankruptcy, reorganization, insolvency,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, including, without limitation, laws relating to
fraudulent transfers or conveyances, preferential transfers and equitable
subordination, presently or from time to time in effect and general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law), as such laws may be applied in any such proceeding with
respect to the Certificate Insurer and (y) the qualification that the remedy of
specific performance and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings with respect thereto may be brought;
5. To the extent the Certificate Insurance Policy constitutes a
security within the meaning of Section 2(1) of the Securities Act, it is a
security that is exempt from the registration requirements of the Act.
6. The information set forth under the caption "THE CERTIFICATE
INSURER" in the Prospectus Supplement, insofar as such information constitutes a
description of the Certificate Insurance Policy, accurately summarizes the
Certificate Insurance Policy.
K. The Depositor and ContiMortgage shall each have furnished to the
Underwriters a certificate, dated the Closing Date and signed by the Chairman of
the Board, the President or a Vice President of the Depositor and ContiMortgage,
respectively, stating as it relates to each:
1. The representations and warranties of the Depositor in this
Agreement are true and correct as of the Closing Date; and the Depositor has
complied with all agreements contained herein which are to have been complied
with on or prior to the Closing Date;
2. The information contained in the Prospectus relating to
ContiMortgage and the Mortgage Loans is true and accurate in all material
respects and nothing has come to his or her attention that would lead such
officer to believe that the Registration Statement or the Prospectus includes
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein not misleading;
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3. There has been no amendment or other document filed affecting the
Certificate of Incorporation or bylaws of the Depositor since May 18, 1995 or
the Certificate of Incorporation or bylaws of ContiMortgage since October 19,
1990 and no such amendment has been authorized. No event has occurred since June
1, 1996 which has affected the good standing of the Depositor or ContiMortgage
under the laws of the State of Delaware; and
4. There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Depositor or ContiMortgage from March 31, 1996.
L. The Trustee shall have furnished to the Underwriters a certificate
of the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution, authentication and
delivery of the Certificates by the Trustee thereunder and such other matters as
the Representative shall reasonably request.
M. The Certificate Insurance Policy and the Insurance Agreement shall
have been issued by the Certificate Insurer and shall have been duly
authenticated by an authorized agent of the Certificate Insurer, if so required
under applicable state law or regulations.
N. The Offered Certificates (other than the Class A-10IO Certificates)
shall have been rated "AAA" by Standard & Poor's and "Aaa" by Moody's Investors
Service. The Class A-10IO Certificates shall have been rated "AAAr" by Standard
& Poor's and "Aaa" by Moody's Investors Service.
O. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested not less than three full business days prior to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this Agreement none of
the following shall have occurred: (i) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the over-the counter
market shall have been suspended or minimum prices shall have been established
on either of such exchanges or such market by the Commission, by such exchange
or by any other regulatory body or governmental authority having jurisdiction;
(ii) a banking moratorium shall have been declared by Federal or state
authorities; (iii) the United States shall have become engaged in hostilities,
there shall have been
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an escalation of hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States; or (iv)
there shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets of the United States shall be such) as to make it in each
of the instances set forth in clauses (i), (ii), (iii) and (iv) herein, in the
reasonable judgment of the Underwriters, impractical or inadvisable to proceed
with the public offering or delivery of the Certificates on the terms and in the
manner contemplated in the Prospectus.
If any condition specified in this Section VI shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION VII. Payment of Expenses. The Depositor agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the
Certificates and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Prospectus and any amendment or supplement to the Prospectus or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the costs of reproducing and distributing this Agreement; (e) the
fees and expenses of qualifying the Certificates under the securities laws of
the several jurisdictions as provided in Section V(G) hereof and of preparing,
printing and distributing a Blue Sky Memorandum and a Legal Investment Survey
(including related fees and expenses of counsel to the Representative); (f) any
fees charged by securities rating services for rating the Offered Certificates;
and (g) all other costs and expenses incidental to the performance of the
obligations of the Depositor (including costs and expenses of counsel to the
Depositor); provided that, except as provided in this Section VII, the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Offered Certificates which
they may sell and the expenses of advertising any offering of the Offered
Certificates made by the Underwriters, and the Underwriters shall pay the cost
of any accountant's comfort letters relating to any Computational Materials (as
defined herein).
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section VI or Section XI, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses,
including fees and disbursements of Dewey Ballantine, counsel for the
Underwriters.
SECTION VIII. Indemnification and Contribution. A. The Depositor agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, but not limited
19
<PAGE>
to, any loss, claim, damage, liability or action relating to purchases and sales
of the Offered Certificates), to which such Underwriter or any such controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereof or supplement
thereto, (ii) 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, (iii) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or supplement
thereto, or (iv) the omission or alleged omission to state therein 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 and
shall reimburse such Underwriter and each such controlling person promptly upon
demand for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Depositor shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the Prospectus,
or any amendment thereof or supplement thereto, or the Registration Statement,
or any amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Depositor by or on behalf
of such Underwriter specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability which the Depositor may otherwise have
to any Underwriter or any controlling person of any such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Depositor or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) 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, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein 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, but in each case only
to the extent that the 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 or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor or any director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any
20
<PAGE>
liability which any Underwriter may otherwise have to the Depositor or any such
director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this Section
VIII of notice of any claim or the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section VIII, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section VIII except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Section
VIII.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section VIII for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically
authorized by the indemnifying party in writing; (ii) such indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for such indemnified party to employ separate counsel;
or (iii) the indemnifying party has failed to assume the defense of such action
and employ counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section VIII consist of one
or more Underwriters or any of its or their controlling persons, or the
Depositor, if the indemnified parties under this Section VIII consist of the
Depositor or any of the Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section VIII(A) and (B), shall use its best efforts to cooperate
with the indemnifying party in the defense
21
<PAGE>
of any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. 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 on any claims that are the subject of such action.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
D. Each Underwriter agrees to provide the Depositor no later than two
Business Days prior to the day on which the Prospectus Supplement is required to
be filed pursuant to Rule 424 with a copy of any Computational Materials
(defined below) produced by such Underwriter for filing with the Commission on
Form 8-K.
E. Each Underwriter severally agrees, assuming all Seller Provided
Information is accurate and complete in all material respects, to indemnify and
hold harmless the Depositor, each of the Depositor's officers and directors and
each person who controls the Depositor within
the meaning of Section 15 of the Securities Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities 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 Computational
Materials provided by such Underwriter, 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, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that in no event shall an Underwriter
be liable to the Depositor under paragraph E in an amount in excess of the fees
received by such Underwriter in connection with the offering of the Offered
Certificates. The obligations of an Underwriter under this Section VIII (E)
shall be in addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be equally
applicable to this Section VIII (E).
22
<PAGE>
F. If the indemnification provided for in this Section VIII shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section VIII (A), (B) or (E) in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be 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 relevant class of Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section VIII (C),
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 related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Depositor bear to the total
underwriting discounts and commissions received by the related Underwriter from
time to time in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or by such Underwriter, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section VIII (F) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
VIII (F) shall be deemed to include, for purposes of this Section VIII (F), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
For purposes of this Section VIII, in no case shall any Underwriter
(except with respect to any document (other than the Computational Materials)
incorporated by reference into the Registration Statement or Prospectus at the
request of such Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered Certificates) be
responsible for any amount in excess of the amount by which (x) the amount
received by such Underwriter in connection with its sale of the Offered
Certificates exceeds (y) the amount paid by such Underwriter to the Depositor
for the Offered Certificates hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of
fraudulent misrepresentation.
23
<PAGE>
G. For purposes of this Section VIII, as to each Underwriter the term
"Computational Materials" means such portion, if any, of the information
delivered to the Depositor by such Underwriter pursuant to Section VIII(D) for
filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference; and
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means any computer tape (or other information)
furnished to any Underwriter by the Seller concerning the assets comprising the
Trust.
H. The Underwriters confirm that the information set forth in the last
paragraph on the cover page of the Prospectus Supplement and the Computational
Materials are correct and constitute the only information furnished in writing
to the Depositor by or on behalf of any Underwriter specifically for inclusion
in the Registration Statement and the Prospectus.
SECTION IX. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in 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 made by or on behalf of the Underwriters or controlling
persons thereof, or by or on behalf of the Depositor, and shall survive delivery
of any Offered Certificates to the Underwriters.
SECTION X. Default by One or More of the Underwriters. If one or more
of the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth; provided, however, that in no event
shall any Underwriter other than Greenwich Capital Markets, Inc. be obligated to
purchase any Class A-10IO Certificates. If, however, the Underwriters have not
completed such arrangements within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Certificates does
not exceed 10% of the aggregate principal amount of the Offered Certificates to
be purchased pursuant to this Agreement, the non-defaulting Underwriters named
in this Agreement shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all such non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Offered Certificates to be
purchased pursuant to this Agreement, this Agreement shall terminate, without
any liability on the part of any non-defaulting Underwriters.
24
<PAGE>
No action taken pursuant to this Section X shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this
Section X, each of the Underwriters and the Depositors shall have the right to
postpone the Closing Date for a period not exceeding five Business Days in order
that any required changes in the Registration Statement or Prospectus or in any
other documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may terminate
this Agreement immediately upon notice to the Depositor, at any time at or prior
to the Closing Date if any of the events or conditions described in Section VI
(Q) of this Agreement shall occur and be continuing. In the event of any such
termination, the covenant set forth in Section V (G), the provisions of Section
VII, the indemnity agreement set forth in Section VIII, and the provisions of
Sections IX and XIV shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to CS First Boston, 55 E. 52nd Street, New York, New York
10019, Attention: Investment Banking Department/Transaction Advisory Group (Fax:
212-318-0532); and
B. if to the Depositor, shall be delivered or sent by mail, telex or
facsimile transmission to care of ContiSecurities Asset Funding Corporation, 277
Park Avenue, New York, New York 10172, Attention: Chief Counsel (Fax:
212-207-2937).
SECTION XIII. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section XIII, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
SECTION XIV. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them.
25
<PAGE>
SECTION XV. Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION XVI. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles of
conflicts of law thereof.
The parties hereto hereby submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in the
State of New York located in the City and County of New York, and appellate
court from any thereof, in any action, suit or proceeding brought against it or
in connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
The parties hereto hereby irrevocably waive, to the fullest extent
permitted by law, any and all rights to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.
SECTION XVII. Counterparts. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION XVIII. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
26
<PAGE>
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriters, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
CONTISECURITIES ASSET FUNDING
CORP.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as
of the date first above written:
CS FIRST BOSTON CORPORATION
Acting on its own behalf and as
Representative of the Several
Underwriters referred to in the
foregoing Agreement
By:
-----------------------------------------
Name:
Title:
CONTIMORTGAGE CORPORATION
Accepts and hereby agrees solely to the
provisions of Section V.H.
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Class of Certificates Initial Principal Dollar Amount
Name of Purchased by the of Certificates Purchased by Price to
Underwriter Underwriters Underwriters Public
- ----------- ------------ ------------ ------
<S> <C> <C> <C>
CS First Boston
A-1 $ 7,250,000 99.9962%
A-2 $ 27,000,000 99.9795%
A-3 $ 13,500,000 99.9564%
A-4 $ 20,625,000 99.8918%
A-5 $ 5,375,000 99.9390%
A-6 $ 15,625,000 99.8963%
A-7 $ 10,750,000 99.7944%
A-8 $ 9,875,000 99.6222%
A-9 $ 13,750,000 100.0000%
----------
TOTAL: $ 123,750,000
-----
Greenwich Capital
Markets, Inc.
A-1 $ 7,250,000 99.9962%
A-2 $ 27,000,000 99.9795%
A-3 $ 13,500,000 99.9564%
A-4 $ 20,625,000 99.8918%
A-5 $ 5,375,000 99.9390%
A-6 $ 15,625,000 99.8963%
A-7 $ 10,750,000 99.7944%
A-8 $ 9,875,000 99.6222%
A-9 $ 13,750,000 100.0000%
A-10IO $ 450,000,000* 100.0000%
------------
TOTAL: $ 123,750,000
-----
Lehman Brothers Inc.
A-1 $ 7,250,000 99.9962%
A-2 $ 27,000,000 99.9795%
A-3 $ 13,500,000 99.9564%
A-4 $ 20,625,000 99.8918%
A-5 $ 5,375,000 99.9390%
A-6 $ 15,625,000 99.8963%
A-7 $ 10,750,000 99.7944%
A-8 $ 9,875,000 99.6222%
A-9 $ 13,750,000 100.0000%
----------
TOTAL: $ 123,750,000
-----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class of Certificates Initial Principal Dollar Amount
Name of Purchased by the of Certificates Purchased by Price to
Underwriter Underwriters Underwriters Public
- ----------- ------------ ------------ ------
<S> <C> <C> <C>
Merrill Lynch & Co.
A-1 $ 7,250,000 99.9962%
A-2 $ 27,000,000 99.9795%
A-3 $ 13,500,000 99.9564%
A-4 $ 20,625,000 99.8918%
A-5 $ 5,375,000 99.9390%
A-6 $ 15,625,000 99.8963%
A-7 $ 10,750,000 99.7944%
A-8 $ 9,875,000 99.6222%
A-9 $ 13,750,000 100.0000%
----------
TOTAL: $ 123,750,000
-----
ContiFinancial Services A-2 $ 10,000,000
Corporation --------------------
TOTAL: $ 10,000,000
-----
$ 505,000,000
--------------------
TOTAL: $ 505,000,000
-----
- -------------------
<FN>
*=Notional Principal Balance
</FN>
</TABLE>
<PAGE>
POOLING AND SERVICING AGREEMENT
Relating to
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
Among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
CONTIMORTGAGE CORPORATION,
as Seller,
CONTIMORTGAGE CORPORATION,
as Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY
as Trustee
Dated as of June 1, 1996
<PAGE>
CONTENTS
--------
<TABLE>
<CAPTION>
Page
----
<S> <C>
CONVEYANCE...................................................................................................... 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION...................................... 2
Section 1.01 Definitions.......................................................................... 2
-----------
Section 1.02 Use of Words and Phrases............................................................. 34
------------------------
Section 1.03 Captions; Table of Contents.......................................................... 35
---------------------------
Section 1.04 Opinions............................................................................. 35
--------
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST................................. 36
Section 2.01 Establishment of the Trust........................................................... 36
--------------------------
Section 2.02 Office............................................................................... 36
------
Section 2.03 Purposes and Powers.................................................................. 36
-------------------
Section 2.04 Appointment of the Trustee; Declaration of Trust..................................... 36
------------------------------------------------
Section 2.05 Expenses of the Trust................................................................ 36
---------------------
Section 2.06 Ownership of the Trust............................................................... 37
----------------------
Section 2.07 Situs of the Trust................................................................... 37
------------------
Section 2.08 Miscellaneous REMIC Provisions....................................................... 37
------------------------------
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS................................ 40
Section 3.01 Representations and Warranties of the Depositor...................................... 40
-----------------------------------------------
Section 3.02 Representations and Warranties of the Servicer....................................... 41
----------------------------------------------
Section 3.03 Representations and Warranties of the Seller......................................... 43
--------------------------------------------
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the Home
--------------------------------------------------------------------
Equity Loans In Certain Situations................................................... 46
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement
Mortgages............................................................................ 53
---------
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
------------------------------------------------------------------
Certification by Trustee............................................................. 57
------------------------
Section 3.07 Intercreditor Arrangements Between the Trust and the Seller with
----------------------------------------------------------------
Respect to Retained Yield............................................................ 58
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES...................................... 59
Section 4.01 Issuance of Certificates............................................................. 59
------------------------
Section 4.02 Sale of Certificates................................................................. 59
--------------------
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.................................... 60
Section 5.01 Terms................................................................................ 60
-----
i
<PAGE>
Page
----
Section 5.02 Forms................................................................................ 60
-----
Section 5.03 Execution, Authentication and Delivery............................................... 60
--------------------------------------
Section 5.04 Registration and Transfer of Certificates............................................ 61
-----------------------------------------
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.................................... 63
-------------------------------------------------
Section 5.06 Persons Deemed Owners................................................................ 63
---------------------
Section 5.07 Cancellation......................................................................... 64
------------
Section 5.08 Limitation on Transfer of Ownership Rights........................................... 64
------------------------------------------
Section 5.09 Assignment of Rights................................................................. 65
--------------------
ARTICLE VI
COVENANTS.................................................. 66
Section 6.01 Distributions........................................................................ 66
-------------
Section 6.02 Money for Distributions to be Held in Trust; Withholding............................. 66
--------------------------------------------------------
Section 6.03 Protection of Trust Estate........................................................... 67
--------------------------
Section 6.04 Performance of Obligations........................................................... 68
--------------------------
Section 6.05 Negative Covenants................................................................... 68
------------------
Section 6.06 No Other Powers...................................................................... 68
---------------
Section 6.07 Limitation of Suits.................................................................. 68
-------------------
Section 6.08 Unconditional Rights of Owners to Receive Distributions.............................. 69
-------------------------------------------------------
Section 6.09 Rights and Remedies Cumulative....................................................... 69
------------------------------
Section 6.10 Delay or Omission Not Waiver......................................................... 70
----------------------------
Section 6.11 Control by Owners.................................................................... 70
-----------------
Section 6.12 Indemnification...................................................................... 70
---------------
Section 6.13 Access to Owners of Certificates' Names and Addresses................................ 71
-----------------------------------------------------
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES..................................... 72
Section 7.01 Collection of Money.................................................................. 72
-------------------
Section 7.02 Establishment of Accounts;........................................................... 72
--------------------------
Section 7.03 Flow of Funds........................................................................ 73
-------------
Section 7.04 Reserved............................................................................. 77
--------
Section 7.05 Investment of Accounts............................................................... 77
----------------------
Section 7.06 Payment of Trust Expenses............................................................ 78
-------------------------
Section 7.07 Eligible Investments................................................................. 78
--------------------
Section 7.08 Accounting and Directions by Trustee................................................. 80
------------------------------------
Section 7.09 Reports by Trustee to Owners and Certificate Insurer................................. 81
----------------------------------------------------
Section 7.10 Reports by Trustee. ................................................................ 83
------------------
Section 7.11 Preference Payments.................................................................. 83
-------------------
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS............................................. 85
Section 8.01 Servicer and Sub-Servicers........................................................... 85
--------------------------
Section 8.02 Collection of Certain Home Equity Loan Payments...................................... 86
-----------------------------------------------
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers.......................... 86
-----------------------------------------------------------
Section 8.04 Successor Sub-Servicers.............................................................. 86
-----------------------
Section 8.05 Liability of Servicer; Indemnification .............................................. 86
--------------------------------------
ii
<PAGE>
Page
----
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the
Owners............................................................................... 87
------
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee...................... 87
---------------------------------------------------------------
Section 8.08 Principal and Interest Account....................................................... 87
------------------------------
Section 8.09 Delinquency Advances and Servicing Advances.......................................... 89
-------------------------------------------
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans............................... 90
------------------------------------------------------
Section 8.11 Maintenance of Insurance............................................................. 91
------------------------
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.......................... 91
-----------------------------------------------------------
Section 8.13 Realization Upon Defaulted Home Equity Loans; Inspection............................. 92
--------------------------------------------------------
Section 8.14 Trustee to Cooperate; Release of Files............................................... 93
--------------------------------------
Section 8.15 Servicing Compensation............................................................... 94
----------------------
Section 8.16 Annual Statement as to Compliance.................................................... 94
---------------------------------
Section 8.17 Annual Independent Certified Public Accountants' Reports............................. 94
--------------------------------------------------------
Section 8.18 Access to Certain Documentation and Information Regarding the Home
------------------------------------------------------------------
Equity Loans......................................................................... 95
------------
Section 8.19 Assignment of Agreement.............................................................. 95
-----------------------
Section 8.20 Removal of Servicer; Resignation of Servicer......................................... 95
--------------------------------------------
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance................... 99
------------------------------------------------------------------
ARTICLE IX
TERMINATION OF TRUST.............................................101
Section 9.01 Termination of Trust.................................................................101
--------------------
Section 9.02 Termination Upon Option of Owners of Class R Certificates............................101
---------------------------------------------------------
Section 9.03 Termination Upon Loss of REMIC Status................................................102
-------------------------------------
Section 9.04 Disposition of Proceeds..............................................................103
-----------------------
ARTICLE X
THE TRUSTEE.................................................104
Section 10.01 Certain Duties and Responsibilities..................................................104
-----------------------------------
Section 10.02 Removal of Trustee for Cause.........................................................105
----------------------------
Section 10.03 Certain Rights of the Trustee........................................................106
-----------------------------
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.............................107
--------------------------------------------------------
Section 10.05 May Hold Certificates................................................................108
---------------------
Section 10.06 Money Held in Trust..................................................................108
-------------------
Section 10.07 Compensation and Reimbursement; No Lien for Fees.....................................108
------------------------------------------------
Section 10.08 Corporate Trustee Required; Eligibility..............................................108
---------------------------------------
Section 10.09 Resignation and Removal; Appointment of Successor....................................109
-------------------------------------------------
Section 10.10 Acceptance of Appointment by Successor Trustee.......................................110
----------------------------------------------
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
------------------------------------------------------------------
Trustee..............................................................................110
-------
Section 10.12 Reporting; Withholding...............................................................111
----------------------
Section 10.13 Liability of the Trustee.............................................................111
------------------------
Section 10.14 Appointment of Co-Trustee or Separate Trustee........................................112
---------------------------------------------
ARTICLE XI
MISCELLANEOUS................................................114
iii
<PAGE>
Page
----
Section 11.01 Compliance Certificates and Opinions.................................................114
------------------------------------
Section 11.02 Form of Documents Delivered to the Trustee...........................................114
------------------------------------------
Section 11.03 Acts of Owners.......................................................................115
--------------
Section 11.04 Notices, etc. to Trustee.............................................................115
------------------------
Section 11.05 Notices and Reports to Owners; Waiver of Notices.....................................115
------------------------------------------------
Section 11.06 Rules by Trustee and Seller..........................................................116
---------------------------
Section 11.07 Successors and Assigns...............................................................116
----------------------
Section 11.08 Severability.........................................................................116
------------
Section 11.09 Benefits of Agreement................................................................116
---------------------
Section 11.10 Legal Holidays.......................................................................116
--------------
Section 11.11 Governing Law; Submission to Jurisdiction............................................117
-----------------------------------------
Section 11.12 Counterparts.........................................................................117
------------
Section 11.13 Usury................................................................................118
-----
Section 11.14 Amendment............................................................................118
---------
Section 11.15 Paying Agent; Appointment and Acceptance of Duties...................................119
--------------------------------------------------
Section 11.16 REMIC Status.........................................................................119
------------
Section 11.17 Additional Limitation on Action and Imposition of Tax................................121
-----------------------------------------------------
Section 11.18 Appointment of Tax Matters Person....................................................121
---------------------------------
Section 11.19 The Certificate Insurer..............................................................121
-----------------------
Section 11.20 Reserved.............................................................................121
--------
Section 11.21 Third Party Rights...................................................................122
------------------
Section 11.22 Notices..............................................................................122
-------
SCHEDULE I-A SCHEDULE OF FIXED RATE GROUP HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF ADJUSTABLE RATE GROUP HOME EQUITY LOANS
SCHEDULE II HOME EQUITY LOANS WITH RETAINED YIELD
SCHEDULE III HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
SCHEDULE IV HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
SCHEDULE V HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
SCHEDULE VI TARGETED BALANCE SCHEDULE
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT A-9 FORM OF CLASS A-9 CERTIFICATE
EXHIBIT A-10IO FORM OF CLASS A-10IO CERTIFICATE
EXHIBIT B FORM OF CLASS R CERTIFICATE
EXHIBIT B-IO FORM OF CLASS B-IO CERTIFICATE
EXHIBIT C RESERVED
EXHIBIT D FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H [RESERVED]
iv
<PAGE>
Page
----
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
</TABLE>
v
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY
LOAN TRUST 1996-2, dated as of June 1, 1996 by and among CONTISECURITIES ASSET
FUNDING CORP., a Delaware corporation, in its capacity as Depositor (the
"Depositor"), CONTIMORTGAGE CORPORATION, a Delaware corporation in its
capacities as Seller (in such capacity, the "Seller") and as Servicer (in such
capacity, the "Servicer") and MANUFACTURERS AND TRADERS TRUST COMPANY, a New
York banking corporation, in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee, valid instruments, and to
make this Agreement a valid agreement, in accordance with their and its terms,
have been done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve in
the capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation is intended to be a third-party
beneficiary of this Agreement and is hereby recognized by the parties hereto to
be a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Seller, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Class A Certificates, the Class B-IO Certificates and the Class R
Certificates in accordance with their terms, all of the sums distributable under
this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of its respective right, title and interest in and to any and
all benefits accruing to it from (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to this Agreement and any principal and
interest payments received thereon on or prior to the Cut-Off Date) listed in
Schedules I-A and I-B to this Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee herewith (and all substitutions therefor as provided by Sections 3.03,
3.04 and 3.06), together with the related Home Equity Loan documents and the
Seller's interest in any Property which secured a Home Equity Loan but which has
been acquired by foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts as may be held by the Trustee in the Certificate
Account, the Upper-Tier Fixed Rate Group Distribution Account and the Upper-Tier
Adjustable Rate Group Distribution Account together with investment earnings on
such amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided herein), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Insurance Agreement, (d) the Certificate Insurance Policies
issued thereunder and (e) proceeds of all the foregoing (including, but not by
way of limitation, all proceeds of any mortgage insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and
<PAGE>
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Certificates as specified herein
((a)-(e) above shall be collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
------------
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"A-1IO Pass-Through Rate": 2.5363% per annum.
-----------------------
"A-2IO Pass-Through Rate": 1.9363% per annum.
-----------------------
"A-3IO Pass-Through Rate": 1.7363% per annum.
-----------------------
"A-4IO Pass-Through Rate": 1.5863% per annum.
-----------------------
"A-5IO Pass-Through Rate": 1.3863% per annum.
-----------------------
"A-6IO Pass-Through Rate": 1.1863% per annum.
-----------------------
"A-7IO Pass-Through Rate": 0.8363% per annum.
-----------------------
"A-8IO Pass-Through Rate": 0.5363% per annum.
-----------------------
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class A-10IO Certificates and any
Payment Date, the calendar month immediately preceding the month in which the
Payment Date occurs; a "calendar month" shall be deemed to be 30 days. With
respect to the Class A-1 and Class A-9 Certificates and any Payment Date, the
period commencing on the immediately preceding Payment Date (or the Closing Date
in the case of the first Payment Date) and ending on the day immediately
preceding the current Payment Date. All calculations of interest on the Fixed
Rate Certificates and the Class A-10IO Certificates will be made on the basis of
a 360-day year assumed to consist of twelve 30 day months and calculations of
interest on the Class A-9 Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and in a year of 360 days.
"Adjustable Rate Group": The pool of Home Equity Loans identified in
the related Schedule of Home Equity Loans as having been assigned to the
Adjustable Rate Group in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof.
"Adjustable Rate Group Available Funds": As defined in Section 7.02(d)
hereof.
2
<PAGE>
"Adjustable Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Adjustable Rate Group Certificate Insurance Policy": The certificate
guaranty insurance policy (number 21305) dated June 11, 1996 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-9 Certificates
pursuant to which the Certificate Insurer guarantees Insured Payments.
"Adjustable Rate Group Initial Specified Subordinated Amount": As
defined in the Insurance Agreement.
"Adjustable Rate Group Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all interest due during
the related Remittance Period with respect to the Home Equity Loans in the
Adjustable Rate Group (less the Servicing Fee on such Home Equity Loans), (ii)
all Compensating Interest paid by the Servicer on such Monthly Remittance Date
with respect to the Adjustable Rate Group and (iii) the portion of the
Substitution Amount relating to interest on the Home Equity Loans in the
Adjustable Rate Group.
"Adjustable Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Adjustable Rate Group Interest Remittance
Amount and (ii) the Adjustable Rate Group Principal Remittance Amount for such
Monthly Remittance Date.
"Adjustable Rate Group Principal Distribution Amount": With respect to
the Class A-9 Certificates for any Payment Date, the lesser of:
(a) the Adjustable Rate Group Total Available Funds plus any
Insured Payment with respect to the Class A-9 Certificates
minus the Class A-9 Current Interest; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the
Class A-9 Certificates as such amounts relate to principal
previously distributed on the Class A-9 Certificates,
(B) the principal actually collected by the Servicer
with respect to Home Equity Loans in the Adjustable Rate Group
during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan in the
Adjustable Rate Group that was repurchased by the Seller or
purchased by the Servicer on or prior to the related Monthly
Remittance Date, to the extent such Loan Balance is actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(D) any Substitution Amounts delivered by the Seller
on the related Monthly Remittance Date in connection with a
substitution of a Home Equity Loan in the Adjustable Rate
Group (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to Home Equity Loans in the
Adjustable Rate Group during the related Remittance Period (to
the extent such Net Liquidation Proceeds relate to principal)
to the extent such Net Liquidation Proceeds are actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
3
<PAGE>
(F) the amount of any Subordination Deficit with
respect to the Adjustable Rate Group for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to the Adjustable Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal), and
(H) the amount of any Subordination Increase Amount
with respect to the Adjustable Rate Group for such Payment
Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose.
over
----
(ii) the amount of any Subordination Reduction Amount with
respect to the Adjustable Rate Group for such Payment Date.
"Adjustable Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Adjustable
Rate Group during the related Remittance Period, (ii) the Loan Balance of each
Home Equity Loan in the Adjustable Rate Group that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the extent such Loan
Balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan in the Adjustable Rate Group, to the
extent such Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, and (iv) all Net
Liquidation Proceeds actually collected by the Servicer with respect to the Home
Equity Loans in the Adjustable Rate Group during the related Remittance Period
(to the extent such Net Liquidation Proceeds related to principal).
"Adjustable Rate Group Specified Subordinated Amount": As defined in
the Insurance Agreement.
"Adjustable Rate Group Subordinated Amount": As of any Payment Date,
the excess, if any, of (x) the aggregate Loan Balances of the Home Equity Loans
in the Adjustable Rate Group as of the close of business on the last day of the
related Remittance Period over (y) the Class A-9 Certificate Principal Balance
as of such Payment Date (after taking into account the payment of the Class A-9
Distribution Amount thereon (except for any Subordination Deficit with respect
to the Adjustable Rate Group and Subordination Increase Amount with respect to
the Adjustable Rate Group) on such Payment Date).
"Adjustable Rate Group Total Available Funds: As defined in Section
7.02(d) hereof.
"Adjustable Rate Group Total Monthly Excess Spread": With respect to
the Adjustable Rate Group and any Payment Date, the excess, if any, of (i) the
interest which is collected on the Home Equity Loans in such Group during the
related Remittance Period less the Servicing Fee with respect to Home Equity
Loans in the Adjustable Rate Group plus (x) any Delinquency Advances and (y)
Compensating Interest paid by the Servicer with respect to the Adjustable Rate
Group for such Remittance Period over (ii) the interest due on the Class A-9
Certificates on such Payment Date.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) the
Weighted Average Pass- Through Rate plus (b) the Class A-10IO Pass-Through Rate
plus (c) any portion of the Premium Amount
4
<PAGE>
and the Trustee Fee (calculated as a percentage of the outstanding principal
amount of the Certificates) then accrued and outstanding.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Home Equity Loan, or, in the case of a Home Equity Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Seller and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
"Available Funds": The Fixed Rate Group Available Funds or the
Adjustable Rate Group Available Funds, as the case may be.
"Available Funds Shortfall": A Fixed Rate Group Available Funds
Shortfall or Adjustable Rate Group Available Funds Shortfall, as the case may
be.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in The City of New York, or in the city in
which the principal corporate trust office of the Trustee is located, are
authorized or obligated by law or executive order to be closed.
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates (other than the Class A-10IO Certificates) for any Payment Date,
the sum of (x) the amount, if any, by which (i) the Class A Distribution Amount
allocable to such Class as of the immediately preceding Payment Date exceeded
(ii) the amount of the actual distribution made to the Owners of such Class of
the Class A Certificates on such immediately preceding Payment Date plus (y) 30
days' interest on such amount at the Pass-Through Rate in effect with respect to
such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, Class B-IO
Certificates or Class R Certificates, each representing the interests and the
rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Insurance Policies": The Adjustable Rate Group Certificate
Insurance Policy and the Fixed Rate Group Certificate Insurance Policy.
"Certificate Insurer": MBIA Insurance Corporation, a New York insurance
company, or any successor thereto, as issuer of the Certificate Insurance
Policies.
"Certificate Insurer Default": The existence and continuance of any of
the following:
5
<PAGE>
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policies in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (B) a decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganizing, rehabilitation, arrangement, adjustment or composition of or in
respect of the Certificate Insurer under any applicable United States federal or
state law, or appointing a custodian, receiver, liquidator, rehabilitator,
assignee, trustee, sequestrator or other similar official of the Certificate
Insurer or of any substantial part of its property, or ordering the winding-up
or liquidation of its affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate Insurer to
pay debts generally as they become due, or the admission by the Certificate
Insurer in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Certificate Insurer in furtherance
of any such action.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Class A Certificates, the Certificate Principal
Balances thereof, as follows:
Class A-1 Certificates - $29,000,000
Class A-2 Certificates - $118,000,000
Class A-3 Certificates - $54,000,000
Class A-4 Certificates - $82,500,000
Class A-5 Certificates - $21,500,000
Class A-6 Certificates - $62,500,000
Class A-7 Certificates - $43,000,000
Class A-8 Certificates - $39,500,000
Class A-9 Certificates - $55,000,000
The Class A-10IO Certificates, Class B-IO Certificates and the
Class R Certificates do not have a Certificate Principal Balance.
"Class": Any Class of the Class A Certificates, the B-IO
Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class
A-5 Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates or Class A-10IO Certificates.
6
<PAGE>
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates (other than the Class A-10IO Certificates) less any amounts
actually distributed on such Class A Certificates with respect to the Class A
Distribution Amount pursuant to Section 7.03(c)(iii)(D) and (H) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A Certificate Termination Date": With respect to the
Class A-1 Certificates, the Class A-1 Certificate Termination Date, with respect
to the Class A-2 Certificates, the Class A-2 Certificate Termination Date, with
respect to the Class A-3 Certificates, the Class A-3 Certificate Termination
Date, with respect to the Class A-4 Certificates, the Class A-4 Certificate
Termination Date, with respect to the Class A-5 Certificates, the Class A-5
Certificate Termination Date, with respect to the Class A-6 Certificates, the
Class A-6 Certificate Termination Date, with respect to the Class A-7
Certificates, the Class A-7 Certificate Termination Date, with respect to the
Class A-8 Certificates, the Class A-8 Certificate Termination Date, with respect
to the Class A-9 Certificates, the Class A-9 Certificate Termination Date and
with respect to the Class A-10IO Certificates, the Class A-10IO Certificate
Termination Date.
"Class A Distribution Amount": The sum of the Class A-1
Distribution Amount, the Class A-2 Distribution Amount, the Class A-3
Distribution Amount, the Class A-4 Distribution Amount, the Class A-5
Distribution Amount, the Class A-6 Distribution Amount, the Class A-7
Distribution Amount, the Class A-8 Distribution Amount, the Class A-9
Distribution Amount and the Class A-10IO Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-1 Certificate, substantially in the
form annexed hereto as Exhibit A-1, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to the
Class A-1 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-1 Certificate Termination Date": The Payment Date on
which the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-1 Certificates.
"Class A-1 Distribution Amount": The sum of (x) Class A-1
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-1 Certificates pursuant to Section
7.03(c)(iii)(D)(1) hereof.
"Class A-1 Pass-Through Rate": 5.90% per annum.
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"Class A-2 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Certificate, substantially in the
form annexed hereto as Exhibit A-2, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed with respect to the
Class A-2 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-2 Certificate Termination Date": The Payment Date on
which the Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-2 Certificates as it relates to interest previously paid on the
Class A-2 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-2 Certificates.
"Class A-2 Distribution Amount": The sum of (x) Class A-2
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of Class A-2 Certificates pursuant to Section
7.03(c)(iii)(D)(2) hereof.
"Class A-2 Pass-Through Rate": 6.50% per annum.
"Class A-3 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-3 Certificate, substantially in the
form annexed hereto as Exhibit A-3, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed with respect to the
Class A-3 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-3 Certificate Termination Date": The Payment Date on
which the Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-3 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-3 Certificates as it relates to interest previously paid on the
Class A-3 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-3 Certificates.
"Class A-3 Distribution Amount": The sum of (x) Class A-3
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-3 Certificates pursuant to Section
7.03(c)(iii)(D)(3) hereof.
"Class A-3 Pass-Through Rate": 6.70% per annum.
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"Class A-4 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-4 Certificate, substantially in the
form annexed hereto as Exhibit A-4, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed with respect to the
Class A-4 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-4 Certificate Termination Date": The Payment Date on
which the Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-4 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-4 Certificates as it relates to interest previously paid on the
Class A-4 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-4 Certificates.
"Class A-4 Distribution Amount": The sum of (x) Class A-4
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-4 Certificates pursuant to Section
7.03(c)(iii)(D)(4) hereof.
"Class A-4 Pass-Through Rate": 6.85% per annum.
"Class A-5 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-5 Certificate, substantially in the
form annexed hereto as Exhibit A-5, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed with respect to the
Class A-5 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-5 Certificate Termination Date": The Payment Date on
which the Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-5 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-5 Certificates as it relates to interest previously paid on the
Class A-5 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-5 Certificates.
"Class A-5 Distribution Amount": The sum of (x) Class A-5
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(c)(iii)(D)(5) hereof.
"Class A-5 Pass-Through Rate": 7.05% per annum.
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"Class A-6 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-6 Certificate, substantially in the
form annexed hereto as Exhibit A-6, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed with respect to the
Class A-6 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-6 Certificate Termination Date": The Payment Date on
which the Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-6 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-6 Certificates.
"Class A-6 Distribution Amount": The sum of (x) Class A-6
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-6 Certificates pursuant to Section
7.03(c)(iii)(D)(6) hereof.
"Class A-6 Pass-Through Rate": 7.25% per annum.
"Class A-7 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-7 Certificate, substantially in the
form annexed hereto as Exhibit A-7, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed with respect to the
Class A-7 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-7 Certificate Termination Date": The Payment Date on
which the Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-7 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-7 Certificates as it relates to interest previously paid on the
Class A-7 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-7 Certificates.
"Class A-7 Distribution Amount": The sum of (x) Class A-7
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-7 Certificates pursuant to Section
7.03(c)(iii)(D)(7) hereof.
"Class A-7 Pass-Through Rate": 7.60% per annum.
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"Class A-8 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-8 Certificate, substantially in the
form annexed hereto as Exhibit A-8, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed with respect to the
Class A-8 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-8 Certificate Termination Date": The Payment Date on
which the Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-8 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-8 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-8 Certificates as it relates to interest previously paid on the
Class A-8 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-8 Certificates.
"Class A-8 Distribution Amount": The sum of (x) Class A-8
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-8 Certificates pursuant to Section
7.03(c)(iii)(D)(8) hereof.
"Class A-8 Pass-Through Rate": On any Payment Date, the lower
of (a) 7.90% per annum and (b) the weighted average Coupon Rate of each Home
Equity Loan in the Fixed Rate Group less the Expense Rate.
"Class A-9 Available Funds Cap Rate": On any Payment Date on
or prior to the Payment Date in June 1997, the weighted average of the Coupon
Rates of the Home Equity Loans in the Adjustable Rate Group less the Expense
Rate and on any Payment Date thereafter, the weighted average of the Coupon
Rates of the Home Equity Loans in the Adjustable Rate Group less the sum of (x)
the Expense Rate and (y) 0.50% per annum.
"Class A-9 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-9 Certificate, substantially in the
form annexed hereto as Exhibit A-9, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-9 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-9 Certificates less any amounts actually distributed with respect to the
Class A-9 Distribution Amount pursuant to Section 7.03(c)(iii)(H) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-9 Certificate Termination Date": The Payment Date on
which the Class A-9 Certificate Principal Balance is reduced to zero.
"Class A-9 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-9 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-9 Pass-Through Rate plus the Preference Amount owed to the
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Owners of the Class A-9 Certificates as it relates to interest previously paid
on the Class A-9 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-9 Certificates.
"Class A-9 Distribution Amount": The sum of (x) Class A-9
Current Interest and (y) the Adjustable Rate Group Principal Distribution Amount
payable to the Owners of Class A-9 Certificates pursuant to Section
7.03(c)(iii)(H) hereof.
"Class A-9 Pass-Through Rate: For any Payment Date in any
month up to and including the month in which the Clean-Up Call Date occurs, the
lesser of (i) LIBOR plus 0.33% per annum and (ii) the Class A-9 Available Funds
Cap Rate for such Payment Date and for any Payment Date in any month following
the month in which the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus
0.66% per annum and (ii) the Class A-9 Available Funds Cap Rate for such Payment
Date.
"Class A-10IO Carry Forward Amount": With respect to any
Payment Date, the sum of the Upper-Tier A-1IO Carry Forward Amount, the
Upper-Tier A-2IO Carry Forward Amount, the Upper-Tier A-3IO Carry Forward
Amount, the Upper-Tier A-4IO Carry Forward Amount, the Upper- Tier A-5IO Carry
Forward Amount, the Upper-Tier A-6IO Carry Forward Amount, the Upper-Tier A- 7IO
Carry Forward Amount and the Upper-Tier A-8IO Carry Forward Amount.
"Class A-10IO Certificate": Any one of the Certificates
designated on the face thereof as a Class A-10IO Certificate, substantially in
the form annexed hereto as Exhibit A-10IO, authenticated and delivered by the
Trustee. The Class A-10IO Certificates are not themselves an interest in a
REMIC, but they represent the sum of the specified portions of interest from the
Upper-Tier A-IO Certificates.
"Class A-10IO Certificate Termination Date": The Payment Date
on which the Class A- 10IO Notional Principal Amount is reduced to zero.
"Class A-10IO Current Interest": With respect to any Payment
Date, the sum of (x) the interest accrued during the related Accrual Period on
the Class A-10IO Notional Principal Amount at the Class A-10IO Pass-Through Rate
for such Payment Date and (y) the Class A-10IO Carry Forward Amount.
"Class A-10IO Distribution Amount": The sum of (x) Class
A-10IO Current Interest and (y) the Class A-10IO Carry-Forward Amount.
"Class A-10IO Notional Principal Amount": As of any time of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Certificates.
"Class A-10IO Pass-Through Rate": As of any Payment Date, the
lesser of (x) the weighted average of the A-1IO Pass-Through Rate, the A-2IO
Pass-Through Rate, the A-3IO Pass- Through Rate, the A-4IO Pass-Through Rate,
the A-5IO Pass-Through Rate, the A-6IO Pass-Through Rate, the A-7IO Pass-Through
Rate and the A-8IO Pass-Through Rate (weighted by the related Class A
Certificate Principal Balance) immediately prior to such Payment Date and (y)
the difference between (i) the weighted average Coupon Rate of the Home Equity
Loans in the Fixed Rate Group and (ii) the sum of (a) the weighted average of
the Pass-Through Rates on the Fixed Rate Certificates (weighted by the related
Class A Certificate Principal Balance) and (b) the Expense Rate.
"Class B-IO Carry Forward Amount": With respect to any Payment
Date the sum of (a) the amount, if any, by which (x) the Class B-IO Distribution
Amount as of the immediately preceding Payment Date exceeded (y) the amount of
the actual distribution made to Owners of the Class B-IO
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Certificates on such immediately preceding Payment Date plus (b) 30 days'
interest on such amount at the Late Payment Rate.
"Class B-IO Certificate": Any one of the Certificates
designated on the face thereof as a Class B-IO Certificate, substantially in the
form annexed hereto as Exhibit B-IO, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein. The Class B-IO
Certificates represent a class of "regular interests" in the Lower-Tier REMIC;
the distribution amount set forth: (i) in clause (1) of the definition of Class
B-IO Distribution Amount is the "Lower-Tier B-1IO Interest"; and (ii) in clause
(2) of such definition is the "Lower-Tier B-2IO Interest."
"Class B-IO Distribution Amount": With respect to any Payment
Date, the sum of:
(1) with respect to Home Equity Loans in the Fixed Rate Group
one-twelfth of the product of (x) the sum of the aggregate
outstanding Loan Balances of such Home Equity Loans on the
immediately preceding Payment Date and (y) the excess of (I)
the weighted average of the Coupon Rates of such Home Equity
Loans on such immediately preceding Payment Date over (II) the
sum of the following payments allocable to the Fixed Rate
Group on or in respect of the related Payment Date (in the
case of (A), (B), (C),(D) and (E) expressed as a percentage of
such aggregate outstanding Loan Balance): (A) the Servicing
Fee, (B) the Premium Amount, (C) the Trustee Fee, (D) any
Reimbursement Amount, (E) any Retained Yield and (F) the Fixed
Rate Group Weighted Average Pass- Through Rate and (G) the
Class A-10IO Pass-Through Rate;
(2) with respect to Home Equity Loans in the Adjustable Rate
Group, one-twelfth of the product of (x) the sum of the
aggregate outstanding Loan Balances of such Home Equity Loans
on the immediately preceding Payment Date and (y) the excess
of (I) the weighted average of the Coupon Rates of such Home
Equity Loans on such immediately preceding Payment Date over
(II) the sum of the following payments allocable to the
Adjustable Rate Group on or in respect of the related Payment
Date (in the case of (A), (B), (C) and (D) expressed as a
percentage of such aggregate outstanding Loan Balance); (A)
the Servicing Fee, (B) the Premium Amount, (C) the Trustee
Fee, (D) any Reimbursement Amount and (E) the Class A-9
Pass-Through Rate for such Payment Date; and
(3) the Class B-IO Carry Forward Amount.
"Class R Certificate": Any one of the Certificates designated
on the face thereof as a Class R Certificate, substantially in the form annexed
hereto as Exhibit B, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Lower-Tier REMIC for the purposes
of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on
which the aggregate Loan Balances of the Home Equity Loans has declined to
$50,500,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
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"Corporate Trust Office": The principal office of the Trustee
at One M&T Plaza, Buffalo, New York 14240.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Losses": As of any date of determination,
the aggregate amount of Realized Losses with respect to the Home Equity Loans
since the Cut-Off Date.
"Current Interest": With respect to any Payment Date, the sum
of the Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class A-8 Current Interest, the Class A-9 Current Interest and the Class A-10IO
Current Interest.
"Cut-Off Date": As of the close of business on May 31, 1996.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which,
pursuant to the Note relating thereto, interest is computed and charged to the
Mortgagor at the Coupon Rate on the outstanding principal balance of such Note
based on the number of days elapsed between receipt of the Mortgagor's last
payment through receipt of the Mortgagor's most current payment.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any
payment due thereon is not made by the close of business on the day such payment
is scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such
payment has not been received by the close of business on the corresponding day
of the month immediately succeeding the month in which such payment was due, or,
if there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as
Exhibit G hereto and delivered by the Seller to the Trustee on the Startup Day
pursuant to Section 4.01 hereof.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square,
New York, New York 10004, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the
Principal and Interest Account, a trust account maintained by the trust
department of a federal or state chartered depository institution acceptable to
the Certificate Insurer, acting in its fiduciary capacity, having combined
capital and surplus of at least $50,000,000; provided, however, that if the
Principal and Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A" by Standard &
Poor's and "A2" by Moody's and (ii) if such Principal and Interest Account is
moved to a new institution, the Servicer shall provide the Trustee, the
Certificate Insurer and the Owners with a statement identifying the location of
the Principal and Interest Account.
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"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"Disqualified Organization": Shall have the meaning set forth
from time to time in the definition thereof at Section 860E(e)(5) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated
pursuant to Section 7.07 hereof.
"Excess Subordinated Amount": With respect to any Home Equity
Loan Group and Payment Date, the excess, if any, of (x) the Subordinated Amount
that would apply to the related Home Equity Loan Group on such Payment Date
after taking into account the payment of the related Class A Distribution
Amounts on such Payment Date (except for any distributions of related
Subordination Reduction Amounts on such Payment Date), over (y) the related
Specified Subordinated Amount for such Payment Date.
"Expense Rate": For any Payment Date, the sum of the rates at
which the Servicing Fee, the Premium Amount and the Trustee Fee are calculated.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to
Section 3.06 hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of Class A
Certificates, as set out in Section 2.08(k).
"First Mortgage Loan": A Home Equity Loan which constitutes a
first priority mortgage lien with respect to the related Property.
"Fixed Rate Certificates": Collectively, the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates.
"Fixed Rate Group": The pool of Home Equity Loans identified
in the related Schedule of Home Equity Loans as having been assigned to the
Fixed Rate Group in Schedule I-A hereto, including any Qualified Replacement
Mortgages delivered in replacement thereof.
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"Fixed Rate Group Available Funds": As defined in Section
7.02(c) hereof.
"Fixed Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Fixed Rate Group Certificate Insurance Policy": The
certificate guaranty insurance policy (number 21304) dated June 11, 1996 issued
by the Certificate Insurer for the benefit of the owners of the Fixed Rate
Certificates and the Class A-10IO Certificate pursuant to which the Certificate
Insurer guarantees Insured Payments.
"Fixed Rate Group Initial Specified Subordinated Amount": As
defined in the Insurance Agreement.
"Fixed Rate Group Interest Remittance Amount": As of any
Monthly Remittance Date, the sum, without duplication, of (i) all interest due
during the related Remittance Period with respect to the Home Equity Loans in
the Fixed Rate Group (less the Servicing Fee with respect to such Home Equity
Loans), (ii) all Compensating Interest paid by the Servicer on such Monthly
Remittance Date with respect to the Fixed Rate Group and (iii) the portion of
the Substitution Amount relating to interest on the Home Equity Loans in the
Fixed Rate Group.
"Fixed Rate Group Monthly Remittance Amount": As of any
Monthly Remittance Date, the sum of (i) the Fixed Rate Group Interest Remittance
Amount and (ii) the Fixed Rate Group Principal Remittance Amount for such
Monthly Remittance Date.
"Fixed Rate Group Principal Distribution Amount": With respect
to the Fixed Rate Certificates for any Payment Date, the lesser of:
(a) the Fixed Rate Group Total Available Funds plus any Insured
Payment with respect to the Fixed Rate Certificates minus the
Current Interest with respect to the Fixed Rate Certificates;
and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the
Fixed Rate Certificates as such amounts relate to principal
previously distributed on the Fixed Rate Certificates,
(B) the principal actually collected by the Servicer
with respect to Home Equity Loans in the Fixed Rate Group
during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan in the
Fixed Rate Group that was repurchased by the Seller or
purchased by the Servicer on or prior to the related Monthly
Remittance Date, to the extent such Loan Balance is actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(D) any Substitution Amounts delivered by the Seller
on the related Monthly Remittance Date in connection with a
substitution of a Home Equity Loan in the Fixed Rate Group (to
the extent such Substitution Amounts relate to principal), to
the extent such Substitution Amounts are actually received by
the Trustee on or prior to the related Monthly Remittance
Date,
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(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to Home Equity Loans in the Fixed
Rate Group during the related Remittance Period (to the extent
such Net Liquidation Proceeds relate to principal) to the
extent such Net Liquidation Proceeds are actually received by
the Trustee on or prior to the related Monthly Remittance
Date,
(F) the amount of any Subordination Deficit with
respect to the Fixed Rate Group for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to the Fixed Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal), and
(H) the amount of any Subordination Increase Amount
with respect to the Fixed Rate Group for such Payment Date, to
the extent of any Net Monthly Excess Cashflow available for
such purpose;
over
----
(ii) the amount of any Subordination Reduction Amount with
respect to the Fixed Rate Group for such Payment Date.
"Fixed Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Fixed Rate
Group during the related Remittance Period, (ii) the Loan Balance of each Home
Equity Loan in the Fixed Rate Group that was purchased from the Trustee on or
prior to such Monthly Remittance Date, to the extent such Loan Balance was
actually deposited in the Principal and Interest Account, (iii) any Substitution
Amounts relating to principal delivered by the Seller in connection with a
substitution of a Home Equity Loan in the Fixed Rate Group, to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, and (iv) all Net
Liquidation Proceeds actually collected by the Servicer with respect to the Home
Equity Loans in the Fixed Rate Group during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal).
"Fixed Rate Group Specified Subordinated Amount": As defined in the
Insurance Agreement.
"Fixed Rate Group Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the aggregate Loan Balances of the Home Equity Loans in
the Fixed Rate Group as of the close of business on the last day of the related
Remittance Period over (y) the Certificate Principal Balance of the Fixed Rate
Certificates as of such Payment Date (after taking into account the payment of
the Fixed Rate Group Principal Distribution Amount thereon (except for any
Subordination Deficit with respect to the Fixed Rate Group and Subordination
Increase Amount with respect to the Fixed Rate Group) on such Payment Date).
"Fixed Rate Group Total Available Funds": As defined in Section 7.02(c)
hereof.
"Fixed Rate Group Total Monthly Excess Spread": With respect to the
Fixed Rate Group and any Payment Date, the excess, if any, of (i) the interest
which is collected on the Home Equity Loans in such Group during the related
Remittance Period less the Servicing Fee and any Retained Yield with respect to
Home Equity Loans in the Fixed Rate Group plus (x) any Delinquency Advances and
(y) Compensating Interest paid by the Servicer with respect to the Fixed Rate
Group for such Remittance
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Period over (ii) the sum of the interest due on the Fixed Rate Certificates and
the Class A-10IO Certificates on such Payment Date.
"Fixed Rate Group Weighted Average Pass-Through Rate": As to the Fixed
Rate Certificates and any Payment Date, the weighted average of the Class A-1
Pass-Through Rate, the Class A-2 Pass- Through Rate, the Class A-3 Pass-Through
Rate, the Class A-4 Pass-Through Rate, the Class A-5 Pass- Through Rate, the
Class A-6 Pass-Through Rate, the Class A-7 Pass-Through Rate and the Class A-8
Pass-Through Rate weighted by the respective Certificate Principal Balance of
the related Class as of such Payment Date before taking into account any
distributions to be made on such Payment Date.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by
FNMA from time to time, and the Servicer shall elect to apply such amendments in
accordance with Section 8.01 hereof.
"Highest Lawful Rate": As defined in Section 11.13.
"Home Equity Loan Group" or "Group": The Fixed Rate Group or the
Adjustable Rate Group, as the case may be. References herein to the related
Class of Class A Certificates, when used with respect to a Home Equity Loan
Group, shall mean (A) in the case of the Fixed Rate Group, the Fixed Rate
Certificates and the Class A-10IO Certificates and (B) in the case of the
Adjustable Rate Group, the Class A-9 Certificates.
"Home Equity Loans": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
May 15, 1996 among the Certificate Insurer, the Depositor and the Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Insurance Agreement": The Insurance Agreement dated as of June 1,
1996, among the Depositor, the Seller, the Servicer, the Certificate Insurer and
the Trustee, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
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"Insured Payment": With respect to either Home Equity Loan Group and as
to any Payment Date (i) the excess, if any, of (a) the sum of the related
Current Interest and the then existing related Subordination Deficit, if any,
over (b) the Total Available Funds with respect to such Group (net of the
Premium Amount allocable to such Group) after taking into account (x) the cross
collateralization provisions of Sections 7.03(c)(i)(A) and (B) and
7.03(c)(ii)(A) and (B) hereof and (y) the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment Date
without regard to any related Insured Payment to be made with respect to such
Payment Date plus (ii) an amount equal to the Preference Amount with respect to
the related Class of Class A Certificates.
"Interest Remittance Amount": The sum of the Fixed Rate Group Interest
Remittance Amount and the Adjustable Rate Group Interest Remittance Amount.
"Late Payment Rate": For any Payment Date, the fluctuating rate of
interest, as it is published from time to time in the New York, New York edition
of The Wall Street Journal under the caption "Money Rates" as the "prime rate,"
to change when and as such published prime rate changes plus 2%. The Late
Payment Rate shall be computed on the basis of a year of 360 days calculating
the actual number of days elapsed. In no event shall the Late Payment Rate
exceed the maximum rate permissible under any applicable law limiting interest
rates.
"LIBOR": With respect to any Accrual Period for the Class A-9
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Class A-9 Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of any
defaulted Home Equity Loan, such expenses including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.09(b) with respect to the related Home Equity
Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such
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Home Equity Loan included in previous Monthly Remittance Amounts, provided,
however, that the Loan Balance for any Home Equity Loan that has become a
Liquidated Loan shall be zero as of the first day of the Remittance Period
following the Remittance Period in which such Home Equity Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate less the Retained Yield, together with (without
duplication) the aggregate amounts of (i) all unreimbursed Delinquency Advances
and Servicing Advances theretofore made with respect to such Home Equity Loan,
(ii) all Delinquency Advances and Servicing Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) all
reimbursed Delinquency Advances to the extent that reimbursement is not made
from the Mortgagor or from Liquidation Proceeds from the respective Home Equity
Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
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"Lower-Tier A-4 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": 8.4363% per annum.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": On any Payment Date, the lower of
(a) 8.4363% per annum and (b) the weighted average Coupon Rate of the Home
Equity Loans in the Fixed Rate Group less the Expense Rate.
"Lower-Tier A-9 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-9 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-9 Pass-Through Rate.
"Lower-Tier A-9 Pass-Through Rate": For any Payment Date in any month
up to and including the month in which the Clean-Up Call Date occurs, the lesser
of (a) LIBOR plus 0.33% per annum and (b) the Class A-9 Available Funds Cap Rate
for such Payment Date and for any Payment Date in any month following the month
in which the Clean-Up Call Date occurs, the lesser of (a) LIBOR plus 0.66% per
annum and (b) the Class A-9 Available Funds Cap Rate for such Payment Date.
"Lower-Tier Adjustable Rate Group Distribution Amount": With respect to
any Payment Date, the sum of the Lower-Tier A-9 Monthly Interest and the
Adjustable Rate Group Principal Distribution Amount, as a distribution on the
Lower-Tier Interest A-9 until the Lower-Tier Interest A-9 Termination Date;
provided that Insured Payments shall be deemed to be paid in respect of the
Lower-Tier Interests to the extent such Insured Payments relate to Class A-9
Certificates.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payments
Dates pursuant to Section 7.03(c)(iii)(D) and (H).
"Lower-Tier B-1IO Interest": As defined in the definition of Class B-IO
Certificate.
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"Lower-Tier B-2IO Interest": As defined in the definition of Class B-IO
Certificate.
"Lower-Tier Fixed Rate Group Distribution Amount": With respect to any
Payment Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2
Monthly Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4
Monthly Interest, the Lower-Tier A-5 Monthly Interest, the Lower- Tier A-6
Monthly Interest, the Lower-Tier A-7 Monthly Interest, the Lower-Tier A-8
Monthly Interest and the Fixed Rate Group Principal Distribution Amount, which
such Fixed Rate Group Principal Distribution Amount is allocated as follows: as
a distribution on the Lower-Tier Interest A-1 until the Lower-Tier Interest A-1
Termination Date, the Class A-1 Distribution Amount; as a distribution on the
Lower-Tier Interest A-2 until the Lower-Tier Interest A-2 Termination Date, the
Class A-2 Distribution Amount; as a distribution on the Lower-Tier Interest A-3
until the Lower-Tier Interest A-3 Termination Date, the Class A-3 Distribution
Amount; as a distribution on the Lower-Tier Interest A-4 until the Lower-Tier
Interest A-4 Termination Date, the Class A-4 Distribution Amount; as a
distribution on the Lower-Tier Interest A-5 until the Lower-Tier Interest A-5
Termination Date, the Class A-5 Distribution Amount; as a distribution on the
Lower-Tier Interest A-6 until the Lower-Tier Interest A-6 Termination Date, the
Class A-6 Distribution Amount; as a distribution on the Lower-Tier Interest A-7
until the Lower-Tier Interest A-7 Termination Date, the Class A-7 Distribution
Amount and, as a distribution on the Lower-Tier Interest A-8 until the
Lower-Tier Interest A-8 Termination Date, the Class A-8 Distribution Amount;
provided that Insured Payments shall be deemed to be paid in respect of the
Lower- Tier Interests to the extent such Insured Payments relate to the related
Class A Certificates.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-9": The interest of that name established
pursuant to Section 2.08(a) hereof.
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"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-2 on such Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-6 on such Payment Date.
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-7 on such Payment Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-8 on such Payment Date.
"Lower-Tier Interest A-9 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-9 is reduced to zero through the
distribution made in respect of Lower- Tier Interest A-9 on such Payment Date.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate (other than the Upper-Tier Fixed Rate Group Distribution Account
and the Upper-Tier Adjustable Rate Group Distribution Account which are assets
of the Upper-Tier REMIC).
"Monthly Remittance Amount": The sum of the Fixed Rate Group Monthly
Remittance Amount and the Adjustable Rate Group Monthly Remittance Amount.
"Monthly Remittance Date": The 10th day of each month or, if such day
is not a Business Day, the Business Day succeeding such day, commencing in the
month following the Startup Day.
"Moody's": Moody's Investors Service.
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"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(c)(ii)
hereof.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
"Operative Documents": Collectively, this Agreement, the Certificate
Insurance Policy, the Certificates, the Indemnification Agreement and the
Insurance Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Home Equity Loans as of the Startup Day, i.e., $504,939,794.58.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Owner": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 5.06
and Section 7.03(e) hereof, respectively; provided that solely for the purposes
of determining the exercise of any voting rights hereunder, if Class A
Certificates are beneficially owned by the Seller or any affiliate thereof, the
Seller or such affiliate shall not be considered an Owner hereunder.
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"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day.
"Percentage Interest": With respect to a Class A Certificate (other
than the Class A-10IO Certificates) a fraction, expressed as a percentage, the
numerator of which is the initial Class A Certificate Principal Balance
represented by such Class A Certificate and the denominator of which is the
aggregate initial Class A Certificate Principal Balance represented by all the
Class A Certificates. With respect to a Class A-10IO Certificate, Class B-IO
Certificate or a Class R Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate,
all of which shall total 100% with respect to the related Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Class A Certificates, any
amounts of Current Interest and principal included in previous distributions of
any Class A Distribution Amounts to the Owners of the Class A Certificates which
are recovered from such Owners as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction and which
have not theretofore been repaid to such Owners and for which there has been
full compliance with the provisions of Section 7.11 (including the receipt of
payment therefor from the Certificate Insurer).
"Premium Amount": As defined in the Insurance Agreement.
"Prepaid Installment": With respect to any Home Equity Loan, any
installment of principal thereof and interest thereon received by the Servicer
prior to the scheduled due date for such installment, intended by the Mortgagor
as an early payment thereof and not as a Prepayment with respect to such Home
Equity Loan.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment),
Substitution Amounts, the portion of the purchase price of any Home Equity Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b)
hereof representing principal and the proceeds of any Insurance Policy which are
to be applied as a payment of principal on the related Home Equity Loan shall be
deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
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"Principal Remittance Amount": The sum of the Fixed Rate Group
Principal Remittance Amount and the Adjustable Rate Group Principal Remittance
Amount.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Prospectus dated April 17, 1996 constituting part of
the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1996-2 Prospectus Supplement dated May 15, 1996 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a Coupon
Rate at least equal to the Coupon Rate of the Home Equity Loan being replaced
(net of any Retained Yield with respect to such Home Equity Loan), (ii) is of
the same property type or is a single family dwelling and the same occupancy
status or is a primary residence as the replaced Home Equity Loan, (iii) shall
mature no later than June 1, 2026, (iv) has a Loan-to-Value Ratio as of the
Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the replaced
Home Equity Loan at such time, (v) shall be of the same or higher credit quality
classification (determined in accordance with the Seller's credit underwriting
guidelines set forth in the Seller's underwriting manual) as the Home Equity
Loan which such Qualified Replacement Mortgage replaces, (vi) has a Loan Balance
as of the related Replacement Cut-Off Date equal to or less than the Loan
Balance of the replaced Home Equity Loan as of such Replacement Cut-Off Date,
(vii) shall not provide for a "balloon" payment if the related Home Equity Loan
did not provide for a "balloon" payment (and if such related Home Equity Loan
provided for a "balloon" payment, such Qualified Replacement Mortgage shall have
an original maturity of not less than the original maturity of such related Home
Equity Loan), (viii) shall be a fixed rate Home Equity Loan if the Home Equity
Loan being replaced is in the Fixed Rate Group and shall be a first lien
adjustable rate Home Equity Loan if the Home Equity Loan being replaced is in
the Adjustable Rate Group and (ix) satisfies the criteria set forth from time to
time in the definition thereof at Section 860G(a)(3) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess of Net
Liquidation Proceeds realized thereon applied in reduction of such Loan Balance.
"Record Date": With respect to the Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class A-10IO Certificates and
each Payment Date, the last day of the calendar
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month immediately preceding the calendar month in which such Payment Date occurs
and with respect to the Class A-1 and Class A-9 Certificates, the day
immediately preceding such Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Seller or any affiliate thereof, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
33-99340), including all amendments thereto and including the Prospectus
relating to the Class A Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, the sum of (x)(i) all
Insured Payments previously paid to the Trustee by the Certificate Insurer and
not previously repaid to the Certificate Insurer pursuant to Section
7.03(c)(i)(C) and (D) hereof plus (ii) interest accrued on each such Insured
Payment not previously repaid calculated at the Reimbursement Late Payment Rate
and (y)(i) any amounts then due and owing to the Certificate Insurer under the
Insurance Agreement plus (ii) interest on such amounts at the Late Payment Rate.
The Certificate Insurer shall notify the Trustee, the Depositor and the Seller
of the amount of any Reimbursement Amount.
"Reimbursement Late Payment Rate": Means for any Payment Date, the rate
of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 2%. The Late Payment Rate shall be computed on the basis of a year of 365
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under any applicable law limiting interest rates.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the month
in which a Monthly Remittance Date occurs.
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"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Net Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(c)(i), 7.03(c)(ii), 7.03(c)(iii), 7.03(c)(iv)(A) and 7.03(c)(iv)(B) hereof.
"Retained Yield": With respect to the Home Equity Loans listed on
Schedule II, interest at the rate set forth therein.
"Schedule of Home Equity Loans": The schedules of Home Equity Loans,
separated by Home Equity Loan Group listing each Home Equity Loan in the related
Group to be conveyed on the Startup Day. Such Schedules of Home Equity Loans
shall identify each Home Equity Loan by the Servicer's loan number and the
borrower's name and address (including the state) of the Property and shall set
forth as to each Home Equity Loan the lien status thereof, the Loan-to-Value
Ratio and the Loan Balance as of the Cut-Off Date or Subsequent Cut-Off Date,
the Coupon Rate thereof (and with respect to the Home Equity Loans in the
Adjustable Rate Group the margin), the current scheduled monthly payment of
principal and interest and the maturity of the related Note, the property type,
occupancy status, Appraised Value and original term-to-maturity thereof and
whether or not such Home Equity Loan (including related Note) has been modified.
"Scheduled Payment": As of any date of calculation, with respect to a
Home Equity Loan, the then stated scheduled monthly installment of principal and
interest payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date).
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": ContiMortgage Corporation, a Delaware corporation.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Property having a first priority lien.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
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"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to .50% per
annum of the then outstanding principal amount of such Home Equity Loan as of
the first day of each calendar month payable on a monthly basis; provided,
however, that in the event that, as of any Payment Date, (i) the sum of (x) the
Current Interest on the Fixed Rate Certificates applicable to such Payment Date
(expressed as a percentage of the aggregate outstanding Loan Balance) and (y)
the annualized rate at which the Servicing Fee would otherwise be calculated
exceeds (ii) the weighted average Coupon Rate of the Home Equity Loans in the
Fixed Rate Group for the related Remittance Period, then the Servicing Fee for
the related Remittance Period shall be reduced by an amount equal to the product
of (a) one-twelfth of such excess (not to exceed 10 basis points on a per annum
basis) and (b) the aggregate Loan Balances of the Home Equity Loans in the Fixed
Rate Group of the opening of business on the first day of such related
Remittance Period.
"Specified Subordinated Amount": As applicable, the Fixed Rate Group
Specified Subordinated Amount or the Adjustable Rate Group Specified
Subordinated Amount.
"Standard & Poor's": Standard & Poor's, a Division of the McGraw Hill
Companies.
"Startup Day": June 11, 1996.
"Subordinate Certificates": Collectively, the Class R Certificates and
the Class B-IO Certificates.
"Subordinated Amount": The Fixed Rate Group Subordinated Amount or the
Adjustable Rate Group Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to any Home Equity Loan
Group and Payment Date, the excess, if any, of (i) the Specified Subordinated
Amount applicable to such Home Equity Loan Group and Payment Date over (ii) the
Subordinated Amount applicable to such Home Equity Loan Group and Payment Date
prior to taking into account the payment of any related Subordination Increase
Amounts on such Payment Date.
"Subordination Deficit": With respect to any Home Equity Loan Group and
Payment Date, the amount, if any, by which (x) the aggregate of the related
Class A Certificate Principal Balances, after taking into account the payment of
the Class A Distribution Amount with respect to such Home Equity Loan Group on
such Payment Date (except for any Subordination Deficit with respect to such
Home Equity Loan Group and Subordination Increase Amount with respect to such
Home Equity Loan Group), exceeds (y) the aggregate Loan Balances of the Home
Equity Loans in the related Home Equity Loan Group as of the close of business
on the last day of the related Remittance Period.
"Subordination Increase Amount": With respect to any Home Equity Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amounts on such Payment Date (except for any
Subordination Increase Amount with respect to such Home Equity Loan Group)) and
(ii) the aggregate amount of Net Monthly Excess Cashflow allocated to such Home
Equity Loan Group pursuant to Sections 7.03(c)(ii)(A) and (B) on such Payment
Date.
"Subordination Reduction Amount": With respect to any Home Equity Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Home Equity Loan
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Group and Payment Date and (y) the Principal Remittance Amount with respect to
such Home Equity Loan Group for the related Remittance Period.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Amount": On any Payment Date prior to the Class A-1
Certificate Termination Date, the amount of the Fixed Rate Group Principal
Distribution amount necessary to reduce the Class A-1 Certificate Principal
Balance to the Targeted Balance for such Payment Date.
"Targeted Balance": For any Payment Date, the balance set out opposite
such Payment Date on the Targeted Balance Schedule attached hereto as Schedule
VI.
"Tax Matters Certificate": The Class R Certificate, initially issued to
ContiFunding Corporation as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates and the Upper-Tier Residual Class, each of which shall be
issued to and held by ContiFunding Corporation throughout the term hereof unless
another Person shall accept an assignment of such interest and the designation
of Tax Matters Person pursuant to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": As defined in Section 7.02(d) hereof.
"Total Monthly Excess Cashflow": As defined in Section 7.03(c)(i)
hereof.
"Total Monthly Excess Spread": The Fixed Rate Group Total Monthly
Excess Spread or the Adjustable Rate Group Total Monthly Excess Spread, as the
case may be.
"Trust": ContiMortgage Home Equity Loan Trust 1996-2, the trust created
under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Manufacturers and Traders Trust Company, a New York banking
corporation, the Corporate Trust Department of which is located on the date of
execution of this Agreement at One M&T
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Plaza, Buffalo, New York 14240, not in its individual capacity but solely as
Trustee under this Agreement, and any successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date in an
amount equal to one-twelfth of the sum of (i) 0.0044% multiplied by the
then-outstanding Class A Certificate Principal Balance and (ii) $4,750.
"Underwriters": CS First Boston Corporation, ContiFinancial Services
Corporation, Greenwich Capital Markets Inc., Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
"Upper-Tier A-IO Certificates": Any one of the Upper-Tier A-1IO
Certificates, Upper-Tier A-2IO Certificates, Upper-Tier A-3IO Certificates,
Upper-Tier A-4IO Certificates, Upper-Tier A-5IO Certificates, Upper-Tier A-6IO
Certificates, Upper-Tier A-7IO Certificates and Upper-Tier A-8IO Certificates.
"Upper Tier A-1IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-1IO
Distribtuion Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-1IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-1IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-1IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-1IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-1IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-1 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-1IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-1IO Certificates as it relates to interest previously paid on the
Upper-Tier A-1IO Certificates.
"Upper-Tier A-1IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-1IO Current Interest and (ii) the
Upper-Tier A-1IO Carry Forward Amount.
"Upper-Tier A-2IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-2IO
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-2IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-2IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-2IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-2IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-2IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-2 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-2IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-2IO Certificates as it relates to interest previously paid on the
Upper-Tier A-2IO Certificates.
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"Upper-Tier A-2IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-2IO Current Interest and (ii) the
Upper-Tier A-2IO Carry Forward Amount.
"Upper-Tier A-3IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-3IO
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-3IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-3IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-3IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-3IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-3IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-3 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-3IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-3IO Certificates as it relates to interest previously paid on the
Upper-Tier A-3IO Certificates.
"Upper-Tier A-3IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-3IO Current Interest and (ii) the
Upper-Tier A-3IO Carry Forward Amount.
"Upper-Tier A-4IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-4IO
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-4IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-4IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-4IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-4IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-4IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-4 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-4IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-4IO Certificates as it relates to interest previously paid on the
Upper-Tier A-4IO Certificates.
"Upper-Tier A-4IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-4IO Current Interest and (ii) the
Upper-Tier A-4IO Carry Forward Amount.
"Upper-Tier A-5IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-5IO
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-5IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-5IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-5IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-5IO Certificates are
nontransferable and uncertificated.
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"Upper-Tier A-5IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-5 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-5IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-5IO Certificates as it relates to interest previously paid on the
Upper-Tier A-5IO Certificates.
"Upper-Tier A-5IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-5IO Current Interest and (ii) the
Upper-Tier A-5IO Carry Forward Amount.
"Upper-Tier A-6IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-6IO
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-5IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-6IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-6IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-6IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-6IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-6 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-6IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-6IO Certificates as it relates to interest previously paid on the
Upper-Tier A-6IO Certificates.
"Upper-Tier A-6IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-6IO Current Interest and (ii) the
Upper-Tier A-6IO Carry Forward Amount.
"Upper-Tier A-7IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-7IO
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution made in respect of the Upper-Tier A-5IO
Certificates on such immediately preceding Payment Date.
"Upper Tier A-7IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-7IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-7IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-7IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-7 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-7IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-7IO Certificates as it relates to interest previously paid on the
Upper-Tier A-7IO Certificates.
"Upper-Tier A-7IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-7IO Current Interest and (ii) the
Upper-Tier A-7IO Carry Forward Amount.
"Upper-Tier A-8IO Carry Forward Amount": With respect to any Payment
Date, the sum of the amount, if any, by which (x) the Upper-Tier A-8IO
Distribution Amount as of the immediately preceding
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Payment Date exceeded (y) the amount of the actual distribution made in respect
of the Upper-Tier A-5IO Certificates on such immediately preceding Payment Date.
"Upper Tier A-8IO Certificate": An interest in the Upper-Tier REMIC
which (x) represents the right to receive the Upper-Tier A-8IO Distribution
Amount and (y) is designated as a "regular interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions. The Upper-Tier A-8IO Certificates are
nontransferable and uncertificated.
"Upper-Tier A-8IO Current Interest": With respect to any Payment Date,
the aggregate amount of interest accrued on the Class A-8 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the A-8IO Pass-Through Rate plus the Preference Amount owed in respect of the
Upper-Tier A-8IO Certificates as it relates to interest previously paid on the
Upper-Tier A-8IO Certificates.
"Upper-Tier A-8IO Distribution Amount": With respect to any Payment
Date, the sum of (i) the Upper-Tier A-8IO Current Interest and (ii) the
Upper-Tier A-8IO Carry Forward Amount.
"Upper-Tier Adjustable Rate Group Distribution Account": The Upper-Tier
Adjustable Rate Group Distribution Account established pursuant to Section
7.02(a) hereof.
"Upper-Tier Fixed Rate Group Distribution Account": The Upper-Tier
Fixed Rate Group Distribution Account established pursuant to Section 7.02(a)
hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Class A Certificates. The assets of the Upper-Tier
REMIC shall include the Upper-Tier Fixed Rate Group Distribution Account, the
Upper-Tier Adjustable Rate Group Distribution Account and the right to receive
the distributions deposited therein with respect to each Lower-Tier Interest.
"Upper-Tier REMIC Residual Class": With respect to the Upper-Tier
REMIC, the interest therein designated as the "residual interest" therein for
the purposes of the REMIC Provisions. The Upper-Tier REMIC Residual Class shall
be uncertificated, and shall be issuable only in Percentage Interests of 99.999%
to ContiSecurities Asset Funding II, L.L.C. and 0.001% to ContiFunding
Corporation, as Tax Matters Person. Such interests shall be non-transferrable,
except that ContiFunding Corporation may assign such interest to another person
who accepts such assignment and the designation as Tax Matters Person pursuant
to Section 11.18 hereof. The Upper-Tier REMIC Residual Class is entitled only to
any amounts at any time held in the Upper-Tier Fixed Rate Group Distribution
Account and the Upper-Tier Adjustable Rate Group Distribution Account and not
required to be paid to the Owners of the Class A Certificates, which is expected
to be zero at all times during the term of this Agreement.
"Weighted Average Pass-Through Rate": As to the Class A Certificates
and any Payment Date, the weighted average of the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through
Rate, the Class A-7 Pass-Through Rate, the Class A-8 Pass-Through Rate and the
Class A-9 Pass-Through Rate (such rate calculated for this purpose on the basis
of a 360-day year assumed to consist of twelve 30 day months) weighted by the
respective Certificate Principal Balances of the related Class, as of such
Payment Date prior to taking into account any distributions to be made on such
Payment Date.
Section 1.02 Use of Words and Phrases.
------------------------
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"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
----------------------------
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
---------
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
---------------------------
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "ContiMortgage Home Equity Loan Trust 1996-2," which shall
contain two subtrusts.
Section 2.02 Office.
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The office of the Trust shall be in care of the Trustee, addressed to
One M&T Plaza, Buffalo, New York 14240, Attention Corporate Trust Department, or
at such other address as the Trustee may designate by notice to the Depositor,
the Seller, the Servicer, the Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
--------------------
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect either the Lower-Tier REMIC's or the Upper-Tier REMIC's status
as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
------------------------------------------------
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
----------------------
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section
7.03(c)(iv)(A) hereof), (ii) any reasonable expenses of the Trustee, and (iii)
any other expenses of the Trust that have been reviewed by the Seller, which
review shall not be required in connection with the enforcement of a remedy by
the Trustee resulting from a default under this Agreement, shall be paid
directly by the Seller. The Seller shall pay directly the reasonable fees and
expenses of counsel to the Trustee. The reasonable fees and expenses of the
Trustee's counsel in connection with the review and delivery of this Agreement
and related documentation shall be paid by the Seller on the Startup Day.
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<PAGE>
Section 2.06 Ownership of the Trust.
-----------------------
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
-------------------
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in the
State of New York and payments will be received by the Trustee only in the State
of New York and payments from the Trustee will be made only from the State of
New York. The Trust's only office will be at the office of the Trustee as set
forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
-------------------------------
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows:
<TABLE>
<CAPTION>
Initial Lower- Lower-Tier Final Scheduled
Class Designation Tier Balance Pass-Through Rate Payment Dates
----------------- ------------ ----------------- -------------
<S> <C> <C> <C>
Lower-Tier Interest A-1 $29,000,000 8.4363% September 15, 1997
Lower-Tier Interest A-2 $118,000,000 8.4363% June 15, 2010
Lower-Tier Interest A-3 $54,000,000 8.4363% April 15, 2011
Lower-Tier Interest A-4 $82,500,000 8.4363% April 15, 2011
Lower-Tier Interest A-5 $21,500,000 8.4363% April 15, 2011
Lower-Tier Interest A-6 $62,500,000 8.4363% June 15, 2011
Lower-Tier Interest A-7 $43,000,000 8.4363% February 15, 2015
Lower-Tier Interest A-8 $39,500,000 (1) July 15, 2027
Lower-Tier Interest A-9 $55,000,000 (2) July 15, 2027
Class B-IO (consisting of (3)
two "regular interests")
Class R Certificates (4)
- -------------------
<FN>
(1) On any Payment Date, the lower of (a) 8.4363% per annum and (b) the
weighted average Coupon Rate of each Home Equity Loan in the Fixed Rate
Group less the Expense Rate.
(2) For any Payment Date in any month up to and including the month in
which the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.33%
per annum and (ii) the Class A-9 Available Funds Cap Rate for such
Payment Date and for any Payment Date in any month following the month
in which the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus
0.66% per annum and (ii) the Class A-9 Available Funds Cap Rate for
such Payment Date.
(3) The notional amount of each of the two Lower-Tier B-IO Interests is
equal to the corresponding Loan Balances of the Home Equity Loans in
each of the two Home Equity Loan Groups.
(4) The Class R Certificates are not issued with a Lower-Tier Balance or a
Lower-Tier Pass-Through Rate.
</FN>
</TABLE>
(b) The Lower-Tier Interest A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8 and
A-9 Certificates shall be issued as non-certificated interests. The Class B-IO
Certificates and the Class R Certificates shall be issued from the Lower-Tier
REMIC in fully registered certificated form.
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<PAGE>
(c) The Depositor hereby designates Lower-Tier Interest A-1, Lower-Tier
Interest A-2, Lower-Tier Interest A-3, Lower-Tier Interest A-4, Lower-Tier
Interest A-5, Lower-Tier Interest A-6, Lower-Tier Interest A-7, Lower-Tier
Interest A-8, Lower-Tier Interest A-9, Lower-Tier B-1IO Interest and Lower-Tier
B-2IO Interest, as "regular interests" and the Class R Certificates as the
single class of "residual interests" in the Lower-Tier REMIC for purposes of the
REMIC Provisions.
(d) The Depositor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Upper-Tier A-1IO, Upper-Tier A-2IO, Upper-Tier A- 3IO, Upper-Tier A-4IO,
Upper-Tier A-5IO, Upper-Tier A-6IO, Upper-Tier A-7IO, Upper-Tier A-8IO, as
"regular interests," and the Upper-Tier REMIC Residual Class as the single class
of "residual interests" in the Upper-Tier REMIC for purposes of the REMIC
Provisions. The Depositor hereby designates the Lower-Tier Interest A-1, the
Lower-Tier Interest A-2, the Lower-Tier Interest A-3, the Lower-Tier Interest
A-4, the Lower-Tier Interest A-5, the Lower-Tier Interest A-6, the Lower-Tier
Interest A-7, the Lower-Tier Interest A-8, the Lower-Tier Interest A-9, the
Upper-Tier Fixed Rate Group Distribution Account and the Upper-Tier Adjustable
Rate Group Distribution Account as the only assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interests in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Lower-Tier REMIC and amounts distributed on the Upper-Tier Residual Class,
if any, shall be treated as distributions by the Upper-Tier REMIC.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
38
<PAGE>
(k) For federal income tax purposes, the Final Scheduled Payment Date
for each Class of the Class A Certificates is hereby set to be the Payment Date
indicated below:
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates September 15, 1997
Class A-2 Certificates June 15, 2010
Class A-3 Certificates April 15, 2011
Class A-4 Certificates April 15, 2011
Class A-5 Certificates April 15, 2011
Class A-6 Certificates June 15, 2011
Class A-7 Certificates February 15, 2015
Class A-8 Certificates July 15, 2027
Class A-9 Certificates July 15, 2027
Class A-10IO Certificates July 15, 2027
END OF ARTICLE II
39
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
------------------------------------------------
The Depositor hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
40
<PAGE>
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
41
<PAGE>
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Servicer and each Sub- Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer is designated as
an approved seller-servicer by FNMA for first and second mortgage loans and has
combined equity and subordinated debt of at least $1,500,000, as determined in
accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which the Servicer is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the
42
<PAGE>
Servicer or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein with respect to the Servicer,
in light of the circumstances under which they were made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with relevant
FNMA guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Seller, the Servicer, any Sub-Servicer,
the Certificate Insurer, any Owner or the Trustee (each, for purposes of this
paragraph, a party) of a breach of any of the representations and warranties set
forth in this Section 3.02 which materially and adversely affects the interests
of the Owners or of the Certificate Insurer, the party discovering such breach
shall give prompt written notice to the other parties. Within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Trustee pursuant to Section
8.20 hereof; provided, however, that if any party can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Seller.
----------------------------------------------
The Seller hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it, make such
43
<PAGE>
qualification necessary. The Seller has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by the Seller and its
performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Seller and will not violate the
Seller's Certificate of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in a breach of, any material contract, agreement or other
instrument to which the Seller is a party or by which the Seller is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Seller or any of
its properties.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributable to the
Seller therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Seller required to be stated therein or necessary to make
the statements contained therein with respect to the Seller, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Seller that materially
adversely affects or in the future may (so far as the Seller can now reasonably
foresee) materially adversely affect the Seller or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement.
44
<PAGE>
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate by the Trustee under this Agreement,
the Trust will have good title to such Home Equity Loan (including the related
Note) and such other items of the Trust Estate free and clear of any lien,
charge, mortgage, encumbrance or rights of others, except as set forth in
Section 3.04 (b) (ix) (other than liens which will be simultaneously released).
(i) Neither the Seller nor any affiliate thereof will report on any
financial statement any part of the Servicing Fee as an adjustment to the sales
price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(k) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(m) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(n) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, the Seller,
the Certificate Insurer or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.03 which materially and adversely affects the interests of the
Owners or the Certificate Insurer, the party discovering such breach shall give
prompt written notice to the other parties. The Seller hereby covenants and
agrees that within 60 days of its discovery or its receipt of notice of breach,
it shall cure such breach in all material respects or, with respect to a breach
of clause (h) above, the Seller may (or may cause an affiliate of the Seller to)
on the Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) substitute in lieu of any Home Equity Loan not in compliance with
clause (h) a Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the applicable Replacement
Cut-Off Date is less than the Loan Balance of such Home Equity Loan as of such
Replacement Cut-Off Date, deliver an amount equal
45
<PAGE>
to such difference together with the aggregate amount of (A) all Delinquency
Advances and Servicing Advances theretofore made with respect to such Home
Equity Loan and (B) all Delinquency Advances and Servicing Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
(a "Substitution Amount") to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at the
Loan Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless the
Seller obtains for the Trustee and the Certificate Insurer an opinion of counsel
experienced in federal income tax matters to the effect that such a repurchase
or substitution would not constitute a Prohibited Transaction for the Trust or
any REMIC therein or otherwise subject the Trust or any REMIC therein to tax and
would not jeopardize the status of either of the Lower-Tier REMIC or Upper-Tier
REMIC as a REMIC (a "REMIC Opinion") addressed to the Trustee and the
Certificate Insurer and acceptable to the Certificate Insurer and the Trustee.
Any Home Equity Loan as to which repurchase or substitution was delayed pursuant
to this Section shall be repurchased or substituted for (subject to compliance
with Sections 3.03, 3.04 or 3.06, as the case may be) upon the earlier of (a)
the occurrence of a default or imminent default with respect to such Home Equity
Loan and (b) receipt by the Trustee and the Certificate Insurer of a REMIC
Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect
to the Home Equity Loans In Certain Situations.
--------------------------------------------------------
(a) Upon the discovery by the Seller, the Servicer, the Certificate
Insurer, any Sub-Servicer or the Trustee (i) that any of the statements set
forth in subsection (b) below were untrue as of the Startup Day with the result
that the interests of the Owners or the Certificate Insurer are materially and
adversely affected or (ii) that statements set forth in Clauses (ix), (x),
(xiii), (xxxvi), (xl), or (xli) of subsection (b) below were untrue in any
material respect as of the Startup Day, the party discovering such breach shall
give prompt written notice to the other parties. Upon the earliest to occur of
the Seller's discovery, its receipt of notice of breach from any one of the
other parties or such time as a situation resulting from an existing statement
which is untrue materially and adversely affects the interests of the Owners or
of the Certificate Insurer, the Seller hereby covenants and warrants that it
shall promptly cure such breach in all material respects or subject to the last
two sentences of Section 3.03 it shall on the second Monthly Remittance Date
next succeeding such discovery, receipt of notice or such time (i) substitute in
lieu of each Home Equity Loan which has given rise to the requirement for action
by the Seller a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. Other than as
specified in Section 6.12 hereof, it is understood and agreed that the
obligation of the Seller so to substitute or purchase any Home Equity Loan as to
which such a statement set forth below is untrue in any material respect and has
not been remedied shall constitute the sole remedy respecting a discovery of any
such statement which is untrue in any material respect in this Section 3.04
available to the Owners, the Trustee and the Certificate Insurer.
(b) Unless otherwise specified, the information set out below specifies
as of the Startup Day:
(i) The information with respect to each Home Equity Loan set
forth in the related Schedule of Home Equity Loans is true and
correct as of the Cut-Off Date;
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(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Home Equity Loan has been or will be delivered to
the Trustee on the Startup Day or as otherwise provided in Section
3.05;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums and
townhouses or small multifamily or mixed-use property but shall not
include co-operatives, or mobile homes or manufactured homes;
provided, however, that not more than 3% and 2% of the aggregate
Loan Balance of the Home Equity Loans in the Fixed Rate Group and
Adjustable Rate Group, respectively, and secured by condominiums
with more than 4 stories and no more than 3% and 1% are secured by
condominiums of less than 4 stories;
(v) No Home Equity Loan in the Fixed Rate Group has a
Loan-to-Value Ratio in excess of 80%, except 17% of such Home Equity
Loans which have a Loan-to-Value Ratio not greater than 95%; no Home
Equity Loan in the Adjustable Rate Group has a Loan-to- Value-Ratio
greater than 85% and an average Loan-to-Value Ratio greater than
75%.
(vi) Each Home Equity Loan is being serviced by the Servicer;
(vii) The Note related to each Home Equity Loan in the Fixed
Rate Group bears a fixed Coupon Rate (net of Retained Yield) of at
least 7.5% per annum, and the Note related to each Home Equity Loan
in the Adjustable Rate Group bears a current Coupon Rate (net of
Retained Yield) of at least 7.45% per annum. The weighted average
Coupon Rate of the Home Equity Loans in the Fixed Rate Group is at
least 11.13% and the weighted average Coupon Rate of the Home Equity
Loans in the Adjustable Rate Group is at least 9.85%;
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal monthly
Scheduled Payments which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date (other
than Notes representing not more than 54.97% and 0.32% of the
aggregate Loan Balance of the Initial Home Equity Loans in the Fixed
Rate Group and the Adjustable Rate Group, respectively, which may
provide for a "balloon" payment due at the end of the 15th year,
which maturity date is not more than 15 years from the date of
origination);
(ix) As of the Startup Day, each Mortgage is a valid and
subsisting first or second lien of record on the Property subject in
the case of any Second Mortgage Loan only to a Senior Lien on such
Property and subject in all cases to the exceptions to title set
forth in the title insurance policy or attorney's opinion of title
with respect to the related Home Equity Loan, which exceptions are
generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by such
Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller to the Depositor and by the
Depositor to the Trust herein contemplated, the Seller and the
Depositor, as the case may be, held good and indefeasible title to,
and was the sole owner of, each Home Equity Loan (including the
related Note) conveyed by the Seller subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
clause
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(ix) or other liens which will be released simultaneously with such
transfer and assignment; and immediately upon the transfer and
assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity
Loan (other than any Retained Yield) subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
paragraph (ix) or other liens which will be released simultaneously
with such transfer and assignment;
(xi) As of the Startup Day, (a) no more than 0.51% and 0.72%
of the Home Equity Loans in the Fixed Rate Group and the Adjustable
Rate Group, respectively, as a percentage of the outstanding
aggregate Loan Balance of the Home Equity Loans in such Group, are
30- 59 days Delinquent, (b) no more than 0.10% of the Home Equity
Loans in the Fixed Rate Group, as a percentage of the outstanding
aggregate Loan Balances of the Home Equity Loans in such Group, are
60-89 days Delinquent and none of the Home Equity Loans in the
Adjustable Rate Group is 60+ days Delinquent, (c) none of the Home
Equity Loans in the Fixed Rate Group, is 90+ days Delinquent, (d)
none of the Home Equity Loans in the Adjustable Rate Group are 90 or
more days Delinquent, (e) no Obligor of any Home Equity Loan has
been 30 days or more Delinquent more than once during the 12 months
immediately preceding the Startup Day except as indicated on
Schedule III attached hereto and (f) no Obligor of any Home Equity
Loan has been 90 or more days Delinquent during the 12 months
immediately preceding the Startup Day except as indicated on
Schedule III attached hereto.
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of
the related Mortgagor to pay the unpaid principal of or interest on
such Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to,
or equal with, the lien of the related Mortgage except those which
are insured against by any title insurance policy referred to in
paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, usury,
equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no title policy
has been obtained (provided that no title policy has been obtained
with respect to not more than 1.0% of the Original Aggregate Loan
Balance of the Home Equity Loans), or (b) a lender's title insurance
policy, issued in standard American Land Title Association form by a
title insurance company authorized to transact business in the state
in which the related Property is situated, in an amount at least
equal to the original balance of such Home Equity Loan together, in
the case of a Second Mortgage Loan, with the then-current principal
balance of the mortgage note relating to the Senior Lien, insuring
the mortgagee's interest under the related Home Equity Loan as the
holder of a valid first or second mortgage lien of record on the
real property described in the related Mortgage, as the case may be,
subject only to exceptions of the character referred to in paragraph
(ix) above,
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was effective on the date of the origination of such Home Equity
Loan, and, as of the Startup Day, such policy is valid and
thereafter such policy shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as
defined in Section 8.03 with respect to the Home Equity Loans
serviced by it;
(xviii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Property;
(xix) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting
the requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien),
(B) the minimum amount required to compensate for damage or loss on
a replacement cost basis or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance
with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity
Loan had full legal capacity to execute all documents relating to
such Home Equity Loan and convey the estate therein purported to be
conveyed;
(xxi) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by the Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee;
(xxii) As of the Startup Day, no more than 0.39% and 1.12% of
the aggregate Loan Balance of the Home Equity Loans in the Fixed
Rate Group and the Adjustable Rate Group, respectively, will be
secured by Properties located within any single zip code area;
(xxiii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such recordation
is necessary to perfect the lien thereof as against creditors of or
purchasers from the Seller (or, subject to Section 3.05 hereof, are
in the process of being recorded);
(xxiv) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary,
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to protect the interest of the Owners and the Certificate Insurer
and which has been delivered to the Trustee. The substance of any
such alteration or modification is reflected on the related Schedule
of Home Equity Loans;
(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee
to make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Home Equity Loans were paid;
(xxvi) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvii) No Home Equity Loan was originated under a buydown
plan;
(xxviii) No Home Equity Loan has a shared appreciation
feature, or other contingent interest feature;
(xxix) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected
thereon;
(xxx) Each Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the related Home
Equity Loan in the event the related Property is sold without the
prior consent of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the respective Schedule of Home Equity Loans. The consolidated
principal amount does not exceed the original principal amount of
the related Home Equity Loan. No Note permits or obligates the
Servicer to make future advances to the related Mortgagor at the
option of the Mortgagor;
(xxxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement.
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxiv) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
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(xxxv) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder
thereof adequate for the realization against the related Property of
the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Property at a trustee's
sale or the right to foreclose the related Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and neither the Servicer
nor the Seller has waived any default, breach, violation or event of
acceleration;
(xxxviii) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement which has been approved by the primary mortgage
guaranty insurer, if any, and which has been delivered to the
Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least
twelve months prior to the maturity date of the related first
mortgage loan if such first mortgage loan provides for a balloon
payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xli) The credit underwriting guidelines applicable to each
Home Equity Loan conform in all material respects to the description
thereof set forth in the Prospectus Supplement;
(xlii) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xliii) The Home Equity Loans were not selected for inclusion
in the Trust by the Seller on any basis intended to adversely affect
the Trust;
(xliv) No more than 3.94% and 1.09% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group and the
Adjustable Rate Group, respectively, are secured by Properties that
are non-owner occupied Properties (i.e., investor-owned and
vacation);
(xlv) No more than 5.63% and 9.36% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group and the
Adjustable Rate Group, respectively, are
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secured by Home Equity Loans which were originated under the
Seller's non-income verification program;
(xlvi) The Seller has no actual knowledge that there exist any
hazardous substances, hazardous wastes or solid wastes, as such
terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental
legislation on any Property;
(xlvii) The Seller was properly licensed or otherwise
authorized, to the extent required by applicable law, to originate
or purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home
Equity Loans by the Trustee as trustee of the Trust will not involve
the violation of such laws;
(xlviii) With respect to each Property subject to a ground
lease (i) the current ground lessor has been identified and all
ground rents which have previously become due and owing have been
paid; (ii) the ground lease term extends, or is automatically
renewable, for at least five years beyond the maturity date of the
related Initial Home Equity Loan; (iii) the ground lease has been
duly executed and recorded; (iv) the amount of the ground rent and
any increases therein are clearly identified in the lease and are
for predetermined amounts at predetermined times; (v) the ground
rent payment is included in the borrower's monthly payment as an
expense item; (vi) the Trust has the right to cure defaults on the
ground lease; and (vii) the terms and conditions of the leasehold do
not prevent the free and absolute marketability of the Property. As
of the Cut-Off Date, the Loan Balance of the Home Equity Loans with
related Properties subject to ground leases does not exceed 1% of
the Original Aggregate Loan Balance;
(xlix) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient
to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;
(l) As of the Startup Day, the Seller has not received a
notice of default of any first mortgage loan secured by any Property
which has not been cured by a party other than the Seller; and
(li) All of the Home Equity Loans in the Adjustable Rate Group
are in a first lien position;
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $500,000;
(liii) Each Home Equity Loan is secured by a mortgage on
property which, at the time of origination of each Home Equity Loan,
has an appraised value of less than $1 million;
(liv) No more than 7.5% of the Fixed Rate Group Home Equity
Loans are in a second priority position and none of the Adjustable
Rate Group Home Equity Loans are in a second priority position; and
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(lv) The weighted average margin of the Adjustable Rate Group
Home Equity Loans is 6.60%.
(c) In the event that any such repurchase results in a prohibited
transaction tax, the Trustee shall immediately notify the Seller in writing
thereof and the Seller will, within 10 days of receiving notice thereof from the
Trustee, deposit the amount due from the Trust with the Trustee for the payment
thereof, including any interest and penalties, in immediately available funds.
In the event that any Qualified Replacement Mortgage is delivered by the Seller
to the Trust pursuant to Section 3.03, Section 3.04 or Section 3.06 hereof, the
Seller shall be obligated to take the actions described in Section 3.04(a) with
respect to such Qualified Replacement Mortgage upon the discovery by any of the
Owners, the Seller, the Servicer, the Certificate Insurer, any Sub-Servicer or
the Trustee that the statements set forth in clause (ix), (x), (xiii), (xxxvi),
(xl) or (xli) of subsection (b) above are untrue in any material respect on the
date such Qualified Replacement Mortgage is conveyed to the Trust or that any of
the other statements set forth in subsection (b) above are untrue on the date
such Qualified Replacement Mortgage is conveyed to the Trust such that the
interests of the Owners or the Certificate Insurer in the related Qualified
Replacement Mortgage are materially and adversely affected; provided, however,
that for the purposes of this subsection (c) the statements in subsection (b)
above referring to items "as of the Cut-Off Date" or "as of the Startup Day"
shall be deemed to refer to such items as of the date such Qualified Replacement
Mortgage is conveyed to the Trust. Notwithstanding the fact that a
representation contained in subsection (b) above may be limited to the Seller's
knowledge, such limitation shall not relieve the Seller of its repurchase
obligation under this Section and Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Home Equity Loans and Qualified
--------------------------------------------------
Replacement Mortgages.
---------------------
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys to
the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys, without recourse,
to the Trustee for the benefit of the Owners all of their respective right,
title and interest in and to the Trust Estate; provided, however, that the
Seller reserves and retains all of its right, title and interest in and to the
Retained Yield; provided, further, however, that the Seller reserves and retains
all of its right, title and interest in and to principal (including Prepayments)
collected and interest accrued on each Home Equity Loan on or prior to the
Cut-Off Date. The transfer by the Depositor of the Home Equity Loans set forth
on the Schedule of Home Equity Loans to the Trustee is absolute and is intended
by the Owners and all parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Home Equity Loans conveying good
title thereto free and clear of any liens and encumbrances from the Seller to
the Depositor and from the Depositor to the Trust and that the Home Equity Loans
not be part of the Depositor's or the Seller's estate in the event of
insolvency. In the event that such conveyance is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a first
priority
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perfected security interest in the Trust Estate, and that this Agreement shall
constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Delaware and Pennsylvania, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Home Equity Loans and the other property described above as
collateral. The characterization of the Seller as debtor and the Depositor as
secured party on such financing statements is solely for protective purposes and
shall in no way be construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Seller's entire right, title and
interest in and to the Trust Estate. In connection with such filing, the Seller
agrees that it shall cause to be filed all necessary continuation statements
thereof and to take or cause to be taken such actions and execute such documents
as are necessary to perfect and protect the Trustee's, the Owners' and the
Certificate Insurer's interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of New York and Delaware, a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee as secured party and
listing the Home Equity Loans and the other property described above as
collateral. The characterization of the Depositor as debtor and the Trustee as
secured party in such financing statements is solely for protective purposes and
shall in no way be construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Depositor's entire right, title and
interest in and to the Trust Estate. In connection with such filing, the
Depositor agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's, the
Owners' and the Certificate Insurer's interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Home Equity
Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the Startup Day
with respect to each Home Equity Loan (A) the original Notes endorsed
in blank or to the order of the Trustee, (B) the original title
insurance policy or a copy certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening assignments, showing a complete
chain of title from origination to the Trustee, if any, including
warehousing assignments, with evidence of recording thereon, (D)
originals of all assumption and modification agreements, if any and (E)
either: (1) the original Mortgage, with evidence of recording thereon
(if such original Mortgage has been returned to the Seller from the
applicable recording office or a certified copy thereof if such
original Mortgage has not been returned to the Seller from the
applicable recording office), or (2) a copy of the Mortgage certified
by the public recording office in those instances where the original
recorded Mortgage has been lost,
(ii) cause, within 60 days following the Startup Day,
assignments of the Mortgages to "Manufacturers and Traders Trust
Company, as Trustee of ContiMortgage Home Equity Loan Trust 1996-2
under the Pooling and Servicing Agreement dated as of June 1, 1996" to
be submitted for recording in the appropriate jurisdictions; provided,
however, that the Depositor shall not be required to record an
assignment of a Mortgage if the Depositor furnishes to the Trustee and
the Certificate Insurer, on or before the Startup Day, at the
Depositor's expense an opinion of counsel with respect to the relevant
jurisdiction that such recording is not necessary to perfect the
Trustee's interest in the related Home Equity Loans (in form and
substance and
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from counsel satisfactory to the Certificate Insurer, Moody's and
Standard & Poor's); notwithstanding the furnishing of such opinion of
counsel, however, the Certificate Insurer may, in its reasonable
discretion after consultation with the Depositor prior to the date on
which all assignments of Mortgages are required to be filed hereunder,
require the filing of assignments of Mortgages in any state that is the
subject of such opinions; and
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments, to
the Trustee within 15 days of receipt thereof by the Depositor (but in
any event, with respect to any Mortgage as to which original recording
information has been made available to the Depositor, within one year
after the Startup Day).
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the second preceding paragraph, the Seller shall deliver to
the Trustee a list of all Mortgages for which no Mortgage assignment has yet
been submitted for recording by the Seller, which list shall state the reason
why the Seller has not yet submitted such Mortgage assignments for recording.
With respect to any Mortgage assignment disclosed on such list as not yet
submitted for recording for a reason other than a lack of original recording
information, the Trustee shall make an immediate demand on the Seller to prepare
such Mortgage assignments, and shall inform the Certificate Insurer of the
Seller's failure to prepare such Mortgage assignments. Thereafter, the Trustee
shall cooperate in executing any documents prepared by the Certificate Insurer
and submitted to the Trustee in connection with this provision. Following the
expiration of the 60-day period referred to in clause (ii) of the second
preceding paragraph, the Seller shall promptly prepare a Mortgage assignment for
any Mortgage for which original recording information is subsequently received
by the Seller, and shall promptly deliver a copy of such Mortgage assignment to
the Trustee. The Seller agrees that it will follow its normal servicing
procedures and attempt to obtain the original recording information necessary to
complete a Mortgage assignment. In the event that the Seller is unable to obtain
such recording information with respect to any Mortgage prior to the end of the
18th calendar month following the Startup Day and has not provided to the
Trustee a Mortgage assignment with evidence of recording thereon relating to the
assignment of such Mortgage to the Trustee, the Trustee shall notify the Seller
of the Seller's obligation to provide a completed assignment (with evidence of
recording thereon) on or before the end of the 20th calendar month following the
Startup Day with respect to the Home Equity Loans. A copy of such notice shall
be sent by the Trustee to the Certificate Insurer. If no such completed
assignment (with evidence of recording thereon) is provided before the end of
such 20th calendar month, the related Home Equity Loan shall be deemed to have
breached the representation contained in clause (xxiii) of Section 3.04(b)
hereof; provided, however, that if as of the end of such 20th calendar month the
Seller demonstrates to the satisfaction of the Certificate Insurer that it is
exercising its best efforts to obtain such completed assignment and, during each
month thereafter until such completed assignment is delivered to the Trustee,
the Seller continues to demonstrate to the satisfaction of the Certificate
Insurer that it is exercising its best efforts to obtain such completed
assignment, the related Home Equity Loan will not be deemed to have breached
such representation. The requirement to deliver a completed assignment with
evidence of recording thereon will be deemed satisfied upon delivery of a copy
of the completed assignment certified by the applicable public recording office.
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Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) The Seller shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of the Seller in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by the Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all
its right, title and interest to principal and interest due on such Qualified
Replacement Mortgage after the applicable Replacement Cut-Off Date; provided,
however, that the Seller shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such Qualified Replacement
Mortgage on or prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such released Home Equity Loan on or prior to the applicable
Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating thereto, endorsed in
blank or to the order of the Trustee, (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by the Seller (but in any event within
120 days after the date of conveyance of such Qualified Replacement Mortgage)
and (iv) deliver the title insurance policy, or where no such policy is required
to be provided under Section 3.05(b)(i)(B), the other evidence of title in the
same manner required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and on
the order of the Seller (i) the original Note relating thereto, endorsed without
recourse or representation, to the Seller, (ii) the original Mortgage so
released and all assignments relating thereto and (iii) such other documents as
constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
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Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
----------------------------------------------------
Equity Loans; Certification by Trustee.
--------------------------------------
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by the Seller or the Depositor
in the form attached as Exhibit E hereto, and declares that it will hold such
documents and any amendments, replacement or supplements thereto, as well as any
other assets included in the definition of Trust Estate and delivered to the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners. The Trustee agrees, for the benefit of the
Owners, to review such items within 45 days after the Startup Day (or, with
respect to any document delivered after the Startup Day, within 45 days of
receipt and with respect to any Qualified Replacement Mortgage, within 45 days
after the assignment thereof) and to deliver to the Depositor, the Seller, the
Servicer and the Certificate Insurer a certification in the form attached hereto
as Exhibit F (a "Pool Certification") to the effect that, as to each Home Equity
Loan listed in the Schedule of Home Equity Loans (other than any Home Equity
Loan paid in full or any Home Equity Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Home Equity Loan and (iii)
based on its examination and only as to the foregoing documents, the information
set forth on the Schedule of Home Equity Loans accurately reflects the
information set forth in the File. The Trustee shall have no responsibility for
reviewing any File except as expressly provided in this subsection 3.06(a).
Without limiting the effect of the preceding sentence, in reviewing any File,
the Trustee shall have no responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Trustee is the assignee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Home Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, the Seller, the Certificate Insurer and the Owners. In
performing any such review, the Trustee may conclusively rely on the Seller as
to the purported genuineness of any such document and any signature thereon. It
is understood that the scope of the Trustee's review of the items delivered by
the Seller pursuant to Section 3.05(b)(i) is limited solely to confirming that
the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. The Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File of which it is so notified by the Trustee. If,
however, within 60 days after the Trustee's notice to it respecting such defect
the Seller has not remedied the defect and the defect materially and adversely
affects the interest in the related Home Equity Loan of the Owners or of the
Certificate Insurer, the Seller will (or will cause an affiliate of the Seller
to) on the next succeeding Monthly Remittance Date (i) substitute in lieu of
such Home Equity Loan a Qualified Replacement Mortgage and deliver the
Substitution Amount to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan
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at a purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be delivered to the Servicer for deposit in the Principal and
Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 12th month after the Startup Day indicating the current status
of the exceptions previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the Trustee and the
Servicer shall provide to the Certificate Insurer no less frequently than
monthly updated certifications indicating the then current status of exceptions,
until all such exceptions have been eliminated.
Section 3.07 Intercreditor Arrangements Between the Trust and the
----------------------------------------------------
Seller with Respect to Retained Yield.
--------------------------------------
(a) In the event that any Mortgagor makes a partial payment of any
Scheduled Payment due on a Home Equity Loan such partial payment shall be
applied to payment of the related Note as provided therein; provided, however,
that with respect to application of such amount to interest such amount shall be
applied first, to that portion of the interest component of such Note conveyed
by the Seller to the Trust pursuant to Section 3.05 hereof and second to that
portion of the interest component of such Note retained by the Seller as
Retained Yield.
(b) Notwithstanding the retention by the Seller of the Retained Yield
on any Home Equity Loan, the Trustee (or, pursuant to the terms of Article VIII
hereof, the Servicer acting on behalf of the Trustee) shall be permitted and is
hereby authorized to take any and all actions and to exercise any and all
rights, remedies and options granted under the terms of such Home Equity Loan to
the mortgagee thereunder, including, without limitation, those rights set forth
in Section 10.01(b) hereof. The Seller hereby agrees not to exercise any such
rights, remedies and options with respect to the Home Equity Loans without the
prior written consent of the Trustee and the Certificate Insurer (or the prior
written consent of the Servicer acting on behalf of the Trustee).
(c) The Seller hereby agrees to cooperate with the Trustee, the
Certificate Insurer and the Servicer and will take any action, including joining
in such proceedings at law or equity and executing such documents as the
Trustee, the Certificate Insurer or the Servicer may reasonably request to
effectuate the agreements set forth in subsection (b) preceding, and, in
connection therewith, hereby designates the Trustee and the Servicer as the
Seller's attorneys-in-fact to execute any instruments which would be required to
be executed by a mortgagee in connection with the servicing of the Home Equity
Loans; provided, however, that nothing herein shall permit the Trustee or the
Servicer to transfer, convey, set over or otherwise convey to any Person
(including the Owners) the Seller's rights to the Retained Yield.
Section 3.08 Reserved.
---------
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
------------------------
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
---------------------
At 11 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York
(or at such other location acceptable to the Seller), the Seller will sell and
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters the Class A
Certificates with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co., or in such other names as the Underwriters
shall direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, and (ii) to the respective
registered owners thereof, a Class B-IO Certificate with a Percentage Interest
equal to 100%, registered in the name of ContiSecurities Asset Funding II,
L.L.C., a Class R Certificate with a Percentage Interest equal to 99.999%,
registered in the name of ContiSecurities Asset Funding II, L.L.C. and a Class R
Certificate with a Percentage Interest equal to .001%, registered in the name of
ContiFunding Corporation.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Class A Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
-----
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and except for the rights of
the Trustee on behalf of the Owners of the Class A Certificates with respect to
the Certificate Insurance Policy). The Class A Certificates are payable solely
from payments received on or with respect to the Home Equity Loans (other than
the Servicing Fees), moneys in the Principal and Interest Account, earnings on
moneys and the proceeds of property held as a part of the Trust Estate and, with
respect to the Class A Certificates upon the occurrence of certain events, from
Insured Payments. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Home Equity Loans (and, with respect to the Owners
of the Class A Certificates, Insured Payments deposited in the Certificate
Account), pro rata in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
-----
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class A-9 Certificates, the Class A-10IO Certificates, the Class R Certificates
and the Class B-IO Certificates shall be in substantially the forms set forth in
Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10IO, B and B-IO hereof,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement or as may in the
Depositor's judgment be necessary, appropriate or convenient to comply, or
facilitate compliance, with applicable laws, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any applicable securities laws or
as may, consistently herewith, be determined by the Authorized Officer of the
Depositor executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
--------------------------------------
Each Certificate shall be executed on behalf of the Trust, by the
manual or facsimile signature of one of the Depositor's Authorized Officers and
shall be authenticated by the manual or facsimile signature of one of the
Trustee's Authorized Officers.
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Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Depositor shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
-----------------------------------------
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer, or if there are no longer any Class A Certificates then outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, the Trustee will give the Certificate Insurer and the Owners
prompt written notice of the appointment of such Registrar and of the location,
and any change in the location, of the Register. In connection with any such
appointment the annual fees of the bank then serving as Trustee and Registrar
shall thenceforth be reduced by the amount to be agreed upon by the Trustee and
the Depositor at such time and the reasonable fees of the Registrar shall be
paid, as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or percentage interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
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(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9 Certificates shall be
issued in denominations of no less than $1,000 and integral multiples thereof
(except that one certificate in each class may be issued in an amount less than
$1,000 or in an integral multiple other than $1,000). The Class A-10IO
Certificates will be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller and the Trustee shall have no responsibility or obligation
to Direct or Indirect Participants or beneficial owners for which the Depository
holds Class A Certificates from time to time as a Depository. Without limiting
the immediately preceding sentence, the Depositor, the Servicer, the Seller and
the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Class A Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Class A Certificate as shown in the Register,
of any notice with respect to the Class A Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Depositor or the Trustee is unable to locate
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a qualified successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Class A Certificates
shall no longer be restricted to being registered in the Register in the name of
Cede & Co. (or a successor nominee) as nominee of the Depository. At that time,
the Depositor may determine that the Class A Certificates shall be registered in
the name of and deposited with a successor depository operating a global
book-entry system, as may be acceptable to the Depositor and at the Depositor's
expense, or such depository's agent or designee but, if the Depositor does not
select such alternative global book-entry system, then the Class A Certificates
may be registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
--------------------------------------------------
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless, then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, the Seller shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
----------------------
The Certificate Insurer, the Trustee and any agent of the Trustee may
treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
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Section 5.07 Cancellation.
-------------
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
-------------------------------------------
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate or assignment of an interest in the Upper-Tier REMIC
Residual Class (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate or assignment of an
interest in the Upper-Tier REMIC Residual Class (whether pursuant to a purchase,
a transfer resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be an
Owner for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Class R Certificate or Upper-Tier REMIC Residual Class.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Class R Certificate
nor authenticate and make available any new Class R Certificate unless the
Trustee has received an affidavit from the proposed transferee in the form
attached hereto as Exhibit I. Each holder of a Class R Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.08(a). The Upper-Tier REMIC Residual Class is not
transferable except that the Owner of the Tax Matters Person Residual Interest
in the Upper-Tier REMIC may assign its interest to another Person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Class B-IO Certificate or a Class R Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is made in accordance with said Act and
laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee or the Depositor shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the Depositor
and the Certificate Insurer in the event that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from said Act and laws or is being made pursuant to said Act and laws, which
opinion of counsel shall not be an expense of the Trustee, the Trust Estate or
the Certificate Insurer, and (ii) the Trustee shall require the Transferee to
execute an investment letter acceptable to and in form and substance
satisfactory to the Seller and the Certificate Insurer certifying to the
Trustee, the Certificate Insurer and the Seller the facts surrounding such
transfer, which investment letter shall not be an expense of the Trustee, the
Trust Estate, the Certificate Insurer or the Seller. The Owner of a Class B-IO
Certificate or a Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Certificate Insurer, the
Depositor and the Seller against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
(c) No transfer of a Class B-IO or Class R Certificate shall be made
unless the Trustee shall have received either: (i) a representation letter from
the transferee of such Class B-IO or Class R Certificate, acceptable to and in
form and substance satisfactory to the Trustee, to the effect that such
transferee is not an employee benefit plan subject to Section 406 of ERISA nor a
plan or other arrangement subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 4975
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of the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor
using the assets of any Plan to effect such transfer or in the case of an
insurance company purchasing such Certificates, with funds from its general
account, the transfer is covered by the Prohibited Transaction Class Exemption
95-60 (ii) in the event that any Class B-IO or Class R Certificates is purchased
by a Plan, or by a person or entity acting on behalf of any Plan or using the
assets of any Plan to effect such transfer, an Opinion of Counsel, acceptable to
and in form and substance satisfactory to the Trustee, which Opinion of Counsel
shall not be at the expense of either the Trustee or the Trust, to the effect
that the purchase or holding of any Class B-IO or Class R Certificates will not
result in the assets of the Trust being deemed to be "plan assets," will not
cause the Trust to be subject to the fiduciary requirements and prohibited
transaction provisions of ERISA and the Code, and will not subject the Trustee
to any obligation or liability in addition to those expressly undertaken under
this Agreement. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate to or on behalf of any Plan without the
delivery to the Trustee of an Opinion of Counsel as described above shall be
null and void and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor, the Seller or the Servicer. No sale or other transfer of any
Class A Certificate may be made to an affiliate of the Seller unless the Trustee
and the Certificate Insurer shall have been furnished with an opinion of counsel
acceptable to the Certificate Insurer and the Trustee experienced in federal
bankruptcy matters to the effect that such sale or transfer would not adversely
affect the character of the conveyance of the Home Equity Loans to the Trust as
a sale. To the extent any payment to an Owner of a Class A Certificate
constitutes an Insured Payment, such payment will not be made to the Seller, the
Depositor or the Servicer or any Subservicer. No sale or other transfer of the
Class R Certificate issued to ContiFunding Corporation on the Startup Day may be
transferred or sold to any Person, except to a person who accepts the
appointment of Tax Matters Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
---------------------
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
--------------
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) a Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8 or Class A-9 Certificate having
an original principal balance of not less than $1,000,000 or (B) a Class A-10IO,
Class B-IO Certificate or Class R Certificate having a Percentage Interest of
not less than 10% in writing not later than one Business Day prior to the
applicable Record Date (which request does not have to be repeated unless it has
been withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, made on each Payment Date, in each case to each Owner of record on the
immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
---------------------------------------------------------
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee,
and no amounts so withdrawn from the Certificate Account for payments of
Certificates and no Insured Payment shall be paid over to the Trustee except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate and remaining
unclaimed by the Owner of such Class A Certificate for the period then specified
in the escheat laws of the State of New York after such amount has become due
and payable shall be discharged from such trust and be paid to the Owners of the
Class R Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee
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or such Paying Agent before being required to make any such payment, may, at the
expense of the Trust, cause to be published once, in the eastern edition of The
Wall Street Journal, notice that such money remains unclaimed and that, after a
date specified therein, which shall be not fewer than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
paid to the Owners of the Class R Certificates. The Trustee shall, at the
direction of the Depositor, also adopt and employ, at the expense of the Trust,
any other reasonable means of notification of such payment (including but not
limited to mailing notice of such payment to Owners whose right to or interest
in moneys due and payable but not claimed is determinable from the records of
the Registrar, the Trustee or any Paying Agent, at the last address of record
for each such Owner).
Section 6.03 Protection of Trust Estate.
---------------------------
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Depositor to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer as such rights are set forth in this Agreement;
provided, however, that nothing in this Section shall require any action by the
Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been requested
by the Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates; provided, further, however, that if
there is a dispute with respect to payments under the Certificate Insurance
Policy the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
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Section 6.04 Performance of Obligations.
--------------------------
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
------------------
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly permitted
hereby or (B) permit any lien, charge, adverse claim, security
interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
----------------
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
--------------------
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policy,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor and the Trustee of such Owner's intention to
institute such proceeding;
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(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class B-IO Certificates and the Class R Certificates, shall
have made written request to the Trustee to institute such
proceeding in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates are Outstanding, the
Certificate Insurer consented in writing thereto (unless the
Certificate Insurer is the party against whom the proceeding
is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Class A Certificates or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class B-IO Certificates and the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
--------------------------------------------------------
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
-------------------------------
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or the Owners
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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Section 6.10 Delay or Omission Not Waiver.
-----------------------------
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect to
any event described in Section 8.20(a) or (b) shall impair any such right or
remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or
the Owners, as the case may be.
Section 6.11 Control by Owners.
------------------
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class B-IO Certificates and the Class R Certificates then
Outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates or the Trust Estate, including, but not limited to, those powers
set forth in Section 6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that the Seller or the
Trustee, as the case may be, need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12 Indemnification.
----------------
The Depositor agrees to indemnify and hold the Trustee, the Certificate
Insurer and each Owner harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Certificate Insurer and any Owner
may sustain in any way related to the failure of the Depositor to perform its
duties in compliance with the terms of this Agreement. The Depositor shall
immediately notify the Trustee, the Certificate Insurer and each Owner if such a
claim is made by a third party with respect to this Agreement, and the Depositor
shall assume (with the consent of the Trustee) the defense of any such claim and
pay all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Seller, the Trustee, the Certificate Insurer and/or
any Owner in respect of such claim. The Trustee may, if necessary, reimburse the
Depositor from amounts otherwise distributable on the Class B-IO or Class R
Certificates for all amounts advanced by it pursuant to the preceding sentence,
except when the claim relates directly to the failure of the Depositor to
perform its duties in compliance with the terms of this Agreement. In addition
to the foregoing, the Seller agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and
other costs, fees and expenses that the Trustee, the Certificate Insurer and any
Owner may sustain in any way related to the breach by the Seller of its
representations and warranties set forth in Section 3.04(b)(xiii) or (xv) hereof
with respect to a Home Equity Loan if such Home Equity Loan qualifies as a "high
cost mortgage" pursuant to Section 226.32 of the Truth-in-Lending Act, as
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amended. The provisions of this Section 6.12 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
Section 6.13 Access to Owners of Certificates' Names and Addresses. (a)
If any owner (for purposes of this Section 6.13, an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Owners with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
--------------------
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(e) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts;
--------------------------
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, the Upper-Tier Fixed Rate Group Distribution Account, and the
Upper-Tier Adjustable Rate Group Distribution Account, each of which is to be
held by the Trustee on behalf of the Owners of the Certificates, the Trustee and
the Certificate Insurer, as their interests may appear.
(b) Reserved.
--------
(c) On the Business Day after each Monthly Remittance Date the Trustee
shall determine (subject to the terms of Section 10.03(j) hereof, based solely
on information provided to it by the Servicer) with respect to the immediately
following Payment Date, the amount that is expected to be on deposit in the
Certificate Account as of such Payment Date for the Fixed Rate Group
(disregarding the amount of any Insured Payments), which amount will be equal to
the sum of (x) the amount on deposit therein with respect to such Group
excluding the amount of any Total Monthly Excess Cashflow from the Fixed Rate
Group included in such amount plus (y) any amount of Total Monthly Excess
Cashflow from the Adjustable Rate Group to be applied on such Payment Date to
the Fixed Rate Certificates. The amount described in clause (x) of the preceding
sentence with respect to each Payment Date is the "Fixed Rate Group Available
Funds"; the sum of the amounts described in clauses (x) and (y) of the preceding
sentence with respect to each Payment Date is the "Fixed Rate Group Total
Available Funds."
(d) On the Business Day after each Monthly Remittance Date the Trustee
shall determine (subject to the terms of Section 10.03(j) hereof, based solely
on information provided to it by the Servicer) with respect to the immediately
following Payment Date, the amount that is expected to be on deposit in the
Certificate Account as of such Payment Date for the Adjustable Rate Group
(disregarding the amount of any Insured Payments), which amount will be equal to
the sum of (x) the amount on deposit therein with respect to such Group
excluding the amount of any Total Monthly Excess Cashflow from the Adjustable
Rate Group included in such amount plus (y) any amount of Total Monthly Excess
Cashflow from the Fixed Rate Group to be applied on such Payment Date to the
Class A-9 Certificates. The amount described in clause (x) of the preceding
sentence with respect to each Payment Date is the "Adjustable Rate Group
Available Funds"; the sum of the amounts described in clauses (x) and (y) of the
preceding sentence with respect to each Payment Date is the "Adjustable Rate
Group Total Available Funds." Collectively, the Fixed Rate Group Total Available
Funds and the Adjustable Rate Group Total Available Funds is the "Total
Available Funds."
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Section 7.03 Flow of Funds.
--------------
(a) With respect to the Fixed Rate Group, the Trustee shall deposit to
the Certificate Account, without duplication, upon receipt, any Insured Payments
relating to such Group, the proceeds of any liquidation of the assets of the
Trust insofar as such assets relate to the Fixed Rate Group, all remittances
made to the Trustee pursuant to Section 8.08(d)(ii) insofar as such assets
relate to the Fixed Rate Group, and the Fixed Rate Group Monthly Remittance
Amount remitted by the Servicer.
(b) With respect to the Adjustable Rate Group, the Trustee shall
deposit to the Certificate Account without duplication upon receipt, any Insured
Payments relating to such Group, the proceeds of any liquidation of the assets
of the Trust insofar as such assets relate to the Adjustable Rate Group, all
remittances made to the Trustee pursuant to Section 8.08(d)(ii) insofar as such
assets relate to the Adjustable Rate Group and the Adjustable Rate Group Monthly
Remittance Amount remitted by the Servicer.
(c) With respect to the Certificate Account, on each Payment Date, the
Trustee shall make the following allocations, disbursements and transfers for
each Home Equity Loan Group from amounts deposited therein pursuant to
subsections (a) and (b), respectively, in the following order of priority, and
each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements have
occurred:
(i) first, on each Payment Date, the Trustee shall allocate an amount
equal to the sum of (x) the Total Monthly Excess Spread with respect to such
Home Equity Loan Group and Payment Date (net of the related Premium Amount paid
pursuant to clause (iii)(C) or (G) below, as applicable, and the Trustee Fee
allocable to such Group then payable under clause (iv)(A) below) plus (y) any
Subordination Reduction Amount with respect to such Home Equity Loan Group and
Payment Date (such sum being the "Total Monthly Excess Cashflow" with respect to
such Home Equity Loan Group and Payment Date) with respect to such Home Equity
Loan Group in the following order of priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Group shall be allocated to the
payment of the related Class A Distribution Amount
pursuant to clauses (iii)(D) or (iii)(H), as
applicable, below on such Payment Date with respect
to the related Home Equity Loan Group in an amount
equal to the amount, if any, by which (x) the related
Class A Distribution Amount (calculated for this
purpose only by reference to clause (b) of the
definition of the Fixed Rate Group Principal
Distribution Amount or Adjustable Rate Group
Principal Distribution Amount, as the case may be,
and without any Subordination Increase Amount with
respect to the related Group) for such Payment Date
exceeds (y) the Available Funds with respect to such
Home Equity Loan Group for such Payment Date (the
amount of such difference being the "Fixed Rate Group
Available Funds Shortfall" with respect to the Fixed
Rate Group, and the "Adjustable Rate Group Available
Funds Shortfall" with respect to the Adjustable Rate
Group);
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocation described in clause
(A) above shall be allocated against any Available
Funds Shortfall with respect to the other Home Equity
Loan Group and to the payment of the related Class A
Distribution Amount with respect to the other Home
Equity Loan Groups pursuant to clause (iii) below;
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(C) third, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(A) and (B) above shall be disbursed to the
Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount with respect to
the related Home Equity Loan Group; and
(D) fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(A), (B) and (C) above shall be disbursed to the
Certificate Insurer in respect of any Reimbursement
Amount with respect to the other Home Equity Loan
Group.
(ii) second, the amount, if any, of the Total Monthly Excess
Cashflow with respect to a Home Equity Loan Group on a Payment
Date remaining after the allocations described in clause (i)
above (the "Net Monthly Excess Cashflow" for such Home Equity
Loan Group and Payment Date) is required to be allocated in
the following order of priority:
(A) first, such Net Monthly Excess Cashflow shall be used
to reduce to zero, through the allocation of a
Subordination Increase Amount to the payment of the
related Class A Distribution Amount pursuant to
clause (iii) below, any Subordination Deficiency
Amount with respect to the related Home Equity Loan
Group as of such Payment Date;
(B) second, any Net Monthly Excess Cashflow remaining
after the application described in clause (A) above
shall be used to reduce to zero, through the
allocation of a Subordination Increase Amount to the
payment of the related Class A Distribution Amount
pursuant to clause (iii) below, the Subordination
Deficiency Amount, if any, with respect to the other
Home Equity Loan Group; and
(C) third, any Net Monthly Excess Cashflow remaining
after the applications described in clauses (A) and
(B) above shall be paid to the Servicer to the extent
of any unreimbursed Delinquency Advances and
unreimbursed Servicing Advances;
(iii) third, following the making by the Trustee of all allocations,
transfers and disbursements described above under this
subsection (c) from amounts (including any related Insured
Payment) then on deposit in the Certificate Account with
respect to the related Home Equity Loan Group, the Trustee
shall distribute:
(A) with respect to the Fixed Rate Group, the Lower-Tier
Fixed Rate Group Distribution Amount (including the
proceeds of any Insured Payments made by the
Certificate Insurer) as a distribution on the related
Lower-Tier Interests to the Upper-Tier Fixed Rate
Group Distribution Account;
(B) from the Upper-Tier Fixed Rate Group Distribution
Account to the Owners of the Fixed Rate Certificates
and the Class A-10IO Certificates, the related
Current Interest thereon until the related Class A
Certificate Termination Date on a pro rata basis
based on Current Interest with respect to each such
Class of Fixed Rate Certificates and the Class A-10IO
Certificates without any priority among the related
Fixed Rate Certificates and the Class A-10I0
Certificates;
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(C) from Total Monthly Excess Spread, the Premium Amount
allocable to the Fixed Rate Group for such Payment
Date to the Certificate Insurer;
(D) from the Upper-Tier Fixed Rate Group Distribution
Account as a distribution of principal to the Owners
of the related Class of Fixed Rate Certificates, the
Fixed Rate Group Principal Distribution Amount shall
be distributed as follows:
(1) first, to the Owners of the Class A-1
Certificates the amount necessary to reduce the Class
A-1 Certificate Principal Balance to the Targeted
Amount, until the Class A-1 Certificate Termination
Date;
(2) second, until the Class A-1 Certificate
Termination Date, concurrently with the distribution
described in clause (1) above, the Fixed Rate Group
Principal Distribution Amount in excess of the
Targeted Amount to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Termination Date and, thereafter, to the Owners of
the Class A-2 Certificates, until the Class A-2
Certificate Termination Date (provided, however, that
if the Class A-2 Certificate Termination Date occurs
prior to the Class A-1 Certificate Termination Date,
the Fixed Rate Group Principal Distribution Amount
shall be distributed to the Owner of the Class A-1
Certificates until the Class A-1 Certificate
Termination Date);
(3) third, to the Owners of the Class A-3
Certificates until the Class A-3 Certificate
Termination Date;
(4) fourth, to the Owners of the Class A-4
Certificates until the Class A-4 Certificate
Termination Date;
(5) fifth, to the Owners of the Class A-5
Certificates until the Class A-5 Certificate
Termination Date;
(6) sixth, to the Owners of the Class A-6
Certificates until the Class A-6 Certificate
Termination Date; and
(7) seventh, to the Owners of the Class A-7
Certificates until the Class A-7 Certificate
Termination Date;
(8) eighth, to the Owners of the Class A-8
Certificates until the Class A-8 Certificate
Termination Date;
(E) with respect to the Adjustable Rate Group, the
Lower-Tier Adjustable Rate Group Distribution Amount
(including the proceeds of any Insured Payments made
by the Certificate Insurer) as a distribution of the
Lower-Tier A-9 Interest to the Upper-Tier Adjustable
Rate Group Distribution Account;
(F) from the Upper-Tier Adjustable Rate Group
Distribution Account to the Owners of the Class A-9
Certificates, the Class A-9 Current Interest; and
(G) from Total Monthly Excess Spread, the Premium Amount
allocable to the Adjustable Rate Group for such
Payment Date to the Certificate Insurer;
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(H) from the Upper-Tier Adjustable Rate Group
Distribution Account as a distribution of principal
to the Owners of the Class A-9 Certificates, the
Adjustable Rate Group Principal Distribution Amount;
(iv) fourth, following the making by the Trustee of all
allocations, transfers and disbursements described above under
this subsection (c), from amounts then on deposit in the
Certificate Account, the Trustee shall distribute in the
following order of priority;
(A) to the Trustee, the Trustee Fees then due (plus any
expenses owing to the Trustee pursuant to Section
3.02(e) of the Insurance Agreement);
(B) to the Owners of the Class B-IO Certificates, the
Class B-IO Distribution Amount; and
(C) to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for
such Payment Date.
(d) On any Payment Date during the continuance of any Certificate
Insurer Default:
(i) Any amounts otherwise payable to the Certificate
Insurer as Premium Amounts or Reimbursement Amounts
shall be retained in the Certificate Account as Total
Available Funds; and
(ii) If there is a Subordination Deficit, then the Class A
Principal Distribution Amount for such Payment Date
shall be distributed pro rata to the Owners of any
Outstanding Class A Certificates (other than the
Class A-1OIO Certificates) on such Payment Date.
(e) Notwithstanding clause (c)(iii) above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Class A Certificates on
account of principal pursuant to clauses (c)(iii)(D) and (c)(iii)(H) shall not
exceed the original Certificate Principal Balance of the related Certificates.
(f) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Certificate Account and shall distribute such Insured
Payments, or the proceeds thereof, (i) in the case of the Fixed Rate
Certificates and the Class A-10IO Certificates, through the Upper-Tier Fixed
Rate Group Distribution Account to the Owners of such Certificates and (ii) in
the case of the Class A-9 Certificates, through the Upper-Tier Adjustable Rate
Group Distribution Account, to the Owners of such Certificates.
(g) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with moneys received pursuant to the terms of the Certificate Insurance
Policy shall not be considered payment of such Certificates from the Trust and
shall not result in the payment of or the provision for the payment of the
principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner by
its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee or the Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on any
Class A Certificates to the Owners of such Certificates, the Certificate Insurer
will be fully subrogated to the rights of such Owners to receive such principal
and interest together with any interest thereon of the applicable Pass-Through
Rate from the Trust and (b) the
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Certificate Insurer shall be paid such principal and interest only from the
sources and in the manner provided herein for the payment of such principal and
interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it unless on such Payment Date the Owners of
the Class A Certificates shall also have received the full amount of the
Distribution Amount for such Payment Date.
The Trustee or Paying Agent shall (i) receive as attorney-in-fact of
each Owner of Class A Certificates any Insured Payment from the Certificate
Insurer and (ii) disburse the same to the Owners of the related Class A
Certificates as set forth in Section 7.03(c)(iii). Insured Payments disbursed by
the Trustee or Paying Agent from proceeds of the Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such payments discharge
the obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to Section 7.03(c)(i) hereof.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class B-IO Certificates and the Class R Certificates
to receive distributions in respect of the Class B-IO Certificates and the Class
R Certificates, and all ownership interests of the Owners of the Class B-IO
Certificates and the Class R Certificates in and to such distributions, shall be
subject and subordinate to the preferential rights of the holders of the Class A
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class B-IO Certificates
and the Class R Certificates in amounts deposited in the Accounts from time to
time shall not vest unless and until such amounts are distributed in respect of
the Class B-IO Certificates and the Class R Certificates in accordance with the
terms of this Agreement. Notwithstanding anything contained in this Agreement to
the contrary, the Owners of the Class B-IO Certificates and the Class R
Certificates shall not be required to refund any amount properly distributed on
the Class B-IO Certificates and the Class R Certificates pursuant to this
Section 7.03.
Section 7.04 Reserved.
---------
Section 7.05 Investment of Accounts.
-----------------------
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners shall be invested
and reinvested by the Trustee in the name of the Trustee for the benefit of the
Owners, as directed in writing by the Depositor, in one or more Eligible
Investments bearing interest or sold at a discount. The bank serving as Trustee
or any affiliate thereof may be the obligor on any investment which otherwise
qualifies as an Eligible Investment. No investment in any Account shall mature
later than the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
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(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest in money market funds described in Section
7.07(i); to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt, and any
loss resulting from such investments shall be charged to such Account, as
appropriate, subject to the requirement of Section 8.08(b) that the Servicer
contribute funds in an amount equal to such loss in the case of the Principal
and Interest Account.
Section 7.06 Payment of Trust Expenses.
--------------------------
(a) The Trustee shall make demand on the Seller to pay the amount of
the expenses of the Trust (other than payments of premiums to the Certificate
Insurer) (including Trustee's fees and expenses not covered by Section
7.03(c)(iv)(A)) and the Depositor shall promptly pay such expenses directly to
the Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Trustee.
Section 7.07 Eligible Investments.
---------------------
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FNMA senior debt obligations, but excluding any of such securities whose terms
do not provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) Federal Housing Administration debentures;
(c) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(d) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1+ or
better by Standard & Poor's and P-1 by Moody's;
(e) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(f) Investment agreements approved by the Certificate Insurer
provided:
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1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligation rated Aa2
or better by Moody's and AA or better by Standard & Poor's, or is the
lead bank of a parent bank holding company with an uninsured, unsecured
and unguaranteed senior debt obligation meeting such rating
requirements, and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other obligations
of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or
bank;
(g) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
Moody's and A-1+ or AA, respectively, or better by Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus
and undivided profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate Insurer, and
the Trustee shall have received written confirmation from such third
party that it holds such securities, free and clear of any lien, as
agent for the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
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(h) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's; and
(i) Investments in no load money market funds rated AAAm or AAAm-G by
Standard & Poor's and Aaa by Moody's;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
-------------------------------------
(a) On the Business Day after each Monthly Remittance Date occurring on
or prior to the later to occur of the Class A-8 Certificate Termination Date and
the Class A-9 Certificate Termination Date, the Trustee shall determine, no
later than 12:00 noon on such Determination Date, whether an Insured Payment
will be required to be made by the Certificate Insurer on the following Payment
Date. If the Trustee determines that an Insured Payment will be required to be
made by the Certificate Insurer on the following Payment Date then no later than
12:00 noon on the Business Day immediately preceding the related Payment Date
the Trustee shall furnish the Certificate Insurer and the Depositor with a
completed Notice in the form set forth as Exhibit J hereto. The Notice shall
specify the amount of Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and the
Trustee), the Trustee shall notify (subject to the terms of Section 10.03(j)
hereof, based solely on information provided to the Trustee by the Servicer) the
Depositor, the Seller, the Certificate Insurer and each Owner of the following
information with respect to the next Payment Date (which notification may be
given by facsimile or by telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate
Account;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes in the aggregate, on the next
Payment Date;
(3) The amount of any Subordination Increase Amount;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1),
(3) and (4) preceding to the allocation and distribution of the related
Class A Distribution Amounts on such Payment Date in accordance with
Section 7.03 hereof;
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(6) The Certificate Principal Balance of each Class of Class A
Certificates (other than the Class A-10IO Certificates), and the Class
A-10IO Notional Principal Amount, the aggregate amount of the principal
of each Class of Class A Certificates to be paid on such Payment Date
and the remaining Certificate Principal Balance of each Class of Class
A Certificates following any such payment;
(7) The amount, if any, of any Realized Losses for the related
Remittance Period; and
(8) The amount of any Subordination Reduction Amount.
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.
-----------------------------------------------------
(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Certificate Insurer, the Underwriters, Standard &
Poor's and Moody's:
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other recoveries of principal included therein, and any
Subordination Increase Amount with respect to the related Home Equity
Loan Group;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment Date
was less than the related Class A Distribution Amount on such Payment
Date, the related Carry Forward Amount and the allocation thereof to
the related Classes of the Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the
amounts distributed to the Owners of Class A Certificates on such
Payment Date;
(vi) the principal amount (or notional principal amount) of
each Class of Class A Certificate (based on a Certificate in the
original principal amount of $1,000) which will be Outstanding and the
aggregate Loan Balance of each Group, in each case after giving effect
to any payment of principal on such Payment Date;
(vii) the aggregate Loan Balance of all Home Equity Loans and
the aggregate Loan Balance of the Home Equity Loans in each Group, in
each case after giving effect to any payment of principal on such
Payment Date;
(viii) the Subordinated Amount and Subordination Deficit for
each Group, if any, remaining after giving effect to all distributions
and transfers on such Payment Date;
(ix) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
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(x) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Group;
(xi) the weighted average Coupon Rate of the Home Equity
Loans with respect to each Group;
(xii) such other information as the Certificate Insurer may
reasonably request with respect to Delinquent Home Equity Loans; and
(xiii) the largest Home Equity Loan balance outstanding in each
Group.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.01 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, each Owner, the Certificate Insurer, the Underwriters, Standard &
Poor's and Moody's, together with the information described in Subsection (a)
preceding, the following information with respect to each Home Equity Loan Group
which is hereby required to be prepared by the Servicer and furnished to the
Trustee for such purpose on or prior to the related Monthly Remittance Date:
(i) the related Class A Certificate Principal
Balance, as of such Payment Date;
(ii) the number and aggregate principal balances of
Home Equity Loans in each Group (a) 30-59 days Delinquent, (b) 60-89
days Delinquent and (c) 90 or more days Delinquent, as of the close of
business on the last Business Day of the calendar month next preceding
such Payment Date,
(iii) the numbers and aggregate Loan Balances of all
Home Equity Loans in each Group as of such Payment Date and the
percentage that each of the amounts represented by clauses (a), (b) and
(c) of paragraph (ii) above represent as a percentage of the respective
amounts in this paragraph (iii);
(iv) the status and the number and dollar amounts of
all Home Equity Loans in each Group in foreclosure proceedings as of
the close of business on the last Business Day of the calendar month
next preceding such Payment Date, separately stating, for this purpose,
all Home Equity Loans in each Group with respect to which foreclosure
proceedings were commenced in the immediately preceding calendar month;
(v) the number of Mortgagors and the Loan Balances of
Home Equity Loans in each Group of (a) the related Mortgages involved
in bankruptcy proceedings as of the close of business on the last
Business Day of the calendar month next preceding such Payment Date and
(b) Home Equity Loans in each Group that are "balloon" loans;
(vi) the existence and status of any REO Properties
in each Group, as of the close of business of the last Business Day of
the month next preceding the Payment Date;
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(vii) the book value of any REO Property in each
Group as of the close of business on the last Business Day of the
calendar month next preceding the Payment Date; and
(viii) the amount of Cumulative Realized Losses for
each Group.
(c) The Servicer shall furnish to the Trustee and to the Certificate
Insurer, during the term of this Agreement, such periodic, special, or other
reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee or the Certificate Insurer may reasonably require; provided, that the
Servicer shall be entitled to be reimbursed by the requesting party for the fees
and actual expenses associated with providing such reports, if such reports are
not generally produced in the ordinary course of business.
Section 7.10 Reports by Trustee.
-------------------
(a) The Trustee shall report to the Depositor, the Seller, the
Underwriters, the Certificate Insurer and each Owner, with respect to the amount
on deposit in the Certificate Account, the amount therein relating to each Group
and the identity of the investments included therein, as the Depositor, the
Seller or the Certificate Insurer may from time to time request. Without
limiting the generality of the foregoing, the Trustee shall, at the request of
the Depositor, the Seller or the Certificate Insurer transmit promptly to the
Depositor, the Seller and the Certificate Insurer copies of all accountings of
receipts in respect of the Home Equity Loans furnished to it by the Servicer and
shall notify the Seller and the Certificate Insurer if any Monthly Remittance
Amount has not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 Preference Payments
-------------------
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Certificate Insurer of (i) a certified copy of such order, (ii) an opinion of
counsel satisfactory to the Certificate Insurer that such order is final and not
subject to appeal, (iii) an assignment in such form as is reasonably required by
the Certificate Insurer, irrevocably assigning to the Certificate Insurer all
rights and claims of the Owners relating to or arising under the Class A
Certificates against the debtor which made such Preference Amount or otherwise
with respect to such Preference Amount and (iv) appropriate instruments to
effect the appointment of the Certificate Insurer as agent for such owner in any
legal proceeding related to such Preference Amount, such instruments being in a
form satisfactory to the Certificate Insurer, provided that if such documents
are received after 12:00 noon New York City time on such Business Day, they will
be deemed to be received on the following Business Day. Such payment shall be
disbursed to the receiver, conservator, debtor-in- possession or trustee in
bankruptcy named in the Order and not to the Trustee or any Owner of Class A
Certificate directly (unless an Owner of a Class A Certificate has previously
paid such amount to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order, in which case such payment shall be disbursed
to the Trustee for distribution to such Owner upon proof of such payment
reasonably satisfactory to the Certificate Insurer).
Each Owner of a Class A Certificate, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer may at any time during the continuation of any
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proceeding relating to a preference claim direct all matters relating to such
preference claim, including, without limitation, the direction of any appeal of
any order relating to such preference claim and the posting of any surety or
performance bond pending any such appeal. In addition and without limitation of
the foregoing, the Certificate Insurer shall be subrogated to the rights of the
Servicer, the Trustee and the Owner of each Class A Certificate in the conduct
of any such preference claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such preference claim.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
---------------------------
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the servicing standards set forth in the FNMA
Guide and shall have full power and authority, acting alone, to do or cause to
be done any and all things in connection with such servicing and administration
which it may deem necessary or desirable. It is the intent of the parties hereto
that the Servicer shall have all of the servicing obligations hereunder which a
lender would have under the FNMA Guide (as such provisions relate to second lien
mortgages); provided, however, that to the extent that such standards, such
obligations or the FNMA Guide are amended by FNMA after the date hereof and the
effect of such amendment would be to impose upon the Servicer any material
additional costs or other burdens relating to such servicing obligations, the
Servicer may, at its option, determine not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and provided further, however, that Section
8.14(a) shall constitute an authorization from the Trustee to the Servicer to
execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Home Equity Loan paid in full (or with respect to
which payment in full has been escrowed). The Trustee shall execute any
documentation furnished to it by the Servicer for recordation by the Servicer in
the appropriate jurisdictions as shall be necessary to effectuate the foregoing.
Subject to Sections 8.13 and 8.14, the Trustee shall execute any authorizations
and other documents as the Servicer or such Sub-Servicer shall reasonably
request that are furnished to the Trustee to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder.
The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
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Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
------------------------------------------------
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FNMA Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
---------------------------------------------
Sub-Servicers.
--------------
The Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution that is acceptable
to the Certificate Insurer and that is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub- Servicing
Agreement and (x) has (i) been designated an approved seller-servicer by FHLMC
or FNMA for second mortgage loans and (ii) has equity of at least $5,000,000, as
determined in accordance with generally accepted accounting principles or (y) is
a Servicer Affiliate. The Servicer shall give notice to the Trustee, the
Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Equity Loans when any Sub-Servicer has received
such payments. Each Sub-Servicer shall be required to service the Home Equity
Loans in accordance with this Agreement and any such Sub-Servicing Agreement
shall be consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that a successor Servicer shall have the
option to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns.
Section 8.04 Successor Sub-Servicers.
------------------------
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
---------------------------------------
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for
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indemnification of the Servicer by such Sub-Servicer and nothing contained in
such Sub-Servicing Agreement shall be deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee, the Certificate Insurer and each Owner if a claim is made by
a third party with respect to this Agreement, and the Servicer shall assume
(with the consent of the Trustee and the Certificate Insurer) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Certificate Insurer
and/or Owner in respect of such claim. The Trustee may, if necessary, reimburse
the Servicer from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence except when
the claim relates directly to the failure of the Servicer to service and
administer the Home Equity Loans in compliance with the terms of this Agreement.
The provisions of this Section 8.05 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer,
-------------------------------------------------
Trustee or the Owners.
----------------------
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee, the Certificate
Insurer and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
-------------------------------------------------------
Trustee.
-------
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on the part of the Trustee; provided, however,
that the successor Servicer may terminate the Sub-Servicer as provided in
Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 Principal and Interest Account.
-------------------------------
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: Manufacturers and Traders
Trust Company, as Trustee under the Pooling and Servicing Agreement dated as of
June 1, 1996. If the institution at any time holding the Principal and Interest
Account ceases to be eligible as a Designated Depository Institution hereunder,
then the Servicer shall, within 30 days, be required to name
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a successor institution meeting the requirements for a Designated Depository
Institution hereunder. If the Servicer fails to name such a successor
institution, then the Principal and Interest Account shall thenceforth be held
as a trust account with a qualifying Designated Depository Institution. The
Servicer shall notify the Trustee, the Certificate Insurer and the Owners if
there is a change in the name, account number or institution holding the
Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested (up to the limits insured by the FDIC) or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trustee for the benefit of the Owners. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Total Monthly Excess Spread included therein)
by the Servicer. Any investment losses on funds held in the Principal and
Interest Account shall be for the account of the Servicer and promptly upon the
realization of such loss shall be contributed by the Servicer to the Principal
and Interest Account. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal collections on the Home Equity
Loans received, and interest collections on the Home Equity Loans accrued after
the Cut-Off Date including any Prepayments and Net Liquidation Proceeds, other
recoveries or amounts related to the Home Equity Loans received by the Servicer
and any income from REO Properties, but net of (i) the Servicing Fee with
respect to each Home Equity Loan and other servicing compensation to the
Servicer as permitted by Section 8.15 hereof, (ii) principal collected and
interest accrued on any Home Equity Loan on or prior to the Cut-Off Date, (iii)
Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the
sum of (I) the Loan Balance of the related Home Equity Loan immediately prior to
liquidation, (II) accrued and unpaid interest on such Home Equity Loan (net of
the Servicing Fee) to the date of such liquidation, and (III) any Realized
Losses incurred during the related Remittance Period, (iv) the Retained Yield on
any Home Equity Loan actually received by the Servicer, (v) reimbursements for
Delinquency Advances and (vi) reimbursements for amounts deposited in the
Principal and Interest Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amount herein referred to as
"Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Principal and Interest Account, with respect to each
Home Equity Loan Group, only in the following priority and for the following
purposes:
(A) to withdraw interest paid with respect to any Home Equity
Loans that had accrued for periods prior to the Cut-Off
Date;
(B) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
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(C) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to
Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Remittance Date, deliver to the Trustee and the Certificate Insurer a monthly
servicing report, with respect to each Home Equity Loan Group, containing the
following information: principal and interest collected, scheduled interest
Liquidated Loans, summary and detailed delinquency reports, Liquidation Proceeds
and other similar information concerning the servicing of the Home Equity Loans.
In addition, the Servicer shall inform the Trustee and the Certificate Insurer
on each Monthly Remittance Date, with respect to each Home Equity Loan Group, of
the amounts of any Loan Purchase Prices or Substitution Amounts so remitted
during the related Remittance Period, and of the Loan Balance of the Home Equity
Loan having the largest Loan Balance as of such date.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee
to perform its reporting requirements under Section 7.09 and the Trustee shall
forward such information to the Underwriters within five Business Days of
receipt thereof.
Section 8.09 Delinquency Advances and Servicing Advances.
--------------------------------------------
(a) If the amount on deposit in the Certificate Account as of any
Monthly Remittance Date is less than the sum of (I) the Interest Remittance
Amount on such Monthly Remittance Date and (II) the Principal Remittance Amount
on such Monthly Remittance Date, the Servicer shall remit to the Trustee for
deposit into the Certificate Account a sufficient amount of its own funds to
make the total amount remitted to the Trustee equal to such sum. Such amounts of
the Servicer's own funds so deposited are "Delinquency Advances", including but
not limited to any amount advanced due to the invocation by a Mortgagor of the
relief provisions provided by the Soldiers' and Sailors' Civil Relief Act of
1940.
The Servicer shall be permitted to fund its payment of Delinquency
Advances on any Business Day and to reimburse itself for any Delinquency
Advances paid from the Servicer's own funds from collections on any Home Equity
Loan in the related Home Equity Loan Group deposited to the Principal and
Interest Account subsequent to the related Remittance Period and shall deposit
into the Principal and Interest Account with respect thereto (i) collections
from the Mortgagor whose Delinquency gave rise to the shortfall which resulted
in such Delinquency Advance and (ii) Net Liquidation Proceeds recovered on
account of the related Mortgage Loan to the extent of the amount of aggregate
Delinquency Advances related thereto. If not recovered from the related
Mortgagor or the related Net Liquidation Proceeds, the Servicer shall recover
Delinquency Advances pursuant to Section 7.03(c)(ii)(C).
Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
aggregate remaining Scheduled Payments due on the Home Equity Loans, the
Servicer shall not be required to make any future Delinquency Advances, and
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shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided in the prior paragraph. The Servicer shall give written
notice of such determination to the Trustee and the Certificate Insurer; and the
Trustee shall promptly furnish a copy of such notice to the Owners of the Class
R Certificates; provided, that the Servicer shall be entitled to recover any
unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds prior
to the payment of the Liquidation Proceeds to any other party to this Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a "Servicing
Advance". The Servicer may recover Servicing Advances (x) from the Mortgagors to
the extent permitted by the Home Equity Loans or, if not recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(c)(ii)(C). The Servicer shall be entitled to recover
the Servicing Advances from the aforesaid Liquidation Proceeds prior to the
payment of the Liquidation Proceeds to any other party to this Agreement. Except
as provided in the previous sentence, in no case may the Servicer recover
Servicing Advances from the principal and interest payments on any Home Equity
Loan or from any amounts relating to any other Home Equity Loan except as
provided in Section 7.03(c)(ii)(C).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
-------------------------------------------------------
(a) If a Prepayment of a Home Equity Loan occurs during any calendar
month or if the amount received with respect to a date-of-payment or simple
interest Home Equity Loan represents less than a full month's interest, any
difference between the interest collected from the Mortgagor and the full
month's interest at the Coupon Rate less the Retained Yield and the Servicing
Fee ("Compensating Interest") that is due shall be deposited by the Servicer
(but not in excess of the aggregate Servicing Fee for the related Remittance
Period) to the Principal and Interest Account on the next succeeding Monthly
Remittance Date and shall be included in the Monthly Remittance to be made
available to the Trustee on such Monthly Remittance Date.
(b) The Servicer, and in the absence of the exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, to purchase for its own account any Home Equity Loan which becomes
Delinquent, in whole or in part, as to four consecutive monthly installments or
any Home Equity Loan as to which enforcement proceedings have been brought by
the Servicer pursuant to Section 8.13; provided, however, that the Servicer or
the Certificate Insurer, as the case may be, may not purchase any such Home
Equity Loan unless the Servicer or the Certificate Insurer, as the case may be,
has delivered to the Trustee an opinion of counsel experienced in federal income
tax matters acceptable to the Certificate Insurer and the Trustee to the effect
that such a purchase would not constitute a Prohibited Transaction for the Trust
or otherwise subject the Trust to tax and would not jeopardize the status of
either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC. Any such Loan so
purchased shall be purchased by the Servicer or the Certificate Insurer as the
case may be on a Monthly Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the Principal
and Interest Account.
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(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 Maintenance of Insurance.
-------------------------
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage, and which provides for a recovery by
the Trust of insurance proceeds relating to such Home Equity Loan in an amount
not less than the least of (i) the outstanding principal balance of the Home
Equity Loan (plus the related senior lien loan, if any), (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis and (iii)
the full insurable value of the premises. The Servicer shall maintain the
insurance policies required hereunder in the name of the mortgagee, its
successors and assigns, as loss payee. The policies shall require the insurer to
provide the mortgagee with 30 days' notice prior to any cancellation or as
otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by Moody's and Standard & Poor's. Upon the request of the
Certificate Insurer or the Trustee, the Servicer will cause to be delivered to
such requesting Person a certified true copy of such blanket policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable carrier in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
------------------------------------------------
Agreements.
-----------
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel to the
foregoing effect shall conclusively establish the reasonableness of such belief.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such agreement, obtain the prior written
consent of the Certificate Insurer. The Home Equity Loan, as assumed, shall
conform in all respects to
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the requirements, representations and warranties of this Agreement. The Servicer
shall notify the Trustee that any such assumption or substitution agreement has
been completed by forwarding to the Trustee the original copy of such assumption
or substitution agreement (indicating the File to which it relates) which copy
shall be added by the Trustee to the related File and which shall, for all
purposes, be considered a part of such File to the same extent as all other
documents and instruments constituting a part thereof. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the required
monthly payment on the related Home Equity Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Home Equity Loan shall
not be changed nor shall any required monthly payments of principal or interest
be deferred or forgiven. Any fee collected by the Servicer or the Sub-Servicer
for consenting to any such conveyance or entering into an assumption or
substitution agreement shall be retained by or paid to the Servicer as
additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans; Inspection.
---------------------------------------------------------
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 23 months of its acquisition by the Trust, at
such price as the Servicer deems necessary to comply with this covenant unless
the Seller obtains for the Certificate Insurer, Trustee and the Servicer an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee, addressed to the Certificate Insurer, the
Trustee and the Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust or any REMIC therein as defined in
Section 860F of the Code or cause either the Lower-Tier REMIC or the Upper-Tier
REMIC to fail to qualify as a REMIC under the REMIC Provisions at any time that
any Certificates are outstanding. Notwithstanding the generality of the
foregoing provisions, the Servicer shall manage, conserve, protect and operate
each REO Property for the Owners solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the Lower-Tier REMIC or the Upper Tier
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Owners, rent the same, or any part thereof, as the Servicer deems to be in the
best interest of the Owners for the period prior to the sale of such REO
Property. The
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Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Property in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Property. The Servicer shall not take
any such action with respect to any Property known by the Servicer to contain
such wastes or substances or to be within one mile of the site of such wastes or
substances, without the prior written consent of the Certificate Insurer. With
respect to any Home Equity Loan secured by a mixed use Property, the Servicer
shall, prior to foreclosing upon or otherwise comparably effecting the ownership
in the name of the Servicer on behalf of the Trust, either (x) perform a "phase
one environmental study" of such Property or (y) repurchase such Property at the
Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the FNMA Guide,
when it has recovered, whether through trustee's sale, foreclosure sale or
otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan". After a Home Equity Loan has become a Liquidated Loan, the
Servicer shall promptly prepare and forward to the Depositor, the Trustee and
the Certificate Insurer a report detailing the Liquidation Proceeds received
from the Liquidated Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
Section 8.14 Trustee to Cooperate; Release of Files.
---------------------------------------
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee the FNMA "Request for Release of Documents" (FNMA Form 2009). Upon
receipt of such Request for Release of Documents, the Trustee shall promptly
release the related File, in trust, in its reasonable discretion to (i) the
Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of the
Trustee. Upon any such payment in full, or the receipt of such notification that
such funds have been placed in escrow, the Servicer is authorized to give, as
attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of the Servicer and
delivery to the Trustee of a receipt signed by an Authorized Officer of the
Servicer, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer; provided that there shall not be
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released and unreturned at any one time more than 10% of the entire number of
Files. Such receipt shall obligate the Servicer to return the File to the
Trustee when the need therefor by the Servicer no longer exists unless the Home
Equity Loan shall be liquidated, in which case, upon receipt of the FNMA
"Liquidation Schedule" relating to such liquidation, the receipt shall be
released by the Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to- income ratio after any release does not exceed
the maximum Loan-to-Value Ratio and debt-to-income ratio established in
accordance with the underwriting standards of the Home Equity Loans as set forth
in the Prospectus Supplement under "The Seller and Servicer - Credit and
Underwriting Guidelines" and any increase in the Loan-to-Value Ratio shall not
exceed 15% unless approved in writing by the Certificate Insurer; and (z) the
lien priority of the related Mortgage is not affected. Upon receipt by the
Trustee of an Officer's Certificate executed on behalf of the Servicer setting
forth the action proposed to be taken in respect of a particular Home Equity
Loan and certifying that the criteria set forth in the immediately preceding
sentence have been satisfied, the Trustee shall execute and deliver to the
Servicer the consent or partial release so requested by the Servicer. A proposed
form of consent or partial release, as the case may be, shall accompany any
Officer's Certificate delivered by the Servicer pursuant to this paragraph. The
Servicer shall notify the Certificate Insurer and the Rating Agencies if an
application is approved under clause (y) above without approval in writing by
the Certificate Insurer.
Section 8.15 Servicing Compensation.
-----------------------
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer.
Section 8.16 Annual Statement as to Compliance.
----------------------------------
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Certificate Insurer and the Rating Agencies, on or before March
31 of each year, commencing in 1997, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
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On or before June 30 of any year, commencing in 1997, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Depositor, which in no event shall exceed $1,000 per annum), shall cause to
be delivered to the Trustee, the Certificate Insurer and the Rating Agencies a
letter or letters of a firm of independent, nationally recognized certified
public accountants reasonably acceptable to the Certificate Insurer, dated as of
the date of the Servicer's fiscal audit for
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subsequent letters, stating that such firm has examined the Servicer's overall
servicing operations in accordance with the requirements of the Uniform Single
Audit Program for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
Section 8.18 Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Home Equity Loans.
----------------------
The Servicer shall provide to the Trustee, the Certificate Insurer, the
FDIC and the supervisory agents and examiners of each of the foregoing (which,
in the case of supervisory agents and examiners, may be required by applicable
state and federal regulations) access to the documentation regarding the Home
Equity Loans, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Servicer
designated by it.
Section 8.19 Assignment of Agreement.
------------------------
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Trustee and the Certificate Insurer, which consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.20(i) hereof for a successor servicer.
Section 8.20 Removal of Servicer; Resignation of Servicer.
---------------------------------------------
(a) The Certificate Insurer (or the Owners, with the consent of the
Certificate Insurer pursuant to Section 6.11 hereof) may remove the Servicer
upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or similar entity with
respect to the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business
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Day in the case of a delay in making a required payment to the Trustee
under Section 8.08(d)(ii)(a)) after the earlier of (a) actual knowledge
of an officer of the Servicer or (b) receipt of notice from the Trustee
or the Certificate Insurer of said failure; provided, however, that if
the Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the Owners or
the Certificate Insurer for a period of sixty (60) days after the
earlier of the Servicer's discovery or receipt of notice thereof;
provided, however, that if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (1) the Servicer is
the surviving entity of such combination or (2) the surviving entity is
a corporation or a state-chartered or national bank acceptable to the
Certificate Insurer (and the Owners of the Class R Certificates as
provided below but if such Owners and the Certificate Insurer cannot
agree, the Certificate Insurer shall control) organized and doing
business under the laws of any state or the United States.
(b) The Certificate Insurer may remove the Servicer upon the occurrence
of any of the following events:
(i) a Fixed Rate Group Available Funds Shortfall, or
an Adjustable Rate Group Available Funds Shortfall; provided, however,
that in the event that the Trustee shall become the Servicer hereunder,
if the Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that such event was due to circumstances beyond the
control of the Servicer, the right of removal hereunder shall not be
considered a default by the Servicer;
(ii) the failure by the Servicer to make any required
Servicing Advance when due;
(iii) the aggregate number of Home Equity Loans 90 or
more days Delinquent, in foreclosure or relating to REO Properties has
exceeded ten percent of the total number of Home Equity Loans remaining
in the Trust for four consecutive months; provided, however, that in
the event that the Trustee shall become the Servicer hereunder, if the
Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that such event was due to circumstances beyond the
control of the Servicer, the right of removal hereunder shall not be
considered a default by the Servicer; or
(iv) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating Interest when due;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate Insurer
and by registered or certified mail, notice of the occurrence of one or more of
the events set forth in clause (iii) above and the Servicer shall not have
remedied, or shall not have taken actions satisfactory to the Certificate
Insurer to remedy, such event or events within 60 days after the
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Servicer's receipt of such notice and (y) upon the Trustee's determination that
a required Delinquency Advance or payment of Compensating Interest has not been
made by the Servicer, the Trustee shall so notify an Authorized Officer of the
Servicer, the Owners, if any, and the Certificate Insurer as soon as is
reasonably practical.
(c) If any event described in subsection (b)(iii) above occurs and is
continuing, during the thirty (30) day period following receipt of notice, the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
shall cooperate with each other to determine if the occurrence of such event is
more likely than not the result of the acts or omissions of the Servicer or more
likely than not the result of events beyond the control of the Servicer. If the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
conclude that the event is the result of the latter, the Servicer may not be
terminated, unless and until some other event set forth in subsection (b) (i),
(ii) or (iv) has occurred and is continuing. If the Trustee, the Owners of the
Class R Certificates and the Certificate Insurer conclude that the event is the
result of the former, the Certificate Insurer may terminate the Servicer in
accordance with this Section and the Trustee shall act as successor Servicer,
provided that the Trustee shall have until the 30th day following the date of
receipt of notice of the event to become the successor Servicer or to appoint a
successor Servicer pursuant to this Section.
If the Trustee, the Owners of the Class R Certificates and the
Certificate Insurer cannot agree, and the basis for such disagreement is not
arbitrary or unreasonable, as to the cause of the event, the decision of the
Certificate Insurer shall control; provided, however, that if the Certificate
Insurer decides to terminate the Servicer, the Trustee shall be relieved of its
obligation to assume the servicing or to appoint a successor, which shall be the
exclusive obligation of the Certificate Insurer.
The Certificate Insurer agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of the Certificate Insurer from time to
time.
(d) If any event described in sections (a) and (b) above (other than
(b)(iii) for which Section 8.20(c) controls) occurs and is continuing, the
Certificate Insurer shall notify the Owners of the Class R Certificates in
writing if the Certificate Insurer intends to terminate the Servicer in its
capacity as Servicer under this Agreement. During the 30 day period following
receipt of such notice by the Owners of the Class R Certificates, such Owners
and the Certificate Insurer shall cooperate with each other to determine if the
occurrence of such event is more likely than not the result of the acts or
omissions of the Servicer or more likely than not the result of events beyond
the control of the Servicer. If the Owners of the Class R Certificates and the
Certificate Insurer conclude that the event is the result of the latter, the
Servicer may not be terminated. If the Owners of the Class R Certificates and
the Certificate Insurer conclude that the event is the result of the former, the
Certificate Insurer may terminate the Servicer in accordance with this Section
and the Trustee shall act as successor Servicer, provided that the Trustee shall
have until the 30th day following the date of receipt of notice of the event to
become the successor Servicer or to appoint a successor Servicer pursuant to
this Section. If the Owners of the Class R Certificates and the Certificate
Insurer cannot agree as to the cause of the event, the decision of the
Certificate Insurer shall control.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Trustee and the Certificate Insurer.
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(f) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(i) Upon removal or resignation of the Servicer, the Trustee (x) may
solicit bids for a successor servicer as described below, and (y) pending the
appointment of a successor servicer as a result of soliciting such bids, shall
serve as Servicer. The Trustee shall, if it is unable to obtain a qualifying bid
and is prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing and home finance institution,
bank or mortgage servicing institution which has been designated as an approved
seller-servicer by FNMA or FHLMC for first and second mortgage loans and having
equity of not less than $5,000,000 (or such lower level as may be acceptable to
the Certificate Insurer), as determined in accordance with generally accepted
accounting principles and acceptable to the Certificate Insurer and the Owners
of the Class R Certificates (provided that if the Certificate Insurer and such
Owners cannot agree as to the acceptability of such successor Servicer, the
decision of the Certificate Insurer shall control) as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. The compensation of any
successor Servicer (including, without limitation, the Trustee) so appointed
shall be the aggregate Servicing Fee, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15; provided, however, that if the Trustee
acts as successor Servicer then the Seller agrees to pay to the Trustee at such
time that the Trustee becomes such successor Servicer a set-up fee of
twenty-five dollars ($25.00) for each Home Equity Loan then included in the
Trust Estate. The Trustee shall be obligated to serve as successor Servicer
whether or not the fee described in the preceding sentence is paid by the
Seller, but shall in any event be entitled to receive, and to enforce payment
of, such fee from the Seller.
(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain servicing. The Trustee shall deduct from any sum received by
the Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust from the Servicer shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the successor
Servicer.
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(k) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Servicer, as applicable, all amounts
which then have been or should have been deposited in the Principal and Interest
Account by the Servicer or which are thereafter received with respect to the
Home Equity Loans. Neither the Trustee nor any other successor Servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer. If the Servicer resigns or is replaced hereunder, the Seller
agrees to reimburse the Trust, the Owners and the Certificate Insurer for the
costs and expenses associated with the transfer of servicing to the replacement
Servicer, but subject to a maximum reimbursement to all such parties in the
amount of twenty-five dollars ($25.00) for each Home Equity Loan then included
in the Trust Estate.
(l) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately make all Delinquency Advances
and deposit them to the Principal and Interest Account which the Servicer has
theretofore failed to remit with respect to the Home Equity Loans; provided,
however, that if the Trustee is acting as successor Servicer, the Trustee shall
only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (l)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the Home Equity Loans.
(m) The Servicer which is being removed or is resigning shall give
notice to the Certificate Insurer, to the Mortgagors, to Moody's and to Standard
& Poor's of the transfer of the servicing to the successor Servicer.
(n) The Trustee shall give notice to the Certificate Insurer, the
Owners, the Trustee, the Seller, Moody's and Standard & Poor's of the occurrence
of any event described in paragraphs (a) or (b) above of which the Trustee is
aware.
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
--------------------------------------------------------
Insurance.
----------
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer or any agents thereof may inspect
the Servicer's servicing operations and discuss the servicing operations of the
Servicer during the Servicer's normal business hours with any of its officers or
directors; provided, however, that the costs and expenses incurred by the
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer;
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(b) The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FNMA Guide or any successor provision thereof; provided, however, that if
the Trustee shall become the Servicer, any customary insurance coverage that the
Trustee maintains shall be deemed sufficient hereunder; provided, further, that
in the event that the fidelity bond or the errors and omissions coverage is no
longer in effect, the Trustee shall promptly give such notice to the Certificate
Insurer and the Owners. Upon the request of the Trustee or the Certificate
Insurer, the Servicer shall cause to be delivered to such requesting Person a
certified true copy of such fidelity bond or errors and omission policy.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
---------------------
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance Policy,
of all amounts held by the Trustee and required to be paid to such Owners
pursuant to this Agreement upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate, (c) at any time
when a Qualified Liquidation of both Home Equity Loan Groups included within the
Trust is effected as described below and (d) the final payment to the
Certificate Insurer of all amounts then owing to it. To effect a termination of
this Agreement pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of the Lower-Tier
REMIC and the Upper-Tier REMIC to adopt a plan of complete liquidation for each
of the Home Equity Loan Groups, as contemplated by Section 860F(a)(4) of the
Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee either shall sell the Home Equity Loans and distribute the
proceeds of the liquidation of the Trust Estate, or shall distribute equitably
in kind all of the assets of the Trust Estate to the remaining Owners of the
Certificates each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of twenty-one
(21) years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of Saint James,
living on the date hereof. The Trustee shall give written notice of termination
of the Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R
--------------------------------------------
Certificates.
-------------
(a) On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the Class R
Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Adjusted
Pass-Through Rate, plus all accrued and unpaid Servicing Fees plus the aggregate
amount of any unreimbursed Delinquency Advances and Servicing Advances and any
Delinquency Advances which the Servicer has theretofore failed to remit. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
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(b) In connection with any such purchase, such Owners of the Class R
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to the Lower-Tier REMIC and the Upper-Tier REMIC, a plan of complete
liquidation for all of the Home Equity Loan Groups as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee and the Certificate
Insurer an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that such
purchase and liquidations constitutes, as to the Lower-Tier REMIC and the
Upper-Tier REMIC, a Qualified Liquidation. In addition, such Owners of the Class
R Certificates shall provide to the Trustee and the Certificate Insurer an
opinion of counsel acceptable to the Trustee and the Certificate Insurer to the
effect that such purchase and liquidation does not constitute a preference
payment pursuant to the United States Bankruptcy Code.
(c) The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R Certificates may be exercised by
the Certificate Insurer if (i) not exercised by such owners and (ii) the
Servicer as of the Closing Date is no longer the Servicer hereunder.
(d) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or the
Certificate Insurer, as the case may be, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
--------------------------------------
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal or, if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
does not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final Determination"), at any time on or after the date which is 30
calendar days following such Final Determination (i) the Certificate Insurer or
the Owners of a majority in Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate Insurer may
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code and (ii) the
Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise then remaining in the Trust Estate at a price equal
to the sum of (x) the greater of (i) 100% of the aggregate Loan Balances of the
Home Equity Loans as of the day of purchase minus amounts remitted from the
Principal and Interest Account representing collections of principal on the Home
Equity Loans during the current Remittance Period, and (ii) the fair market
value of such Home Equity Loans (disregarding accrued interest), (y) one month's
interest on such amount computed at the Adjusted Pass-Through Rate and (z) the
aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances
and any Delinquency Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount at the Adjusted
Pass-Through Rate, (b) the aggregate amount of any unreimbursed Delinquency
Advances
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and Servicing Advances and (c) any Delinquency Advances which the Servicer has
theretofore failed to remit. If, during the Purchase Option Period, the Owners
of the Class R Certificates have not exercised the option described in the
immediately preceding paragraph, then upon the expiration of the Purchase Option
Period (i) in the event that the Certificate Insurer or the Owners of the Class
A Certificates with the consent of the Certificate Insurer have given the
Trustee the direction described in clause (a)(i) above, the Trustee shall sell
the Home Equity Loans and distribute the proceeds of the liquidation of the
Trust Estate, each in accordance with the plan of complete liquidation, such
that, if so directed, the liquidation of the Trust Estate, the distribution of
the proceeds of the liquidation and the termination of this Agreement occur no
later than the close of the 60th day, or such later day as the Certificate
Insurer or the Owners of the Class A Certificates with the consent of the
Certificate Insurer shall permit or direct in writing, after the expiration of
the Purchase Option Period and (ii) in the event that the Certificate Insurer
has given the Trustee notice of the Certificate Insurer's determination to
purchase the Trust Estate described in clause (a)(ii) above the Certificate
Insurer shall, within 60 days, purchase all (but not fewer than all) Home Equity
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise then remaining in the Trust Estate. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount computed at the
Adjusted Pass-Through Rate, (b) the aggregate amount of unreimbursed Delinquency
Advances and (c) any Delinquency Advances which the Servicer has theretofore
failed to remit. In connection with such purchase, the Servicer shall remit to
the Trustee all amounts then on deposit in the Principal and Interest Account
for deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase. The foregoing opinion shall be
deemed satisfactory unless the Certificate Insurer gives the Owners of a
majority of the Percentage Interests of the Class R Certificates notice that
such opinion is not satisfactory within thirty days after receipt of such
opinion. In connection with any such purchase, such Owners shall direct the
Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
------------------------
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer from
the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
------------------------------------
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished pursuant to
and conforming to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicer, the Servicer and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer, have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or
of the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or
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Classes and the Certificate Insurer relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement relating to
such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) Neither the Servicer, the Seller nor the Trustee knowingly shall
take any action that would cause the Class A Certificates to fail to qualify as
"mortgage related securities" within the meaning of the Securities Exchange Act
of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
-----------------------------
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Seller, the
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Certificate Insurer, or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Class A
Certificates then Outstanding, or, if there are no Class A Certificates
then Outstanding, by such Percentage Interests represented by the Class
R Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give to the Certificate Insurer, Moody's and
Standard & Poor's notice of the occurrence of any such event of which the
Depositor is aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Subordinate Certificates, may, whether or not the Trustee resigns pursuant to
Section 10.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
------------------------------
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Certificate Insurer, or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
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(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodians;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and to make
various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good faith
on any such information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the Trustee has actual
knowledge, or is advised by any Owner of a Certificate (either in writing or
orally with prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
---------------------------------------------------------
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
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Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, the Seller or the Servicer in
respect of the Home Equity Loans or deposited into or withdrawn from the
Principal and Interest Account or the Certificate Account by the Depositor, the
Servicer or the Seller, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 May Hold Certificates.
----------------------
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
--------------------
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
-------------------------------------------------
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c)(iv)(A) and Section 7.06
hereof. The Trustee shall have no lien on the Trust Estate for the payment of
such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
----------------------------------------
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A- from Standard & Poor's (or such lower rating as may be acceptable to
Standard & Poor's) and A2 by Moody's (or such lower rating as may be acceptable
to Moody's). If such Trustee publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall, upon the request of the Seller
with the consent of the Certificate Insurer (which consent shall not be
unreasonably withheld) or of the Certificate Insurer, resign immediately in the
manner and with the effect hereinafter specified in this Article X.
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Section 10.09 Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure to receive the
Trustee Fee. A copy of such notice shall be sent by the resigning Trustee to the
Rating Agencies. Upon receiving notice of resignation, the Depositor shall
promptly appoint a successor trustee or trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Seller, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees. If no successor trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A Certificates with the consent of the Certificate Insurer, or, if
there are no Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, may at any time
remove the Trustee and appoint a successor trustee acceptable to the Certificate
Insurer by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor, to the Servicer and to the Certificate Insurer,
copies of the record of the act taken by the Owners, as provided for in Section
11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller shall promptly appoint a successor trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
trustee and supersede the successor trustee appointed by the Depositor. If no
successor trustee shall have been so appointed by the Depositor or the
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Owners and shall have accepted appointment in the manner hereinafter provided,
any Owner may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
-----------------------------------------------
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of the Trustee.
------------------------
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
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Section 10.12 Reporting; Withholding.
-----------------------
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with respect to
such allocation of expenses. The Trustee shall, upon request of the Depositor,
collect any forms or reports from the Owners determined by the Depositor to be
required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
-------------------------
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Insurer, the Depositor, the Seller, the Servicer or
any Owner for any action taken or for refraining from the taking of any action
in good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Trustee, its directors,
officers, employees or agents or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or willful misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Subject to the foregoing
sentence, the Trustee shall not be liable for losses on investments of amounts
in the Certificate Account (except for any losses on obligations on which the
bank serving as Trustee is the obligor). In addition, the Depositor, the Seller
and Servicer covenant and agree to indemnify the Trustee, and when the Trustee
is acting as Servicer, the Servicer, from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Depositor shall pay all amounts
not otherwise paid pursuant to Sections 2.05 and 7.06 hereof. The Trustee and
any director, officer, employee or agent of the Trustee may rely and shall be
protected in acting or refraining from acting in good faith on any certificate,
notice or other document of any kind prima facie properly executed and submitted
by the Authorized Officer of any Person respecting any matters arising
hereunder. The provisions of this Section 10.13 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
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Section 10.14 Appointment of Co-Trustee or Separate Trustee.
----------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
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
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in respect of this Agreement on its behalf and in its name. If any separate
Trustee or co-Trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
The Servicer and the Trustee hereby appoint Meridian Bank, New Jersey
(the "Initial Co- Trustee") as co-trustee with respect to the Mortgage Loans
secured by Mortgaged Properties situated in New Jersey and any other part of the
Trust Estate or property securing the same that at any time may be situated in
New Jersey.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
-------------------------------------
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, the Seller, the Certificate Insurer
or the Owners, as the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
-------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matters upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, the Seller or the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Depositor, the Seller or the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such
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matters are erroneous. Any opinion of counsel may be based on the written
opinion of other counsel, in which event such opinion of counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
-------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Certificate Insurer, the Depositor or the Seller shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
-------------------------------------------------
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
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required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee and Seller.
----------------------------
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
-----------------------
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
-------------
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
----------------------
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10 Legal Holidays.
---------------
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not
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be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made or mailed on the nominal date of any such
Monthly Remittance Date, such Payment Date, or such other date for the payment
of any distribution to any Owner or the mailing of such notice, as the case may
be, and no interest shall accrue for the period from and after any such nominal
date, provided such payment is made in full on such next succeeding Business
Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
------------------------------------------
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, the Seller and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful attorney
and duly authorized agent for acceptance of service of legal process with
respect to any action, suit or proceeding set forth in paragraph (b) hereof.
Each of the Seller and the Servicer agrees that service of such process upon the
Trustee shall constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Servicer or the Certificate Insurer or any
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
-------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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Section 11.13 Usury.
------
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
----------
(a) The Trustee, the Depositor, the Seller and the Servicer may, at any
time and from time to time, and without notice to or the consent of the Owners
but with the consent of the Certificate Insurer, amend this Agreement, subject
to the provisions of Section 11.16 and 11.17 and the Trustee shall consent to
such amendment, for the purpose of (i) curing any ambiguity, correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or adding provisions hereto which are not inconsistent with
the provisions hereof; (ii) upon receipt of an opinion of counsel experienced in
federal income tax matters to the effect that no entity-level tax will be
imposed on the Trust or upon the transferor of a Class R Certificate as a result
of the ownership of any Class R Certificate by a Disqualified Organization,
removing the restriction on transfer set forth in Section 5.08(b) hereof or
(iii) complying with the requirements of the Code and the regulations proposed
or promulgated thereunder including any amendments necessary to maintain REMIC
status or (iv) for any other purpose, provided that in the case of this clause
(iv) the Seller delivers (A) an opinion of counsel acceptable to the Trustee
that such amendment will not adversely affect in any material respect the
interest of the Owners and (B) such amendment will not result in a withdrawal or
reduction of the rating of the Class A Certificates without regard to the
Certificate Insurance Policy. Notwithstanding anything to the contrary herein,
no such amendment shall (a) change in any manner the amount of, or change the
timing of, payments which are required to be distributed to any Owner without
the consent of the Owner of such Certificate, or (b) which affects in any the
manner the terms or provisions of the Certificate Insurance Policy.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Owner in the manner set forth in Section 11.05, and to the Rating Agencies.
(c) The Certificate Insurer, the Owners and the Rating Agencies shall
be provided with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
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Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
---------------------------------------------------
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
-------------
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall each constitute, and that the affairs of the Lower-Tier
REMIC and the Upper-Tier REMIC shall each be conducted so as to qualify it as a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
ContiFunding Corporation or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as "tax matters person" (as
defined in the REMIC Provisions) for the Trust and in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely manner, annual tax
returns and any other tax return required to be filed by the Lower-Tier REMIC
and the Upper-Tier REMIC established hereunder using a calendar year as the
taxable year for the Lower-Tier REMIC and the Upper-Tier REMIC established
hereunder; (ii) in the related first such tax return, make (or cause to be made)
an election satisfying the requirements of the REMIC Provisions, on behalf of
the Lower-Tier REMIC and the Upper-Tier REMIC, for it to be treated as a REMIC;
(iii) prepare and forward, or cause to be prepared and forwarded, to the Owners
all information, reports or tax returns
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required with respect to the Lower-Tier REMIC and the Upper-Tier REMIC as, when
and in the form required to be provided to the Owners, and to the Internal
Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of either the Lower-Tier REMIC or the Upper-Tier REMIC, except
as provided under this Agreement; (v) represent the Trust of the Lower-Tier
REMIC or the Upper-Tier REMIC in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to a taxable year of the Trust or the
Lower-Tier REMIC or the Upper-Tier REMIC, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC, and
otherwise act on behalf of the Trust or any REMIC therein in relation to any tax
matter involving the Trust or any REMIC therein; (vi) comply with all statutory
or regulatory requirements with regard to its conduct of activities pursuant to
the foregoing clauses of this Section 11.16, including, without limitation,
providing all notices and other information to the Internal Revenue Service and
Owners of Class R Certificates required of a "tax matters person" pursuant to
subtitle F of the Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax imposed (A) on
transferors of residual interests to certain Disqualified Organizations or (B)
on pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of ContiFunding Corporation or such other designated
Tax Matters Person pursuant to this Section 11.16 shall survive the termination
or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and the Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of "REMIC" status for the
Lower-Tier REMIC or the Upper-Tier REMIC, (ii) not to engage in any "prohibited
transaction", as such term is defined in Section 860F(a)(2) of the Code, (iii)
not to engage in any other action which may result in the imposition on the
Trust of any other taxes under the Code and (iv) to cause the Servicer not to
take or engage in any such action, to the extent the Seller is aware of any such
proposed action by the Servicer.
(c) The Lower-Tier REMIC and the Upper-Tier REMIC shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that such transaction does not result in a tax imposed on the Trustee or
cause a termination of REMIC status for the Lower-Tier REMIC or the Upper-Tier
REMIC; provided, however, that such transaction is otherwise permitted under
this Agreement.
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(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC
as a result of their negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
------------------------------------------------------
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer to the effect
that such transaction does not result in a tax imposed on the Trust or the
Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination of REMIC status
for the Lower- Tier REMIC or the Upper-Tier REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of the Lower-Tier REMIC and the Upper-Tier REMIC and use such
income, to the extent necessary, to pay such tax; provided that, to the extent
that any such income is paid to the Internal Revenue Service, the Trustee shall
retain an equal amount from future amounts otherwise distributable to the Owners
of Class R Certificates and shall distribute such retained amounts to the Owners
of Class A Certificates to the extent they are fully reimbursed and then to the
Owners of the Class R Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
----------------------------------
A Tax Matters Person will be appointed for the Lower-Tier REMIC and the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC and the
Upper-Tier REMIC shall be ContiFunding Corporation as long as it owns a Class R
Certificate. If ContiFunding Corporation does not own a Class R Certificate, the
Tax Matters Person may be any other entity that owns a Class R Certificate and
accepts a designation hereunder as Tax Matters person by delivering an affidavit
in the form of Exhibit I. ContiFunding Corporation shall notify the Trustee in
writing of the name and address of another person who accepts a designation as
Tax Matters Person hereunder.
Section 11.19 The Certificate Insurer.
------------------------
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. At such time as the Class A Certificates are no
longer Outstanding hereunder, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Reserved.
---------
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Section 11.21 Third Party Rights.
-------------------
The Trustee, the Seller and the Owners agree that the Certificate
Insurer shall be deemed a third-party beneficiary of this Agreement as if it
were a party hereto.
Section 11.22 Notices.
--------
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee:
----------- Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-5589
Fax: (716) 842-4474
Attention: Corporate Trust Administration
The Depositor:
------------- ContiSecurities Asset Funding Corp.
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel
Tel: (212) 207-2822
Fax: (212) 207-5251
The Seller:
----------- ContiMortgage Corporation
500 Enterprise Road
Horsham, PA 19044
Tel: (215) 957-3700
Fax: (215) 957-2897
The Servicer:
------------- ContiMortgage Corporation
500 Enterprise Road
Horsham, PA 19044
Tel: (215) 957-3700
Fax: (215) 957-2897
The Certificate
---------------
Insurer:
------- MBIA Insurance Corporation
113 King St.
Armonk, NY 10504
Attention: Insured Portfolio
Management - SF (ContiMortgage 1996-2)
Tel: (914) 765-3799
Fax: (914) 273-4545
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Moody's:
-------- Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Standard & Poor's:
------------------ Standard & Poor's, a Division of the McGraw
Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 412-0224
Underwriters:
------------- CS First Boston Corporation
Park Avenue Plaza
55 West 52nd Street
New York, NY 10055
Tel: (212) 909-2000
Fax: (212) 355-6721
ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
Lehman Brothers Inc.
Three World Financial Center
New York, NY 10285-10000
Tel: (212) 510-3000
Fax: (212) 656-0498
Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Merrill Lynch Pierce, Fenner & Smith Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Owners: As set forth in the Register.
-------
123
<PAGE>
Others: Any notice to the Depositor, Seller or
------- Servicer shall also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
END OF ARTICLE XI
124
<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 thereunto duly authorized, all as of the day and year first above
written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By:
----------------------------------
Title:
-------------------------------
By:
----------------------------------
Title:
-------------------------------
CONTIMORTGAGE CORPORATION, as Seller
By:
----------------------------------
Title:
-------------------------------
By:
----------------------------------
Title:
-------------------------------
CONTIMORTGAGE CORPORATION, as Servicer
By:
----------------------------------
Title:
-------------------------------
By:
----------------------------------
Title:
-------------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
----------------------------------
Title:
-------------------------------
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of _____________, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of ContiSecurities Asset Funding Corp., a
Delaware Corporation; and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
---------------------
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of _____________, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of ContiMortgage Corporation, a Delaware
Corporation; and that he signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-----------------------
Notary Public
<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of _____________, 1996, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________,
____________________, _______________________; that he is the Chief Operating
Officer of ContiMortgage Corporation, a Delaware corporation; and that he signed
his name thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
------------------------
Notary Public
<PAGE>
)
): ss.:
)
On the ___ day of _______________, 1996, before me personally came
______________, to me known, who, being by me duly sworn did depose and say that
he/she resides at ____________________; that he/she is a Assistant Vice
President of Manufacturers and Traders Trust Company, the New York banking
corporation described in and that executed the above instrument as Trustee; and
that he/she signed his/her name thereto by order of the Board of Directors of
said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
--------------------
Notary Public
<PAGE>
SCHEDULE I-A
SCHEDULE OF FIXED RATE GROUP HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE I-B
SCHEDULE OF ADJUSTABLE RATE GROUP HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE II
HOME EQUITY LOANS WITH RETAINED YIELD
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE III
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE IV
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE V
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE VI
TARGETED BALANCE SCHEDULE
Date Targeted Amount
---- ---------------
June 1, 1996 $29,000,000.00
July 15, 1996 26,478,190.69
August 15, 1996 23,966,484.30
September 15, 1996 21,464,825.48
October 15, 1996 18,973,159.11
November 15, 1996 16,491,430.30
December 15, 1996 14,019,584.35
January 15, 1997 11,557,566.83
February 15, 1997 9,105,323.50
March 15, 1997 6,662,800.34
April 15, 1997 4,229,943.56
May 15, 1997 1,806,699.58
June 15, 1997 0
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(5.90% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-1-1 21075WCM5
-----------------
CUSIP
$29,000,000 June 11, 1996 September 15, 1997
- ----------------- ------------------------ ------------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Date of Authentication
----------
A-1-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans (other than the Retained
Yield indicated in Schedule II to the Pooling and Servicing Agreement (as
defined below) and any principal and interest payments received thereon prior to
the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller has caused to be delivered to the Depositor and the Depositor
has caused to be delivered to the Trustee which the Depositor has caused to be
delivered to the Seller and which the Seller has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Seller's interest in any Property which secured a
Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account and the Upper-Tier Fixed Rate Group Distribution
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); (c) the
Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance Policy
issued thereunder; and (e) proceeds of all the foregoing (including, but not by
way of limitation, all proceeds of any mortgage insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the Certificates
as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-1-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1996-2, Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling and
Servicing Agreement") by and among ContiMortgage Corporation, in its capacity as
the Seller (the "Seller") and as the Servicer (the "Servicer"), ContiSecurities
Asset Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan Trust
1996-2 Home Equity Loan Pass-Through Certificates, Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificates"), Class A-9 (the "Class A-9 Certificates"), Class
A-10IO (the "Class A-10IO Certificates"), Class B-IO (the "Class B-IO
Certificates") and Class R (Residual Interest) (the "Class R Certificates"). The
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class A-4 Certificates, the Class A-5 Certificates, the Class A-6
Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the Class
A-9 Certificates and the Class A-10IO Certificates shall be together referred to
as the "Class A Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing July 15, 1996, the Owners of the Class A-1 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-1
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-1 Certificates. The Percentage Interest of each
Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Class A-1
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payment" means with respect to either Home Equity Loan Group and as to any
Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-1-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy,
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-1
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-1 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-1 Certificates and shall receive all future distributions of the Class
A-1 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to the Owners
of all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan in the Trust Estate or
(b) the disposition of all property acquired in respect of any Home
A-1-4
<PAGE>
>
Equity Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Trust Estate is effected as described below. To effect a
termination of the Pooling and Servicing Agreement pursuant to clause (ii)
above, the Owners of all Certificates then Outstanding shall unanimously direct
the Trustee on behalf of the Trust to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall either
sell the Home Equity Loans and distribute the proceeds of the liquidation of the
Trust, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
A-1-5
<PAGE>
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP., as Depositor
By:
----------------------
Name:
--------------------
Title:
-------------------
By:
----------------------
Name:
--------------------
Title:
-------------------
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(6.50% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-2-1 21075WCN3
---------------
CUSIP
$118,000,000 jJune 11, 19 June 15, 2010
- ---------------------- -------------------- ------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Date of Authentication
-----------
A-2-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-2 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-2-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-2 (the "Class A-2 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4
(the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class
A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"),
Class A-8 (the "Class A-8 Certificates"), Class A-9 (the "Class A-9
Certificates"), Class A-10IO (the "Class A-10IO Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates and the Class A-10IO Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-2
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-2 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-2 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-2 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-2 Certificates. The Percentage
Interest of each Class A-2 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-2 Certificate on the Startup Day by the aggregate Class
A-2 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-2-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-2 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-2 Certificates and shall receive all future distributions of the Class
A-2 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last
A-2-4
<PAGE>
Home Equity Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate or
(ii) at any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing
A-2-5
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-2
Certificates are exchangeable for new Class A-2 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
----------------------
Name:
---------------------
Title:
--------------------
By:
----------------------
Name:
---------------------
Title:
--------------------
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(6.70% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-3-1 21075WCP8
------------
CUSIP
$54,000,000 June 11, 1996 April 15, 2011
- ---------------------- ------------------------ ------------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
- -------------------------------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date of Authentication:
---------------
A-3-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-3 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-3-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-3 (the "Class A-3 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-4
(the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class
A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"),
Class A-8 (the "Class A-8 Certificates"), Class A-9 (the "Class A-9
Certificates"), Class A-10IO (the "Class A-10IO Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates and the Class A-10IO Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-3
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-3 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-3 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-3 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-3 Certificates. The Percentage
Interest of each Class A-3 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-3 Certificate on the Startup Day by the aggregate Class
A-3 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-3-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-3 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-3
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-3 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-3 Certificates and shall receive all future distributions of the Class
A-3 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last
A-3-4
<PAGE>
Home Equity Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate or
(ii) at any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing
A-3-5
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-3
Certificates are exchangeable for new Class A-3 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-3-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
------------------------
Name:
----------------------
Title:
---------------------
By:
-----------------------
Name:
----------------------
Title:
---------------------
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(6.85% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-4-1 21075WCQ6
--------------
CUSIP
$82,500,000 June 11, 1996 April 15, 2011
- ----------------------- ----------------------- ---------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
-------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Date of Authentication:
-----------
A-4-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-4 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-4-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-4 (the "Class A-4 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class
A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"),
Class A-8 (the "Class A-8 Certificates"), Class A-9 (the "Class A-9
Certificates") Class A-10IO (the "Class A-10IO Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates and the Class A-10IO Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-4
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-4 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-4 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-4 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-4 Certificates. The Percentage
Interest of each Class A-4 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-4 Certificate on the Startup Day by the aggregate Class
A-4 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-4-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-4 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-4
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-4 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-4 Certificates and shall receive all future distributions of the Class
A-4 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last
A-4-4
<PAGE>
Home Equity Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate or
(ii) at any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing
A-4-5
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-4
Certificates are exchangeable for new Class A-4 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-4-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
------------------------
Name:
----------------------
Title:
---------------------
By:
------------------------
Name:
----------------------
Title:
---------------------
A-4-7
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(7.05% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-5-1 21075WCR4
------------
CUSIP
$21,500,000 June 11, 1996 April 15, 2011
- -------------------- ----------------------- --------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date of Authentication:
---------------
A-5-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-5 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-5-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1996-2, Home Equity Loan
Pass-Through Certificates, Class A-5 (the "Class A-5 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling and
Servicing Agreement") by and among ContiMortgage Corporation, in its capacity as
the Seller (the "Seller") and as the Servicer (the "Servicer"), ContiSecurities
Asset Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan Trust
1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificates"), Class A-9 (the "Class A-9 Certificates"), Class
A-10IO (the "Class A-10IO Certificates"), Class B-IO (the "Class B-IO
Certificates") and Class R (Residual Interest) (the "Class R Certificates"). The
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class A-4 Certificates, the Class A-5 Certificates, the Class A-6
Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the Class
A-9 Certificates and the Class A-10IO Certificates shall be together referred to
as the "Class A Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-5
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-5 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-5 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-5 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-5 Certificates. The Percentage
Interest of each Class A-5 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-5 Certificate on the Startup Day by the aggregate Class
A-5 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-5-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-5 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-5
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-5
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-5 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-5 Certificates and shall receive all future distributions of the Class
A-5 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last
A-5-4
<PAGE>
Home Equity Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate or
(ii) at any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing
A-5-5
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-5
Certificates are exchangeable for new Class A-5 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-5-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
----------------------
Name:
---------------------
Title:
--------------------
By:
-----------------------
Name:
---------------------
Title:
--------------------
A-5-7
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(7.25% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-6-1 21075WCS2
-------------
CUSIP
$62,500,000 June 11, 1996 June 15, 2011
- ----------------------- ------------------------ ------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
-------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date of Authentication:
-------------
A-6-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-6-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-6 (the "Class A-6 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-7 (the "Class A-7 Certificates"),
Class A-8 (the "Class A-8 Certificates"), Class A-9 (the "Class A-9
Certificates"), Class A-10IO (the "Class A-10IO Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates and the Class A-10IO Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-6
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-6 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-6 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-6 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-6 Certificates. The Percentage
Interest of each Class A-6 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-6 Certificate on the Startup Day by the aggregate Class
A-6 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-6-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-6 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-6
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-6 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-6 Certificates and shall receive all future distributions of the Class
A-6 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last
A-6-4
<PAGE>
Home Equity Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate or
(ii) at any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing
A-6-5
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-6
Certificates are exchangeable for new Class A-6 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-6-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
-----------------------
Name:
---------------------
Title:
--------------------
By:
----------------------
Name:
---------------------
Title:
--------------------
A-6-7
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(7.60% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-7-1 21075WCT0
----------------
CUSIP
$43,000,000 June 11, 1996 February 15, 2016
- ----------------------- ------------------------ --------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
Date of Authentication:
-------------
A-7-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-7 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-7-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-7 (the "Class A-7 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"),
Class A-8 (the "Class A-8 Certificates"), Class A-9 (the "Class A-9
Certificates"), Class A-10IO (the "Class A-10IO Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates and the Class A-10IO Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-7
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-7 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-7 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-7 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-7 Certificates. The Percentage
Interest of each Class A-7 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-7 Certificate on the Startup Day by the aggregate Class
A-7 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-7-3
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-7 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-7
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-7 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-7 Certificates and shall receive all future distributions of the Class
A-7 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last
A-7-4
<PAGE>
Home Equity Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate or
(ii) at any time when a Qualified Liquidation of the Trust Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (ii) above, the Owners of all Certificates then Outstanding
shall unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing
A-7-5
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-7
Certificates are exchangeable for new Class A-7 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-7-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
----------------------
Name:
---------------------
Title:
--------------------
By:
----------------------
Name:
---------------------
Title:
--------------------
A-7-7
<PAGE>
EXHIBIT A-8
FORM OF CLASS A-8 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-8
(7.90%* Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
- ----------------
* Subject to certain limitations described herein.
No: A-8-1 21075WCV5
--------------
CUSIP
$39,500,000 June 11, 1996 July 15, 2027
- ----------------------- ----------------------- --------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date of Authentication:
--------------
A-8-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A which the Seller has caused to
be delivered to the Depositor and the Depositor has caused to be delivered to
the Trustee which the Depositor has caused to be delivered to the Seller and
which the Seller has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling
and Servicing Agreement), together with the related Home Equity Loan documents
and the Seller's interest in any Property which secured a Home Equity Loan but
which has been acquired by foreclosure or deed in lieu of foreclosure, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts as may be held by the Trustee in the Certificate
Account and the Upper-Tier Fixed Rate Group Distribution Account together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein), whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Insurance Agreement; (d) the
Fixed Rate Group Certificate Insurance Policy issued thereunder; and (e)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified in the Pooling and
Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-7 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-8-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-8 (the "Class A-8 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its c capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"),
Class A-7 (the "Class A-7 Certificates"), Class A-9 (the "Class A-9
Certificates"), Class A-10IO (the "Class A-10IO Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates and the Class A-10IO Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-8
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-8 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-8 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-8 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-8 Certificates. The Percentage
Interest of each Class A-8 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-8 Certificate on the Startup Day by the aggregate Class
A-8 Certificate Principal Balance on the Startup Day.
"Class A-8 Pass-Through Rate" means on any Payment Date, the
lower of (a) 7.90% per annum and (b) the weighted average Coupon Rate of each
Home Equity Loan in the Fixed Rate Group less the Expense Rate.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
A-8-3
<PAGE>
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment Date
without regard to any related Insured Payment to be made with respect to such
Payment Date), plus (ii) an amount equal to the Preference Amount with respect
to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-8 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-8
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-8
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-8 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-8 Certificates and shall receive all future distributions of the Class
A-8 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than
A-8-4
<PAGE>
those available under the related Certificate Insurance Policy of all amounts
held by the Trustee and required to be paid to such Owners pursuant to the
Pooling and Servicing Agreement upon the later to occur of (a) the final payment
or other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate or (b) the disposition of all property acquired
in respect of any Home Equity Loan remaining in the Trust Estate or (ii) at any
time when a Qualified Liquidation of the Trust Estate is effected as described
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding shall
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
A-8-5
<PAGE>
The Class A-8 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-8 Certificates are exchangeable
for new Class A-8 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-8-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
------------------------
Name:
-----------------------
Title:
----------------------
By:
-------------------------
Name:
-----------------------
Title:
----------------------
A-8-7
<PAGE>
EXHIBIT A-9
FORM OF CLASS A-9 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-9
(Adjustable Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-9-1 21075WCU7
---------------
CUSIP
$55,000,000 July 15, 2027
- ----------------------- -------------------
Original Certificate _______June 11, 1996________ Final Scheduled
Principal Balance Date Payment Date
CEDE & CO.
---------------------------------
Registered Owner
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date of Authentication:
--------------
A-9-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-B to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Adjustable
Rate Group Distribution Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided herein), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Insurance Agreement; (d) the Adjustable Rate Group
Certificate Insurance Policy issued thereunder; and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-9 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to July 15, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-9-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-9 (the "Class A-9 Certificates")
and issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among ContiMortgage Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Trustee (the "Trustee"), to which Pooling
and Servicing Agreement the Owner of this Certificate by virtue of acceptance
hereof assents and by which such Owner is bound. Also issued under the Pooling
and Servicing Agreement are Certificates designated as ContiMortgage Home Equity
Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"),
Class A-7 (the "Class A-7 Certificates"), Class A-8 (the "Class A-8
Certificates"), Class A-10IO (the "Class A-10IO Certificates"),Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-7 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates, the Class A-10IO Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class B-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-9
Certificates as of the close of business on the day immediately preceding such
Payment Date (the "Record Date") will be entitled to receive the Class A-9
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-9 Certificate Principal
Balance of at least $1,000,000 (by wire transfer or otherwise) to the account of
an Owner at a domestic bank or other entity having appropriate facilities
therefor, if such Owner has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.
Each Owner of record of a Class A-9 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-9 Certificates. The Percentage
Interest of each Class A-9 Certificate as of any date of determination will be
equal to the percentage obtained by dividing the original Certificate Principal
Balance of such Class A-8 Certificate on the Startup Day by the aggregate Class
A-9 Certificate Principal Balance on the Startup Day.
"Class A-9 Pass-Through Rate: For any Payment Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.33% per annum and (ii) the Class A-9 Available Funds Cap Rate
for such Payment Date and for any Payment Date in any month following the month
in which the Clean-Up Call Date, the lesser of (i) LIBOR plus 0.66% per annum
and (ii) the Class A-9 Available Funds Cap Rate for such Payment Date.
"Class A-9 Available Funds Cap Rate": On any Payment Date on or prior
to the Payment Date in June 1997, the weighted average of the Coupon Rates of
the Home Equity Loans in the Adjustable Rate Group less the Expense Rate and on
any Payment Date thereafter, the weighted average of the Coupon Rates of the
Home Equity Loans in the Adjustable Rate Group less the Expense Rate.
A-9-3
<PAGE>
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralizations
provisions of Sections 7.03(c)(i)(A) and (B) and 7.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment Date
without regard to any related Insured Payment to be made with respect to such
Payment Date), plus (ii) an amount equal to the Preference Amount with respect
to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-9 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-9
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the owners of such Class A-9
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-9 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class
A-9-4
<PAGE>
A-9 Certificates and shall receive all future distributions of the Class A-9
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(ii) above, the Owners of all Certificates then Outstanding shall unanimously
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code, and the Trustee
shall either sell the Home Equity Loans and distribute the proceeds of the
liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners
A-9-5
<PAGE>
of the Certificate and of any Certificate issued upon the registration of
Transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-9 Certificates are issuable only as registered
Certificates in minimum denominations of $1000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-9 Certificates are exchangeable
for new Class A-9 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-9-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
------------------------
Name:
----------------------
Title:
---------------------
By:
------------------------
Name:
----------------------
Title:
---------------------
A-9-7
<PAGE>
EXHIBIT A-10IO
FORM OF CLASS A-10IO CERTIFICATE
THIS CERTIFICATE REPRESENTS THE SUM OF THE SPECIFIED PORTION
OF INTEREST FROM EIGHT UNCERTIFIED "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-10IO
Upper Tier A-1IO Certificate
Upper Tier A-2IO Certificate
Upper Tier A-3IO Certificate
Upper Tier A-4IO Certificate
Upper Tier A-5IO Certificate
Upper Tier A-6IO Certificate
Upper Tier A-7IO Certificate
Upper Tier A-8IO Certificate
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-10IO-1 21075WCW3
-------------
CUSIP
100% June 11, 1996 July 15, 2027
- ---------------- ----------------------- -------------------
Percentage Interest Date Final Scheduled
Payment Date
$0 CEDE & CO.
- ---------------------------------------------------------
Original Principal Amount Registered Owner
A-10IO-1
<PAGE>
$200,000,000
- ------------
Original Notional Principal Amount
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date of Authentication:
---------------------
A-10IO-2
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
ASSUMING THAT THE HOME EQUITY LOANS PREPAY AT A RATE BASED ON
100% OF THE PREPAYMENT ASSUMPTION DESCRIBED IN THE PROSPECTUS SUPPLEMENT, THIS
CERTIFICATE HAS BEEN ISSUED WITH APPROXIMATELY $11,795.21 OF OID PER $1,000,000
OF CLASS A-10IO NOTIONAL PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO MATURITY WILL
BE 17.49% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE LONG FIRST
ACCRUAL PERIOD IS $55.17 PER $1,000,000 OF CLASS A-10IO NOTIONAL PRINCIPAL
AMOUNT COMPUTED USING DAILY COMPOUNDING.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER
OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH
RESPECT TO THE HOME EQUITY LOANS.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-10IO-3
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-10IO (the "Class 10IO
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1996 (the "Pooling and Servicing Agreement") by and among ContiMortgage
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), ContiSecurities Asset Funding Corp., in its capacity as
Depositor, (the "Depositor") and Manufacturers and Traders Trust Company, a New
York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as ContiMortgage
Home Equity Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-7 (the "Class
A-7 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8 (the
"Class A-8 Certificates"), Class A-9 (the "Class A-9 Certificates"), Class B-IO
(the "Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-7 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, Class A-9 Certificates and the Class A-10IO Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class B-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-10IO
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-10IO Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-10IO Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-10IO Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-10IO Certificates. The Percentage
Interest of each Class A-10IO Certificate as of any date of determination will
be equal to the portion of the Class stated or the Percentage Interest on the
face thereof.
"Class A-10IO Notional Principal Amount": As of any time of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Certificates.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and &.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-10IO-4
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-10IO Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-10IO
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-10IO
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-10IO Certificates with respect to such Insured Payment, shall
be deemed to the extent of the payments so made to be a registered Owner of such
Class A-10IO Certificates and shall receive all future distributions of the
Class A-10IO Distribution Amount until all such Insured Payments by the
Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
A-10IO-5
<PAGE>
Home Equity Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(ii) above, the Owners of all Certificates then Outstanding shall unanimously
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code, and the Trustee
shall either sell the Home Equity Loans and distribute the proceeds of the
liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-10IO Certificates are issuable only as registered
Certificates in minimum Percentage Interests of 10%. As provided in the Pooling
and Servicing Agreement and subject to certain limitations therein set forth,
Class A-10IO Certificates are exchangeable for new Class A-10IO Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-10IO-6
<PAGE>
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-10IO-7
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
-----------------------
Name:
----------------------
Title:
---------------------
By:
------------------------
Name:
---------------------
Title:
---------------------
A-10IO-8
<PAGE>
EXHIBIT A-10IO
FORM OF CLASS A-10IO CERTIFICATE
THIS CERTIFICATE REPRESENTS THE SUM OF THE SPECIFIED PORTION
OF INTEREST FROM EIGHT UNCERTIFIED "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-10IO
Upper Tier A-1IO Certificate
Upper Tier A-2IO Certificate
Upper Tier A-3IO Certificate
Upper Tier A-4IO Certificate
Upper Tier A-5IO Certificate
Upper Tier A-6IO Certificate
Upper Tier A-7IO Certificate
Upper Tier A-8IO Certificate
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-10IO-2 21075WCW3
CUSIP
100% June 11, 1996 July 15, 2027
- ---------------- ------------------------ --------------------
Percentage Interest Date Final Scheduled
Payment Date
$0 CEDE & CO.
- ------------------------------------------------------
Original Principal Amount Registered Owner
A-10IO-1
<PAGE>
$200,000,000
- ------------
Original Notional Principal Amount
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
Date of Authentication:
------------
A-10IO-2
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
ASSUMING THAT THE HOME EQUITY LOANS PREPAY AT A RATE BASED ON 100% OF
THE PREPAYMENT ASSUMPTION DESCRIBED IN THE PROSPECTUS SUPPLEMENT, THIS
CERTIFICATE HAS BEEN ISSUED WITH APPROXIMATELY $11,795.21 OF OID PER $1,000,000
OF CLASS A-10IO NOTIONAL PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO MATURITY WILL
BE 17.49% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE LONG FIRST
ACCRUAL PERIOD IS $55.17 PER $1,000,000 OF CLASS A-10IO NOTIONAL PRINCIPAL
AMOUNT COMPUTED USING DAILY COMPOUNDING.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER
OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH
RESPECT TO THE HOME EQUITY LOANS.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-10IO-3
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-10IO (the "Class 10IO
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1996 (the "Pooling and Servicing Agreement") by and among ContiMortgage
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), ContiSecurities Asset Funding Corp., in its capacity as
Depositor, (the "Depositor") and Manufacturers and Traders Trust Company, a New
York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as ContiMortgage
Home Equity Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-7 (the "Class
A-7 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8 (the
"Class A-8 Certificates"), Class A-9 (the "Class A-9 Certificates"), Class B-IO
(the "Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-7 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, Class A-9 Certificates and the Class A-10IO Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class B-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-10IO
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-10IO Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-10IO Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-10IO Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-10IO Certificates. The Percentage
Interest of each Class A-10IO Certificate as of any date of determination will
be equal to the portion of the Class stated or the Percentage Interest on the
face thereof.
"Class A-10IO Notional Principal Amount": As of any time of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Certificates.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and &.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-10IO-4
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-10IO Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-10IO
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-10IO
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-10IO Certificates with respect to such Insured Payment, shall
be deemed to the extent of the payments so made to be a registered Owner of such
Class A-10IO Certificates and shall receive all future distributions of the
Class A-10IO Distribution Amount until all such Insured Payments by the
Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
A-10IO-5
<PAGE>
Home Equity Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(ii) above, the Owners of all Certificates then Outstanding shall unanimously
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code, and the Trustee
shall either sell the Home Equity Loans and distribute the proceeds of the
liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-10IO Certificates are issuable only as registered
Certificates in minimum Percentage Interests of 10%. As provided in the Pooling
and Servicing Agreement and subject to certain limitations therein set forth,
Class A-10IO Certificates are exchangeable for new Class A-10IO Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-10IO-6
<PAGE>
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-10IO-7
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
--------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
A-10IO-8
<PAGE>
EXHIBIT A-10IO
FORM OF CLASS A-10IO CERTIFICATE
THIS CERTIFICATE REPRESENTS THE SUM OF THE SPECIFIED PORTION
OF INTEREST FROM EIGHT UNCERTIFIED "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-10IO
Upper Tier A-1IO Certificate
Upper Tier A-2IO Certificate
Upper Tier A-3IO Certificate
Upper Tier A-4IO Certificate
Upper Tier A-5IO Certificate
Upper Tier A-6IO Certificate
Upper Tier A-7IO Certificate
Upper Tier A-8IO Certificate
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Home Equity Loans insured or guaranteed
by, ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional ownership interest in the Home Equity Loans
and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("ContiMortgage Home Equity Loan Trust 1996-2") or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No: A-10IO-3 21075WCW3
---------------------
CUSIP
100% June 11, 1996 July 15, 2027
- ---------------- ------------------------ --------------------
Percentage Interest Date Final Scheduled
Payment Date
$0 CEDE & CO.
- --------------------------------------------------------
Original Principal Amount Registered Owner
A-10IO-1
<PAGE>
$50,000,000
- -----------
Original Notional Principal Amount
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date of Authentication:
----------------
A-10IO-2
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the Upper-Tier Fixed Rate
Group Distribution Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
ASSUMING THAT THE HOME EQUITY LOANS PREPAY AT A RATE BASED ON 100% OF
THE PREPAYMENT ASSUMPTION DESCRIBED IN THE PROSPECTUS SUPPLEMENT, THIS
CERTIFICATE HAS BEEN ISSUED WITH APPROXIMATELY $11,795.21 OF OID PER $1,000,000
OF CLASS A-10IO NOTIONAL PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO MATURITY WILL
BE 17.49% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE LONG FIRST
ACCRUAL PERIOD IS $55.17 PER $1,000,000 OF CLASS A-10IO NOTIONAL PRINCIPAL
AMOUNT COMPUTED USING DAILY COMPOUNDING.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER
OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH
RESPECT TO THE HOME EQUITY LOANS.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-10IO-3
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-2, Home
Equity Loan Pass-Through Certificates, Class A-10IO (the "Class 10IO
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1996 (the "Pooling and Servicing Agreement") by and among ContiMortgage
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), ContiSecurities Asset Funding Corp., in its capacity as
Depositor, (the "Depositor") and Manufacturers and Traders Trust Company, a New
York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as ContiMortgage
Home Equity Loan Trust 1996-2 Home Equity Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"),
Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-7 (the "Class
A-7 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8 (the
"Class A-8 Certificates"), Class A-9 (the "Class A-9 Certificates"), Class B-IO
(the "Class B-IO Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-7 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, Class A-9 Certificates and the Class A-10IO Certificates shall be
together referred to as the "Class A Certificates" and the Class A Certificates,
the Class B-IO Certificates and the Class R Certificates are together referred
to herein as the "Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing July 15, 1996, the Owners of the Class A-10IO
Certificates as of the close of business on the last day of the calendar month
immediately preceding the calendar month in which a Payment Date occurs (the
"Record Date") will be entitled to receive the Class A-10IO Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-10IO Certificate Principal Balance of at least $1,000,000 (by
wire transfer or otherwise) to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Each Owner of record of a Class A-10IO Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-10IO Certificates. The Percentage
Interest of each Class A-10IO Certificate as of any date of determination will
be equal to the portion of the Class stated or the Percentage Interest on the
face thereof.
"Class A-10IO Notional Principal Amount": As of any time of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Certificates.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
"Insured Payment" means with respect to either Home Equity Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the related Current
Interest and the then existing related Subordination Deficit, if any, over (b)
Total Available Funds with respect to such Group (net of the Premium Amount
allocable to such Group) after taking into account the crosscollateralization
provisions of Sections 7.03(c)(i)(A) and (B) and &.03(c)(ii)(A) and (B) of the
Pooling and Servicing Agreement and the portion of any Fixed Rate Group
Principal Distribution Amount or Adjustable Rate Group Principal Distribution
Amount, as the case may be, to be actually distributed on such Payment
A-10IO-4
<PAGE>
Date without regard to any related Insured Payment to be made with respect to
such Payment Date), plus (ii) an amount equal to the Preference Amount with
respect to the related Class of Class A Certificates.
Upon receipt of amounts under the Certificate Insurance Policy
on behalf of the Owners of the Class A-10IO Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the Class A-10IO
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer
pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement permits the Servicer to enter into Sub-Servicing Agreements with
certain institutions eligible for appointment as Sub-Servicers for the servicing
and administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Home Equity Loans
insured or guaranteed by, ContiSecurities Asset Funding Corp. or ContiMortgage
Corporation or any of their affiliates. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Home Equity Loans
and amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policy, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee or Paying Agent), to the Owners of such Class A-10IO
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-10IO Certificates with respect to such Insured Payment, shall
be deemed to the extent of the payments so made to be a registered Owner of such
Class A-10IO Certificates and shall receive all future distributions of the
Class A-10IO Distribution Amount until all such Insured Payments by the
Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the related Certificate Insurance Policy of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
A-10IO-5
<PAGE>
Home Equity Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(ii) above, the Owners of all Certificates then Outstanding shall unanimously
direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code, and the Trustee
shall either sell the Home Equity Loans and distribute the proceeds of the
liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain circumstances provided for in the Pooling and
Servicing Agreement, such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-10IO Certificates are issuable only as registered
Certificates in minimum Percentage Interests of 10%. As provided in the Pooling
and Servicing Agreement and subject to certain limitations therein set forth,
Class A-10IO Certificates are exchangeable for new Class A-10IO Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-10IO-6
<PAGE>
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-10IO-7
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
--------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
A-10IO-8
<PAGE>
EXHIBIT B-IO
FORM OF CLASS B-IO CERTIFICATE
ContiMortgage Home Equity Loan Trust 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS B-IO CERTIFICATE
Representing Certain Interests Relating to a Pool
of Home Equity Loans formed by ContiSecurities Asset
Funding Corp.
and Serviced by
CONTIMORTGAGE CORPORATION
as Servicer
This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
certificate represents a fractional ownership interest in the Home Equity Loans
as described herein, moneys in certain Accounts created pursuant to the Pooling
and Servicing Agreement and certain other rights relating thereto and is payable
only from amounts received by the Trustee relating to the Home Equity Loans held
by the Trust.
No.: B-IO-1
June 11, 1996
-------------
Date
100% July 15, 2027
- ------------------- -------------
Percentage Interest Final Scheduled
Distribution Date
CONTISECURITIES ASSET FUNDING II, L.L.C.
----------------------------------------
Registered Holder
Trustee Authentication
Manufacturers and Traders Trust Company,
as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date of Authentication:
--------------------------
B-IO-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans (other than the Retained
Yield indicated in Schedule II to the Pooling and Servicing Agreement (as
defined below) and any principal and interest payments received thereon prior to
the Cut-Off Date) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller has caused to be delivered to the Depositor and the Depositor
has caused to be delivered to the Trustee which the Depositor has caused to be
delivered to the Seller and which the Seller has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Seller's interest in any Property which secured a
Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account and the Upper-Tier Fixed Rate Group Distribution
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); (c) the
Insurance Agreement; (d) the Fixed Rate Group Certificate Insurance Policy
issued thereunder; and (e) proceeds of all the foregoing (including, but not by
way of limitation, all proceeds of any mortgage insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the Certificates
as specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9 AND CLASS
A-10IO CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
B-IO-2
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF PRINCIPAL WITH RESPECT
TO THE HOME EQUITY LOANS.
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1996-2, Home Equity Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of June 1, 1996 (the "Pooling and Servicing
Agreement") by and among ContiMortgage Corporation, in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), ContiSecurities
Asset Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan Trust
1996-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class
A-10IO (collectively, the "Class A Certificates") and Class R (the "Class R
Certificates"). The Class A Certificates, the Class B-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing July 15, 1996, the Holders of the Class B-IO Certificates as of the
close of business on the last business day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs (the "Record
Date") will be entitled to receive the Class B-IO Distribution Amount (as
defined in the Pooling and Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least 5 business days prior to the related record date,
or by check mailed to the address of the person entitled thereto as it appears
on the Register.
Each Owner of record of a Class B-IO Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Holders of the Class B-IO Certificates. The Percentage Interest of each
Class B-IO Certificate as of any date of determination will be equal to the
percentage interest set forth on such Class B-IO Certificate.
The Trustee or any duly appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Holder shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
B-IO-3
<PAGE>
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, the Depositor or ContiMortgage or any of their subsidiaries and
affiliates and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, or any other
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to the Owners
of all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan in the Lower-Tier REMIC
or (b) the disposition of all property acquired in respect of any Home Equity
Loan remaining in the Lower-Tier REMIC or (ii) at any time when a Qualified
Liquidation of the Lower-Tier REMIC is effected as described below. To effect a
termination of the Pooling and Servicing Agreement pursuant to clause (ii)
above, the Owners of all Certificates then Outstanding shall unanimously direct
the Trustee on behalf of the Trust to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall either
sell the Home Equity Loans and distribute the proceeds of the liquidation of the
Trust, or shall distribute equitably in kind all of the assets of the Lower-Tier
REMIC to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Lower-Tier REMIC, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the
Lower-Tier REMIC and the Upper-Tier REMIC, and thereby effect early retirement
of the Certificates, on any Monthly Remittance Date after the Clean-Up Call Date
and (ii) under certain circumstances relating to the qualification of the
Lower-Tier REMIC and the Upper-Tier REMIC as a REMIC under the Code the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
B-IO-4
<PAGE>
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then outstanding with the
prior written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and of each Account Party and not less than a majority
of the Percentage Interest represented by each affected Class of Certificates
then Outstanding, and in certain other circumstances provided for in the Pooling
and Servicing Agreement may be amended without the consent of the Owners. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class B-IO Certificates are issuable only as registered
Certificates in minimum percentage interests of all interests in the Class B-IO
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class B-IO Certificates are exchangeable
for new Class B-IO Certificates of the same percentage interest as the Class
B-IO Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-IO-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
--------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
B-IO-6
<PAGE>
EXHIBIT B
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
B-1
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans Originated or Purchased
and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional residual ownership interest in the Trust
Estate.)
No: R - 1 June 11, 1996
-----------------------
Date
Percentage Interest 99.999 % July 15, 2027
---------- ------------------
Final Scheduled Payment Date
ContiSecurities Asset Funding II L.L.C.
---------------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans (other than the Retained Yield
indicated in Schedule II to the Pooling and Servicing Agreement (as defined
below) and any principal and interest payments received thereon prior to the
Cut-Off Date) listed in Schedules I-A and I-B to the Pooling and Servicing
Agreement which the Seller has caused to be delivered to the Depositor and the
Depositor has caused to be delivered to the Trustee which the Depositor has
caused to be delivered to the Seller and which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account and the together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein), whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Insurance Agreement; (d) the
Fixed Rate Group Certificate Insurance Policy and the Adjustable Rate Group
Certificate Insurance Policy issued thereunder; and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement.
B-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date of Authentication:
----------------------
B-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1996-2, Home Equity Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of June 1, 1996 (the "Pooling and Servicing
Agreement") by and among ContiMortgage Corporation, in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), ContiSecurities
Asset Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan Trust
1996-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class
A-10IO (collectively, the "Class A Certificates") and Class B-IO (the "Class
B-IO Certificates"). The Class A Certificates, the Class B-IO Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing July 15, 1996, each Owner of a Class R Certificate as of the close of
business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiMortgage Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent
B-4
<PAGE>
provided in the Pooling and Servicing Agreement with respect to such Certificate
or to institute suit for the enforcement of any such distribution, and such
right shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to the Owners
of all Certificates from amounts other than those available under the
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan in the Upper-Tier REMIC
and the Lower-Tier REMIC or (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (ii) at any
time when a Qualified Liquidation of the Trust Estate is effected as described
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding shall
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Upper-Tier REMIC and the
Lower-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates, Class B-IO Certificates and
the Class R Certificates, then outstanding with the prior written consent of the
Certificate Insurer have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Lower-Tier REMIC will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent
B-5
<PAGE>
by the Owner at the time of the giving thereof, of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
--------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
B-7
<PAGE>
EXHIBIT B
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
B-1
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans Originated or Purchased
and Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by,
ContiSecurities Asset Funding Corp. or ContiMortgage Corporation. This
Certificate represents a fractional residual ownership interest in the Trust
Estate.)
No: R - 2 June 11, 1996
-----------------------
Date
Percentage Interest 0.001 % March 15, 2027
---------- -------------------
Final Scheduled Payment Date
ContiFunding Corporation
------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than the
Retained Yield indicated in Schedule II to the Pooling and Servicing Agreement
(as defined below) and any principal and interest payments received thereon
prior to the Cut-Off Date) listed in Schedules I-A and I-B to the Pooling and
Servicing Agreement which the Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee and the Subsequent
Home Equity Loans (other than the Retained Yield indicated in Schedule II to the
Pooling and Servicing Agreement and any principal and interest payments received
thereon on or prior to the Subsequent Cut-Off Date) listed in Schedules I-C and
I-D to the Pooling and Servicing Agreement which the Depositor has caused to be
delivered to the Seller and which the Seller has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Seller's interest in any Property which secured a
Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account and the Capitalized Interest Account together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein), whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Insurance Agreement; (d) the
Certificate Insurance Policy and the Adjustable Rate Group Certificate Insurance
Policy issued thereunder; and (e) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable,
B-2
<PAGE>
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified in the Pooling and
Servicing Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Date of Authentication:
---------------------
B-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1996-2, Home Equity Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of June 1, 1996 (the "Pooling and Servicing
Agreement") by and among ContiMortgage Corporation, in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), ContiSecurities
Asset Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation, in its
capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan Trust
1996-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9
(collectively, the "Class A Certificates") and Class B-IO (the "Class B-IO
Certificates"). The Class A Certificates, the Class B-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing July 15, 1996, each Owner of a Class R Certificate as of the close of
business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiMortgage Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent
B-4
<PAGE>
provided in the Pooling and Servicing Agreement with respect to such Certificate
or to institute suit for the enforcement of any such distribution, and such
right shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of (i) the payment to the Owners
of all Certificates from amounts other than those available under the
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan in the Upper-Tier REMIC
and the Lower-Tier REMIC or (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (ii) at any
time when a Qualified Liquidation of the Trust Estate is effected as described
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (ii) above, the Owners of all Certificates then Outstanding shall
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the proceeds of
the liquidation of the Trust, or shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean-Up Call Date and (ii) under certain
circumstances relating to the qualification of the Upper-Tier REMIC and the
Lower-Tier REMIC as a REMIC under the Code the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates, Class B-IO Certificates and
the Class R Certificates, then outstanding with the prior written consent of the
Certificate Insurer have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Lower-Tier REMIC will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent
B-5
<PAGE>
by the Owner at the time of the giving thereof, of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed on behalf of the Trust.
CONTISECURITIES ASSET FUNDING
CORP.,
as Depositor
By:
--------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
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<PAGE>
EXHIBIT D
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
-----------------------------
I, __________________________, _______________ of ContiMortgage
Corporation ("ContiMortgage"), hereby certify that between the "Cut-Off Date"
(as defined in the Pooling and Servicing Agreement dated as of June 1, 1996
among ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage, as
Seller and Servicer, and Manufacturers and Traders Trust Company, as Trustee)
and the "Startup Day," the following schedule of "Home Equity Loans" (each as
defined in the Pooling and Servicing Agreement) have been prepaid in full.
Account Original Current Date Paid
Number Name Amount Balance Off
------ ---- ------ ------- ---
Dated: June __, 1996
By:
-------------------------
Title:
----------------------
D-1
<PAGE>
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
------------------------------------
Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as trustee (the "Trustee") under that certain
Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling and
Servicing Agreement") among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, a Delaware corporation, as Seller (the "Seller") and
Servicer, and Manufacturers and Traders Trust Company, as Trustee, hereby
acknowledges receipt (subject to review as required by Section 3.06(a) of the
Pooling and Servicing Agreement) of the items delivered to it by the Seller and
the Depositor with respect to the Home Equity Loans pursuant to Section
3.05(b)(i) of the Pooling and Servicing Agreement.
The Schedule of Home Equity Loans is attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) of the Pooling and Servicing
Agreement as required thereby.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
------------------------------
Title:
---------------------------
Dated: June __, 1996
E-1
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
------------------
WHEREAS, the undersigned is an Authorized Officer of Manufacturers and
Traders Trust Company, a New York banking corporation, acting in its capacity as
trustee (the "Trustee") of a certain pool of mortgage loans (the "Pool")
heretofore conveyed in trust to the Trustee, pursuant to that certain Pooling
and Servicing Agreement dated as of June 1, 1996 (the "Pooling and Servicing
Agreement") among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Seller (the "Seller") and Servicer, and
Manufacturers and Traders Trust Company, as Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Mortgage Files relating to the
Pool within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Pool, and the Seller is
required to remedy such defects or take certain other action, all as set forth
in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement
requires the Trustee to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Trustee makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
------------------------------
Title:
---------------------------
Dated: June __, 1996
F-1
<PAGE>
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
--------------
Manufacturers and Traders Trust Company, as Trustee
One M&T Plaza
Buffalo, New York 14240
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of June 1, 1996 (the "Pooling and Servicing Agreement") among ContiSecurities
Asset Funding Corp., as Depositor, ContiMortgage Corporation, a Delaware
Corporation ("ContiMortgage"), as Seller and Servicer, and Manufacturers and
Traders Trust Company, a New York banking corporation, as Trustee (the
"Trustee"), ContiMortgage HEREBY CERTIFIES that all conditions precedent to the
issuance of the ContiMortgage Home Equity Loan Trust 1996-2, Home Equity Loan
Pass-Through Certificate, Class A, Class B-IO and Class R (the "Certificates"),
HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said
Certificates, and to RELEASE said Certificates to the owners thereof, or
otherwise upon their order.
Very truly yours,
CONTISECURITIES ASSET FUNDING CORP.,
By:
-------------------------------
Title:
----------------------------
Dated: June __, 1996
G-1
<PAGE>
EXHIBIT H
[RESERVED]
H-1
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this __ day of _________, _____.
[NAME OF INVESTOR]
By:
-------------------------------
[Name of Officer]
[Title of Officer]
I-1
<PAGE>
[Corporate Seal]
Attest:
- ------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] of the Investor, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this _____ day of ____________, _____.
___________
NOTARY PUBLIC
COUNTY OF _________
STATE OF _________
My commission expires the ____ day of _______________, _____.
I-2
<PAGE>
EXHIBIT J
FORM OF NOTICE
TO: [_________________________________]
RE: ContiMortgage Home Equity Loan Trust 1996-2
Home Equity Loan Pass-Through Certificate, Class A
Policy No. _________
Determination Date: _____________
Payment Date: _________________
We refer to that certain Pooling and Servicing Agreement by and between
ContiMortgage Corporation, as seller and servicer, ContiSecurities Asset Funding
Corp., as depositor, and Manufacturers Traders and Trust Company, as Trustee
(the "Trustee"), relating to ContiMortgage Home Equity Loan Trust 1996-2 and
dated as of June 1, 1996; all capitalized terms not otherwise defined herein
shall have the same respective meanings as set forth in such Pooling and
Servicing Agreement.
An Insured Payment, as defined in the Pooling and Servicing Agreement, is
required to be paid and, pursuant to Section 7.08(b) of the Pooling and
Servicing Agreement, this statement constitutes a claim for such Insured Payment
in the amount of $ under the Certificate Insurance Policy.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
Telephone Number:
-------------------
J-1
<PAGE>
[Arter & Hadden Letterhead]
June 11, 1996
The Addressees Listed on Schedule I hereto
ContiMortgage Home Equity Loan Trust 1996-2
ContiMortgage Home Equity Loan Pass-Through Certificates
--------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to ContiSecurities Asset Funding Corp., a
Delaware corporation (the "Depositor"), in connection with the issuance and sale
of certificates representing undivided fractional interests in the ContiMortgage
Home Equity Loan Trust 1996-2 (the "Trust") pursuant to a Pooling and Servicing
Agreement dated as of June 1, 1996 (the "Pooling and Servicing Agreement"),
among the Depositor, ContiMortgage Corporation ("ContiMortgage") and
Manufacturers and Traders Trust Company ("Trustee"). Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement.
In that connection, we have examined: (a) the Certificate of
Incorporation and the By-Laws of the Depositor; (b) certified copies of
resolutions of the Board of Directors of the Depositor adopted by unanimous
written consent on June 11, 1996; (c) an executed copy of the Pooling and
Servicing Agreement, (d) an executed copy of the Insurance Agreement dated June
1, 1996 (the "Insurance Agreement"), among the Depositor, ContiMortgage, MBIA
Insurance Corporation (the "Certificate Insurer") and the Trustee; (e) the
Underwriting Agreement dated May 15, 1996 (the "Underwriting Agreement"),
between the Depositor and CS First Boston Corporation, as Representative of the
several Underwriters (the "Underwriters"); (f) the Indemnification Agreement
dated as of May 15, 1996 among the Depositor, the Certificate Insurer and the
Underwriters (the "Indemnification Agreement") (the Pooling and Servicing
Agreement, the Insurance Agreement, the Indemnification Agreement and the
Underwriting Agreement are collectively referred to as the "Agreements"), (g)
specimens of the Class A-1, Class A-2, Class A-3 and Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9 and Class A-10IO (collectively, the "Class
A Certificates") Class B-IO, and Class R Certificates (collectively, with the
Class A Certificates, the "Certificates") issued pursuant to the Pooling and
Servicing Agreement; (h) Registration Statement No. 33-99340 on Form S-3 filed
with the Securities and Exchange Commission under the Securities Act of 1933
(the "Act") and any amendments thereto; (i) the Prospectus (the "Prospectus") as
filed with the Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act of 1933 relating to the offering of the Class A Certificates,
including the basic Prospectus dated April 17, 1996 (the "Basic Prospectus") and
the Prospectus Supplement dated May 15, 1996 (the "Prospectus Supplement"); and
(j) such other documents as we have deemed necessary or appropriate for
<PAGE>
the purposes of this opinion. In rendering our legal opinions herein we have
relied as to certain factual matters upon certificates of officers or
representatives of the Depositor and statements and certificates of public
officials and others. We have not made any independent investigation of such
factual matters; however, in the course of our representation of the Depositor
in connection with the Pooling and Servicing Agreement, nothing has come to our
attention that leads us to believe that such certifications or statements are
false.
Based on the foregoing, and subject to the qualifications, limitations
and exceptions noted below, we are of opinion as follows:
(i) The Certificates, assuming due execution by the Depositor and
due authentication and delivery by the Trustee and delivery
pursuant to the Depositor's instructions, are validly issued
and outstanding and are entitled to the benefits of the
Pooling and Servicing Agreement.
(ii) Upon receipt by the Trustee of the Notes evidencing the Home
Equity Loans, endorsed as described in the Pooling and
Servicing Agreement, and the receipt by the Depositor of the
purchase price for the Certificates and for so long as the
Trustee maintains actual physical possession of such Notes,
(a) the Trustee shall be vested with the Depositor's title to,
and shall obtain all right, title and interest of the
Depositor in, each Home Equity Loan conveyed by the Depositor
and (b) in the event that the sale of the Home Equity Loans
were to be recharacterized as a financing secured by the Home
Equity Loans, the Trustee would have a first perfected
security interest in the Notes evidencing the Home Equity
Loans received by the Trustee.
(iii) The Registration Statement has become effective under the Act
and, to the best of our knowledge, the Commission has not
issued any stop order suspending the effectiveness of the
Registration Statement or any order directed to any prospectus
relating to the Certificates (including the Prospectus
Supplement) and has not initiated or threatened any proceeding
for that purpose.
(iv) The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth
in the General Instructions to Form S-3, have been satisfied
with respect to the Registration Statement and the Prospectus.
(v) The Registration Statement as of the date on which it was
declared effective and the Prospectus Supplement as of the
date thereof (other than the financial and statistical data
included therein, as to which we do not express any opinion)
complied as to form in all material respects with the
requirements of the Act and the rules and regulations
thereunder.
(vi) Neither the qualification of the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939 nor the
registration of the Trust created by such Agreement under the
Investment Company Act of 1940 is currently required.
(vii) The statements set forth in the Basic Prospectus under the
captions "Description of the Certificates" and
"Administration" and in the Prospectus Supplement under the
captions "Description of the Class A Certificates" and "The
Pooling and Servicing Agreement," to the extent such
statements purport to summarize certain provisions of the
Certificates or of the Pooling and Servicing Agreement, are
fair and accurate in all material respects.
2
<PAGE>
(viii) The statements set forth in the Basic Prospectus and the
Prospectus Supplement under the captions "ERISA
Considerations" and "Certain Federal Income Tax Consequences"
to the extent that they constitute matters of federal law,
provide a fair and accurate summary of such law or
conclusions.
(ix) Neither the Depositor nor the Trust is an "investment company"
or under the "control" of an "investment company" as such
terms are defined in the 1940 Act.
(x) Assuming that (a) the Trustee causes certain assets of the
Trust Estate, as the Trustee has covenanted to do in the
Pooling and Servicing Agreement, to be treated as a "real
estate mortgage investment conduit" ("REMIC"), as such term is
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), and (b) the parties to the Pooling and Servicing
Agreement comply with the terms thereof, the Lower-Tier REMIC
and the Upper-Tier REMIC will each be treated as a REMIC, the
Class A Certificates (other than the Class A-10IO
Certificates) and the Upper-Tier A-IO Certificates will be
treated as the "regular interests" in the Upper-Tier REMIC and
the Upper-Tier REMIC Residual Class will be treated as the
sole "residual interest" in the Upper-Tier REMIC. The Class A-
10IO Certificates are not themselves on interest in a REMIC,
but they represent the sum of the specified portions of
interest from the Upper-Tier A-IO Certificates. The Lower-
Tier Interests A-1 through A-9 and the Lower-Tier B-IO
Interest will be treated as the "regular interests" in the
REMIC and the Class R Certificates will be treated as the sole
"residual Interest" in the Lower-Tier REMIC.
(xi) To the best of our knowledge, there are no actions,
proceedings or investigations pending that would adversely
affect the status of the Lower-Tier REMIC or the Upper-Tier
REMIC as a REMIC.
(xii) As a consequence of the qualification of the Lower-Tier REMIC
or the Upper-Tier REMIC as REMICs, the Class A Certificates
(other than the Class A-10IO Certificates) and the Upper-Tier
A-IO Certificates will be treated as "qualifying real property
loans" under Section 593(d) of the Code, "regular . . .
interest(s) in a REMIC" under Section 7701(a)(19)(C) of the
Code and "real estate assets" under Section 856(c) of the Code
in the same proportion that the assets in the Trust consist of
qualifying assets under such Sections. In addition, as a
consequence of the qualification of the Lower-Tier REMIC or
the Upper-Tier REMIC as REMICs, interest on the Class A
Certificates will be treated as "interest on obligations
secured by mortgages on real property" under Section 856(c) of
the Code to the extent that such Class A Certificates (other
than the Class A-10IO Certificates) and the Upper-Tier A-IO
Certificates are treated as "real estate assets" under Section
856(c) of the Code.
In passing on the form of the Registration Statement and the
Prospectus, we necessarily assumed the correctness of the statements made or
included therein by the Depositor and take no responsibility therefor except
insofar as such statements relate to the description of the Certificates and the
Pooling and Servicing Agreement or the matters referred in clauses and above or
relate to us. Nevertheless, in the course of the preparation of the Registration
Statement and Prospectus we had discussions with officials of the Depositor with
regard to the requirements of the Act and the rules and regulations thereunder
with reference to the preparation of registration statements and prospectuses.
Nothing has come to our attention in the course of our examination of the
Registration Statement and the Prospectus or in our discussions or otherwise
which would lead us to believe that the Registration Statement at the time the
Registration Statement became effective, contained an untrue statement of a
3
<PAGE>
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except as to financial
or statistical data contained in the Registration Statement) or that the
Prospectus, as of its date and as of the date hereof contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading (except as to financial or statistical data contained in
the Prospectus and the statements set forth in the Prospectus under the caption
"The Certificate Insurer," as to which we do not express any view); or that any
document incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
date hereof (other than any document filed at the request of either of the
Underwriters to the extent such document relates to Computational Materials (as
defined in the Underwriting Agreement)) contained, as of the time it became
effective or was filed with the Commission, as the case may be, 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, in the
light of the circumstances under which they were made, not misleading. We do not
know of any amendment to the Registration Statement required to be filed, or of
any contracts, indentures or other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be described in the
Registration Statement which have not been filed or described as required.
In rendering the foregoing opinion, we made the following assumptions:
(1) the parties thereto (other than the Depositor) have the
corporate power to enter into and perform all their
obligations under the Agreements;
(2) the due authorization, execution and delivery of the
Agreements by the parties thereto (other than the Depositor),
and the validity and binding effect on the parties thereto
(other than the Depositor) of the Agreements;
(3) the genuineness of all signatures; and
(4) the authenticity of all documents submitted to us as originals
and the conformity to originals of all documents submitted to
us as copies.
As to the opinion expressed in clause , we assume that the parties to
the Pooling and Servicing Agreement have and will perform their respective
obligations thereunder, including, with respect to the Trustee's rights as a
perfected lienholder under the Mortgages, the execution, delivery and proper
recordation of assignments in form and substance sufficient to effectuate the
assignment of Mortgages from the Depositor as seller to the Trustee on behalf of
the Trust in the appropriate jurisdictions following payment of legal and
sufficient consideration therefor, without any such Mortgage having been
satisfied or released, or the underlying obligation discharged, and without the
Trustee having actual or constructive notice of the existence of any claim,
lien, charge, mortgage, security interest, encumbrance or right of the
Depositor, or creditors of the Depositor or others. Further, we have assumed the
absence of any defense against enforcement of, or right of offset against, each
such Note and the related Mortgage. We have undertaken no independent review of
the Home Equity Loans, including the Notes, Mortgages and title thereto, and
have relied solely upon the representations of ContiMortgage in the Pooling and
Servicing Agreement that it has good and indefeasible title to the Home Equity
Loans.
This opinion is limited to matters involving the federal laws of the
United States of America, the laws of the State of New York and, to the extent
relevant to the opinions expressed herein, the General Corporation Law of the
State of Delaware.
4
<PAGE>
This letter, and the legal opinions herein, are intended to be relied
upon solely by the addressees hereof and solely for the purposes of the
transactions contemplated by the Agreements and are not to be relied upon by any
other person or entity, or for any other purpose.
We bring to your attention the fact that our legal opinions are an
expression of professional judgment and are not a guaranty of a result.
We do not undertake to advise you of matters which may come to our
attention subsequent to the date hereof which may affect our legal opinions
expressed herein.
Very truly yours,
ARTER & HADDEN
<PAGE>
The statistical information presented below concerning the pool of Home
Equity Loans is based on the pool of Home Equity Loans as of June 1, 1996 (the
"Cut-Off Date") and includes all Home Equity Loans transferred to the REMIC
Trust on such date.
Geographic Distribution of Mortgaged Properties - Fixed Rate Group
The geographic distribution of Home Equity Loans in the Fixed Rate
Group by state, as of the Cut-Off Date, was as follows:
Number of Home Aggregate % of Aggregate
State Equity Loans Loan Balance Loan Balance
- ----- ------------ ------------ ------------
Alabama 3 $ 176,152.66 0.04%
Arkansas 1 55,098.76 0.01
Arizona 74 5,583,440.88 1.24
California 119 11,756,132.31 2.61
Colorado 115 8,903,058.69 1.98
Connecticut 78 6,488,859.88 1.44
District of Columbia 58 4,469,374.96 0.99
Delaware 28 1,888,262.39 0.42
Florida 341 18,245,984.36 4.06
Georgia 238 14,011,775.05 3.11
Idaho 19 1,123,573.06 0.25
Indiana 331 15,519,995.36 3.45
Illinois 555 36,259,417.58 8.06
Iowa 12 487,154.00 0.11
Kansas 29 1,517,410.24 0.34
Kentucky 91 4,534,908.50 1.01
Louisiana 2 77,714.38 0.02
Maine 44 2,425,370.96 0.54
Maryland 323 25,988,904.12 5.78
Massachusetts 231 18,216,386.95 4.05
Michigan 884 40,714,549.94 9.05
Minnesota 44 2,805,037.97 0.62
Mississippi 13 481,168.73 0.11
Missouri 105 6,210,658.56 1.38
Nebraska 1 41,862.44 0.01
Nevada 38 2,193,023.78 0.49
New Hampshire 9 562,773.34 0.13
New Jersey 511 42,090,677.90 9.35
New Mexico 35 3,436,432.52 0.76
New York 516 40,731,873.58 9.05
North Carolina 369 19,515,684.89 4.34
Ohio 693 38,222,774.85 8.50
Oklahoma 1 35,977.16 0.01
Oregon 43 2,783,235.18 0.62
Pennsylvania 517 31,778,409.52 7.06
Rhode Island 79 6,042,869.15 1.34
South Carolina 174 8,962,204.82 1.99
Tennessee 109 6,129,035.75 1.36
Texas 2 194,161.08 0.04
Utah 77 6,057,974.71 1.35
Vermont 2 265,500.00 0.06
Virginia 96 5,980,136.04 1.33
Washington 38 2,548,331.88 0.57
West Virginia 1 29,075.00 0.01
Wisconsin 76 4,399,665.03 0.98
-- ------------ ----
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
<PAGE>
Combined Loan-to-Value Ratios - Fixed Rate Group
The Combined loan-to-value ratios as of the date of origination of the
Home Equity Loans in the Fixed Rate Group (based upon appraisals made at the
time of origination thereof) (the "Loan-to-Value Ratios") as of the Cut-Off Date
were distributed as follows:
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Combined LTV's Home Equity Loans Loan Balance Loan Balance
- -------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
10.01 to 15.00% 17 $ 353,105.42 0.08%
15.01 to 20.00 43 963,727.30 0.21
20.01 to 25.00 48 1,032,838.00 0.23
25.01 to 30.00 83 2,405,805.47 0.53
30.01 to 35.00 103 3,069,795.84 0.68
35.01 to 40.00 99 3,584,270.22 0.80
40.01 to 45.00 137 6,277,393.92 1.40
45.01 to 50.00 314 12,060,300.29 2.68
50.01 to 55.00 201 10,697,364.72 2.38
55.01 to 60.00 374 20,634,692.77 4.59
60.01 to 65.00 561 33,768,913.38 7.51
65.01 to 70.00 785 47,506,507.56 10.56
70.01 to 75.00 1,018 67,172,357.54 14.93
75.01 to 80.00 1,927 128,414,614.14 28.54
80.01 to 85.00 994 73,473,399.43 16.33
85.01 to 90.00 420 38,522,082.90 8.56
90.01 to 95.01 1 4,900.00 0.00
- --------------- -------
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
</TABLE>
Cut-Off Date Coupon Rates - Fixed Rate Group
The Coupon Rates borne by the Notes relating to the Home Equity Loans
in the Fixed Rate Group were distributed as follows as of the Cut-Off Date:
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
7.01 to 8.00% 24 $ 2,568,375.93 0.57%
8.01 to 9.00 229 17,162,955.29 3.81
9.01 to 10.00 1,147 83,042,974.96 18.46
10.01 to 11.00 1,792 127,840,266.49 28.41
11.01 to 12.00 1,656 104,134,826.86 23.14
12.01 to 13.00 1,153 65,873,042.93 14.64
13.01 to 14.00 557 27,718,541.47 6.16
14.01 to 15.00 354 13,550,337.92 3.01
15.01 to 16.00 139 5,821,756.51 1.29
16.01 to 17.00 44 1,279,711.67 0.28
17.01 to 18.00 28 901,305.17 0.20
18.01 to 19.00 2 47,973.70 0.01
- --------------- ------
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
</TABLE>
<PAGE>
Cut-Off Date Loan Balances - Fixed Rate Group
The distribution of the outstanding principal amounts of the Home
Equity Loans in the Fixed Rate Group as of the CutOff Date was as follows:
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Range of Loan Balances Home Equity Loans Loan Balance Loan Balance
- ---------------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
$0.00 to 25,000.00 899 $ 17,090,028.74 3.80%
25,000.01 to 50,000.00 2,468 93,667,190.38 20.82
50,000.01 to 75,000.00 1,816 111,271,001.96 24.73
75,000.01 to 100,000.00 884 76,409,660.68 16.98
100,000.01 to 125,000.00 474 52,633,547.83 11.70
125,000.01 to 150,000.00 272 37,059,168.75 8.24
150,000.01 to 175,000.00 123 19,800,537.72 4.40
175,000.01 to 200,000.00 75 14,043,635.27 3.12
200,000.01 to 225,000.00 51 10,797,619.26 2.40
225,000.01 to 250,000.00 29 6,900,945.30 1.53
250,000.01 to 275,000.00 11 2,876,871.56 0.64
275,000.01 to 300,000.00 6 1,728,142.03 0.38
300,000.01 to 325,000.00 8 2,513,168.33 0.56
325,000.01 to 350,000.00 6 2,054,570.54 0.46
350,000.01 to 400,000.00 3 1,095,980.55 0.24
-- ------------ ----
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
</TABLE>
Types of Mortgaged Properties - Fixed Rate Group
The Properties securing the Home Equity Loans in the Fixed Rate Group
as of the Cut-Off Date were of the property types as follows:
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Property Types Home Equity Loans Loan Balance Loan Balance
- -------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Condominium 54 $ 2,314,143.56 0.51%
Manufactured Housing 68 3,215,315.54 0.71
Mixed Use 35 3,184,125.09 0.71
Planned Unit Development 25 2,244,730.92 0.50
Single Family Attached 267 14,194,443.97 3.15
Single Family Detached 6,228 390,363,586.89 86.76
Two-to-Four Family 448 34,425,722.93 7.65
--- -------------- ------
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
</TABLE>
<PAGE>
Distribution of Months Since Origination - Fixed Rate Group
The distribution of the number of months since the date of origination
of the Home Equity Loans in the Fixed Rate Group as of the Cut-Off Date was as
follows:
<TABLE>
<CAPTION>
Months Elapsed Number of Aggregate % of Aggregate
Since Origination Home Equity Loans Loan Balance Loan Balance
- ----------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
0 to 1 4,229 $269,583,050.60 59.92%
2 to 12 2,893 180,236,618.06 40.06
13 to 24 3 122,400.24 0.03%
- -------------- -------
Total 7,125 $449,942,068.90 100.00%
===== ============== =======
</TABLE>
Distribution of Remaining Term to Maturity - Fixed Rate Group
The distribution of the number of months remaining to maturity of the
Home Equity Loans in the Fixed Rate Group as of the Cut-Off Date was as follows:
<TABLE>
<CAPTION>
Months Remaining Number of Aggregate % of Aggregate
to Maturity Home Equity Loans Loan Balance Loan Balance
- ----------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
0 to 120 304 $ 8,952,507.01 1.99%
121 to 180 4,833 313,364,602.27 69.65
181 to 240 1,539 91,875,775.72 20.42
241 to 300 23 1,756,020.80 0.39
301 to 360 426 33,993,163.10 7.55
--- -------------- -------
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
</TABLE>
Occupancy Status - Fixed Rate Group
The occupancy status of the Properties securing the Home Equity Loans
in the Fixed Rate Group as of the Cut-Off Date was as follows
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Occupancy Status Home Equity Loans Loan Balance Loan Balance
- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Investor Owned 350 $ 17,739,503.97 3.94%
Owner Occupied 6,775 432,202,564.93 96.06
----- -------------- -----
Total 7,125 $449,942,068.90 100.00%
===== =============== =======
</TABLE>
<PAGE>
Geographic Distribution of Mortgaged Properties - the Adjustable Rate Group
The geographic distribution of Home Equity Loans in the Adjustable Rate
Group by state, as of the Cut-Off Date, was as follows:
Number of Aggregate % of Aggregate
State Home Equity Loans Loan Balance Loan Balance
- ----- ----------------- ------------ ------------
Arizona 20 $ 2,362,060.50 4.29%
California 23 3,29,851.08 5.85
Colorado 10 926,130.08 1.68
Connecticut 2 220,870.26 0.40
District of Columbia 3 467,670.04 0.85
Florida 6 486,461.15 0.88
Georgia 8 652,971.21 1.19
Idaho 1 48,697.96 0.09
Indiana 33 1,669,873.22 3.04
Illinois 39 4,516,551.27 8.21
Kansas 1 127,500.00 0.23
Kentucky 4 273,115.89 0.50
Maryland 15 1,849,989.74 3.36
Massachusetts 9 1,029,507.73 1.87
Michigan 347 23,288,801.72 42.35
Minnesota 15 997,106.99 1.81
Missouri 1 30,386.11 0.06
Nevada 1 93,200.00 0.17
New Jersey 4 500,335.72 0.91
New Mexico 10 1,053,387.22 1.92
New York 4 384,676.38 0.70
North Carolina 3 294,744.69 0.54
Ohio 44 3,616,756.36 6.58
Oklahoma 1 31,985.00 0.06
Oregon 8 787,604.83 1.43
Pennsylvania 16 1,212,900.66 2.21
Rhode Island 3 248,483.27 0.45
South Carolina 1 104,832.10 0.19
Tennessee 4 504,123.95 0.92
Utah 19 2,035,736.18 3.70
Vermont 1 79,945.77 0.15
Virginia 4 361,948.49 0.66
Washington 6 669,882.78 1.22
Wisconsin 9 849,637.33 1.54
- ---------- ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
<PAGE>
Original Loan-to-Value Ratios - the Adjustable Rate Group
The original Loan-to-Value Ratios of the Home Equity Loans in the
Adjustable Rate Group as of the Cut-Off Date were distributed as follows:
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Original LTV's Home Equity Loans Loan Balance Loan Balance
- -------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
15.01 to 20.00% 2 $ 249,613.48 0.45%
20.01 to 25.00 1 16,233.12 0.03
25.01 to 30.00 2 109,841.03 0.20
30.01 to 35.00 5 139,117.30 0.25
35.01 to 40.00 4 210,775.42 0.38
40.01 to 45.00 9 549,691.17 1.00
45.01 to 50.00 15 819,704.24 1.49
50.01 to 55.00 13 946,880.30 1.72
55.01 to 60.00 34 2,398,166.20 4.36
60.01 to 65.00 34 2,262,384.93 4.11
65.01 to 70.00 88 6,542,728.30 11.90
70.01 to 75.00 137 10,904,593.76 19.83
75.01 to 80.00 244 20,970,692.00 38.13
80.01 to 85.00 83 8,462,801.90 15.39
85.01 to 90.00 4 414,512.53 0.75
- -------------- ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
Cut-Off Date Coupon Rates -- the Adjustable Rate Group
The Coupon Rates borne by the Notes relating to the Home Equity Loans
in the Adjustable Rate Group were distributed as follows as of the Cut-Off Date:
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
7.01 to 8.00% 31 $ 3,435,470.03 6.25%
8.01 to 9.00 118 12,701,421.46 23.09
9.01 to 10.00 207 17,129,204.94 31.15
10.01 to 11.00 180 12,586,497.52 22.89
11.01 to 12.00 98 6,760,491.60 12.29
12.01 to 13.00 18 1,244,518.43 2.26
13.01 to 14.00 21 959,290.53 1.74
14.01 to 15.00 2 180,831.17 0.33
- -------------- ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
<PAGE>
Cut-Off Date Loan Balances -- the Adjustable Rate Group
The distribution of the outstanding principal amounts of the Home
Equity Loans in the Adjustable Rate Group as of the Cut-Off Date was as follows:
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Range of Loan Balances Home Equity Loans Loan Balance Loan Balance
- ---------------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
$0.00 to $25,000.00 19 $ 388,720.80 0.71%
25,000.01 to 50,000.00 179 6,926,849.22 12.59
50,000.01 to 75,000.00 177 11,037,856.40 20.07
75,000.01 to 100,000.00 135 11,686,752.15 21.25
100,000.01 to 125,000.00 68 7,477,949.99 13.60
125,000.01 to 150,000.00 30 4,083,966.14 7.43
150,000.01 to 175,000.00 28 4,532,683.72 8.24
175,000.01 to 200,000.00 19 3,605,795.12 6.56
200,000.01 to 225,000.00 5 1,081,111.27 1.97
225,000.01 to 250,000.00 4 975,191.29 1.77
250,000.01 to 275,000.00 5 1,317,187.65 2.39
275,000.01 to 300,000.00 2 560,310.03 1.02
300,000.01 to 325,000.00 1 322,500.00 0.59
325,000.01 to 350,000.00 3 1,000,851.89 1.82
- ------------ ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
Types of Mortgaged Properties -- the Adjustable Rate Group
The Properties securing the Home Equity Loans in the Adjustable Rate
Group as of the Cut-Off Date were of the property types as follows:
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Property Types Home Equity Loans Loan Balance Loan Balance
- -------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Condominium 6 $ 400,945.00 0.73%
Manufactured Housing 5 350,806.79 0.64
Planned Unit Development 3 431,207.94 0.78
Single Family Attached 6 361,994.65 0.66
Single Family Detached 634 51,262,865.53 93.21
Two-to-Four Family 21 2,189,905.77 3.98
-- ------------ ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
Distribution of Months Since Origination -- the Adjustable Rate Group
The distribution of the number of months since the date of origination
of the Home Equity Loans in the Adjustable Rate Group as of the Cut-Off Date was
as follows:
<TABLE>
<CAPTION>
Months Elapsed Number of Aggregate % of Aggregate
Since Origination Home Equity Loans Loan Balance Loan Balance
- ----------------- ----------------- ------------ ------------
<C> <C> <C> <C> <C>
0 to 1 397 $ 32,799,103.56 59.64%
2 to 12 278 22,198,622.12 40.36
--- -------------- -----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
<PAGE>
Distribution of Remaining Term to Maturity -- the Adjustable Rate Group
The distribution of the number of months remaining to maturity of the
Home Equity Loans in the Adjustable Rate Group as of the Cut-Off Date was as
follows:
<TABLE>
<CAPTION>
Months Remaining Number of Aggregate % of Aggregate
to Maturity Home Equity Loans Loan Balance Loan Balance
- ----------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
0 to 120 3 $ 69,680.81 0.13%
121 to 180 13 616,943.13 1.12
181 to 240 11 658,107.28 1.20
241 to 300 1 41,532.39 0.08
301 to 360 647 53,611,462.07 97.48
--- ------------- -----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
Occupancy Status -- the Adjustable Rate Group
The occupancy status of the Properties securing the Home Equity Loans
in the Adjustable Rate Group as of the Cut-Off Date was as follows:
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Occupancy Status Home Equity Loans Loan Balance Loan Balance
- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Investor Owned 13 $ 598,878.06 1.09%
Owner Occupied 662 54,398,847.62 98.91
--- ------------- -----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
Distribution of Margins -- the Adjustable Rate Group
The margins borne by the Notes relating to the Home Equity Loans in the
Adjustable Rate Group as of the Cut-Off Date was as follows:
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Margins Home Equity Loans Loan Balance Loan Balance
- ------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
3.00 to 3.99% 3 $ 166,742.23 0.30%
4.00 to 4.99 37 4,321,155.44 7.86
5.00 to 5.99 108 10,581,634.61 19.24
6.00 to 6.99 192 16,364,197.63 29.75
7.00 to 7.99 264 17,941,301.49 32.62
8.00 to 8.99 56 4,744,838.54 8.63
9.00 to 9.99 14 767,399.88 1.40
10.00 to 10.99 1 110,455.86 0.20
- -------------- ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
<PAGE>
Distribution of Maximum Coupon Rates -- the Adjustable Rate Group
The maximum Coupon Rates borne by the Notes relating to the Home Equity
Loans in the Adjustable Rate Group as of the Cut-Off Date was as follows:
</TABLE>
<TABLE>
<CAPTION>
Maximum Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
13.00 to 13.99% 9 $ 1,164,810.01 2.12%
14.00 to 14.99 80 8,271,015.11 15.04
15.00 to 15.99 211 18,329,146.38 33.33
16.00 to 16.99 221 17,243,339.54 31.35
17.00 to 17.99 107 6,828,629.04 12.42
18.00 to 18.99 20 1,776,169.27 3.23
19.00 to 19.99 22 1,031,032.59 1.87
20.00 to 20.99 5 353,583.74 0.64
- --------------- ----
Total 675 $ 54,997,725.68 100.00%
=== =============== =======
</TABLE>
Distribution of Coupon Rates Change -- the Adjustable Rate Group
The number of months until the next Coupon Rate change for each of the
Notes relating to the Home Equity Loans in the Adjustable Rate Group as of the
Cut-Off Date was as follows:
<TABLE>
<CAPTION>
Month of Next Coupon Number of Aggregate % of Aggregate
Rate Change Home Equity Loans Loan Balance Loan Balance
----------- ----------------- ------------ ------------
<S> <C> <C> <C>
June, 1996.................... 1 $ 25,959.57 0.05%
July, 1996.................... 7 528,240.58 0.96
August, 1996.................. 33 2,094,529.24 3.81
September, 1996............... 238 19,386,976.90 35.25
October, 1996................. 305 24,651,931.87 44.82
November, 1996................ 85 7,595,807.59 13.81
December, 1996................ 6 714,279.93 1.30
- -------------- ----
Total 675 $54,997,725.68 100.00%
=== ============== =======
</TABLE>
