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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)
August 20, 1996
ContiMortgage Home Equity Loan Trust 1996-3
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(Exact name of registrant as specified in its charter)
New York 33-99340-03 Application Pending
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(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 Executive Offices) (Zip Code)
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 1996-3 (the
"Registrant" or the "Trust") issued $550,000,000 in aggregate principal amount
of its Home Equity Pass-Through Certificates, Series 1996-3 (the
"Certificates"), on August 20, 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 August 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-9IO 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-9IO and Class A-10IO Certificates, the Notional
Principal Amount) thereof and the applicable Pass-Through Rate thereof. The
PassThrough Rates for the Class A Certificates are as follows: Class A-1,
6.76%; Class A-2, 6.95%; Class A-3, 7.16%; Class A-4, 7.34%; Class A-5, 7.52%;
Class A-6, 7.83%; Class A-7, 8.04%; Class A-8, as defined in the Pooling and
Servicing Agreement, Class A-9IO, 1.30% and Class A-10IO, 0.90%. The Class A
Certificates have initial aggregate principal amounts as follows: Class A-1,
$136,000,000; Class A-2, $33,000,000; Class A-3, $72,000,000; Class A-4,
$30,000,000; Class A-5, $42,000,000; Class A-6, $54,000,000; Class A-7,
$33,000,000; and Class A-8, $150,000,000. The Class A-9IO and 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 July 30, 1996 filed pursuant to Rule 424(b)(5) of
the Act on August 20, 1996.
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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 July 30, 1996, between
ContiSecurities Asset Funding Corp. and Merrill Lynch & Co.,
as Representative of the Several Underwriters.
4.1 Pooling and Servicing Agreement dated as of August 1, 1996,
among ContiSecurities Asset Funding Corp., ContiMortgage
Corporation, as seller and servicer, and Manufacturers and
Traders Trust Company, as trustee.
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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
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Name: James E. Moore
Title: President
By: /s/ Jerome M. Perelson
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Name: Jerome M. Perelson
Title: Vice President
Dated: September 4, 1996
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EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement dated July 30, 1996,
between ContiSecurities Asset Funding Corp.
and Merrill Lynch & Co., Inc., as
Representative of the Several Underwriters. ________
4.1 Pooling and Servicing Agreement dated as of
August 1, 1996, among ContiSecurities Asset
Funding Corp., ContiMortgage Corporation, as
seller and servicer, and Manufacturers and
Traders Trust Company, as trustee. ________
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EXHIBIT 1.1
$550,000,000
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-3
Home Equity Loan Pass-Through Certificates,
Series 1996-3
UNDERWRITING AGREEMENT
July 30, 1996
Merrill Lynch & Co.
As Representative of the Several Underwriters
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
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 1996-3, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9IO 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 and Class A-7
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. Merrill Lynch & Co. ("Merrill Lynch") 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 August 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 [August 1, 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
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(each, a "Group"), with all fixed rate Home Equity Loans assigned to the "Fixed
Rate Group" and all 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 August 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
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Registration Statement pursuant to the Securities Act or the Rules and
Regulations which have 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.
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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 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
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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 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 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.
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
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have acquired beneficial ownership of all of the Depositor's right, title and
interest in and to 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-9IO and Class A-10IO Certificates set forth opposite their names on
Schedule A, at the purchase price or prices set forth on Schedule
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A; provided, that in no event shall any Underwriter other than Greenwich
Capital Markets, Inc. be obligated to purchase any Class A-9IO or 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-9IO 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 August 20, 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
"Summary of Prospectus," "Description of The Certificates," "The Trusts" 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," "Certain Legal Aspects of
the Mortgage Assets" 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-9IO
and Class A-10IO Certificates will be treated as "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 and the Lower-Tier B-1 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-8 Certificates and the Class A-10IO
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-8 Certificate and Class A-8 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 UpperTier 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
August 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 June 30, 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-9IO and Class
A-10IO Certificates) shall have been rated "AAA" by Standard & Poor's and "Aaa"
by Moody's Investors Service. The Class A-9IO and 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, each Underwriter's
respective officers and directors 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
19
<PAGE>
any action in respect thereof (including, but not limited 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 such officer
or director 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-9IO or 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 Merrill Lynch & Co., World Financial Center, North
Tower, 10th Floor, New York, New York 10281-1310, Attention: [Investment
Banking Department/Transaction Advisory Group (Fax: 212/___-____)]; 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:
MERRILL LYNCH & CO.
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>
SCHEDULE A
<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 $31,500,000 100%
A-2 $8,250,000 100%
A-3 $18,000,000 99.984375%
A-4 $7,500,000 99.96875%
A-5 $10,500,000 100%
A-6 $13,500,000 99.96875%
A-7 $8,250,000 99.953175%
A-8 $37,500,000 100%
TOTAL: $135,000,000
Bear, Stearns & Co. Inc.
A-1 $31,500,000 100%
A-2 $8,250,000 100%
A-3 $18,000,000 99.984375%
A-4 $7,500,000 99.96875%
A-5 $10,500,000 100%
A-6 $13,500,000 99.96875%
A-7 $8,250,000 99.953175%
A-8 $37,500,000 100%
TOTAL: $135,000,000
CS First Boston
A-1 $31,500,000 100%
A-2 $8,250,000 100%
A-3 $18,000,000 99.984375%
A-4 $7,500,000 99.96875%
A-5 $10,500,000 100%
A-6 $13,500,000 99.96875%
A-7 $8,250,000 99.953175%
A-8 $37,500,000 100%
TOTAL: $135,000,000
Greenwich Capital Markets,
Inc.
A-1 $31,500,000 100%
A-2 $8,250,000 100%
A-3 $18,000,000 99.984375%
A-4 $7,500,000 99.96875%
A-5 $10,500,000 100%
A-6 $13,500,000 99.96875%
A-7 $8,250,000 99.953175%
A-8 $37,500,000 100%
A-9IO $400,000,000 100%
A-10IO $150,000,000 100%
TOTAL: $135,000,000
<PAGE>
<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>
ContiFinancial Services
Corporation
A-1 $10,000,000 100%
TOTAL: $10,000,000
TOTAL: $550,000,000
</TABLE>
- -------------------
*=Notional Principal Balance
<PAGE>
EXHIBIT 4.1
POOLING AND SERVICING AGREEMENT
Relating to
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1996-3
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 August 1, 1996
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
CONVEYANCE...................................................................................................... 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION...................................... 2
Section 1.01 Definitions.......................................................................... 2
Section 1.02 Use of Words and Phrases............................................................. 31
Section 1.03 Captions; Table of Contents.......................................................... 32
Section 1.04 Opinions............................................................................. 32
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST................................. 33
Section 2.01 Establishment of the Trust........................................................... 33
Section 2.02 Office............................................................................... 33
Section 2.03 Purposes and Powers.................................................................. 33
Section 2.04 Appointment of the Trustee; Declaration of Trust..................................... 33
Section 2.05 Expenses of the Trust................................................................ 33
Section 2.06 Ownership of the Trust............................................................... 34
Section 2.07 Situs of the Trust................................................................... 34
Section 2.08 Miscellaneous REMIC Provisions....................................................... 34
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS................................ 37
Section 3.01 Representations and Warranties of the Depositor...................................... 37
Section 3.02 Representations and Warranties of the Servicer....................................... 39
Section 3.03 Representations and Warranties of the Seller......................................... 41
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the Home
Equity Loans In Certain Situations................................................... 43
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement
Mortgages............................................................................ 51
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee............................................................. 54
Section 3.07 Reserved............................................................................. 55
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES...................................... 56
Section 4.01 Issuance of Certificates............................................................. 56
Section 4.02 Sale of Certificates................................................................. 56
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.................................... 57
Section 5.01 Terms................................................................................ 57
Section 5.02 Forms................................................................................ 57
i
<PAGE>
<CAPTION>
Page
----
<S> <C> <C>
Section 5.03 Execution, Authentication and Delivery............................................... 57
Section 5.04 Registration and Transfer of Certificates............................................ 58
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.................................... 60
Section 5.06 Persons Deemed Owners................................................................ 60
Section 5.07 Cancellation......................................................................... 61
Section 5.08 Limitation on Transfer of Ownership Rights........................................... 61
Section 5.09 Assignment of Rights................................................................. 62
ARTICLE VI
COVENANTS.................................................. 63
Section 6.01 Distributions........................................................................ 63
Section 6.02 Money for Distributions to be Held in Trust; Withholding............................. 63
Section 6.03 Protection of Trust Estate........................................................... 64
Section 6.04 Performance of Obligations........................................................... 65
Section 6.05 Negative Covenants................................................................... 65
Section 6.06 No Other Powers...................................................................... 65
Section 6.07 Limitation of Suits.................................................................. 66
Section 6.08 Unconditional Rights of Owners to Receive Distributions.............................. 66
Section 6.09 Rights and Remedies Cumulative....................................................... 67
Section 6.10 Delay or Omission Not Waiver......................................................... 67
Section 6.11 Control by Owners.................................................................... 67
Section 6.12 Indemnification...................................................................... 67
Section 6.13 Access to Owners of Certificates' Names and Addresses................................ 68
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES..................................... 69
Section 7.01 Collection of Money.................................................................. 69
Section 7.02 Establishment of Accounts;........................................................... 69
Section 7.03 Flow of Funds........................................................................ 70
Section 7.04 Reserved............................................................................. 74
Section 7.05 Investment of Accounts............................................................... 74
Section 7.06 Payment of Trust Expenses............................................................ 75
Section 7.07 Eligible Investments................................................................. 75
Section 7.08 Accounting and Directions by Trustee................................................. 77
Section 7.09 Reports by Trustee to Owners and Certificate Insurer................................. 78
Section 7.10 Reports by Trustee. ................................................................ 80
Section 7.11 Preference Payments.................................................................. 80
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS............................................. 82
Section 8.01 Servicer and Sub-Servicers........................................................... 82
Section 8.02 Collection of Certain Home Equity Loan Payments...................................... 83
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers.......................... 83
Section 8.04 Successor Sub-Servicers.............................................................. 83
Section 8.05 Liability of Servicer; Indemnification .............................................. 84
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the
Owners............................................................................... 84
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Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee...................... 84
Section 8.08 Principal and Interest Account....................................................... 85
Section 8.09 Delinquency Advances and Servicing Advances.......................................... 86
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans............................... 87
Section 8.11 Maintenance of Insurance............................................................. 88
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.......................... 88
Section 8.13 Realization Upon Defaulted Home Equity Loans; Inspection............................. 89
Section 8.14 Trustee to Cooperate; Release of Files............................................... 90
Section 8.15 Servicing Compensation............................................................... 91
Section 8.16 Annual Statement as to Compliance.................................................... 91
Section 8.17 Annual Independent Certified Public Accountants' Reports............................. 92
Section 8.18 Access to Certain Documentation and Information Regarding the Home
Equity Loans......................................................................... 92
Section 8.19 Assignment of Agreement.............................................................. 92
Section 8.20 Removal of Servicer; Resignation of Servicer......................................... 92
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance................... 97
ARTICLE IX
TERMINATION OF TRUST............................................. 98
Section 9.01 Termination of Trust................................................................. 98
Section 9.02 Termination Upon Option of Owners of Class R Certificates............................ 98
Section 9.03 Termination Upon Loss of REMIC Status................................................ 99
Section 9.04 Disposition of Proceeds..............................................................100
ARTICLE X
THE TRUSTEE.................................................102
Section 10.01 Certain Duties and Responsibilities..................................................102
Section 10.02 Removal of Trustee for Cause.........................................................103
Section 10.03 Certain Rights of the Trustee........................................................104
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.............................105
Section 10.05 May Hold Certificates................................................................106
Section 10.06 Money Held in Trust..................................................................106
Section 10.07 Compensation and Reimbursement; No Lien for Fees.....................................106
Section 10.08 Corporate Trustee Required; Eligibility..............................................106
Section 10.09 Resignation and Removal; Appointment of Successor....................................107
Section 10.10 Acceptance of Appointment by Successor Trustee.......................................108
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
Trustee..............................................................................108
Section 10.12 Reporting; Withholding...............................................................109
Section 10.13 Liability of the Trustee.............................................................109
Section 10.14 Appointment of Co-Trustee or Separate Trustee........................................110
ARTICLE XI
MISCELLANEOUS................................................112
Section 11.01 Compliance Certificates and Opinions.................................................112
Section 11.02 Form of Documents Delivered to the Trustee...........................................112
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Section 11.03 Acts of Owners.......................................................................113
Section 11.04 Notices, etc. to Trustee.............................................................113
Section 11.05 Notices and Reports to Owners; Waiver of Notices.....................................114
Section 11.06 Rules by Trustee and Seller..........................................................114
Section 11.07 Successors and Assigns...............................................................114
Section 11.08 Severability.........................................................................114
Section 11.09 Benefits of Agreement................................................................114
Section 11.10 Legal Holidays.......................................................................115
Section 11.11 Governing Law; Submission to Jurisdiction............................................115
Section 11.12 Counterparts.........................................................................116
Section 11.13 Usury................................................................................116
Section 11.14 Amendment............................................................................116
Section 11.15 Paying Agent; Appointment and Acceptance of Duties...................................117
Section 11.16 REMIC Status.........................................................................117
Section 11.17 Additional Limitation on Action and Imposition of Tax................................119
Section 11.18 Appointment of Tax Matters Person....................................................119
Section 11.19 The Certificate Insurer..............................................................120
Section 11.20 Reserved.............................................................................120
Section 11.21 Third Party Rights...................................................................120
Section 11.22 Notices..............................................................................120
SCHEDULE I-A SCHEDULE OF FIXED RATE GROUP HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF ADJUSTABLE RATE GROUP HOME EQUITY LOANS
SCHEDULE II RESERVED
SCHEDULE III HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
SCHEDULE IV HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
SCHEDULE V HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT A-9IO FORM OF CLASS A-9IO 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]
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
</TABLE>
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POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY
LOAN TRUST 1996-3, dated as of August 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 Trust, without recourse
and for the exclusive benefit of the Owners of the Certificates, all of its
respective right, title and interest in and to any and all benefits accruing to
it from (a) the Home Equity Loans (other than any principal and interest
payments received thereon on or prior to the Cut-Off Date) listed in Schedules
I-A and I-B to this Agreement which the 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 UpperTier 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,
<PAGE>
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified herein ((a)-(e) above shall be
collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein
to the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Fixed Rate Certificates and
Class A-IO Certificates and any Payment Date, the calendar month immediately
preceding the month in which the Payment Date occurs; a "calendar month" shall
be deemed to be 30 days. With respect to the Class A-8 Certificates and any
Payment Date, the period commencing on the immediately preceding Payment Date
(or the Closing Date in the case of the first Payment Date) and ending on the
day immediately preceding the current Payment Date. All calculations of
interest on the Fixed Rate Certificates and the Class A-IO Certificates will be
made on the basis of a 360-day year assumed to consist of twelve 30-day months
and calculations of interest on the Class A-8 Certificates will be made on the
basis of the actual number of days elapsed in the related Accrual Period and in
a year of 360 days.
"Adjustable Rate Group": The pool of Home Equity Loans identified in
the related Schedule of Home Equity Loans as having been assigned to the
Adjustable Rate Group in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof.
"Adjustable Rate Group Available Funds": As defined in Section 7.02(d)
hereof.
"Adjustable Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Adjustable Rate Group Certificate Insurance Policy": The certificate
guaranty insurance policy (number 21820) dated August 20, 1996 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-8 Certificates
and the Class A-10IO 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
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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-8 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-8 Certificates minus the Class A-8 Current
Interest and Class A-10IO 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-8 Certificates as such amounts relate to principal
previously distributed on the Class A-8 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,
(F) the amount of any Subordination Deficit with
respect to the Adjustable Rate Group for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to the Adjustable Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal),
(H) the amount of any Subordination Increase Amount
with respect to the Adjustable Rate Group for such Payment
Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose, and
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(I) the portion of any Carry-Forward Amount relating
to principal with respect to the Adjustable Rate Group for
such Payment Date.
over
(ii) the amount of any Subordination Reduction Amount with
respect to the Adjustable Rate Group for such Payment Date.
"Adjustable Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Adjustable
Rate Group during the related Remittance Period, (ii) the Loan Balance of each
Home Equity Loan in the Adjustable Rate Group that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the extent such Loan
Balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by 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-8 Certificate Principal Balance
as of such Payment Date (after taking into account the payment of the Class A-8
Distribution Amount thereon (except for any Subordination Deficit with respect
to the Adjustable Rate Group and Subordination Increase Amount with respect to
the Adjustable Rate Group) on such Payment Date).
"Adjustable Rate Group Total Available Funds: As defined in Section
7.02(d) hereof.
"Adjustable Rate Group Total Monthly Excess Spread": With respect to
the Adjustable Rate Group and any Payment Date, the excess, if any, of (i) the
sum of (x) the interest which is collected on the Home Equity Loans in such
Group during the related Remittance Period less the Servicing Fee with respect
to Home Equity Loans in the Adjustable Rate Group, (y) any Delinquency Advances
and (z) Compensating Interest paid by the Servicer with respect to the
Adjustable Rate Group for such Remittance Period over (ii) the interest due on
the Class A-8 Certificates on such Payment Date.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) the
Weighted Average PassThrough Rate, (b) the Class A-9IO Pass-Through Rate, (c)
the Class A-10IO Pass-Through Rate, and (d) any portion of the Premium Amount
and the Trustee Fee (calculated as a percentage of the outstanding principal
amount of the Certificates) then accrued and outstanding.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
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<PAGE>
"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 either Class of the Class A-IO 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 and (y) 30 days' interest on such amount at the Pass-Through Rate
in effect with respect to such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, Class B-IO
Certificates or Class R Certificates, each representing the interests and the
rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Insurance Policies": The Adjustable Rate Group
Certificate Insurance Policy and the Fixed Rate Group Certificate Insurance
Policy.
"Certificate Insurer": 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:
(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
5
<PAGE>
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 - $136,000,000
Class A-2 Certificates - $33,000,000
Class A-3 Certificates - $72,000,000
Class A-4 Certificates - $30,000,000
Class A-5 Certificates - $42,000,000
Class A-6 Certificates - $54,000,000
Class A-7 Certificates - $33,000,000
Class A-8 Certificates - $150,000,000
The Class A-IO Certificates, Class B-IO Certificates and the
Class R Certificates do not have a Certificate Principal Balance.
"Class": Any Class of the Class A Certificates, the B-IO
Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class
A-5 Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9IO Certificates or Class A-10IO Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates (other than the Class A-IO Certificates) less any amounts
actually distributed on such Class A Certificates with respect to the Class A
Distribution Amount pursuant to Section 7.03(c)(iii)(D) and (H) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes
of effecting the Certificate Insurer's subrogation rights, that portion of
Insured Payments made in respect of principal).
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"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-9IO Certificates, the Class A-9IO 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-9IO Current
Interest and the Class A-10IO Current Interest.
"Class A-IO Certificate": Any one of the Class A-9IO
Certificates or Class A-10IO Certificates.
"Class A-1 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-1 Certificate, substantially in the
form annexed hereto as Exhibit A-1, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to
the Class A-1 Distribution Amount pursuant to Section 7.03(c)(iii)(D) hereof
with respect to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation rights, that
portion of Insured Payments made in respect of principal).
"Class A-1 Certificate Termination Date": The Payment Date on
which the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual
Period at the Class A-1 Pass-Through Rate plus the Preference Amount owed to
the Owners of the Class A-1 Certificates as it relates to interest previously
paid on the Class A-1 Certificates plus the interest portion of the
Carry-Forward Amount, if any, with respect to the Class A-1 Certificates.
"Class A-1 Distribution Amount": The sum of (x) Class A-1
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-1 Certificates pursuant to Section
7.03(c)(iii)(D)(1) hereof.
"Class A-1 Pass-Through Rate": 6.76% per annum.
"Class A-2 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Certificate, substantially in the
form annexed hereto as Exhibit A-2, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
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"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 interest portion of 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": 6.95% 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 interest portion of the
Carry-Forward Amount, if any, with respect to the Class A-3 Certificates.
"Class A-3 Distribution Amount": The sum of (x) Class A-3
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-3 Certificates pursuant to Section
7.03(c)(iii)(D)(3) hereof.
"Class A-3 Pass-Through Rate": 7.16% per annum.
"Class A-4 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-4 Certificate, substantially in the
form annexed hereto as Exhibit A-4, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
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"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 interest portion of 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": 7.34% 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 interest portion of the
Carry-Forward Amount, if any, with respect to the Class A-5 Certificates.
"Class A-5 Distribution Amount": The sum of (x) Class A-5
Current Interest and (y) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(c)(iii)(D)(5) hereof.
"Class A-5 Pass-Through Rate": 7.52% per annum.
"Class A-6 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-6 Certificate, substantially in the
form annexed hereto as Exhibit A-6, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
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"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 interest portion of the
Carry-Forward Amount, if any, with respect to the Class A-6 Certificates.
"Class A-6 Distribution Amount": The sum of (x) Class A-6
Current Interest and (y) the 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": 7.83% 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 interest portion of 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": On any Payment Date, the lower
of (a) 8.04% per annum and (b) the weighted average Coupon Rate of the Home
Equity Loans in the Fixed Rate Group less the Expense Rate.
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"Class A-8 Available Funds Cap Rate": On any Payment Date on
or prior to the Payment Date in February 1999, 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) 0.90% 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) 1.40% per annum.
"Class A-8 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-8 Certificate, substantially in the
form annexed hereto as Exhibit A-8, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed with respect to
the Class A-8 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-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 interest portion of 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 Adjustable Rate Group Principal Distribution
Amount payable to the Owners of the Class A-8 Certificates pursuant to Section
7.03(c)(iii)(H) hereof.
"Class A-8 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 0.32% per annum and (ii) the Class A-8 Available Funds
Cap Rate for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.64% per annum and
(ii) the Class A-8 Available Funds Cap Rate for such Payment Date.
"Class A-9IO Available Funds Cap Rate": As of any Payment
Date, the excess of (i) the weighted average Coupon Rate of the Home Equity
Loans in the Fixed Rate Group over (ii) the Fixed Rate Group Weighted Average
Pass-Through Rate plus the Expense Rate.
"Class A-9IO Carry-Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the Class A-9IO
Current Interest as of the immediately preceding Payment Date exceeds (ii) the
amount of the actual distribution made to Owners of the Class A-9IO
Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class A-9IO Pass-Through Rate.
"Class A-9IO Certificate": Any one of the Certificates
designated on the face thereof as a Class A-9IO Certificate, substantially in
the form annexed hereto as Exhibit A-9IO, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
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"Class A-9IO Certificate Termination Date": The Payment Date
on which the Class A- 9IO Notional Principal Amount is reduced to zero.
"Class A-9IO Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-9IO Notional Principal
Amount immediately prior to such Payment Date during the related Accrual Period
at the Class A-9IO Pass-Through Rate plus the Preference Amount owed to the
Owners of the Class A-9IO Certificates as it relates to interest previously
paid on the Class A-9IO Certificates plus the Class A-9IO Carry-Forward Amount.
"Class A-9IO Notional Principal Amount": As of any date of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Certificates.
"Class A-9IO Pass-Through Rate: The lesser of (x) 1.30% per
annum and (y) the Class A-9IO Available Funds Cap Rate.
"Class A-10IO Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the Class A-10IO
Current Interest as of the immediately preceding Payment Date exceeded (ii) the
amount of the actual distribution made to Owners of the Class A-10IO
Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class A-10IO Pass-Through Rate.
"Class A-10IO 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 representing the right to distributions as set forth herein.
"Class A-10IO Certificate Termination Date": The Payment Date
on which the Class A- 10IO Notional Principal Amount is reduced to zero.
"Class A-10IO Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-10IO Notional Principal
Amount immediately prior to such Payment Date at the Class A-10IO Pass-Through
Rate plus the Preference Amount owed to the Owners of the Class A- 10IO
Certificates as it relates to interest previously paid on the Class A-10IO
Certificates plus the Class A-10IO Carry-Forward Amount.
"Class A-10IO Notional Principal Amount": As of any time of
determination, the aggregate outstanding Class A-8 Certificate Principal
Balance.
"Class A-10IO Pass-Through Rate": 0.90% per annum.
"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
Certificates on such immediately preceding Payment Date and (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
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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) 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, (E) the Fixed Rate Group Weighted
Average Pass-Through Rate and (F) the Class A-9IO
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, (E) the Class A-8
Pass-Through Rate and (F) the Class A-10IO 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
$55,000,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a)
hereof.
"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.
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"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-9IO Current Interest and the Class
A-10IO Current Interest.
"Cut-Off Date": As of the close of business on August 1,
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.
"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date.
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"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"Disqualified Organization": Shall have the meaning set forth
from time to time in the definition thereof at Section 860E(e)(5) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated
pursuant to Section 7.07 hereof.
"Excess Subordinated Amount": With respect to any Home Equity
Loan Group and Payment Date, the excess, if any, of (x) the Subordinated Amount
that would apply to the related Home Equity Loan Group on such Payment Date
after taking into account the payment of the related Class A Distribution
Amounts on such Payment Date (except for any distributions of related
Subordination Reduction Amounts on such Payment Date), over (y) the related
Specified Subordinated Amount for such Payment Date.
"Expense Rate": For any Payment Date, the sum of the rates at
which the Servicing Fee, the Premium Amount and the Trustee Fee are calculated.
"FDIC": The Federal Deposit Insurance Corporation, a
corporate instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the
Emergency Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to
Section 3.05 hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of Class A
Certificates, as set out in Section 2.08(k).
"First Mortgage Loan": A Home Equity Loan which constitutes a
first priority mortgage lien with respect to the related Property.
"Fiscal Agent": State Street Bank and Trust Company, N.A., as
Fiscal Agent for the Certificate Insurer under the Certificate Insurance
Policies or any successor fiscal agent appointed by the Certificate Insurer.
"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 and
the Class A-7 Certificates.
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"Fixed Rate Group": The pool of Home Equity Loans identified
in the related Schedule of Home Equity Loans as having been assigned to the
Fixed Rate Group in Schedule I-A hereto, including any Qualified Replacement
Mortgages delivered in replacement thereof.
"Fixed Rate Group Available Funds": As defined in Section
7.02(c) hereof.
"Fixed Rate Group Available Funds Shortfall": As defined in
Section 7.03(c)(i)(A) hereof.
"Fixed Rate Group Certificate Insurance Policy": The
certificate guaranty insurance policy (number 21819) dated August 20, 1996
issued by the Certificate Insurer for the benefit of the owners of the Fixed
Rate Certificates and the Class A-9IO 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 the Class A-9IO 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,
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(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,
(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to Home Equity Loans in the
Fixed Rate Group during the related Remittance Period (to the
extent such Net Liquidation Proceeds relate to principal) to
the extent such Net Liquidation Proceeds are actually
received by the Trustee on or prior to the related Monthly
Remittance Date,
(F) the amount of any Subordination Deficit with
respect to the Fixed Rate Group for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to the Fixed Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal),
(H) the amount of any Subordination Increase Amount
with respect to the Fixed Rate Group for such Payment Date,
to the extent of any Net Monthly Excess Cashflow available
for such purpose; and
(I) the portion of any Carry-Forward Amount relating
to principal with respect to the Fixed Rate Group for such
Payment Date,
over
(ii) the amount of any Subordination Reduction Amount with
respect to the Fixed Rate Group for such Payment Date.
"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
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Group Principal Distribution Amount thereon (except for any Subordination
Deficit with respect to the Fixed Rate Group and Subordination Increase Amount
with respect to the Fixed Rate Group) on such Payment Date).
"Fixed Rate Group Total Available Funds": As defined in Section
7.02(c) hereof.
"Fixed Rate Group Total Monthly Excess Spread": With respect to the
Fixed Rate Group and any Payment Date, the excess, if any, of (i) the sum of
(x) the interest which is collected on the Home Equity Loans in such Group
during the related Remittance Period less the Servicing Fee with respect to
Home Equity Loans in the Fixed Rate Group, (y) any Delinquency Advances and (z)
Compensating Interest paid by the Servicer with respect to the Fixed Rate Group
for such Remittance Period over (ii) the sum of the interest due on the Fixed
Rate Certificates and the Class A-9IO 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 PassThrough Rate, the Class A-3 Pass-Through
Rate, the Class A-4 Pass-Through Rate, the Class A-5 PassThrough Rate, the
Class A-6 Pass-Through Rate and the Class A-7 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-9IO Certificates and (B) in the case of the
Adjustable Rate Group, the Class A-8 Certificates and the Class A-10IO
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.
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"Indemnification Agreement": The Indemnification Agreement dated as of
July 30, 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 August 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.
"Insured Payment": With respect to either Home Equity Loan Group and
as to any Payment Date, without duplication, (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-8
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the
London interbank market. In such event, the Trustee will request the principal
London office of each of the Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that date will
be the arithmetic mean of the quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Class A-8 Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
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"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of any
defaulted Home Equity Loan, such expenses including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.09(b) with respect to the related Home Equity
Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such Home Equity Loan included in
previous Monthly Remittance Amounts, provided, however, that the Loan Balance
for any Home Equity Loan that has become a Liquidated Loan shall be zero as of
the first day of the Remittance Period following the Remittance Period in which
such Home Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed
at the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances and Servicing Advances which the Servicer has theretofore
failed to remit with respect to such Home Equity Loan and (iii) all reimbursed
Delinquency Advances to the extent that reimbursement is not made from the
Mortgagor or from Liquidation Proceeds from the respective Home Equity Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised
Value into the original principal balance of the Note relating to such First
Mortgage Loan and (ii) with respect to any Second Mortgage Loan, the percentage
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": 8.06% per annum.
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"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": 8.25% 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": 8.46% 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.
"Lower-Tier A-4 Pass-Through Rate": 8.64% 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": 8.82% 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": 9.13% 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": On any Payment Date, the lower of
(a) 9.34% 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-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date in any month
up to and including the month in which the Clean-Up Call Date occurs, the
lesser of (a) LIBOR plus 0.32% per annum and (b) the Class A-8 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
0.64% per annum and (b) the Class A-8 Available Funds Cap Rate for such Payment
Date.
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"Lower-Tier Adjustable Rate Group Distribution Amount": With respect
to any Payment Date, the sum of the Lower-Tier A-8 Monthly Interest and the
Adjustable Rate Group Principal Distribution Amount, as a distribution on the
Lower-Tier Interest A-8 until the Lower-Tier Interest A-8 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-8
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.
"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 LowerTier A-6
Monthly Interest, the Lower-Tier A-7 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; and 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;
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.
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"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-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 LowerTier 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 LowerTier 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 LowerTier 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 LowerTier 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 LowerTier 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 LowerTier 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 LowerTier 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 LowerTier Interest A-8 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.
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"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, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(c)(ii)
hereof.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"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 Policies, the Certificates, the Indemnification Agreement and the
Insurance Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Home Equity Loans as of the Startup Day, i.e., $549,935,226.50.
"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.
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"Owner": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 5.06
and Section 7.03(g) hereof, respectively; provided that solely for the purposes
of determining the exercise of any voting rights hereunder, if Class A
Certificates are beneficially owned by the Seller or any affiliate thereof, the
Seller or such affiliate shall not be considered an Owner hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day.
"Percentage Interest": With respect to a Class A Certificate (other
than the Class A-IO Certificates) a fraction, expressed as a percentage, the
numerator of which is the initial Class A Certificate Principal Balance
represented by such Class A Certificate and the denominator of which is the
aggregate initial Class A Certificate Principal Balance represented by all the
Class A Certificates. With respect to a Class A-IO 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), 8.10(b) or 8.13(a) hereof representing principal and the proceeds of
any Insurance Policy which are to be applied as a payment of principal on the
related Home Equity Loan shall be deemed to be Prepayments for all purposes of
this Agreement.
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"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": The sum of the Fixed Rate Group
Principal Remittance Amount and the Adjustable Rate Group Principal Remittance
Amount.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property (including all building thereon)
securing a Home Equity Loan.
"Prospectus": The Prospectus dated April 17, 1996 constituting part of
the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1996-3 Prospectus Supplement dated July 30, 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, (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 September 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.
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"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 Fixed Rate Certificates and Class
A-IO Certificates and each Payment Date, the last day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs and
with respect to the Class A-8 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.
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"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing
may be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the
month in which a Monthly Remittance Date occurs; provided that the initial
Remittance Period shall be the period from August 2, 1996 through August 30,
1996.
"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.
"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, whether or not such Home Equity Loan (including related Note) has been
modified and the aggregate Loan Balances of all Home Equity Loans set forth on
such Schedule of Home Equity Loans.
"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.
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"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.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration
duties relating to such Home Equity Loan pursuant to Section 8.15 and equal to
0.50% per annum of the then outstanding principal amount of such Home Equity
Loan as of the first day of each calendar month payable on a monthly basis;
provided, however, that in the event that, as of any Payment Date, (i) the sum
of (x) the Current Interest (with respect to the Class A-7 Current Interest
determined pursuant to Clause (a) of the definition of Class A-7 Pass-Through
Rate) on the Fixed Rate Certificates applicable to such Payment Date (expressed
as a percentage of the aggregate outstanding Loan Balance) and (y) the Expense
Rate (using 0.50% as the Servicing Fee) exceeds (ii) the weighted average
Coupon Rate of the Home Equity Loans in the Fixed Rate Group for the related
Remittance Period, then the aggregate Servicing Fee for the Home Equity Loans
in the Fixed Rate Group 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 Rating Services, a division of
The McGraw-Hill Companies, Inc.
"Startup Day": August 20, 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
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Equity Loan Group and Subordination Increase Amount with respect to such Home
Equity Loan Group), exceeds (y) the aggregate Loan Balances of the Home Equity
Loans in the related Home Equity Loan Group as of the close of business on the
last day of the related Remittance Period.
"Subordination Increase Amount": With respect to any Home Equity Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amounts on such Payment Date (except for any
Subordination Increase Amount with respect to such Home Equity Loan Group)) and
(ii) the aggregate amount of Net Monthly Excess Cashflow allocated to such Home
Equity Loan Group pursuant to Sections 7.03(c)(ii)(A) and (B) on such Payment
Date.
"Subordination Reduction Amount": With respect to any Home Equity Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Home Equity Loan Group and Payment Date and (y)
the Principal Remittance Amount with respect to such Home Equity Loan Group for
the related Remittance Period.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain
Home Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The Class R Certificate, initially issued
to ContiFunding Corporation as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates and the Upper-Tier Residual Class, each of which shall be
issued to and held by ContiFunding Corporation throughout the term hereof
unless another Person shall accept an assignment of such interest and the
designation of Tax Matters Person pursuant to Section 11.18 hereof.
"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.
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"Trust": ContiMortgage Home Equity Loan Trust 1996-3, the trust
created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Manufacturers and Traders Trust Company, a New York banking
corporation, the Corporate Trust Department of which is located on the date of
execution of this Agreement at One M&T 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) 0.0040% multiplied by the
then-outstanding Class A Certificate Principal Balance and (ii) $4,750.
"Underwriters": Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Bear, Stearns & Co. Inc., CS First Boston Corporation, ContiFinancial Services
Corporation and Greenwich Capital Markets Inc.
"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 and the Class A-8 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 1996-3,"
which shall contain two subtrusts.
Section 2.02 Office.
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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Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in
the State of New York and payments will be received by the Trustee only in the
State of New York and payments from the Trustee will be made only from the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows:
Initial Lower- Lower-Tier Final Scheduled
Class Designation Tier Balance Pass-Through Rate Payment Dates
----------------- -------------- ----------------- ---------------
Lower-Tier Interest A-1 $136,000,000 8.06% February 15, 2011
Lower-Tier Interest A-2 $33,000,000 8.25% July 15, 2011
Lower-Tier Interest A-3 $72,000,000 8.46% July 15, 2011
Lower-Tier Interest A-4 $30,000,000 8.64% July 15, 2011
Lower-Tier Interest A-5 $42,000,000 8.82% July 15, 2011
Lower-Tier Interest A-6 $54,000,000 9.13% February 15, 2016
Lower-Tier Interest A-7 $33,000,000 (1) September 15, 2027
Lower-Tier Interest A-8 $150,000,000 (2) September 15, 2027
Class B-IO (consisting of (3) September 15, 2027
two "regular interests")
Class R Certificates (4) September 15, 2027
- -------------------
(1) On any Payment Date, the lower of (a) 9.34% per annum and (b) the
weighted average Coupon Rate of the Home Equity Loans 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
0.32% per annum and (ii) the Class A-8 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 0.64% per annum and (ii) the Class A-8 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.
(b) The Lower-Tier Interest A-1, A-2, A-3, A-4, A-5, A-6, A-7 and A-8
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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(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 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-9IO and
Class A-10IO 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 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.
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(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 February 15, 2011
Class A-2 Certificates July 15, 2011
Class A-3 Certificates July 15, 2011
Class A-4 Certificates July 15, 2011
Class A-5 Certificates July 15, 2011
Class A-6 Certificates February 15, 2016
Class A-7 Certificates September 15, 2027
Class A-8 Certificates September 15, 2027
Class A-9IO Certificates September 15, 2027
Class A-10IO Certificates September 15, 2027
END OF ARTICLE II
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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.
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(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are
attributable to the Depositor therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Depositor required to be stated therein
or necessary to make the statements contained therein with respect to the
Depositor, in light of the circumstances under which they were made, not
misleading. The Registration Statement does not contain any untrue statement of
a material fact required to be stated therein or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
known to the Depositor that materially adversely affects or in the future may
(so far as the Depositor can now reasonably foresee) materially adversely
affect the Depositor or the Home Equity Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents on the part of the Depositor and the performance by the
Depositor of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any
pending insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive delivery of the respective Home
Equity Loans to the Trustee.
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Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of 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
SubServicer 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.
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(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed
to the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated 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
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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
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.
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(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.
(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.
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(o) The Seller is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03 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 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
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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 and
the aggregate Loan Balance of all Home Equity Loans set forth in
the related Schedule of Home Equity Loans is true and correct as of
the Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto)
with respect to each Home Equity Loan has been or will be delivered
to the Trustee on the Startup Day or as otherwise provided in
Section 3.05;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling, which may include condominiums and
townhouses 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 0.03% and 0.00% 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 0.50% and
0.63% 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 24.78% of such Home
Equity Loans which have a Loan-to-Value Ratio not greater than 95%;
no Home Equity Loan in the Fixed Rate Group has a Loan-to-Value
Ratio greater than 71%; no Home Equity Loan in the Adjustable Rate
Group has a Loan-toValue Ratio in excess of 85%, except 1.8% of
such Home Equity Loans which have a Loanto-Value Ratio not greater
than 95%; no Home Equity Loan in the Adjustable Rate Group has a
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 of at least 7.99% per annum,
and the Note related to each Home Equity Loan in the Adjustable
Rate Group bears a current Coupon Rate of at least 6.75% per annum.
The weighted average Coupon Rate of the Home Equity Loans in the
Fixed Rate Group is at least 11.911% and the weighted average
Coupon Rate of the Home Equity Loans in the Adjustable Rate Group
is at least 10.118%;
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(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 54.32% and 0.12% 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 (ix) or other liens which will be released simultaneously
with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Trustee will hold
good and indefeasible title to, and be the sole owner of, each Home
Equity Loan subject to no liens, charges, mortgages, encumbrances
or rights of others except as set forth in paragraph (ix) or other
liens which will be released simultaneously with such transfer and
assignment;
(xi) As of the Startup Day, (a) no more than 1.18% and 0.40%
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 0.09% and 0.01% of the
Home Equity Loans in the Fixed Rate Group and the Adjustable Rate
Group, respectively, as a percentage of the outstanding aggregate
Loan Balance of the Home Equity Loans in such Group, are 60-89 days
Delinquent, (c) none of the Home Equity Loans in the Fixed Rate
Group, is 90 or more days Delinquent, (d) none of the Home Equity
Loans in the Adjustable Rate Group are 90 or more days Delinquent,
(e) no Mortgagor of any Home Equity Loan has been 30 days or more
Delinquent more than once during the 12 months immediately
preceding the Startup Day except as indicated on Schedule III
attached hereto and (f) no Mortgagor of any Home Equity Loan has
been 90 or more days Delinquent during the 12 months immediately
preceding the Startup Day except as indicated on Schedule III
attached hereto.
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of
the related Mortgagor to pay the unpaid principal of or interest on
such Note;
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(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,
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
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(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 0.69% 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, 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;
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(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;
(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;
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(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 4.57% and 3.13% 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 15.22% and 21.97% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group and the
Adjustable Rate Group, respectively, are secured by Home Equity
Loans which were originated under the Seller's non-income
verification program;
(xlvi) 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
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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 $429,251;
(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 $1,000,001;
(liv) No more than 8.32% of the Fixed Rate Group Home Equity
Loans are in a second priority position and none of the Adjustable
Rate Group Home Equity Loans are in a second priority position; and
(lv) The weighted average margin of the Adjustable Rate Group
Home Equity Loans is 6.63%.
(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.
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(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 Trust 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 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 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
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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 1996-3
under the Pooling and Servicing Agreement dated as of August 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 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
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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.
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
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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.
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,
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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 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 Reserved.
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-9IO 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-9IO,
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 and Class A-8 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-IO 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, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Seller, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Class A Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Class A Certificate as shown in the
Register, of any notice with respect to the Class A Certificates or (iii) the
payment to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
amount with respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered Owners
of Class A Certificates appearing as registered Owners in the registration
books maintained by the Trustee at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
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(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 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
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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.
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.
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(c) No transfer of a Class B-IO or Class R Certificate shall be made
unless the Trustee shall have received a representation letter from the
transferee of such Class B-IO or Class R Certificate, acceptable to and in form
and substance satisfactory to the Trustee, to the effect that such transferee
is not an employee benefit plan subject to Section 406 of ERISA nor a plan or
other arrangement subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 4975 of the Code (collectively, a "Plan"), nor
is acting on behalf of any Plan nor using the assets of any Plan to effect such
transfer. Notwithstanding anything else to the contrary herein, any purported
transfer of a Certificate to or on behalf of any Plan without the delivery to
the Trustee a representation letter as described above shall be null and void
and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made
to the Depositor, the 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 or Class A-8 Certificate having an
original principal balance of not less than $1,000,000 or (B) a Class A-IO,
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
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Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or such Paying Agent before being required to make
any such payment, may, at the expense of the Trust, cause to be published once,
in the eastern edition of The Wall Street Journal, notice that such money
remains unclaimed and that, after a date specified therein, which shall be not
fewer than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be paid to the Owners of the Class R
Certificates. The Trustee shall, at the direction of the Depositor, also adopt
and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Depositor to take any action pursuant to this
Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer as such rights are set forth in this Agreement;
provided, however, that nothing in this Section shall require any action by the
Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer or, if there are no longer any
Class A Certificates then outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates; provided, further, however,
that if there is a dispute with respect to payments under a Certificate
Insurance Policy the Trustee's sole responsibility is to the Owners.
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(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or
with the Trustee's fiduciary duties, or adversely affect its rights and
immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person
from any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
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.
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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
Policies, or for the appointment of a receiver or trustee of the Trust, or for
any other remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by
such percentage of the Percentage Interests represented by
the Class B-IO Certificates and the Class R Certificates,
shall have made written request to the Trustee to institute
such proceeding in its own name as Trustee establishing the
Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amount remains unpaid, the Certificate Insurer
consented in writing thereto (unless the Certificate Insurer
is the party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Class A Certificates or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage
Interests represented by the Class B-IO Certificates and the
Class R Certificates;
it being understood and intended that no one or more Owners shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Owner of the same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce any right under
this Agreement, except in the manner herein provided and for the equal and
ratable benefit of all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing
less than a majority of the applicable Class of Certificates and each
conforming to paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer
in its sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provision of this Agreement (unless the Certificate
Insurer is the party against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
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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.
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
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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 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-8 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
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Distribution Amount with respect to the other Home
Equity Loan Groups pursuant to clause (iii) below;
(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-9IO Certificates, the related
Current
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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-9IO
Certificates without any priority among the related
Fixed Rate Certificates and the Class A-9IO
Certificates;
(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 until the Class A-1 Certificate
Termination Date;
(2) second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Termination Date;
(3) third, to the Owners of the Class A-3
Certificates until the Class A-3 Certificate
Termination Date;
(4) fourth, to the Owners of the Class A-4
Certificates until the Class A-4 Certificate
Termination Date;
(5) fifth, to the Owners of the Class A-5
Certificates until the Class A-5 Certificate
Termination Date;
(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;
(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-8 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-8
Certificates and the Class A-10IO Certificates, the
related Current Interest thereon on a pro rata basis
without any priority among the Class A-8
Certificates and Class A-10IO Certificates; and
(G) from Total Monthly Excess Spread, the Premium Amount
allocable to the Adjustable Rate Group for such
Payment Date to the Certificate Insurer;
(H) from the Upper-Tier Adjustable Rate Group
Distribution Account as a distribution of principal
to the Owners of the Class A-8 Certificates, the
Adjustable Rate Group Principal Distribution Amount;
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(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-IO Certificates) on such Payment Date.
(e) Notwithstanding clause (c)(iii) above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Class A Certificates on
account of principal pursuant to clauses (c)(iii)(D) and (c)(iii)(H) shall not
exceed the original Certificate Principal Balance of the related Certificates.
(f) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Class A Certificates, the Trustee shall deposit
such Insured Payments in the Certificate Account and shall distribute such
Insured Payments, or the proceeds thereof, (i) in the case of the Fixed Rate
Certificates and the Class A-IO Certificates, through the Upper-Tier Fixed Rate
Group Distribution Account to the Owners of such Certificates and (ii) in the
case of the Class A-8 Certificates and Class A-10IO Certificates, through the
Upper-Tier Adjustable Rate Group Distribution Account, to the Owners of such
Certificates.
(g) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with moneys received pursuant to the terms of the Certificate Insurance
Policy shall not be considered payment of such Certificates from the Trust and
shall not result in the payment of or the provision for the payment of the
principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner
by its acceptance of a Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the Depositor, the
Servicer, the Trustee or the Registrar (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such Owners to
receive such principal and interest together with any interest thereon of the
applicable Pass-Through Rate from the Trust and (b) the Certificate Insurer
shall be paid such principal and interest only from the sources and in the
manner provided herein for the payment of such principal and interest.
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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 a Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such payments discharge
the obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to Section 7.03(c)(i) hereof.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class B-IO Certificates and the Class R
Certificates to receive distributions in respect of the Class B-IO Certificates
and the Class R Certificates, and all ownership interests of the Owners of the
Class B-IO Certificates and the Class R Certificates in and to such
distributions, shall be subject and subordinate to the preferential rights of
the holders of the Class A Certificates to receive distributions thereon and
the ownership interests of such Owners in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the Owners
of the Class B-IO Certificates and the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until
such amounts are distributed in respect of the Class B-IO Certificates and the
Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the
Owners of the Class B-IO Certificates and the Class R Certificates shall not be
required to refund any amount properly distributed on the Class B-IO
Certificates and the Class R Certificates pursuant to this Section 7.03.
Section 7.04 Reserved.
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners shall be invested
and reinvested by the Trustee in the name of the Trustee for the benefit of the
Owners, as directed in writing by the Depositor, in one or more Eligible
Investments bearing interest or sold at a discount. The bank serving as Trustee
or any affiliate thereof may be the obligor on any investment which otherwise
qualifies as an Eligible Investment. No investment in any Account shall mature
later than the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor thereon).
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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;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of
any Federal Home Loan Banks; provided, that any such investment shall be rated
in one of the two highest ratings categories by Moody's and S&P;
(c) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated
A-1+ or better by Standard & Poor's and P-1 by Moody's;
(d) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB by
Standard & Poor's) which has combined capital, surplus and undivided profits of
at least $50,000,000 which deposits are insured by the FDIC and held up to the
limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer
provided:
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1. The agreement is with a bank or insurance company which
has unsecured, uninsured and unguaranteed senior debt obligations
rated Aa2 or better by Moody's and AA or better by Standard & Poor's,
and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other obligations
of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or
bank;
(f) Repurchase agreements collateralized by securities described in
(a) above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long-term obligation rated P-1 or Aa2, respectively,
or better by Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a
bank which is a member of the FDIC and which has combined capital,
surplus and undivided profits of not less than $125 million, or (c) a
bank approved in writing for such purpose by the Certificate Insurer,
and the Trustee shall have received written confirmation from such
third party that it holds such securities, free and clear of any lien,
as agent for the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1
et seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less
frequently than weekly and will liquidate the collateral securities if
any deficiency in the required collateral percentage is not restored
within two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106% and such collateral
securities must be valued weekly and market-to-market at current
market price plus accrued interest.
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(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's
and Moody's; and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's and Aaa by Moody's;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature 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-7 Certificate Termination Date
and the Class A-8 Certificate Termination Date, the Trustee shall determine, no
later than 12:00 noon on such Determination Date, whether an Insured Payment
will be required to be made by the Certificate Insurer on the following Payment
Date. If the Trustee determines that an Insured Payment will be required to be
made by the Certificate Insurer on the following Payment Date then no later
than 12:00 noon on the second Business Day immediately preceding the related
Payment Date the Trustee shall furnish the Certificate Insurer and the
Depositor with a completed Notice in the form set forth as Exhibit A to the
Insurance Agreement. The Notice shall specify the amount of Insured Payment and
shall constitute a claim for an Insured Payment pursuant to the Certificate
Insurance Policy.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and
the Trustee), the Trustee shall notify (subject to the terms of Section
10.03(j) hereof, based solely on information provided to the Trustee by the
Servicer) the Depositor, 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 the
Fixed Rate Certificates and the Class A-8 Certificates, the Class
A-9IO Notional Principal Amount 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 Fiscal Agent of (i) a certified copy of the order requiring the return of
such Preference Amount, (ii) an opinion of counsel satisfactory to the
Certificate Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the Certificate
Insurer, irrevocably assigning to the Certificate Insurer all rights and claims
of the Owners relating to or arising under the Class A Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment and (iv) appropriate instruments to effect the appointment
of the Certificate Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Certificate Insurer, provided that if such documents are
received after 12:00 noon New York City time on such Business Day, they will be
deemed to be received on the following Business Day. Such payment shall be
disbursed to the receiver or trustee in bankruptcy named in the final court
order of the court exercising jurisdiction on behalf of the Owner and not to
any Owner directly unless such Owner has returned principal or interest paid on
the Class A Certificates to such receiver or trustee in bankruptcy in which
case payment will be disbursed to the Owner.
Each Owner of a Class A Certificate, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer may at any time during the continuation of any
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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.
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The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges)
on any Property shall be recoverable by the Servicer or such Sub-Servicer to
the extent described in Section 8.09(b) hereof.
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 SubServicing
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.
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Section 8.05 Liability of Servicer; Indemnification .
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall
be deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Home Equity Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee, the Certificate Insurer and each Owner if a claim is made
by a third party with respect to this Agreement, and the Servicer shall assume
(with the consent of the Trustee and the Certificate Insurer) the defense of
any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against the Servicer, the Trustee, the
Certificate Insurer and/or Owner in respect of such claim. The Trustee may, if
necessary, reimburse the Servicer from amounts otherwise distributable on the
Class R Certificates for all amounts advanced by it pursuant to the preceding
sentence except when the claim relates directly to the failure of the Servicer
to service and administer the Home Equity Loans in compliance with the terms of
this Agreement. The provisions of this Section 8.05 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee
or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to
be between the Sub-Servicer and the Servicer alone and the Trustee, the
Certificate Insurer and the Owners shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect
to any Sub-Servicer except as set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously
by the Trustee without act or deed on the part of the Trustee; provided,
however, that the successor Servicer may terminate the Sub-Servicer as provided
in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Sub-Servicing Agreements to
the assuming party.
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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 August 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 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) reimbursements for
Delinquency Advances and (v) reimbursements for amounts deposited in the
Principal and Interest Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amount herein referred to as
"Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Principal and Interest Account, with respect to each
Home Equity Loan Group, only in the following priority and for the following
purposes:
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(A) to withdraw interest paid with respect to any Home
Equity Loans that had accrued for periods prior to the
Cut-Off Date;
(B) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
(E) to clear and terminate the Principal and Interest
Account following the termination of the Trust pursuant
to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Remittance Date, deliver to the Trustee 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
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on account of the related Mortgage Loan to the extent of the amount of
aggregate Delinquency Advances related thereto. If not recovered from the
related Mortgagor or the related Net Liquidation Proceeds, the Servicer shall
recover Delinquency Advances pursuant to Section 7.03(c)(ii)(C).
Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
aggregate remaining Scheduled Payments due on the Home Equity Loans, the
Servicer shall not be required to make any future Delinquency Advances, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided in the prior paragraph. The Servicer shall give written
notice of such determination to the Trustee and the Certificate Insurer; and
the Trustee shall promptly furnish a copy of such notice to the Owners of the
Class R Certificates; provided, that the Servicer shall be entitled to recover
any unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds
prior to the payment of the Liquidation Proceeds to any other party to this
Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a
"Servicing Advance". The Servicer may recover Servicing Advances (x) from the
Mortgagors to the extent permitted by the Home Equity Loans or, if not
recovered from the Mortgagor on whose behalf such Servicing Advance was made,
from Liquidation Proceeds realized upon the liquidation of the related Home
Equity Loan and (y) as provided in Section 7.03(c)(ii)(C). The Servicer shall
be entitled to recover the Servicing Advances from the aforesaid Liquidation
Proceeds prior to the payment of the Liquidation Proceeds to any other party to
this Agreement. Except as provided in the previous sentence, in no case may the
Servicer recover Servicing Advances from the principal and interest payments on
any Home Equity Loan or from any amounts relating to any other Home Equity Loan
except as provided in Section 7.03(c)(ii)(C).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment of a Home Equity Loan occurs during any calendar
month or if the amount received with respect to a date-of-payment or simple
interest Home Equity Loan represents less than a full month's interest, any
difference between the interest collected from the Mortgagor and the full
month's interest at the Coupon Rate less the Servicing Fee ("Compensating
Interest") that is due shall be deposited by the Servicer (but not in excess of
the aggregate Servicing Fee for the related Remittance Period) to the Principal
and Interest Account on the next succeeding Monthly Remittance Date and shall
be included in the Monthly Remittance to be made available to the Trustee on
such Monthly Remittance Date.
(b) The Servicer, and in the absence of the exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, to purchase for its own account any Home Equity Loan which becomes
Delinquent, in whole or in part, as to four consecutive monthly installments or
any Home Equity Loan as to which enforcement proceedings have been brought by
the Servicer pursuant to Section 8.13; provided, however, that the Servicer or
the Certificate Insurer, as the case may be, may not purchase any such Home
Equity Loan unless the Servicer or the Certificate Insurer, as the case may be,
has delivered to the Trustee an opinion of counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that such a purchase would not constitute
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a Prohibited Transaction for the Trust or otherwise subject the Trust to tax
and would not jeopardize the status of either the Upper-Tier REMIC or the
Lower-Tier REMIC as a REMIC. Any such Loan so purchased shall be purchased by
the Servicer or the Certificate Insurer as the case may be on a Monthly
Remittance Date at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the Principal and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
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
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Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as Mortgagor and
becomes liable under the Note; provided, however, that to the extent any such
substitution of liability agreement would be delivered by the Servicer outside
of its usual procedures for mortgage loans held in its own portfolio the
Servicer shall, prior to executing and delivering such agreement, obtain the
prior written consent of the Certificate Insurer. The Home Equity Loan, as
assumed, shall conform in all respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee the original copy of such assumption or substitution agreement
(indicating the File to which it relates) which copy shall be added by the
Trustee to the related File and which shall, for all purposes, be considered a
part of such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording
any such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the required monthly payment on the
related Home Equity Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Home Equity Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Servicer or the Sub-Servicer for consenting
to any such conveyance or entering into an assumption or substitution agreement
shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may
be restricted by law from preventing, for any reason whatsoever.
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
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860G(a)(8) of the Code or result in the receipt by the Lower-Tier REMIC or the
Upper Tier REMIC of any "income from non-permitted assets" within the meaning
of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO
Property in the same manner and to such extent as is customary in the locality
where such REO Property is located and may, incident to its conservation and
protection of the interests of the Owners, rent the same, or any part thereof,
as the Servicer deems to be in the best interest of the Owners for the period
prior to the sale of such REO Property. The Servicer shall take into account
the existence of any hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation, on a Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
Property. 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.
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(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of the Servicer and
delivery to the Trustee of a receipt signed by an Authorized Officer of the
Servicer, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer; provided that there shall not be released and
unreturned at any one time more than 10% of the entire number of Files. Such
receipt shall obligate the Servicer to return the File to the Trustee when the
need therefor by the Servicer no longer exists unless the Home Equity Loan
shall be liquidated, in which case, upon receipt of the FNMA "Liquidation
Schedule" relating to such liquidation, the receipt shall be released by the
Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages.
No application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-toincome 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
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fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before June 30 of any year, commencing in 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 subsequent letters, stating that
such firm has examined the Servicer's overall servicing operations in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Trustee, the 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
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order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement
with creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or similar entity with respect to
the Servicer or of all or any substantial part of its assets, or other
like relief in respect thereof under any bankruptcy or insolvency law,
and, if such proceeding is being contested by the Servicer in good
faith, the same shall (A) result in the entry of an order for relief
or any such adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of seventy-five (75) consecutive
days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default
thereof for a period of thirty (30) days (one (1) Business Day in the
case of a delay in making a required payment to the Trustee under
Section 8.08(d)(ii)(a)) after the earlier of (a) actual knowledge of
an officer of the Servicer or (b) receipt of notice from the Trustee
or the Certificate Insurer of said failure; provided, however, that if
the Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the Owners or
the Certificate Insurer for a period of sixty (60) days after the
earlier of the Servicer's discovery or receipt of notice thereof;
provided, however, that if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination
of the Servicer with or into any other entity, unless (1) the Servicer
is the surviving entity of such 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
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to the reasonable satisfaction of the Certificate Insurer that such
event was due to circumstances beyond the control of the Servicer, the
right of removal hereunder shall not be considered a default by the
Servicer; or
(iv) the failure by the Servicer to make any
required Delinquency Advance or to pay any Compensating Interest when
due;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate Insurer
and by registered or certified mail, notice of the occurrence of one or more of
the events set forth in clause (iii) above and the Servicer shall not have
remedied, or shall not have taken actions satisfactory to the Certificate
Insurer to remedy, such event or events within 60 days after the Servicer's
receipt of such notice and (y) upon the Trustee's determination that a required
Delinquency Advance or payment of Compensating Interest has not been made by
the Servicer, the Trustee shall so notify an Authorized Officer of the
Servicer, the Owners, if any, and the Certificate Insurer as soon as is
reasonably practical.
(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
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that the event is the result of the former, the Certificate Insurer may
terminate the Servicer in accordance with this Section and the Trustee shall
act as successor Servicer, provided that the Trustee shall have until the 30th
day following the date of receipt of notice of the event to become the
successor Servicer or to appoint a successor Servicer pursuant to this Section.
If the Owners of the Class R Certificates and the Certificate Insurer cannot
agree as to the cause of the event, the decision of the Certificate Insurer
shall control.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are
no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of the Servicer so causing such a conflict being of a type and
nature carried on by the Servicer at the date of this Agreement. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an opinion of counsel to such effect which shall be delivered to the Trustee
and the Certificate Insurer.
(f) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(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.
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(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain servicing. The Trustee shall deduct from any sum received by
the Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust from the Servicer shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the successor
Servicer.
(k) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it
to enable it to assume the Servicer's functions hereunder and shall promptly
also transfer to the Trustee or such successor Servicer, as applicable, all
amounts which then have been 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.
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Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer or any agents thereof may inspect
the Servicer's servicing operations and discuss the servicing operations of the
Servicer during the Servicer's normal business hours with any of its officers
or directors; provided, however, that the costs and expenses incurred by the
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer;
(b) The Servicer agrees to maintain errors and omissions coverage and
a fidelity bond, each at least to the extent required by Section 305 of Part I
of the FNMA Guide or any successor provision thereof; provided, however, that
if the Trustee shall become the Servicer, any customary insurance coverage that
the Trustee maintains shall be deemed sufficient hereunder; provided, further,
that in the event that the fidelity bond or the errors and omissions coverage
is no longer in effect, the Trustee shall promptly give such notice to the
Certificate Insurer and the Owners. Upon the request of the Trustee or the
Certificate Insurer, the Servicer shall cause to be delivered to such
requesting Person a certified true copy of such fidelity bond or errors and
omission policy.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance
Policies, of all amounts held by the Trustee and required to be paid to such
Owners pursuant to this Agreement upon the latest to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Home Equity Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Home Equity Loan remaining in the Trust Estate, (c)
at any time when a Qualified Liquidation of both Home Equity Loan Groups
included within the Trust is effected as described below and (d) the final
payment to the Certificate Insurer of all amounts then owing to it. To effect a
termination of this Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the Lower-Tier REMIC and the Upper-Tier REMIC to adopt a plan of
complete liquidation for each of the Home Equity Loan Groups, as contemplated
by Section 860F(a)(4) of the Code and (ii) provide to the Trustee an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes a
Qualified Liquidation, and the Trustee either shall sell the Home Equity Loans
and distribute the proceeds of the liquidation of the Trust Estate, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last survivor of the
descendants of 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
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the Adjusted Pass-Through Rate, (b) the aggregate amount of any unreimbursed
Delinquency Advances and Servicing Advances and (c) any Delinquency Advances
which the Servicer has theretofore failed to remit. If, during the Purchase
Option Period, the Owners of the Class R Certificates have not exercised the
option described in the immediately preceding paragraph, then upon the
expiration of the Purchase Option Period (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
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Owners of a majority in Percentage Interest of the
Certificates of the affected Class or Classes and the
Certificate Insurer relating to the time, method and place
of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this
Agreement shall in any event require the Trustee to perform, or be responsible
for the manner of performance of, any of the obligations of the Servicer under
this Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(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
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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
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;
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(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;
(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.
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The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, 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
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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.
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.
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(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 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
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hereto; provided, however, that such corporation or association shall be
otherwise qualified and eligible under this Article X. In case any Certificates
have been executed, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such Trustee may adopt such
execution and deliver the Certificates so executed with the same effect as if
such successor Trustee had itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be
filed by the Trust with any federal, state or local governmental authority
having jurisdiction over the Trust, including other reports that must be filed
with the Owners, such as the Internal Revenue Service's Form 1066 and Schedule
Q and the form required under Section 6050K of the Code, if applicable to
REMICs. Furthermore, the Trustee shall report to Owners, if required, with
respect to the allocation of expenses pursuant to Section 212 of the Code in
accordance with the specific instructions to the Trustee by the Depositor with
respect to such allocation of expenses. The Trustee shall, upon request of the
Depositor, collect any forms or reports from the Owners determined by the
Depositor to be required under applicable federal, state and local tax laws.
(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
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the performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Depositor shall pay all amounts
not otherwise paid pursuant to Sections 2.05 and 7.06 hereof. The Trustee and
any director, officer, employee or agent of the Trustee may rely and shall be
protected in acting or refraining from acting in good faith on any certificate,
notice or other document of any kind prima facie properly executed and
submitted by the Authorized Officer of any Person respecting any matters
arising hereunder. The provisions of this Section 10.13 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee 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
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of this Section 10.14. Each separate Trustee and co-Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a
new or successor Trustee.
The Servicer and the Trustee hereby appoint Meridian Bank, New Jersey
(the "Initial CoTrustee") 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
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of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
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.
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Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such 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.
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Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or
such other date for the payment of any distribution to any Owner or the mailing
of such notice, 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.
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Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed
the maximum nonusurious rate of interest allowed by the applicable laws of the
State of New York or any applicable law of the United States permitting a
higher 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.
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(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.
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
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the Upper-Tier REMIC established hereunder using a calendar year as the taxable
year for the Lower-Tier REMIC and the Upper-Tier REMIC established hereunder;
(ii) in the related first such tax return, make (or cause to be made) an
election satisfying the requirements of the REMIC Provisions, on behalf of the
Lower-Tier REMIC and the Upper-Tier REMIC, for it to be treated as a REMIC;
(iii) prepare and forward, or cause to be prepared and forwarded, to the Owners
all information, reports or tax returns required with respect to the Lower-Tier
REMIC and the Upper-Tier REMIC as, when and in the form required to be provided
to the Owners, and to the Internal Revenue Service and any other relevant
governmental taxing authority in accordance with the REMIC Provisions and any
other applicable federal, state or local laws, including without limitation
information reports relating to "original issue discount" as defined in the
Code based upon the prepayment assumption and calculated by using the "Issue
Price" (within the meaning of Section 1273 of the Code) of the Certificates of
the related Class; (iv) not take any action or omit to take any action that
would cause the termination of the REMIC status of either the Lower-Tier REMIC
or the Upper-Tier REMIC, except as provided under this Agreement; (v) represent
the Trust of the Lower-Tier REMIC or the Upper-Tier REMIC in any administrative
or judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year of
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC, enter into
settlement agreements with any governmental taxing agency, extend any statute
of 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.
117
<PAGE>
(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.
(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 LowerTier 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.
118
<PAGE>
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. At such time as the Class A Certificates and any
Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20 Reserved.
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
119
<PAGE>
The Certificate
Insurer: MBIA Insurance Corporation
113 King St.
Armonk, NY 10504
Attention: Insured Portfolio
Management - SF (ContiMortgage 1996-3)
Tel: (914) 765-3799
Fax: (914) 273-4545
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: Merrill Lynch Pierce, Fenner & Smith Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Tel: (212) 449-1000
Fax: (212) 449-9015
Bear, Stearns & Co.
245 Park Avenue, 4th Floor
New York, New York 10167
Tel: (212) 272-3311
Fax: (212) 272-7294
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
120
<PAGE>
Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Owners: As set forth in the Register.
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
121
<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
RESERVED
<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>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(6.76% 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 1996-3") 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 21075WCX1
---------
CUSIP
$136,000,000 August 20, 1996 February 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-1-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans 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 September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-1-3
<PAGE>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(6.95% 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 1996-3") 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 21075WCY9
---------
CUSIP
$33,000,000 August 20, 1996 July 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-2-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans 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 September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-2-3
<PAGE>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(7.16% 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 1996-3") 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 21075WCZ6
---------
CUSIP
$72,000,000 August 20, 1996 July 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 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-3-3
<PAGE>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(7.34% 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 1996-3") 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 21075WDA0
---------
CUSIP
$30,000,000 August 20, 1996 July 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 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 September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-4-3
<PAGE>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(7.52% 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 1996-3") 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 21075WDB8
CUSIP
$42,000,000 August 20, 1996 July 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 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 September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-5-3
<PAGE>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(7.83% 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 1996-3") 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 21075WDC6
CUSIP
$54,000,000 August 20, 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-6-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans 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 September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-6-3
<PAGE>
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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(8.04%* 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 1996-3") 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-7-1 21075WDD4
CUSIP
$33,000,000 August 20, 1996 September 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-7-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans 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 September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 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.
"Class A-7 Pass-Through Rate" means on any Prepayment Date, the lower
of (a) 8.04% 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, without duplication, (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
A-7-3
<PAGE>
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 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.
A-7-4
<PAGE>
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 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.
A-7-5
<PAGE>
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 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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-8
(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 1996-3") 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-8-1 21075WDE2
CUSIP
$150,000,000 August 20, 1996 September 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 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-7 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to September 16, 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 SEPTEMBER 16, 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 1996-3, 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 August 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 1996-3 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-9IO (the
"Class A-9IO 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-9IO 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 September 16, 1996, the Owners of the Class A-8
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-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": 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 0.32% per annum and (ii) the Class A-8 Available Funds
Cap Rate for such Payment Date and for any month following the month in which
the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.64% per annum and
(ii) the Class A-8 Available Funds Cap Rate for such Payment Date.
"Class A-8 Available Funds Cap Rate": On any Payment Date on
or prior to the Payment Date in February 1999, 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) 0.90% 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) 1.40% per annum.
A-8-3
<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, without duplication, (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 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
A-8-4
<PAGE>
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 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
A-8-5
<PAGE>
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-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-9IO
FORM OF CLASS A-9IO 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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-9IO
(1.30% 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 1996-3") 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-9-1 _________
CUSIP
$0 September 15, 2027
Original Principal August 20, 1996 Final Scheduled
Amount Date Payment Date
$ CEDE & CO.
Original Notional Registered Owner
Principal Amount
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
Date of Authentication:______________
A-9IO-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans 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.
THE INITIAL PER ANNUM RATE OF INTEREST ON THIS CLASS A-9IO
CERTIFICATE IS 1.30%. 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 $___________ OF
OID PER $1,000,000 OF CLASS A-9IO NOTIONAL PRINCIPAL AMOUNT AND THE ANNUAL
YIELD TO MATURITY WILL BE _____% (COMPOUNDED MONTHLY); THE AMOUNT OF OID
ALLOCABLE TO THE LONG FIRST ACCRUAL PERIOD IS $____ PER $1,000,000 OF CLASS
A-9IO 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-9IO-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-3, Home
Equity Loan Pass-Through Certificates, Class A-9IO (the "Class A-9IO
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of August
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 1996-3 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-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 September 16, 1996, the Owners of the Class A-9IO
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-9IO 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-9IO 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-9IO 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-9IO Certificates. The Percentage
Interest of each Class A-9IO 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-9IO Available Funds Cap Rate": As of any Payment Date, the
excess (i) of the weighted average Coupon Rate of the Home Equity Loans in the
Fixed Rate Group over (ii) the Fixed Rate Group Weighted Average Pass-Through
Rate plus the Expense Rate.
"Class A-9IO Notional Principal Amount": As of the time of
determination, the aggregate outstanding Certificate Principal Balance of the
Fixed Rate Certificates.
"Class A-9IO Pass-Through Rate": The lesser of (x) 1.30% per annum and
(y) the Class A-9IO Available Funds Cap Rate.
A-9IO-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, without duplication, (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-9IO 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-9IO
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-9IO Certificates, the Certificate Insurer will be subrogated to the rights of
such Owners of Class A-9IO Certificates with respect to such Insured
A-9IO-4
<PAGE>
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-9IO Certificates and shall receive all future
distributions of the Class A-9IO 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-9IO-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-9IO 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-9IO Certificates are
exchangeable for new Class A-9IO 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-9IO-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-9IO-7
<PAGE>
EXHIBIT A-10IO
FORM OF CLASS A-10IO 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 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-10IO
(0.90% 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 1996-3") 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 --------
CUSIP
100% August 20, 1996 September 15, 2027
Percentage Interest Date Final Scheduled
Payment Date
$0 CEDE & CO.
Original Principal Amount Registered Owner
$
Original Notional Principal Amount
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Date of Authentication:____________
A-10IO-1
<PAGE>
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Home Equity Loans 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.
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 INITIAL PER ANNUM RATE OF INTEREST ON THIS CLASS A-9IO CERTIFICATE
IS 0.90%. 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 $___________ OF OID PER
$1,000,000 OF CLASS A-10IO NOTIONAL PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO
MATURITY WILL BE _____% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO
THE LONG FIRST ACCRUAL PERIOD IS $____ 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-2
<PAGE>
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1996-3, 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 August
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 1996-3 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-9IO (the "Class A-9IO
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-9IO 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 September 16, 1996, the Owners of the Class A-10IO
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-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
Class A-8 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, without duplication, (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 Date without regard to any related Insured Payment to be made
with respect to such
A-10IO-3
<PAGE>
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-4
<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-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-10IO-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-10IO-7
<PAGE>
EXHIBIT B-IO
FORM OF CLASS B-IO CERTIFICATE
ContiMortgage Home Equity Loan Trust 1996-3
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
August 20, 1996
Date
100% September 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 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 together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the Principal and Interest
Account, if any, exclusive of investment earnings thereon (except as otherwise
provided herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); (c) the
Insurance Agreement; (d) the Certificate Insurance Policies issued thereunder;
and (e) proceeds of all the foregoing (including, but not by way of limitation,
all proceeds of any mortgage insurance, hazard insurance and title insurance
policy relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS
A-3, CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS A-8, CLASS A-9IO 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.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
B-IO-2
<PAGE>
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 1996-3, 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 August 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 1996-3 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-9IO, 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 September 16, 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.
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
B-IO-3
<PAGE>
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.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
B-IO-4
<PAGE>
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 1996-3
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 August 20, 1996
Date
Percentage Interest 99.999 % September 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 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 1996-3, 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 August 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 1996-3 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-9IO, 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 September 16, 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 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 August 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: August __, 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 August 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: August __, 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 August 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: August __, 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 August 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 1996-3,
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: August __, 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 , .
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