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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 21, 1997
Headlands Home Equity Loan Trust 1997-1
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(Exact name of registrant as specified in its charter)
Delaware 333-28031 68-0397342
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(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
c/o Headlands Mortgage Company 94939
900 Larkspar Landing Circle ----------
Suite 240 (Zip Code)
Larkspar, California
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (415) 925-5442
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Item 2. Acquisition or Disposition of Assets
Description of the Securities and the Home Equity Loans
Headlands Mortgage Securities, Inc., as Sponsor, has
registered an issuance of Securities (the "Securities") on Form S-3. Pursuant
to the Registration Statement, Headlands Home Equity Loan Trust 1997-1 (the
"Trust") issued $192,924,110.37 Class A Variable Rate Asset Backed Notes and
Class S 1.25% Asset Backed Notes (together, the "Notes") on August 21, 1997.
The Trust also issued in a private placement a Certificate (the "Certificate"),
which will be initially retained by the Sponsor and will initially represent
approximately 2% of the outstanding principal balances of the HELOCs (as
defined below). 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 Notes, the forms of which were filed as Exhibits to the
Registration Statement.
The Notes were issued pursuant to an Indenture attached
hereto as Exhibit 4.1, dated as of August 1, 1997, between The First National
Bank of Chicago, as indenture trustee (the "Trustee").
The Notes evidence fractional undivided ownership interests
in the Trust, the assets of which consist primarily of a pool of adjustable
rate home equity revolving credit line loans made under certain home equity
revolving credit line loan agreements (the "HELOCs") secured by first or second
deeds of trust on primarily one-to four-family residential properties.
As of the Closing Date, the HELOCs had the characteristics
described in the Prospectus dated July 17, 1997 and the Prospectus Supplement
dated as of August 18, 1997 filed pursuant to Rule 424(b)(2) of the Act with
the Commission.
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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 as of August 18, 1997,
among Headlands Mortgage Company and Greenwich Capital Markets, Inc.
4.1 Indenture, dated as of August 1, 1997, between Headlands
Home Equity Loan Trust 1997-1 and The First National Bank of Chicago, as
Indenture Trustee.
4.2 Trust Agreement, dated as of August 1, 1997, between
Headlands Mortgage Securities, Inc. and Wilmington Trust Company, as Owner
Trustee.
4.3 Sale and Servicing Agreement, dated as of August 1, 1997,
among Headlands Home Equity Loan Trust 1997-1, as Issuer, Headlands Mortgage
Company, as Servicer, Headlands Mortgage Securities, Inc., as Sponsor and The
First National Bank of Chicago, as indenture trustee.
4.4 Surety Bond, dated as of August 21, 1997 and delivered by
Capital Markets Assurance Corporation.
10.1 HELOC Purchase Agreement, dated as of August 1, 1997,
among Headlands Mortgage Company, as Seller, and Headlands Mortgage Securities,
Inc., as Purchaser.
10.2 Insurance and Reimbursement Agreement, dated August 1,
1997, among Capital Markets Assurance Corporation, Headlands Mortgage Company,
Headlands Mortgage Securities, Inc. and Greenwich Capital Markets, Inc.
23.1 Consent of KPMG Peat Marwick LLP regarding financial
statements of Capital Markets Assurance Corporation and their report.
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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.
HEADLANDS HOME EQUITY LOAN TRUST 1997-1
By: Headlands Mortgage Company, as Servicer
By: /s/ Kristen Decker
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Name: Kristen Decker
Title: Senior Vice President
Dated: September 10, 1997
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated as of August 18, 1997, among
Headlands Mortgage Company and Greenwich Capital Markets,
Inc.
4.1 Indenture, dated as of August 1, 1997, between Headlands Home
Equity Loan Trust 1997-1 and The First National Bank of
Chicago, as Indenture Trustee.
4.2 Trust Agreement, dated as of August 1, 1997, between
Headlands Mortgage Securities, Inc. and Wilmington Trust
Company, as Owner Trustee.
4.3 Sale and Servicing Agreement, dated as of August 1, 1997,
among Headlands Home Equity Loan Trust 1997-1, as Issuer,
Headlands Mortgage Company, as Servicer, Headlands Mortgage
Securities, Inc., as Sponsor and The First National Bank of
Chicago, as Indenture Trustee.
4.4 Surety Bond, dated as of August 21, 1997 and delivered by
Capital Markets Assurance Corporation.
10.1 HELOC Purchase Agreement, dated as of August 1, 1997, among
Headlands Mortgage Company, as Seller, and Headlands Mortgage
Securities, Inc., as Purchaser.
10.2 Insurance and Reimbursement Agreement, dated August 1, 1997,
among Capital Markets Assurance Corporation, Headlands
Mortgage Company, Headlands Mortgage Securities, Inc. and
Greenwich Capital Markets, Inc.
23.1 Consent of KPMG Peat Marwick LLP regarding financial
statements of Capital Markets Assurance Corporation and their
report.
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EXECUTION COPY
HEADLANDS MORTGAGE COMPANY
HEADLANDS MORTGAGE SECURITIES INC.
REVOLVING HOME EQUITY LOAN ASSET-BACKED NOTES
Series 1997-1
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Class A and Class S
UNDERWRITING AGREEMENT
New York, New York
August 18, 1997
Greenwich Capital Markets Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Dear Sirs:
Headlands Mortgage Securities Inc., a Delaware corporation (the
"Sponsor"), proposes to cause Headlands Home Equity Loan Trust 1997-1 (the
"Trust") to sell to you its Revolving Home Equity Loan Asset-Backed Notes in
the series and classes, in the respective original principal amounts and with
the designations set forth in Schedule I hereto (the "Designated Notes"). Only
the Designated Notes are being purchased by you hereunder. The Designated
Notes, will be issued pursuant to an Indenture (the "Indenture"), dated as of
August 1, 1997, between the Trust and The First National Bank of Chicago, as
indenture trustee (the "Indenture Trustee"). The Trust will be formed pursuant
to a Trust Agreement to be dated as of August 1, 1997 and entered into between
the Sponsor and Wilmington Trust Company, as Owner Trustee. The Designated
Notes and a certificate issued to the Sponsor (the "Certificate") will be
secured by certain Mortgage Loans to be transferred by the Sponsor to the Trust
pursuant to a sale and servicing agreement (the "Sale and Servicing Agreement")
dated August 1, 1997 among the Sponsor, the Trust, Headlands Mortgage Company
(the "Company") and the Indenture Trustee and pledged by the Trust to the
Indenture Trustee under the Indenture. The Designated Notes are described more
fully in Schedule I hereto and in a prospectus supplement furnished to you by
the Company.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Sale and Servicing Agreement.
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1. Representations and Warranties of the Company and the Sponsor. Each
of the Company and the Sponsor represents and warrants to, and agrees with, you
that:
(a) A registration statement on Form S-3 has been filed with
the Securities and Exchange Commission (the "Commission") (the file
number of which is set forth in Schedule I hereto) for the
registration of Asset-Backed Securities, issuable in series under the
Securities Act of 1933, as amended (the "1933 Act"), which
registration statement was declared effective on the date set forth in
Schedule I hereto and copies of which have heretofore been delivered
to you. The Sponsor meets the requirements for use of Form S-3 under
the 1933 Act, and such registration statement, as amended at the date
hereof, meets the requirements set forth in Rule 415(a)(1)(x) under
the 1933 Act and complies in all other material respects with the 1933
Act and the rules and regulations thereunder (the "Rules and
Regulations"). The Sponsor proposes to file with the Commission, with
your consent, pursuant to Rule 424 under the 1933 Act, a supplement to
the form of prospectus included in such registration statement
relating to the Designated Notes and the plan of distribution thereof,
and has previously advised you of all further information (financial
and other) with respect to the Designated Notes and the Mortgage Pool
to be set forth therein. Such registration statement, including all
exhibits thereto, as amended at the date hereof, is referred to herein
as the "Registration Statement"; such prospectus in the form in which
it appears in the Registration Statement is referred to herein as the
"Basic Prospectus" (except that if the prospectus filed by the Sponsor
pursuant to Rule 424(b) under the 1933 Act differs from the prospectus
on file at the time the Registration Statement became effective, the
term "Basic Prospectus" shall refer to such Rule 424(b) prospectus
from and after the time it is mailed to the Commission for filing);
such form of prospectus supplemented by the prospectus supplement (the
"Prospectus Supplement") relating to the Designated Notes, in the form
in which it shall be first filed with the Commission pursuant to Rule
424(b) under the 1933 Act (including the Basic Prospectus as so
supplemented), is referred to herein as the "Final Prospectus".
(b) As of the date hereof, as of the date on which the Final
Prospectus is first filed pursuant to Rule 424 under the 1933 Act, as
of the date on which, prior to the Closing Date (as hereinafter
defined), any amendment to the Registration Statement becomes
effective, as of the date on which any supplement to the Final
Prospectus is filed with the Commission, and at the Closing Date, (i)
the Registration Statement, as amended as of any such time, and the
Final Prospectus, as amended or supplemented as of any such time,
complies and will comply as to form in all material respects with the
applicable requirements of the 1933 Act and the rules and regulations
thereunder, (ii) the Registration Statement, as amended as of any such
time, does not contain and will not contain any untrue statement of a
material fact and does not omit and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and (iii) the Final
Prospectus, as amended or supplemented as of any such time, does not
contain and will not contain any untrue statement of a material fact
and does not omit and will not omit to state any 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; provided, however, that the Sponsor makes
no representations or warranties as to statements contained in or
omitted from the Registration Statement or the Final Prospectus or any
amendment or supplement thereto made in reliance upon and in
conformity with information furnished in writing to the Company by you
specifically for use in the Registration Statement and the Final
Prospectus.
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(c) The documents incorporated by reference in the Final
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 1933 Act or the Securities Exchange Act of
1934 (the "1934 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 Final 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 1933
Act or the 1934 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.
(d) Since the respective dates as of which information is
given in the Final Prospectus, there has not been any material adverse
change in the general affairs, management, financial condition, or
results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus as supplemented or amended as the
Closing Date.
(e) To the extent that the Underwriter (i) has provided to
the Company or the Sponsor Collateral term sheets (as hereinafter
defined) that such Underwriter has provided to a prospective investor,
the Company or the Sponsor has filed such Collateral term sheets as an
exhibit to a report on Form 8-K within two business days of its
receipt thereof, or (ii) has provided to the Company or the Sponsor
Structural term sheets or Computational Materials (each as defined
below) that such Underwriter has provided to a prospective investor,
the Company or the Sponsor will file or cause to be filed with the
Commission a report on Form 8-K containing such Structural term sheet
and Computational Materials, as soon as reasonably practicable after
the date of this Agreement, but in any event, not later than the date
on which the Prospectus is filed with the Commission pursuant to Rule
424 of the Rules and Regulations.
(f) The Company has been duly incorporated and is validly
existing as an S-corporation in good standing under the laws of the
State of California, is duly qualified to do business 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 requires
such qualification, has full power and authority (corporate and other)
necessary to own or hold its properties and to conduct its business as
now conducted by it and to enter into and perform its obligations
under this Agreement, the Sale and Servicing Agreement, the Mortgage
Loan Purchase Agreement, dated as of August 1, 1997 between the
Company and the Sponsor (the "Purchase Agreement") and the
Indemnification and Contribution Agreement dated as of August __, 1997
(the "Indemnification and Contribution Agreement") between the
Company, Capital Markets Assurance Corporation, the Sponsor and you.
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(g) The Sponsor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business 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 requires such
qualification, has full power and authority (corporate or other)
necessary to own and hold its properties and to conduct its business
as now conducted by it and to enter into and perform its obligations
under this Agreement, the Trust Agreement, the Sale and Servicing
Agreement, the Purchase Agreement and the Indemnification and
Contribution Agreement.
(h) As of the Date hereof, as of the date on which the Final
Prospectus is first filed pursuant to Rule 424 under the 1933 Act, as
of the date on which, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, as of the date on which any
supplement to the Final Prospectus is filed with the Commission, and
as of the Closing Date, there has not and will not have been (i) any
request by the Commission for any further amendment to the
Registration Statement or the Final Prospectus or for any additional
information, (ii) any issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threat of any proceeding for that purpose or (iii) any
notification with respect to the suspension of the qualification of
the Designated Notes for sale in any jurisdiction or any initiation or
threat of any proceeding for such purpose.
(i) KPMG Peat Marwick are independent public accountants with
respect to the Company as required by the 1933 Act and the Rules and
Regulations.
(j) This Agreement has been duly authorized, executed and
delivered by the Company and the Sponsor and constitutes a legal,
valid, binding and enforceable agreement of each of the Company and
the Sponsor, subject as to enforceability, to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) general principles of equity
regardless of whether enforcement is sought in a proceeding in equity
or at law.
(k) The Sale and Servicing Agreement, the Indemnification and
Contribution Agreement and the Purchase Agreement when executed and
delivered as contemplated hereby and thereby, will have been duly
authorized, executed and delivered by each of the Company and the
Sponsor, and when so executed and delivered, will constitute legal,
valid, binding and enforceable agreements of each of the Company and
the Sponsor, subject, as to enforceability, to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) general principles of equity
regardless of whether enforcement is sought in a proceeding in equity
or at law.
(l) The Trust Agreement when executed and delivered as
contemplated hereby and thereby will have been duly authorized,
executed and delivered by the Sponsor, and when so executed and
delivered, will constitute a legal, valid, binding and enforceable
agreement of the Sponsor, subject, as to enforceability, to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and (ii) general principles
of equity regardless of whether enforcement is sought in a proceeding
in equity or at law.
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(m) As of the Closing Date, the Designated Notes and the
Indenture will conform in all material respects to the respective
descriptions thereof contained in the Final Prospectus. As of the
Closing Date, the Designated Notes will be duly and validly authorized
and, when duly and validly executed, authenticated and delivered in
accordance with the Indenture and delivered to you against payment
therefor as provided herein, will be duly and validly issued and
outstanding and entitled to the benefits of the Indenture. The
Designated Notes will not be "mortgage related securities," as such
term is defined in the singular in the 1934 Act.
(n) The Indenture, when executed and delivered, will have
been duly qualified under the Trust Indenture Act of 1939.
(o) As of the Closing Date, each of the Mortgage Loans will
meet the criteria for selection described in the Final Prospectus, and
on the Closing Date the representations and warranties of the Company
and the Sponsor with respect to the Mortgage Loans contained in the
Purchase Agreement and the Sale and Servicing Agreement will be true
and correct.
(p) Each of the Company and the Sponsor is not in violation
of its certificate of incorporation or by-laws or in default under any
agreement, indenture or instrument the effect of which violation or
default would be material to the Company or the Sponsor. Neither the
issuance and sale of the Designated Notes, nor the execution and
delivery by the Company and the Sponsor of this Agreement, the Sale
and Servicing Agreement, the Purchase Agreement or the Indemnification
and Contribution Agreement, nor the consummation by the Company and
the Sponsor of any of the transactions herein or therein contemplated,
nor compliance by the Company and the Sponsor with the provisions
hereof or thereof, does or will conflict with or result in a breach of
any term or provision of the certificate of incorporation or by-laws
of the Company or the Sponsor or conflict with, result in a breach,
violation or acceleration of, or constitute a default under, the terms
of any indenture or other agreement or instrument to which the Company
or the Sponsor is a party or by which it is bound, or any statute,
order or regulation applicable to the Company or the Sponsor of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over the Company or the Sponsor. Each of the
Company and the Sponsor is not a party to, bound by or in breach or
violation of any indenture or other agreement or instrument, or
subject to or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it that materially and adversely affects, or
may in the future materially and adversely affect, (i) the ability of
the Company or the Sponsor to perform its obligations under this
Agreement, the Purchase Agreement, the Sale and Servicing Agreement or
the Indemnification and Contribution Agreement or (ii) the business,
operations, financial conditions, properties or assets of the Company.
(q) The execution and delivery by the Sponsor of the Trust
Agreement does not and will not conflict with or result in a breach of
any term or provision of the certificate of incorporation or bylaws of
the Sponsor or conflict with, result in a breach, violation or
acceleration of, or constitute a default under, the terms of any
indenture or other agreement or instrument to which the Sponsor is
bound or is a party or any statute, order or regulation applicable to
the Sponsor.
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(r) There are no actions or proceedings against, or
investigations of, the Company or the Sponsor pending, or, to the
knowledge of the Company or the Sponsor, threatened, before any court,
arbitrator, administrative agency or other tribunal (i) asserting the
invalidity of this Agreement, the Trust Agreement, the Sale and
Servicing Agreement, the Purchase Agreement, the Indemnification and
Contribution Agreement, the Trust Agreement or the Designated Notes,
(ii) seeking to prevent the issuance of the Designated Notes or the
consummation of any of the transactions contemplated by this
Agreement, the Trust Agreement, the Purchase Agreement, the Sale and
Servicing Agreement or the Indemnification and Contribution Agreement,
(iii) that are reasonably likely to be adversely determined and that
might materially and adversely affect the performance by each of the
Company and the Sponsor of its obligations under, or the validity or
enforceability of, this Agreement, the Sale and Servicing Agreement,
the Indemnification and Contribution Agreement, the Trust Agreement or
the Designated Notes or (iv) seeking to affect adversely the federal
income tax attributes of the Designated Notes as described in the
Final Prospectus.
(s) 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 Designated
Notes and the sale of the Designated Notes to you, or the consummation
by the Company or the Sponsor of the other transactions contemplated
by this Agreement, the Sale and Servicing Agreement, the Purchase
Agreement, the Trust Agreement and the Indemnification and
Contribution 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 Designated Notes by you or as have
been obtained.
(t) Each of the Company and the Sponsor 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 Final Prospectus, and neither the Company nor the Sponsor has
received notice of any proceedings relating to the revocation or
modification of any such license, certificates, authority or permit
which if decided adversely to the Company or the Sponsor would, singly
or in the aggregate, materially and adversely affect the conduct of
its business, operations or financial condition.
(u) Any taxes, fees and other governmental charges in
connection with the execution and delivery of this Agreement, the
Purchase Agreement, the Trust Agreement, the Sale and Servicing
Agreement and the Indemnification and Contribution Agreement or the
execution, delivery and sale of the Designated Notes have been or will
be paid on or prior to the Closing Date.
(v) Immediately prior to the assignment of the Mortgage Loans
to the Trust as contemplated by the Sale and Servicing Agreement, the
Company (i) had good title to, and was the sole owner of, each
Mortgage Loan free and clear of any pledge, mortgage, lien, security
interest or other encumbrance (collectively, "Liens"), (ii) had not
assigned to any person any of its right, title or interest in such
Mortgage Loans and (iii) will have the power and authority to sell
such Mortgage Loans to the Sponsor pursuant to the Purchase
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Agreement and upon the execution and delivery of the Sale and
Servicing Agreement by the Sponsor, the Trust will have acquired all
of the Sponsor's and the Company's right, title and interest in and to
the Mortgage Loans.
(w) At the time of execution and delivery of the Indenture,
(1) the Trust will own the Mortgage Loans being pledged to the
Indenture Trustee pursuant thereto, free and clear of any Liens,
except to the extent permitted in the Indenture, and will not have
assigned to any person other than the Indenture Trustee any of its
right, title or interest in the Mortgage Loans, (2) the Trust will
have the power and authority to pledge the Trust Estate to the
Indenture Trustee and to transfer the Notes to You and will have duly
authorized such action by all necessary corporate action, (3) upon
execution and delivery by the Trust to the Indenture Trustee of the
Indenture, and delivery of the Notes to the Trust, the Indenture
Trustee will have a valid, perfected security interest of first
priority in the Trust Estate free of Liens other than Liens permitted
by the Indenture and (4) upon payment and delivery of the Notes to
you, you will acquire ownership of the Notes, free of Liens other than
Liens permitted by the Indenture or created or granted by you.
(x) At the Closing Date, the execution and delivery of the
Indenture by the Trust will have been duly authorized by the Sponsor
and upon due execution and delivery thereof by the parties thereto,
the Indenture will constitute a legal, valid and binding agreement
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, reorganization, insolvency or other similar
laws affecting creditors' rights generally and by general principles
of equity.
(y) As the Closing Date, the Trust will have assigned,
pledged and delivered to the Indenture Trustee under the Indenture all
of its right, title and interest in and to, among other things, (i)
the Mortgage Loans, and (ii) cash and/or other assets, if any, in the
amount set forth in the Indenture (the "Initial Collateral").
(z) The Trust has corporate power and authority to assign,
pledge and deliver the Initial Collateral to the Indenture Trustee
under the Indenture, and at the Closing Date will have duly authorized
such assignment, pledge and delivery to the Indenture Trustee by all
necessary corporate actions.
(aa) Neither the Company, the Sponsor nor the Trust is, and
neither the issuance and sale of the Designated Notes nor the
activities of the Trust pursuant to the Indenture will cause the
Company, the Sponsor or the Trust to be, an "investment company" or
under the control of an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(bb) At the Closing Date, each of the representations and
warranties of the Company and the Sponsor set forth in the Purchase
Agreement and in the Sale and Servicing Agreement will be true and
correct in all material respects.
(cc) At the Closing Date, the Designated Notes shall have
been rated in the highest rating category by at least two nationally
recognized rating agencies.
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2. Purchase and Sale. The commitment of the Underwriter to purchase
the Designated Notes 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 contained and shall be
subject to the terms and conditions herein set forth. The Sponsor agrees to
cause the Trust to sell the Designated Notes to you, and you agree to purchase
the Designated Notes from the Trust, for the purchase price previously agreed
between us, before deducting expenses payable by the Company estimated at
$350,000.
3. Delivery and Payment. Delivery of and payment for the Designated
Notes shall be made at the office of Dewey Ballantine prior to 12:00 p.m.,
Eastern Standard Time, on the date specified in Schedule I hereto (or such
later date not later than seven business days after such specified date as you
shall designate), which date and time may be changed by agreement between you
and the Sponsor or as provided herein (such date and time of delivery and
payment for the Designated Notes being herein called the "Closing Date").
Delivery of the Designated Notes shall be made to you against payment by you of
the purchase price therefor in immediately available funds wired to such bank
as may be designated by the Sponsor, or such other manner of payment as may be
agreed upon by the Sponsor and you. The Designated Notes to be so delivered
shall be in definitive fully registered form, unless otherwise agreed, in such
denominations and registered in such names as you may have requested in writing
not less than two full business days in advance of the Closing Date.
The Sponsor agrees to have the Designated Notes available for
inspection, checking and packaging by you at the offices of Dewey Ballantine,
not later than 4:00 p.m. on the business day prior to the Closing Date.
4. Offering of the Designated Notes. It is understood that you propose
to offer the Designated Notes for sale to the public as set forth in the Final
Prospectus.
5. Covenants of the Company and the Sponsor. Each of the Company and
the Sponsor covenants and agrees with you that:
(a) The Company and the Sponsor will prepare a supplement to
the Basic Prospectus setting forth the amount of Designated Notes
covered thereby and the terms thereof not otherwise specified in the
Basic Prospectus, the expected proceeds to the Company from the sale
of such Designated Notes, and such other information as you and the
Company may deem appropriate in connection with the offering of such
Designated Notes. The Company and the Sponsor will file promptly all
reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of the Final
Prospectus. The Company and the Sponsor promptly will advise you or
your counsel (i) when the Final Prospectus shall have been filed or
transmitted to the Commission for filing pursuant to Rule 424, (ii)
when any amendment to the Registration Statement shall have become
effective or any further supplement to the Prospectus shall have been
filed with the Commission, (iii) of any proposal or request to amend
or supplement the Registration Statement, the Basic Prospectus or the
Final Prospectus or any request by the Commission for any additional
information, (iv) when notice is received from the Commission that any
post-effective amendment to the Registration Statement has become or
will become effective, (v) of the issuance by the Commission of any
stop order
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suspending the effectiveness of the Registration Statement or
post-effective amendment thereto or the institution or threatening of
any proceeding for that purpose, (vi) of the receipt by the Company or
the Sponsor of any notification with respect to the suspension of the
qualification of the Designated Notes for sale in any jurisdiction or
the institution or threatening of any proceeding for that purpose, and
(vii) of the occurrence of any event that would cause the Registration
Statement, as then in effect, to contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that would cause the Final Prospectus, as then in
effect, to contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company and the
Sponsor will use its best efforts to prevent the issuance of any such
stop order or suspension and, if issued, to obtain as soon as possible
the withdrawal thereof. The Company and the Sponsor will cause the
Final Prospectus to be transmitted to the Commission for filing
pursuant to Rule 424 under the 1933 Act or will cause the Final
Prospectus to be filed with the Commission pursuant to said Rule 424.
(b) If, at any time when a prospectus relating to the
Designated Notes is required to be delivered under the 1933 Act, any
event occurs as a result of which the Final Prospectus, as then
amended or supplemented, would contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend or supplement the Final Prospectus to
comply with the 1933 Act or the rules and regulations thereunder, the
Company and the Sponsor promptly will prepare and file with the
Commission, at the expense of the Company or the Sponsor, as the case
may be, subject to paragraph (a) of this Section 5, an amendment or
supplement that will correct such statement or omission or an
amendment that will effect such compliance and, if such amendment or
supplement is required to be contained in a post-effective amendment
to the Registration Statement, the Company and the Sponsor will use
their best efforts to cause such amendment to the Registration
Statement to be made effective as soon as possible.
(c) The Company and the Sponsor will furnish to you and your
counsel, without charge, signed copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall
become effective on or prior to the Closing Date, and so long as
delivery of a prospectus by you may be required by the 1933 Act, as
many copies of any Final Prospectus and any amendments and supplements
thereto as you may reasonably request.
(d) The Company and the Sponsor will file promptly with the
Commission any amendment to the Registration Statement or the
Prospectus or any supplement to the Prospectus that may, in your
judgment or the judgment of the Company or the Sponsor, be required by
the 1933 Act or requested by the Commission.
(e) The Company and the Sponsor will make generally available
to holders of the Designated Notes as soon as practicable, but in any
event not later than 90 days after the close of the period covered
thereby, a statement of earnings of the Trust (which need not be
audited) complying with Section 11(a) of the 1933 Act and the Rules
and Regulations
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(including, at the option of the Company and the Sponsor, 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.
(f) Each of the Company and the Sponsor agrees that, so long
as the Designated Notes shall be outstanding, it will deliver to you
the annual statement as to compliance delivered to the Indenture
Trustee pursuant to Section 3.09 of the Sale and Servicing Agreement
and the annual statement of a firm of independent public accountants
delivered to the Indenture Trustee pursuant to Section 3.10 of the
Sale and Servicing Agreement, as soon as such statements are furnished
to the Company or the Sponsor.
(g) The Company and the Sponsor will furnish such
information, execute such instruments and use their best efforts to
qualify the Designated Notes for sale under the laws of such
jurisdictions as you may designate and will maintain such
qualifications in effect so long as required for the distribution of
the Designated Notes; provided, however, that the Company and the
Sponsor shall not be required to qualify to do business in any
jurisdiction where it is not now qualified or to take any action that
would subject it to general or unlimited service of process in any
jurisdiction where it is not now subject to such service of process.
Subject to the foregoing proviso, the Company and the Sponsor will
file or cause the filing of such statements and reports as may be
required by the laws of each jurisdiction in which the Designated
Notes have been so qualified.
(h) The Company and the Sponsor will enter into this
Agreement, the Sale and Servicing Agreement, the Purchase Agreement
and the Indemnification and Contribution Agreement on or prior to the
Closing Date.
(i) The Sponsor will enter into the Trust Agreement on or
prior to the Closing Date.
(j) The Company and the Sponsor will apply the net proceeds
from the sale of the Designated Notes in the manner set forth in the
Prospectus.
6. Conditions to the Obligations of the Underwriter. Your obligation
hereunder to purchase the Designated Notes shall be subject to the accuracy of
the representations and warranties on the part of the Company and the Sponsor
contained herein as of the date hereof, as of the date of the effectiveness of
any amendment to the Registration Statement filed prior to the Closing Date and
as of the Closing Date, to the accuracy of the statements of the Company and
the Sponsor made in any certificates delivered pursuant to the provisions
hereof, to the performance by the Company and the Sponsor of its obligations
hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective
and no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and
not withdrawn and no proceedings for that purpose shall have been
instituted or threatened; and the Final Prospectus shall have been
filed or transmitted for filing with the Commission in accordance with
Rule 424 under the 1933 Act. 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) You shall have received from Dewey Ballantine, your
counsel, a favorable opinion, dated the Closing Date, to the effect
that:
(i) The Registration Statement has become
effective under the 1933 Act; to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn, no
proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement
and the Final Prospectus, 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;
(ii) To the best knowledge of such counsel,
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 Final 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;
(iii) The statements in the Basic Prospectus
and the Final Prospectus, as the case may be, under the
headings "Certain Federal Income Tax Consequences", "ERISA
Considerations" and "Legal Investment", to the extent that
they constitute matters of New York or federal law or legal
conclusions with respect thereto, have been reviewed by such
counsel and constitute a fair and accurate summary with
respect to those consequences or aspects that are discussed;
(iv) The Indenture has been duly authorized,
executed and delivered, has been duly qualified under the
Trust Indenture Act, and constitutes a legal, valid and
binding instrument enforceable against the Sponsor in
accordance with its terms (subject as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other law affecting creditors'
rights generally from time to time in effect); and the
Designated Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriter
pursuant to this Agreement will constitute legal, valid and
binding obligations of the Sponsor entitled to the benefits
of the Indenture.
Such counsel shall also state that nothing has come to its
attention that would lead it to believe that the Registration Statement (other
than the financial and statistical information contained therein, as to which
such counsel need not express an opinion), at the time it 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 or that the Final Prospectus (other than (i) the financial and
statistical information contained therein or (ii) the information contained in
the Prospectus Supplement under the headings "DESCRIPTION OF THE MORTGAGE
LOANS" and "SERVICING OF THE MORTGAGE LOANS", as of its date, and on the date
hereof, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
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Such counsel may: (1) express its reliance as to factual
matters on the representations and warranties made by, and on certificates or
other documents furnished by officers of, the parties to this Agreement, the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, the Purchase
Agreement and the Indemnification and Contribution Agreement; (2) assume the
due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Company; (3) qualify
such opinion only as to the federal laws of the United States of America, the
laws of the State of New York and the general corporation law of the State of
Delaware. Such counsel shall also confirm that you may rely, on and as of the
Closing Date, on any opinion or opinions of such counsel submitted to the
rating agency or agencies rating the Designated Notes as if addressed to you
and dated the Closing Date.
(c) You shall have received a certificate, signed by the president, a
senior vice president or a vice president of the Company and the Sponsor, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Registration Statement, the Purchase Agreement, the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, the
Indemnification and Contribution Agreement, and this Agreement and that, to the
best of his or her knowledge based upon reasonable investigation:
a. the representations and warranties of the Company and the
Sponsor in this Agreement, as of the Closing Date, and in the Sale and
Servicing Agreement, the Trust Agreement, the Purchase Agreement, and
the Indemnification and Contribution Agreement and in all related
agreements, as of the date specified in such agreements, are true and
correct, and the Company and the Sponsor has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
b. there are no actions, suits or proceedings pending, or to
the best of such officer's knowledge, threatened against or affecting
the Company or the Sponsor which if adversely determined, individually
or in the aggregate, would be reasonably likely to adversely affect
the Company's or the Sponsor's obligations under the Sale and
Servicing Agreement, the Indemnification and Contribution Agreement,
the Purchase Agreement or this Agreement in any material way or the
Sponsor's obligations under the Trust Agreement in any material way;
and no merger, liquidation, dissolution or bankruptcy of the Company
or the Sponsor is pending or contemplated;
c. the information contained in the Registration Statement
and the Final Prospectus relating to the Company and the Sponsor, the
Mortgage Loans or the servicing procedures of it or its affiliates or
subservicer 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 Final Prospectus includes
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein not misleading;
d. the information set forth in the Schedule of Mortgage
Loans required to be furnished pursuant to the Purchase Agreement and
the Sale and Servicing Agreement is true and correct in all material
respects;
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e. there has been no amendment or other document filed
affecting the articles of incorporation or bylaws of the Company or
the Sponsor since December 31, 1996, and no such amendment has been
authorized. No event has occurred since December 31, 1996, which has
affected the good standing of the Company under the laws of the State
of California or the good standing of the Sponsor under the laws of
the State of Delaware;
f. 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 Company, the Sponsor and its subsidiaries, taken as
a whole, from December 31, 1996;
g. on or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (A) any intended or
potential downgrading or (B) any review or possible changes in rating
the direction of which has not been indicated, in the rating, if any,
accorded the Company or its affiliates or in any rating accorded any
securities of the Company, if any, by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the 1933 Act;
h. each person who, as an officer or representative of the
Company or the Sponsor, signed or signs the Registration Statement,
the Sale and Servicing Agreement, the Trust Agreement, the
Indemnification and Contribution Agreement, this Agreement, the
Purchase Agreement or any other document delivered pursuant hereto, on
the date of such execution, or on the Closing Date, as the case may
be, in connection with the transactions described in the Sale and
Servicing Agreement, the Trust Agreement, the Indemnification and
Contribution Agreement, the Purchase Agreement and this Agreement was,
at the respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures; and
i. No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's or the Sponsor's
knowledge, threatened.
The Company and the Sponsor shall attach to such certificate
a true and correct copy of its certificate or articles of incorporation, as
appropriate, and bylaws which are in full force and effect on the date of such
certificate and a certified true copy of the resolutions of its Board of
Directors with respect to the transactions contemplated herein.
(d) You shall have received from Tobin & Tobin, counsel to the
Company, an opinion, dated the Closing Date, to the effect that:
(i) Each of the Company and the Sponsor has
been duly organized and is validly existing as a corporation
in good standing under the laws of its state of incorporation
and is qualified to do business in each state necessary to
enable it to perform its obligations under the Sale and
Servicing Agreement, this Agreement, the Purchase Agreement,
the Trust Agreement and the Indemnification and Contribution
Agreement and has all corporate power and authority necessary
to own or hold its properties and to conduct its business as
now conducted by it and to enter
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<PAGE>
into and perform its obligations under this Agreement, the
Trust Agreement, the Sale and Servicing Agreement, the
Purchase Agreement and the Indemnification and Contribution
Agreement;
(ii) To the best knowledge of such counsel,
there are no actions, proceedings or investigations pending
or threatened against or affecting the Company or the Sponsor
before or by any court, arbitrator, administrative agency or
other governmental authority reasonably likely to be
adversely determined that would materially and adversely
affect the ability of the Company or the Sponsor to carry out
the transactions contemplated in this Agreement, the Trust
Agreement, the Sale and Servicing Agreement, the Purchase
Agreement or the Indemnification and Contribution Agreement;
(iii) No consent, approval, authorization or
order of, or filing or registration with, any state or
federal court or governmental agency or body is required for
the consummation by the Company or the Sponsor of the
transactions contemplated herein, except such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the
Designated Notes and except any recordation of the
assignments of the Mortgage Loans to the Indenture Trustee
pursuant to the Sale and Servicing Agreement that have not
yet been completed;
(iv) Each of the Company and the Sponsor is not
in violation of its certificate of incorporation or by-laws
or in default under any agreement, indenture or instrument
the effect of which violation or default would be material to
the Company or the Sponsor, and neither the issuance and sale
of the Designated Notes, nor the execution or delivery of or
performance under this Agreement, the Trust Agreement, the
Sale and Servicing Agreement, the Purchase Agreement or the
Indemnification and Contribution Agreement, nor the
consummation of any other of the transactions contemplated
herein or therein will conflict with or result in a breach or
violation of any term or provision of, or constitute a
default (or an event which with the passing of time or
notification, or both, would constitute a default) under, the
certificate of incorporation or by-laws of the Company or the
Sponsor, or, to the knowledge of such counsel, any indenture
or other agreement or instrument to which the Company or the
Sponsor or any of its affiliates is a party or by which it or
any of them is bound, or any New York or federal statute or
regulation applicable to the Company or the Sponsor or any of
its affiliates or, to the knowledge of such counsel, any
order of any New York or federal court, regulatory body,
administrative agency or governmental body having
jurisdiction over the Company or the Sponsor or any of its
affiliates;
(v) The Sale and Servicing Agreement, this
Agreement, the Purchase Agreement and the Indemnification and
Contribution Agreement have been duly authorized, executed
and delivered by the Company and the Sponsor and constitute
legal, valid and binding agreements of the Company and the
Sponsor, enforceable against the Company and the Sponsor in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other
14
<PAGE>
similar laws affecting creditors' rights generally and to
general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law;
(vi) The Trust Agreement has been duly
authorized, executed and delivered by the Sponsor and
constitutes a legal, valid and binding agreement of the
Sponsor enforceable against the Sponsor in accordance with
its terms, subject as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and to general
principles or equity, regardless of whether enforcement is
sought in a proceeding in equity or at law;
(vii) The direction by the Sponsor to the
Indenture Trustee to execute, authenticate and deliver the
Designated Notes has been duly authorized by the Sponsor, and
the Designated Notes, when executed and authenticated in the
manner contemplated in the Indenture, will be validly issued
and outstanding and entitled to the benefits of the
Indenture;
(viii) The Designated Notes and the Indenture
conform in all material respects to the descriptions thereof
contained in the Final Prospectus; and
(ix) Neither the transfer of the Mortgage Loans
to the Trust, the pledge of the Mortgage Loans, the issuance
or sale of the Designated Notes nor the execution, delivery
or performance by the Company and the Sponsor of this
Agreement, the Trust Agreement, the Indemnification and
Contribution Agreement, the Sale and Servicing Agreement or
the Purchase Agreement (A) conflicts or will conflict with or
results or will result in a breach of, or constitutes or will
constitute a default under, (i) any term or provision of the
certificate of incorporation or bylaws of the Company or the
Sponsor; (ii) any term or provision of any material
agreement, contract, instrument or indenture, to which the
Company or the Sponsor is a party or is bound and known to
such counsel; or (iii) any order, judgment, writ, injunction
or decree of any court or governmental agency or body or
other tribunal having jurisdiction over the Company or the
Sponsor and known to such counsel; or (B) results in, or will
result in the creation or imposition of any lien, charge or
encumbrance upon the Trust or upon the Designated Notes,
except as otherwise contemplated by the Indenture.
Such counsel may: (1) express its reliance as to factual
matters on the representations and warranties made by, and on certificates or
other documents furnished by officers of, the parties to this Agreement, the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, the Purchase
Agreement and the Indemnification and Contribution Agreement; (2) assume the
due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Company; (3) qualify
such opinion only as to the federal laws of the United States of America, the
laws of the State of New York and the general corporation law of the State of
Delaware. Such counsel shall also confirm that you may rely, on and as of the
Closing Date, on any opinion or opinions of such counsel submitted to the
rating agency or agencies rating the Designated Notes as if addressed to you
and dated the Closing Date.
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<PAGE>
(e) You shall have received from KPMG Peat Marwick, certified public
accountants, one or more letters, including bring-down letters, dated the date
hereof and satisfactory in form and substance to you and your counsel, to the
effect that such accountants have performed certain specified procedures
regarding certain information of an accounting, financial or statistical nature
set forth in the Prospectus Supplement.
(f) You shall have received a rating letter assigning a rating on the
Class A Notes and S Notes of "AAA" and "AAAr", respectively, from Standard &
Poor's Rating Group and "Aaa" and "Aaar", respectively, from Moody's Investors
Service, Inc., which ratings shall not have been withdrawn.
(g) You shall have received from counsel for the Indenture Trustee a
favorable opinion, dated the Closing Date, in form and substance satisfactory
to you and your counsel, to the effect that the Indenture has been duly
authorized, executed and delivered by the Indenture Trustee and constitutes a
legal, valid, binding and enforceable agreement of the Indenture Trustee,
subject, as to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights in general and by
general principles of equity regardless of whether enforcement is considered in
a proceeding in equity or at law, and as to such other matters as may be agreed
upon by you and the Indenture Trustee.
(h) You shall have received from counsel for the Owner Trustee a
favorable opinion, dated the Closing Date, in form and substance satisfactory
to you and your counsel, to the effect that the Trust Agreement has been duly
authorized, executed and delivered by the Owner Trustee and constitutes a
legal, valid, binding and enforceable agreement of the Owner Trustee, subject
as to enforceability to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights in general and by general
principles of equity regardless of whether enforcement is considered in a
proceeding in equity or at law, and as to such other matters as may be agreed
upon by you and the Owner Trustee.
(i) You shall have received from the Indenture Trustee a certificate,
signed by the President, a senior vice president or a vice president of the
Indenture Trustee, dated the Closing Date, to the effect that each person who,
as an officer or representative of the Indenture Trustee, signed or signs the
Designated Notes, the Indenture or any other document delivered pursuant
hereto, on the date hereof or on the Closing Date, in connection with the
transactions described in the Indenture was, at the respective times of such
signing and delivery, and is now, duly elected or appointed, qualified and
acting as such officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures.
(j) You shall have received from the Owner Trustee a certificate,
signed by the President, a senior vice president or a vice president of the
Owner Trustee, dated the Closing Date, to the effect that each person who, as
an officer or representative of the Owner Trustee, signed or signs the Trust
Agreement, the Certificates or any other document delivered pursuant hereto, on
the date hereof or on the Closing Date, in connection with the transactions
described in the Trust Agreement was, at the respective times of such signing
and delivery, and is now, duly elected or appointed, qualified and acting as
such officer or representative, and the signatures of such persons appearing on
such documents are their genuine signatures.
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(k) The Policy relating to the Designated Notes shall have been duly
executed and issued at or prior to the Closing Date and shall conform in all
material respects to the description thereof in the Prospectus.
(l) You shall have received a favorable opinion of in-house counsel to
the Insurer, dated the Closing Date and in form and substance satisfactory to
your counsel, to the effect that:
(i) The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New
York. The Insurer is validly licensed to do business in New York and
is authorized to issue the Policy and perform its obligations under
the Policy in accordance with the terms thereof.
(ii) The execution and delivery by the Insurer of the Policy,
and the Indemnification and Contribution Agreement are within the
corporate power of the Insurer and have been authorized by all
necessary corporate action on the part of the Insurer; the Policy has
been duly executed and is the valid and binding obligation of the
Insurer enforceable in accordance with its terms except that the
enforcement of the Policy may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by
general principles of equity.
(iii) The Insurer is authorized to deliver the
Indemnification and Contribution Agreement, and such agreement has
been duly executed and delivered and constitute the legal, valid and
binding obligations of the Insurer enforceable in accordance with its
terms except that the enforcement of the Indemnification and
Contribution Agreement may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other similar
laws affecting creditors' rights generally and by general principles
of equity and by public policy considerations relating to
indemnification for securities law violations.
(iv) No consent, approval, authorization or order of any
state or federal court or governmental agency or body is required on
the part of the Insurer, the lack of which would adversely affect the
validity or enforceability of the Policy; to the extent required by
applicable legal requirements that would adversely affect validity or
enforceability of the Policy, the form of the Policy has been filed
with, and approved by, all governmental authorities having
jurisdiction over the Insurer in connection with the Policy.
(v) The Policy is not required to be registered under the
1933 Act.
(vi) The information set forth under the caption "THE
CERTIFICATE INSURANCE POLICY" and "THE CERTIFICATE INSURER" in the
Prospectus forming a part of the Registration Statement, insofar as
such statements constitute a description of the Policy, accurately
summarizes the Policy.
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<PAGE>
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Company, the
Indenture Trustee, the Insurer and public officials. Such opinion may assume
the due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Insurer.
(m) On or prior to the Closing Date, there has been no downgrading,
nor has any notice been given of (A) any intended or potential downgrading or
(B) any review or possible changes in rating the direction of which has not
been indicated, in the rating, if any, accorded the Insurer's claims paying
ability by any "nationally recognized statistical rating organization," as such
term is defined for purposes of the 1933 Act.
(n) On or prior to the Closing Date, there has been no downgrading,
nor has any notice been given of (A) any intended or potential downgrading or
(B) any review or possible changes in rating the direction of which has not
been indicated, in the rating, if any, accorded the Company or in any rating
accorded any securities of the Company, if any, by any "nationally recognized
statistical rating organization," as such term is defined for purposes of the
1933 Act.
(o) There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1996, of (A) the Company
and its subsidiaries or (B) the Insurer, that is in your judgment material and
adverse and that makes it in your judgment impracticable to market the
Designated Notes on the terms and in the manner contemplated in the Prospectus.
(p) You shall have received from the Insurer a certificate, signed by
the president, a senior vice president or a vice president of the Insurer,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Policy, the Indemnification and Contribution Agreement
and the related documents and that, to the best of his or her knowledge based
on reasonable investigation:
(i) There are no actions, suits or proceedings pending or
threatened against or affecting the Insurer which, if adversely
determined, individually or in the aggregate, would adversely affect
the Insurer's performance under the Policy or the Indemnification and
Contribution Agreement;
(ii) Each person who as an officer or representative of the
Insurer, signed or signs the Policy, the Indemnification and
Contribution Agreement or any other document delivered pursuant
hereto, on the date thereof, or on the Closing Date, in connection
with the transactions described in this Agreement was, at the
respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures;
(iii) The tables regarding the Insurer's capitalization set
forth under the heading "THE CERTIFICATE INSURANCE POLICY" and "THE
CERTIFICATE INSURER" presents fairly the capitalization of the Insurer
as of June 30, 1997;
(iv) The audited balance sheet of the Insurer as of December
31, 1996 and the related statement of income and retained earnings for
the fiscal year then ended, and the
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accompanying footnotes, together with opinion dated __ of KPMG Peat
Marwick, an independent certificated public accountant, copies of
which are included in the Prospectus Supplement, fairly present in all
material respects the financial condition of the Insurer as of such
date and for the period covered by such statements in accordance with
generally accepted accounting principles consistently applied; the
unaudited balance sheet of the Insurer as of June 30, 1997 and the
related statement of income and retained earnings for the three-month
period then ended, copies of which are included in the Prospectus
Supplement, fairly present in all material respects the financial
condition of the Insurer as of such date and for the period covered by
such statements in accordance with generally accepted accounting
principles applied consistently with those principles applied in
preparing the December 31, 1996 audited statements.
(v) to the best knowledge of such officer, since June 30,
1997, no material adverse change has occurred in the financial
position of the Insurer other than as set forth in the Prospectus
Supplement.
The Insurer shall attach to such certificate a true and
correct copy of its certificate or articles of incorporation, as appropriate,
and its bylaws, all of which are in full force and effect on the date of such
certificate.
(q) You shall have received such further information, certificates,
documents and opinions as you may reasonably have requested not less than three
business days prior to the Closing Date.
(r) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be satisfactory in
form and substance to you and your counsel, and you and such counsel shall have
received such information, certificates and documents as you or they may have
reasonably requested.
(s) Prior to the Closing Date, your counsel 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 Designated Notes 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 Company in connection with the issuance and sale of the Designated
Notes as herein contemplated shall be satisfactory in form and substance to you
and your counsel.
(t) 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 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 the judgment of the Underwriter,
19
<PAGE>
impractical or inadvisable to proceed with the public offering or delivery of
the Designated Notes on the terms and in the manner contemplated in the
Prospectus.
If any of the conditions specified in this Section 6 shall
not have been fulfilled in all material respects when and as provided in this
Agreement, if the Company or the Sponsor is in breach of any covenants or
agreements contained herein or if any of the opinions and certificates referred
to above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to you and your counsel, this
Agreement and all your obligations hereunder may be canceled by you at, or at
any time prior to, the Closing Date. Notice of such cancellation shall be given
to the Company and the Sponsor in writing, or by telephone or facsimile
transmission confirmed in writing.
7. Payment of Expenses. The Sponsor or the Company agrees to
pay: (a) the costs incident to the authorization, issuance, sale and delivery
of the Designated Notes and any taxes payable in connection therewith; (b) the
costs incident to the preparation, printing and filing under the 1933 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 Basic Prospectus, the Final 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
Designated Notes under the securities laws of the several jurisdictions as
provided in Section 5(h) hereof and of preparing, printing and distributing a
Blue Sky Memorandum (including related fees and expenses of your counsel); (f)
any fees charged by securities rating services for rating the Designated Notes;
and (g) all other costs and expenses incident to the performance of the
obligations of the Company.
8. Indemnification and Contribution. (a) Each of the Company and the
Sponsor agrees to indemnify and hold you harmless and each person, if any, who
controls you within the meaning of Section 15 of the 1933 Act from and against
any and all loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of the Designated Notes),
to which you or any such controlling person may become subject, under the 1933
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, (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 Final Prospectus 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 you and each such controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by you 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 Company and
the Sponsor 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 any Basic Prospectus, the Final Prospectus or the Registration
Statement in reliance upon and in conformity with written information
(including any Derived Information) furnished to the Company or the Sponsor by
you specifically for inclusion therein; and provided, further, that as to
20
<PAGE>
any Basic Prospectus this indemnity shall not inure to your benefit or the
benefit of any controlling person on account of any loss, claim, damage,
liability or action arising from the sale of the Designated Notes to any person
by you if you failed to send or give a copy of the Final Prospectus, as amended
or supplemented, to that person within the time required by the 1933 Act, and
the untrue statement or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact in the Preliminary
Prospectus was corrected in the Final Prospectus, unless such failure resulted
from non-compliance by the Company or the Sponsor with Section V(C). For
purposes of the last proviso to the immediately preceding sentence, the term
"Final Prospectus" shall not be deemed to include the documents incorporated
therein by reference, and you shall not be obligated to send or give any
supplement or amendment to any document incorporated therein by reference to
any person other than a person to whom you had delivered such incorporated
document or documents in response to a written request therefor. The foregoing
indemnity agreement is in addition to any liability which each of the Company
and the Sponsor may otherwise have to you or any person who controls you.
(b) You agree to indemnify and hold harmless each of the Company and
the Sponsor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company and
the Sponsor within the meaning of Section 15 of the 1933 Act against any and
all loss, claim, damage or liability, or any action in respect thereof, to
which the Company, the Sponsor or any such director, officer or controlling
person may become subject, under the 1933 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, (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 Final Prospectus 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 Company and the Sponsor by or on your behalf
specifically for inclusion therein and provided that such written information
was not based upon Company-Provided Information, and shall reimburse the
Company and the Sponsor and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the Company and the
Sponsor 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 liability which you may otherwise
have to each of the Company and the Sponsor or any such director, officer or
controlling person.
(c) Promptly after receipt by any indemnified party under this Section
8 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 8, 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 8 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 8.
21
<PAGE>
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, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 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, 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 local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by you, if the indemnified parties under
this Section 8 consist of you or any of your controlling persons, or by the
Company, if the indemnified parties under this Section 8 consist of the
Company, the Sponsor, or any of the Company's directors, officers or
controlling persons.
Each indemnified party, as a condition of the indemnity
agreements contained in Section 8(a) and (b), shall use its best efforts to
cooperate with the indemnifying party in the defense 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.
Notwithstanding the foregoing sentence, 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) You agree to deliver to the Company or the Sponsor no later than
the date on which the Prospectus Supplement is required to be filed pursuant to
Rule 424 with a copy of its Derived Information (defined below) for filing with
the Commission on Form 8-K.
22
<PAGE>
(e) You agree, assuming all Company-Provided Information (defined
below) is accurate and complete in all material respects, to indemnify and hold
harmless the Company, the Sponsor, each of the Company's and the Sponsor's
officers and directors and each person who controls the Company and the Sponsor
within the meaning of Section 15 of the 1933 Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement of a material fact contained in the Derived
Information provided by you, 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. Your obligations under this Section 8(e) shall be in addition to any
liability which you may otherwise have.
(f) Each of the Company and the Sponsor agree to indemnify and hold
harmless the Underwriter, each of the Underwriter's officers and directors and
each person who controls the Underwriter within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages or liabilities, joint
or several, to which they may become subject under the 1933 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 Company-Provided Information provided by the Company or the
Sponsor, 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. Your
obligation under this Section 8(f) shall be in addition to any liability which
you may otherwise have.
The procedures set forth in Section 8(c) shall be equally
applicable to this Section 8(f).
(g) For purposes of this Section 8, the term Derived Information means
such portion, if any, of the information delivered to the Company or the
Sponsor pursuant to Section 8(d) for filing with the Commission on Form 8-K as:
(i) is not contained in the Final Prospectus
without taking into account information incorporated therein
by reference;
(ii) does not constitute Company-Provided
Information; and
(iii) is of the type of information defined as
Collateral term sheets, Structural term sheets or
Computational Materials (as such terms are interpreted in the
No-Action Letters).
23
<PAGE>
"Company-Provided Information" means any computer tape
furnished to the Underwriter by the Company concerning the Mortgage Loans
comprising the Trust or any other information furnished by the Company to the
Underwriter that is relied on or is reasonably anticipated by the parties
hereto to be relied on by the Underwriter in the course of the Underwriter's
preparation of its Derived Information or the written information to be
included in the prospectus supplement by the Underwriter as set forth in
Section 8(i) herein.
The terms "Collateral term sheet" and "Structural term sheet"
shall have the respective meanings assigned to them in the February 13, 1995
letter (the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of
the Public Securities Association (which letter, and the SEC staff's response
thereto, were publicly available February 17, 1995). The term "Collateral term
sheet" as used herein includes any subsequent Collateral term sheet that
reflects a substantive change in the information presented. The term
"Computational Materials" has the meaning assigned to it in the May 17, 1994
letter (the "Kidder letter" and together with the PSA Letter, the "No-Action
Letters") of Brown & Wood on behalf of Kidder, Peabody & Co., Inc. (which
letter, and the SEC staff's response thereto, were publicly available May 20,
1994).
(h) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) 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 Company and the Sponsor on the one hand and you on the other
from the offering of the Designated Notes 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 8(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 Company and the Sponsor on the one
hand and you 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 you and the Company and the Sponsor
shall be deemed to be in such proportion so that you are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Final Prospectus bears to the public offering price
appearing on the cover page of the Final Prospectus.
The relative fault of each of you and the Company and the
Sponsor 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 Company, the Sponsor or by
you, 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 Company, the Sponsor and you agree that it would not be
just and equitable if contributions pursuant to this Section 8(h) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to
24
<PAGE>
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 8(h) shall be deemed to include, for purposes of this
Section 8(h), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
In no case shall you be responsible for any amount in excess
of the underwriting discount applicable to the Designated Notes purchased by
you hereunder. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(i) You confirm that the information set forth (i) in the
Prospectus Supplement relating to market making and (ii) in the fourth
paragraph under the caption "Underwriting" in the Prospectus Supplement,
together with the Derived Information, is correct and constitutes the only
information furnished in writing to the Company or the Sponsor by you or on
your behalf specifically for inclusion in the Registration Statement and the
Final Prospectus.
9. Termination.
(a) This Agreement shall be subject to termination in your
absolute discretion, by notice given to the Company or the Sponsor
prior to delivery of and payment for the Designated Notes, if, prior
to such time, (i) trading of securities generally on the New York
Stock Exchange or the American Stock Exchange shall have been
suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by
either federal or New York State authorities or (iii) there shall have
occurred any material outbreak or declaration of hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in your reasonable judgment,
impracticable to market the Designated Notes on the terms specified
herein.
(b) If the sale of the Designated Notes shall not be
consummated because any condition to your obligations set forth in
Section 6 hereof is not satisfied or because of any refusal, inability
or failure on the part of the Company or the Sponsor to perform any
agreement herein or comply with any provision hereof other than by
reason of your default, the Company and the Sponsor shall reimburse
you for the reasonable fees and expenses of your counsel and for such
other out-of-pocket expenses as shall have been incurred by you in
connection with this Agreement and the proposed purchase of the
Designated Notes, and upon demand the Company and the Sponsor shall
pay the full amount thereof to you.
(c) This Agreement will survive delivery of and payment for
the Designated Notes. The provisions of Section 7 and this Section
8(c) shall survive the termination or cancellation of this Agreement.
10. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to you, will be mailed, delivered or
transmitted by facsimile and confirmed to you at 600 Steamboat Road, Greenwich,
Connecticut 06830, attention: Mortgage Finance Department; or, if sent to (i)
the Sponsor, will be mailed, delivered or transmitted by facsimile and
confirmed to it at 700 Larkspur Landing Circle, Suite 240, Larkspur, California
94939, attention: Finance Department or (ii) the Company, will be mailed,
delivered or transmitted by facsimile and
25
<PAGE>
confirmed to it at 700 Larkspur Landing Circle, Suite 250, Larkspur,
California 94939, attention: Finance Department.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons and their successors and
assigns, and no other person will have any right or obligation hereunder.
12. Applicable Law; Counterparts. This Agreement will be governed by
and construed in accordance with the laws of the State of New York. This
Agreement may be executed in any number of counterparts, each of which shall
for all purposes be deemed to be an original and all of which shall together
constitute but one and the same instrument.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Company and you 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 Designated Notes 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.
14. 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.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
16. 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 is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company, the Sponsor and you.
Very truly yours,
HEADLANDS MORTGAGE COMPANY
By: /s/ Kristen Decker
-------------------------------
Name: Kristen Decker
Title: Senior Vice President
HEADLANDS MORTGAGE SECURITIES INC.
By: /s/ Becky Poisson
-------------------------------
Name: Becky Poisson
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
GREENWICH CAPITAL MARKETS INC.
By: /s/ Brian Bernard
------------------------------
Name: Brian Bernard
Title: Vice President
<PAGE>
SCHEDULE I
Underwriting Agreement dated August 18, 1997.
As used in this Agreement, the term "Registration Statement" refers to the
Registration Statement on Form S-3 (File No. 333-28031) filed on July 11, 1997
and declared effective by the Commission on July 17, 1997.
Closing Date: August 21,1997.
- ------------------------------------------------------------------------------
Title, Purchase Price and Description of Designated Notes:
Headlands Mortgage Securities Inc. Revolving Home Equity Loan
Asset-Backed Designated Notes, Series 1997-1, $192,924,110.37 Class A
Variable Rate Notes and Class S 1.25% Notes.
Cut-off Date Principal Balance: $192,924,110.37
Cut-off Date: 7/31/97.
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
HEADLANDS HOME EQUITY LOAN TRUST 1997-1
CLASS A Variable Rate Asset Backed Notes
CLASS S 1.25% Asset Backed Notes
-----------------
INDENTURE
Dated as of August 1, 1997
-----------------
THE FIRST NATIONAL BANK OF CHICAGO
Indenture Trustee
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions............................................... 2
SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.....17
SECTION 1.3. Rules of Construction.....................................17
SECTION 1.4. Action by or Consent of Noteholders and
Certificateholders....................................17
SECTION 1.5. Conflict with TIA.........................................18
ARTICLE II. THE NOTES
SECTION 2.1. Form......................................................18
SECTION 2.2. Execution, Authentication and Delivery....................18
SECTION 2.3. Registration; Registration of Transfer and Exchange.......19
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes................20
SECTION 2.5. Persons Deemed Owners.....................................21
SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.....21
SECTION 2.7. Cancellation............................................ .22
SECTION 2.8. Release of Collateral.....................................22
SECTION 2.9. Book-Entry Notes..........................................22
SECTION 2.10. Notices to Clearing Agency................................23
SECTION 2.11. Definitive Notes..........................................23
ARTICLE III. COVENANTS
SECTION 3.1. Payment of Principal and Interest.........................24
SECTION 3.2. Maintenance of Office or Agency...........................24
SECTION 3.3. Money for Payments to be Held in Trust....................24
SECTION 3.4. Existence.................................................25
SECTION 3.5. Protection of Trust Property..............................26
SECTION 3.6. Opinions as to Trust Property.............................26
SECTION 3.7. Performance of Obligations; Servicing of HELOCs...........27
SECTION 3.8. Negative Covenants........................................28
SECTION 3.9. Annual Statement as to Compliance.........................28
SECTION 3.10. Issuer May Not Consolidate or Transfer Assets.............29
SECTION 3.11. No Other Business.........................................29
SECTION 3.12. No Borrowing..............................................29
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SECTION 3.13. Servicer's Obligations....................................29
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.........29
SECTION 3.15. Capital Expenditures......................................30
SECTION 3.16. Compliance with Laws......................................30
SECTION 3.17. Restricted Payments.......................................30
SECTION 3.18. Notice of Rapid Amortization Events and Events of
Servicing Termination..................................30
SECTION 3.19. Further Instruments and Acts..............................30
SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust
Agreement..............................................30
SECTION 3.21. Income Tax Characterization...............................30
ARTICLE IV. SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture...................31
SECTION 4.2. Application of Trust Money................................32
SECTION 4.3. Repayment of Monies Held by Note Paying Agent.............32
ARTICLE V. REMEDIES
SECTION 5.1. Rights Upon a Rapid Amortization Event....................32
SECTION 5.2. Limitation of Suits.......................................32
SECTION 5.3. Unconditional Rights of Noteholders To Receive
Principal and Interest.................................33
SECTION 5.4. Restoration of Rights and Remedies........................33
SECTION 5.5. Rights and Remedies Cumulative............................34
SECTION 5.6. Delay or Omission Not a Waiver............................34
SECTION 5.7. Control by Noteholders....................................34
SECTION 5.8. Undertaking for Costs.....................................34
SECTION 5.9. Waiver of Stay or Extension Laws..........................35
SECTION 5.10. Action on Notes...........................................35
SECTION 5.11. Performance and Enforcement of Certain Obligations........35
SECTION 5.12. Subrogation...............................................35
SECTION 5.13. Preference Claims.........................................36
ARTICLE VI. THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee...............................37
SECTION 6.2. Rights of Indenture Trustee...............................38
SECTION 6.3. Individual Rights of Indenture Trustee....................39
SECTION 6.4. Indenture Trustee's Disclaimer............................40
SECTION 6.5. Notice of Defaults........................................40
SECTION 6.6. Reports by Indenture Trustee to Holders...................40
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SECTION 6.7. Compensation and Indemnity................................40
SECTION 6.8. Replacement of Indenture Trustee..........................41
SECTION 6.9. Successor Indenture Trustee by Merger.....................42
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee......................................43
SECTION 6.11. Eligibility: Disqualification.............................44
SECTION 6.12. Preferential Collection of Claims Against Issuer..........44
SECTION 6.13. Appointment and Powers....................................44
SECTION 6.14. Performance of Duties.....................................45
SECTION 6.15. Limitation on Liability...................................45
SECTION 6.16. Reliance Upon Documents...................................45
SECTION 6.17. Representations and Warranties of the Indenture Trustee...45
SECTION 6.18. Waiver of Setoffs.........................................46
SECTION 6.19. Control by the Controlling Party..........................46
SECTION 6.20. Trustee May Enforce Claims Without Possession of Notes....46
SECTION 6.21. Suits for Enforcement.....................................46
SECTION 6.22. Mortgagor Claims..........................................46
ARTICLE VII. NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and
Addresses of Noteholders...............................47
SECTION 7.2. Preservation of Information; Communications to
Noteholders............................................48
SECTION 7.3. Reports by Issuer.........................................48
SECTION 7.4. Reports by Indenture Trustee..............................48
ARTICLE VIII. PAYMENTS AND STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS;
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money.......................................49
SECTION 8.2. Release of Trust Property.................................49
SECTION 8.3. Distributions of Noteholders' Interest Collections and
Investment Proceeds...................................49
SECTION 8.4. Calculation of the Class A Note Rate......................53
SECTION 8.5. Statements to Noteholders.................................53
SECTION 8.6. Rights of Securityholders.................................55
SECTION 8.7. Funding Account...........................................56
SECTION 8.8. Deferred Interest Account.................................57
SECTION 8.9. Opinion of Counsel........................................57
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ARTICLE IX. SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders....58
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.......59
SECTION 9.3. Execution of Supplemental Indentures......................60
SECTION 9.4. Effect of Supplemental Indenture..........................60
SECTION 9.5. Conformity With Trust Indenture Act.......................61
SECTION 9.6. Reference in Notes to Supplemental Indentures.............61
ARTICLE X. REDEMPTION OF NOTES
SECTION 10.1. Redemption................................................61
SECTION 10.2. Surrender of Notes........................................61
SECTION 10.3. Form of Redemption Notice.................................63
SECTION 10.4. Notes Payable on Redemption Date..........................63
ARTICLE XI. MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc.................64
SECTION 11.2. Form of Documents Delivered to Indenture Trustee..........64
SECTION 11.3. Acts of Noteholders.......................................65
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating
Agencies...............................................66
SECTION 11.5. Notices to Noteholders; Waiver............................67
SECTION 11.6. Alternate Payment and Notice Provisions...................67
SECTION 11.7. Conflict with Trust Indenture Act.........................67
SECTION 11.8. Effect of Headings and Table of Contents..................68
SECTION 11.9. Successors and Assigns....................................68
SECTION 11.10. Separability..............................................68
SECTION 11.11. Benefits of Indenture.....................................68
SECTION 11.12. Legal Holidays............................................68
SECTION 11.13. GOVERNING LAW.............................................68
SECTION 11.14. Counterparts..............................................68
SECTION 11.15. Recording of Indenture....................................68
SECTION 11.16. Trust Obligation..........................................69
SECTION 11.17. No Petition...............................................69
SECTION 11.18. Inspection................................................69
SECTION 11.19. Limitation of Liability...................................69
ARTICLE XII. RAPID AMORTIZATION EVENTS
SECTION 12.1. Rapid Amortization Events.................................70
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EXHIBITS
Exhibit A -- Form of Class A Note
Exhibit B -- Form of Class S Note
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INDENTURE dated as of August 1, 1997, between HEADLANDS HOME
EQUITY LOAN TRUST 1997-1, a Delaware business trust (the "Issuer"), and THE
FIRST NATIONAL BANK OF CHICAGO, a national banking association, as trustee (the
"Indenture Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's Class
A Variable Rate Asset Backed Notes (the "Class A Notes"), Class S 1.25% Asset
Backed Notes (the "Class S Notes" and, together with the Class A Notes, the
"Notes"):
As security for the payment and performance by the Issuer of
its obligations under this Indenture and the Notes, the Issuer has agreed to
assign the Collateral (as defined below) to the Indenture Trustee on behalf of
the Noteholders.
Capital Markets Assurance Corporation (the "Credit Enhancer")
has issued and delivered a financial guaranty insurance policy, dated the
Closing Date (the "Note Policy"), pursuant to which the Credit Enhancer
guarantees the Guaranteed Distributions (as defined below).
As an inducement to the Credit Enhancer to issue and deliver
the Note Policy, the Issuer and the Credit Enhancer have executed and delivered
the Insurance and Reimbursement Agreement, dated as of August 1, 1997 (as
amended from time to time, the "Insurance Agreement"), among the Credit
Enhancer, the Issuer, Headlands Mortgage Company and Headlands Mortgage
Securities Inc. and the Indenture Trustee.
As an additional inducement to the Credit Enhancer to issue
the Note Policy, and as security for the performance by the Issuer of the Credit
Enhancer Issuer Secured Obligations and as security for the performance by the
Issuer of the Indenture Trustee Issuer Secured Obligations, the Issuer has
agreed to grant and assign the Collateral (as defined below) to the Indenture
Trustee for the benefit of the Issuer Secured Parties, as their respective
interests may appear.
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GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, for the benefit of the Issuer Secured Parties all of the Issuer's
right, title and interest in and to (i) certain adjustable rate home equity
revolving credit line loans (the "HELOCs") (including any Additional Balances)
made or to be made and conveyed to the Issuer under certain home equity
revolving credit line loan agreements and promissory notes ("Credit Line
Agreements"); (ii) the collections in respect of the HELOCs with due dates after
the Initial Cut-Off Date (except with respect to interest payments on the
Initial HELOCs, an amount equal to 25 days' interest on the Original Pool
Balance, calculated at the weighted average Loan Rate), (iii) property that
secured a HELOC that has been acquired by foreclosure or deed in lieu of
foreclosure; (iv) rights of the Sponsor under hazard insurance policies covering
the Mortgaged Properties; (v) the Policy; (vi) amounts on deposit in the
Collection Account; (vii) amounts on deposit in the Funding Account; (viii)
amounts on deposit in the Spread Account; (ix) amounts on deposit in the
Deferred Interest Account; (x) any and all Subsequent HELOCs (including any
Additional Balances related thereto); (xi) all rights under the Purchase
Agreement assigned to the Issuer (including all representations and warranties
of the Seller contained therein) and all rights of the Issuer under the Sale and
Servicing Agreement; and (xii) any and all proceeds of the foregoing (the
foregoing "Collateral").
The foregoing Grant is made in trust to the Indenture Trustee,
for the benefit first, of the Holders of the Notes, and second, for the benefit
of the Credit Enhancer. The Indenture Trustee hereby acknowledges such Grant,
accepts the trusts under this Indenture in accordance with the provisions of
this Indenture and agrees to perform its duties required in this Indenture to
the best of its ability to the end that the interests of such parties,
recognizing the priorities of their respective interests may be adequately and
effectively protected.
ARTICLE I.
Definitions and Incorporation by Reference
Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes
of this Indenture.
"Accelerated Principal Distribution Amount" means, with
respect to any Distribution Date, the amount, if any, required to reduce the
Class A Note Principal Balance (after giving effect to the distribution of all
other amounts actually distributed on the Class A Notes on such Distribution
Date) so that the Invested Amount (immediately following such Distribution Date)
exceeds the Class A Note Principal Balance (as so reduced) by the Required
Overcollateralization Amount.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified Person, any
other Person controlling, controlled by or under common control with such
Person. For the purposes of this
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definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Alternative Principal Payment" as to any Distribution Date,
the amount (but not less than zero) equal to Principal Collections for such
Distribution Date less the aggregate of Draws under the Credit Line Agreements
during the related Collection Period.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer or agent acting pursuant to a power of attorney of the
Owner Trustee or the Servicer, as applicable, who is authorized to act for the
Owner Trustee or the Servicer, as applicable, in matters relating to the Issuer
and who is identified on the list of Authorized Officers delivered by each of
the Owner Trustee and the Servicer to the Indenture Trustee on the Closing Date
(as such list may be modified or supplemented from time to time thereafter).
"Authorized Newspaper" means a newspaper of general
circulation in the Borough of Manhattan, The City of New York, printed in the
English language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Basic Documents" means this Indenture, the Certificate of
Trust, the Trust Agreement, the Sale and Servicing Agreement, the Purchase
Agreement, the Indemnification Agreement, the Management Agreement, the
Insurance Agreement and other documents and certificates delivered in connection
therewith.
"Book Entry Notes" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.9.
"BIF" means the Bank Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Bank Insurance Fund is not existing and performing duties now
assigned to it, the body performing such duties on such date.
"Business Day" means any day other than a Saturday, Sunday,
legal holiday or other day on which banking institutions in the state of New
York or the state in which the Corporate Trust Office is located are required or
authorized by law to be closed.
"Certificate of Trust" means the certificate of trust of the
Issuer substantially in the form of Exhibit B to the Trust Agreement.
"Certificate Principal Balance" means, as of any date of
determination, the amount equal to (i) the Pool Balance at the end of the day
next preceding such date of determination plus (ii) the amount of Principal
Collections on deposit in the Funding Account, minus (iii) the Invested Amount.
"Certificates" means as defined in the Trust Agreement.
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"Certificateholders' Available Funds" means, as to any
Distribution Date, Certificateholders' Collections up to but not exceeding the
Certificateholders' Subordinated Amount immediately prior to such Distribution
Date.
"Certificateholders' Collections" shall mean, as to any
period, the sum of Certificateholders' Interest Collections and
Certificateholders' Principal Collections for such period.
"Certificateholders' Principal Collections" shall mean, on any
Distribution Date, Principal Collections received during the related Collection
Period minus the amount of such Principal Collections required to be distributed
to Class A Noteholders pursuant to Section 8.3(b) or required to be deposited to
the Funding Account pursuant to Section 8.7.
"Certificateholders' Subordinated Amount" shall mean, at the
time of reference thereto, $3,859,110.37 less (i) the aggregate amount of
Certificateholders' Collections previously applied pursuant to Section 8.3(c)
and (ii) the aggregate amount of Noteholders' Loss Amounts that have previously
been reallocated to the Certificateholders' Interest pursuant to the second
sentence of Section 8.3(c); provided that the Certificateholders' Subordinated
Amount shall not be less than zero.
"Class A Note" means any Class A Note executed and
authenticated by the Indenture Trustee.
"Class A Note Distribution Amount" means, as to any
Distribution Date, the sum of all amounts to be distributed to the Holders of
Class A Notes pursuant to Article VIII.
"Class A Note Principal Balance" means, with respect to any
Distribution Date, (a) the Original Class A Note Principal Balance less (b) the
aggregate of amounts actually distributed as principal on the Class A Notes.
"Class A Note Rate" means, with respect to the first Interest
Period, 5.805% and for any subsequent Interest Period, the sum of (a) LIBOR as
of the second LIBOR Business Day prior to the first day of such Interest Period
and (b) .18%; provided, however, that in no event shall the Class A Note Rate
with respect to any Interest Period exceed the Maximum Rate for such Interest
Period.
"Class S Note" mean any Class S Note executed and
authenticated by the Indenture Trustee.
"Class S Note Rate" means 1.25% per annum (computed on the
basis of the actual days elapsed in a 360-day year.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
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"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means August 21, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" has the meaning specified in the Granting Clause
of this Indenture.
"Company" means Headlands Mortgage Company.
"Controlling Party" means the Credit Enhancer, so long as no
Credit Enhancer Default shall have occurred and be continuing, and the Indenture
Trustee, for so long as a Credit Enhancer Default shall have occurred and be
continuing.
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee at which at any particular time its corporate
trust business shall be administered, which office at date of the execution of
this Agreement is located at One First National Plaza, Suite 0126, Chicago,
Illinois 60670-0126, Attention: Corporate Trust Services Division (for the
purposes of Section 3.2, such office is located at 14 Wall Street, 8th Floor,
New York, New York 10005).
"Credit Enhancer Default" means the failure by the Credit
Enhancer to make a payment required under the Note Policy in accordance with the
terms thereof.
"Credit Enhancer Issuer Secured Obligations" means all amounts
and obligations which the Issuer may at any time owe to or on behalf of the
Credit Enhancer under this Indenture, the Insurance Agreement or any other Basic
Document.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, a Rapid Amortization Event.
"Definitive Notes" has the meaning specified in Section 2.9.
"Deferred Interest" means the amount by which interest
required to be distributed in respect of the Class A Notes on any Distribution
Date exceeds the Maximum Rate.
"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Eligible Account" means an account that is either (i)
maintained with a depository institution whose short-term debt obligations
throughout the time of any deposit therein are rated in the highest short-term
debt rating category by Standard & Poor's and Moody's, (ii) an account or
accounts maintained with a depository institution with a minimum
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long term unsecured debt rating by Standard & Poor's and Moody's which is at
least investment grade provided that the deposits in such account or accounts
are fully insured by either the BIF or the SAIF, or (iii) a segregated trust
account maintained with the corporate trust department of the Indenture Trustee
in its fiduciary capacity, or (iv) an account otherwise acceptable to each
Rating Agency and the Credit Enhancer, as evidenced at closing by delivery of a
rating letter by each Rating Agency and thereafter by delivery of a letter from
each Rating Agency and the Credit Enhancer to the Indenture Trustee, within 30
days of receipt of notice of such deposit.
"Eligible Investments" means one or more of the following
(excluding any callable investments purchased at a premium):
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof, provided that
such obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified
in clause (i) maturing not more than three months from the date of
acquisition thereof, provided that the short-term unsecured debt
obligations of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest short-term rating
category (which is A-1+ for Standard & Poor's and P-1 for Moody's);
(iii) certificates of deposit, time deposits and
bankers' acceptances (which, if Moody's is a Rating Agency, shall each
have an original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity of
more than 365 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, provided that the unsecured short-term debt
obligations of such depository institution or trust company at the date
of acquisition thereof have been rated by each of Moody's and Standard
& Poor's in its highest unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of
not more than 270 days) of any corporation incorporated under the laws
of the United States or any state thereof which on the date of
acquisition has been rated by Standard & Poor's and Moody's in their
highest short-term debt rating categories;
(v) short term investment funds ("STIFS") sponsored
by any trust company or national banking association incorporated under
the laws of the United States or any state thereof which on the date of
acquisition has been rated by Standard & Poor's and Moody's in their
respective highest applicable rating category; and
(vi) interests in any money market fund which at the
date of acquisition of the interests in such fund and throughout the
time such interests are held in such fund has a rating of Aaa by
Moody's and either AAAm or AAAm-G by Standard & Poor's or such lower
rating as will not result in the qualification, downgrading or
withdrawal of the
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then-current rating assigned to the Notes by each Rating Agency
without regard to the Policy;
(vii) other obligations or securities that are
acceptable to each Rating Agency and the Credit Enhancer as an Eligible
Investment hereunder and will not result in a reduction in the then
current rating of the Notes without regard to the Policy, as evidenced
by a letter to such effect from such Rating Agency and the Credit
Enhancer and with respect to which the Servicer has received
confirmation that, for tax purposes, the investment complies with the
last clause of this definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to its stated maturity.
"ERISA" means Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Final Scheduled Distribution Date" shall mean, with respect
to the Class A Notes and the Class S Notes, August 15, 2024.
"Floating Allocation Percentage" means, with respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Invested Amount at the close of business on the preceding
Distribution Date (or at the Closing Date in the case of the first Distribution
Date) and the denominator of which is the sum as of the beginning of the related
Collection Period of (a) the Pool Balance and (b) the amount of Principal
Collections on deposit in the Funding Account.
"Fully Indexed Rate" means, with respect to any HELOC, the
Loan Rate applicable under the related Credit Agreement when such HELOC is fully
indexed following the Teaser Period.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the Granting party or otherwise and generally
to do and receive
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anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"Guaranteed Distribution" means, with respect to any
Distribution Date, the sum of the (i) the Guaranteed Principal Distribution
Amount and (ii) the amount to be distributed to Class A and Class S Noteholders
pursuant to Sections 8.3(a)(i) and 8.3(a)(ii) for such Distribution Date.
"Guaranteed Principal Distribution Amount" means, with respect
to (i) any Distribution Date on or after which the Certificateholders'
Subordinated Amount has been reduced to zero, the amount, if any, required to
reduce the Class A Note Principal Balance (after giving effect to the
distributions of Interest Collections and Principal Collections that are
allocable to principal on the Class A Notes on such Distribution Date) to the
Invested Amount for such Distribution Date (after giving effect to distributions
of principal, if any, and allocation of Noteholders' Loss Amounts on such
Distribution Date) and (ii) the Distribution Date in August, 2024, the amount by
which the outstanding Class A Note Principal Balance (after giving effect to all
other amounts allocable to and distributable as principal on the Class A Notes
on such Distribution Date) exceeds the sum of the amounts on deposit in the
Collection Account available to be distributed to the Class A Noteholders
pursuant to Section 8.3(b).
"HELOC" has the meaning as defined in the Sale and Servicing
Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended and supplemented
from time to time.
"Indenture Trustee" means The First National Bank of Chicago,
a national banking association, not in its individual capacity but as trustee
under this Indenture, or any successor trustee under this Indenture.
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"Indenture Trustee Issuer Secured Obligations" means all
amounts and obligations which the Issuer may at any time owe to the Indenture
Trustee for the benefit of the Noteholders under this Indenture or the Notes.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Sponsor and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Sponsor
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Sponsor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, prepared
by an Independent appraiser or other expert appointed pursuant to an Issuer
Order and approved by the Indenture Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Initial Cut-Off Date" means July 31, 1997.
"Insurance Proceeds" means Proceeds paid by any insurer (other
than the Credit Enhancer) pursuant to any insurance policy covering a HELOC, or
amounts required to be paid by the Servicer pursuant to the last sentence of
Section 3.04 of the Sale and Servicing Agreement, net of any component thereof
(i) covering any expenses incurred by or on behalf of the Servicer in connection
with obtaining such proceeds, (ii) that is applied to the restoration or repair
of the related Mortgaged Property, (iii) released to the Mortgagor in accordance
with the Servicer's normal servicing procedures or (iv) required to be paid to
any holder of a mortgage senior to such HELOC.
"Interest Collections" means, as to any Distribution Date, the
sum of all payments by or on behalf of Mortgagors and any other amounts
constituting interest (including, without limitation, such portion of Insurance
Proceeds and Net Liquidation Proceeds as is allocable to interest on the
applicable HELOC) collected by the Servicer under the HELOCs (excluding fees or
late charges or similar administrative fees paid by Mortgagors) during the
related Collection Period plus investment earnings on funds on deposit in the
Funding Account and any deposits made to the Collection Account during such
Collection Period pursuant to Section 8.7(c)(i) herein minus the Servicing Fee
payable to the Servicer with respect to the related Collection Period. The terms
of the related Credit Line Agreement shall determine the portion of each payment
in respect of such HELOC that constitutes principal or interest.
"Interest Rate" means, with respect to the (i) Class A Notes,
the Class A Note Rate and (ii) Class S Notes, the Class S Note Rate.
"Invested Amount": With respect to any Distribution Date, an
amount equal to the Original Invested Amount minus (i) the amount of Principal
Collections previously
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distributed to Class A Noteholders, amounts allocable to the Certificates and
Noteholders Interest Collections that are used to reimburse Noteholders' Loss
Amounts and amounts distributed as Guaranteed Principal Distribution Amounts
funded by withdrawals from the Spread Account or draws under the Policy
(including amounts previously distributed to Class A Noteholders from Principal
Collections on deposit in the Funding Account) and minus (ii) an amount equal to
the Noteholders' Loss Amounts not previously covered by Noteholders Interest
Collections, absorbed by the Overcollateralization Amount, funded by collections
allocable to the Certificateholders' Interest or reallocated to the
Certificateholders' Interest (up to the Certificateholders' Subordinated
Amount), or funded by withdrawals from the Spread Account or draws on the
Policy.
"Issuer" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Issuer Secured Obligations" means the Credit Enhancer
Issuer Secured Obligations and the Indenture Trustee Issuer Secured
Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee
in respect of the Indenture Trustee Issuer Secured Obligations and the Credit
Enhancer in respect of the Credit Enhancer Issuer Secured Obligations.
"LIBOR" means, as to any date, the rate for United States
dollar deposits for one month which appear on the Telerate Screen LIBOR Page
3750 as of 11:00 a.m., London time. If such rate does not appear on such page
(or such other page as may replace that page on that service, or if such service
is no longer offered, such other service for displaying LIBOR or comparable
rates as may be reasonably selected by the Sponsor after consultation with the
Indenture Trustee), the rate will be the Reference Bank rate. If no such
quotations can be obtained and no Reference Bank Rate is available, LIBOR will
be LIBOR applicable to the preceding Distribution Date.
"LIBOR Business Day" means any day other than (i) a Saturday
or a Sunday or (ii) a day on which banking institutions in the State of New York
or in the city of London, England are required or authorized by law to be
closed.
"Liquidation Expenses" means out-of-pocket expenses (exclusive
of overhead) which are incurred by the Servicer in connection with the
liquidation of any HELOC and not recovered under any insurance policy,
including, without limitation, legal fees and expenses, any unreimbursed amount
expended pursuant to Section 3.06 of the Sale and Servicing Agreement
(including, without limitation, amounts advanced to correct defaults on any
mortgage loan which is senior to such HELOC and amounts advanced to keep current
or pay off a mortgage loan that is senior to such HELOC) respecting the related
HELOC and any related and unreimbursed
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expenditures with respect to real estate property taxes, water or sewer taxes,
condominium association dues, property restoration or preservation or insurance
against casualty, loss or damage.
"Liquidation Loss Amount" means, with respect to any
Distribution Date and any HELOC that becomes a Liquidated HELOC during the
related Collection Period, the unrecovered Asset Balance thereof at the end of
such Collection Period, after giving effect to the Net Liquidation Proceeds
applied in reduction of such Asset Balance.
"Liquidation Proceeds" means Proceeds (including Insurance
Proceeds) received in connection with the liquidation of any HELOC or related
REO, whether through trustee's sale, foreclosure sale or otherwise.
"Loan Rate" has the meaning defined in the Sale and Servicing
Agreement.
"Loss Reduction Amount" means with respect to any
Distribution Date, the portion, if any, of the Noteholders' Loss Amount for such
Distribution Date and all prior Distribution Dates that has not been (a)
distributed to Class A Noteholders on such Distribution Date pursuant to
Sections 8.3(a)(iii) or 8.3(a)(iv), from funds on deposit in the Spread Account,
or by way of the Credit Enhancement Draw Amount, or (b) paid from collections
otherwise allowable to the Certificateholders' Interest or reallocated to the
Certificate Principal Balance pursuant to Section 8.3(c) or (c) absorbed by the
Overcollateralization Amount.
"Managed Amortization Period" means the period from the
termination of the Funding Period to the Rapid Amortization Commencement Date.
"Management Agreement" means the Agreement by and between the
Company and the Issuer.
"Management Fee" means $1,000 per month.
"Manager" means the Person acting in such capacity pursuant to
the Management Agreement or its successors or assigns, which shall initially be
the Company.
"Maximum Principal Payment" means, with respect to any
Distribution Date, the Fixed Allocation Percentage of the Principal Collections
for such Distribution Date.
"Minimum Certificateholders' Interest" means, with respect to
any date, an amount equal to the lesser of (a) 4% of the Pool Balance on such
date and (b) the Certificate Principal Balance as of the Closing Date.
"Net Liquidation Proceeds" means, with respect to any
Liquidated HELOC, Liquidation Proceeds net of Liquidation Expenses.
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"Net Loan Rate" means, with respect to any HELOC and as to any
day, the Loan Rate less the Servicing Fee Rate, the Class S Note Rate, the
Premium Fee Rate and the Trustee Fee Rate.
"Note" means a Class A Note or a Class S Note.
"Noteholders' Interest Collections": As to any Distribution
Date, the product of (i) the Interest Collections during the related Collection
Period and (ii) the Floating Allocation Percentage for such Distribution Date.
"Noteholders' Loss Amount" means with respect to any
Distribution Date, the amount equal to the product of (i) the Floating
Allocation Percentage for such Distribution Date and (ii) the aggregate of the
Liquidation Loss Amounts for such Distribution Date.
"Note Owner" means, with respect to a Book-Entry Note, the
person who is the owner of such Book-Entry Note or following the issuance of
Definitive Notes, the registered owner of the Notes.
"Note Paying Agent" means the Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 and is authorized by the Issuer to make payments to and
distributions from the Collection Account, including payment of principal of or
interest on the Notes on behalf of the Issuer.
"Note Policy" means the insurance policy issued by the Credit
Enhancer with respect to the Notes, including any endorsements thereto.
"Note Policy Claim Amount" has the meaning specified in
Section 4.02 of the Sale and Servicing Agreement.
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.3.
"Officer's Certificate" means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
ss. 314, and delivered to the Indenture Trustee.
"Opinion of Counsel" means one or more opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and, if addressed to the Credit Enhancer, satisfactory
to the Credit Enhancer, and which shall comply with any applicable requirements
of Section 11.1, and if addressed to the Credit Enhancer, satisfactory to the
Credit Enhancer.
"Original Invested Amount" means $189,065,000.
"Original Pool Balance" means $192,924,110.37.
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"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Note Paying Agent in trust for the Holders of
such Notes (provided, however, that if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor, satisfactory to the Indenture
Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Credit Enhancer has been paid as subrogee hereunder or reimbursed pursuant
to the Insurance Agreement as evidenced by a written notice from the Credit
Enhancer delivered to the Indenture Trustee, and the Credit Enhancer shall be
deemed to be the Holder thereof to the extent of any payments thereon made by
the Credit Enhancer; provided, further, that in determining whether the Holders
of the requisite Outstanding Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Sponsor or any Affiliate of any of the foregoing Persons shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgees
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Sponsor or any Affiliate of any of
the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of
all Notes, or class of Notes, as applicable, outstanding at the date of
determination.
"Overcollateralization Amount" means, at the time of reference
thereto, the amount, if any, by which the Invested Amount exceeds the Class A
Note Principal Balance.
"Owner Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity, but solely as owner trustee
under the Trust Agreement, and any successor Owner Trustee thereunder.
"Owner Trustee Fee Rate" has the meaning as defined in the
Sale and Servicing Agreement.
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"Percentage Interest" means as to any Note, the percentage
obtained by dividing the principal denomination (or notional amount) of such
Note by the aggregate of the principal denominations (or notional amounts) of
all Notes of the same class.
"Pool Balance" means, with respect to any date, the aggregate
of the Asset Balances of all HELOCs as of such date.
"Pool Factor" means, with respect to any Distribution Date,
the percentage, carried to seven places, obtained by dividing the Class A Note
Principal Balance for such Distribution Date by the Original Class A Note
Principal Balance.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.4 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" has the meaning specified in the Sale and
Servicing Agreement.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Agreement" means the HELOC Purchase Agreement dated
as of August 1, 1997 between the Company and the Sponsor with respect to the
HELOCs.
"Rapid Amortization Commencement Date" means, the earlier of
(i) the Distribution Date in August, 2003 and (ii) the Distribution Date next
succeeding the Collection Period in which a Rapid Amortization Event is deemed
to occur pursuant to Section 12.1.
"Rapid Amortization Event" shall have the meaning as defined
in Section 12.1.
"Rapid Amortization Period" shall mean the period commencing
on the Rapid Amortization Commencement Date and continuing until the termination
of the Trust pursuant to Section 7.01 of the Sale and Servicing Agreement.
"Rating Agency" means Moody's and Standard & Poor's. If such
agency or a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Sponsor and the Credit Enhancer, notice of which designation shall be given to
the Indenture Trustee. References herein to the highest short term unsecured
rating category of a Rating Agency shall means A1+ or better in the case of
Standard & Poor's and P1 or better in the case of Moody's, and in the case of
any other Rating Agency shall mean the ratings such other Rating Agency deems
equivalent to the foregoing ratings. References herein to the highest long-term
rating category of a Rating Agency shall mean "AAA" in the case of Standard &
Poor's and "Aaa" in the case of Moody's, and in the case
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of any other Rating Agency, the rating such other Rating Agency deems equivalent
to the foregoing ratings.
"Record Date" shall mean the last day preceding the related
Distribution Date; provided, however, that following the date on which
Definitive Notes are available, the Record Date shall be the last day of the
calendar month preceding the month in which the related Distribution Date
occurs.
"Redemption Date" means, in the case of a redemption of the
Notes pursuant to Section 10.1(a), the Distribution Date specified by the
Servicer or the Issuer pursuant to Section 10.1(a).
"Redemption Price" means, in the case of a redemption of the
Notes pursuant to Section 10.1(a), an amount equal to the unpaid principal
amount of the then outstanding principal amount of each class of Notes being
redeemed plus accrued and unpaid interest thereon to but excluding the
Redemption Date.
"Reference Banks" means three major banks that are engaged in
the London interbank market, selected by the Sponsor after consultation with the
Indenture Trustee.
"Required Deferred Interest Amount" means, with respect to any
Teaser HELOC and any Distribution Date, the product of (X) the excess of (i) the
Fully Indexed Rate over (ii) the Teaser Rate and (Y) the related Asset Balance
of such Teaser HELOC and (Z) the number of days in the related Interest Period.
"Responsible Officer" means, with respect to the Indenture
Trustee or any officer of the Indenture Trustee with direct responsibility for
the administration of this Agreement and, also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"SAIF" means the Savings Association Insurance Fund, as from
time to time constituted, created under the Financial Institutions Reform,
Recovery and Enhancement Act of 1989, or if at any time after the execution of
this instrument the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement dated as of August 1, 1997, among the Issuer, the Sponsor, the
Servicer and the Indenture Trustee, as the same may be amended or supplemented
from time to time.
"Scheduled Principal Collections Distribution Amount" means,
with respect to any Distribution Date during the Funding Period or the Managed
Amortization Period and the Class A Notes, an amount equal to the lesser of (i)
the Maximum Principal Payment and (ii) the Alternative Principal Payment. With
respect to any Distribution Date in respect of the Rapid Amortization Period,
the Maximum Principal Payment.
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"Servicer" means the Company, in its capacity as Servicer.
"Sponsor" means Headlands Mortgage Securities Inc. or its
successors in interest.
"Subsequent HELOCs" As defined in the Sale and Servicing
Agreement.
"Teaser HELOCs" Those HELOCs with a Loan Rate that has not
become fully indexed.
"Teaser Period" With respect to any HELOC, the payment period
provided under the related Credit Line Agreement during which time the interest
rate on the HELOC has not been fully indexed.
"Teaser Rate" With respect to any HELOC, the Loan Rate
applicable under the related Credit Line Agreement during the Teaser Period of
the HELOC.
"Termination Date" means the latest of (i) the termination of
the Note Policy and the return of the Note Policy to the Credit Enhancer for
cancellation, (ii) the date on which the Credit Enhancer shall have received
payment and performance of all Credit Enhancer Issuer Secured obligations and
(iii) the date on which the Indenture Trustee shall have received payment and
performance of all Indenture Trustee Issuer Secured Obligations.
"Transfer Deposit Amount": As defined in the Sale and
Servicing Agreement.
"Trust Accounts" means the Spread Account, the Funding
Account, the Collection Account and the Deferred Interest Account.
"Trust Property" means all property and proceeds conveyed
pursuant to Section 2.01 of the Sale and Servicing Agreement, and certain other
rights under that Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
"Unpaid Class A Note Interest Shortfall" means with respect to
any Distribution Date, the aggregate amount, if any, of Class A Note Interest
that was accrued in respect of a prior Distribution Date and has not been
distributed to Class A Noteholders.
"Unpaid Class S Note Interest Shortfall" means with respect to
any Distribution Date, the aggregate amount, if any, of Class S Note Interest
that was accrued in respect of a prior Distribution Date and has not been
distributed to Class S Noteholders.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Sale and Servicing Agreement or
the Trust Agreement.
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SECTION 1.2. Incorporation by Reference of the Trust
Indenture Act. Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
SECTION 1.3. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in
the plural include the singular.
SECTION 1.4. Action by or Consent of Noteholders and
Certificateholders. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or Noteholder, as the case may
be, of record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of Headlands Mortgage Company or any Affiliate thereof shall be deemed not
to be outstanding; provided, however, that, solely for the purpose of
determining whether the Indenture Trustee or the Owner Trustee is entitled to
rely upon any such action or consent, only Notes or Certificates which the Owner
Trustee or the Indenture Trustee, respectively, knows to be so owned shall be so
disregarded.
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SECTION 1.5. Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control and all provisions required by the TIA are hereby incorporated by
reference. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provisions shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
ARTICLE II.
The Notes
SECTION 2.1. Form. The Class A Notes and the Class S Notes, in
each case together with the Indenture Trustee's certificate of authentication,
shall be in substantially the form set forth in Exhibit A and B, respectively,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution of the Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits A and B are part of the terms of this
Indenture.
SECTION 2.2. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be original or
facsimile.
Notes bearing the original or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Indenture Trustee shall authenticate and deliver Class A
Notes for original issue in an aggregate principal amount of $189,065,000 and
Class S Notes for original issue in the aggregate notional amount of
$189,065,000. The Class A Notes and the Class S Notes outstanding at any time
may not exceed such amounts except as provided in Section 2.6.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of $1000
and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears attached to such
Note a certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any
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Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder. Subject to Section 2.11, the
Notes shall be Book-Entry Notes.
SECTION 2.3. Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration or transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, and
if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute or cause the Indenture Trustee to authenticate one or more new Notes, in
any authorized denominations, of the same class and a like aggregate principal
amount. A Noteholder may also obtain from the Indenture Trustee, in the name of
the designated transferee or transferees one or more new Notes, in any
authorized denominations, of the same class and a like aggregate principal
amount. Such requirements shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance by the Issuer with Section 8-401 of the UCC.
At the option of the Holder, Notes may be exchanged for other
Notes in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, and if the
requirements of Section 8-401(1) of the UCC are met, the Issuer shall execute
and upon its request the Indenture Trustee shall authenticate the Notes which
the Noteholder making the exchange is entitled to receive. Such requirements
shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Issuer with Section 8-401 of the UCC.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in the form
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attached to Exhibits A and B, duly executed by the Holder thereof or such
Holder's attorney duly authorized in writing, with such signature guaranteed by
an "eligible guarantor institution" meeting the requirements of the Note
Registrar all in accordance with the Exchange Act, and (ii) accompanied by such
other documents as the Note Registrar may require.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Note Registrar 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 Notes, other than exchanges pursuant to Section 2.4 or 9.6 not
involving any transfer.
SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Notes. If
(i) any mutilated Note is surrendered to the Note Registrar, or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Indenture Trustee and the
Credit Enhancer such security or indemnity as may be required by it to hold the
Issuer, the Indenture Trustee and the Credit Enhancer harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Issuer shall execute and
upon its request the Indenture Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note (such requirement shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance by the Issuer with Section 8-405);
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, the Issuer may, instead of issuing a
replacement Note, direct the Indenture Trustee, in writing, to pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer, the Indenture Trustee and the Credit Enhancer shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to whom
such replacement Note was delivered or any assignee of such Person, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at
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any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
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 Notes.
SECTION 2.5. Persons Deemed Owners. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
the Credit Enhancer and any agent of the Issuer, the Indenture Trustee and the
Credit Enhancer may treat the Person in whose name any Note is registered (as of
the Record Date) as the owner of such Note for the purpose of receiving payments
of principal of and interest, if any on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Issuer, the
Credit Enhancer, the Indenture Trustee nor any agent of the Issuer, the Credit
Enhancer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.6. Payment of Principal and Interest; Defaulted
Interest. The Notes shall accrue interest as provided herein, and such amount
shall be payable on each Distribution Date as specified herein. Any installment
of interest or principal, if any, payable on any Note which is punctually paid
or duly provided for by the Issuer on the applicable Distribution Date shall be
paid to the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date, by check mailed first-class, postage prepaid, to
such Person's address as it appears on the Note Register on such Record Date,
except that, unless Definitive Notes have been issued pursuant to Section 2.11,
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will
be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final installment of principal
payable with respect to such Note on a Distribution Date or on the Final
Scheduled Distribution Date (and except for the Redemption Price for any Note
called for redemption pursuant to Section 10.1(a)) which shall be payable as
provided below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.3.
(a) Upon written notice from the Issuer, the Indenture Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Distribution Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Distribution Date and shall specify that such final installment will
be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2.
(b) If the Issuer defaults in a payment of interest on the
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate to the extent
lawful. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on a subsequent special record date, which date shall be at least
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five Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and, at least 15 days
before any such special record date, the Issuer shall mail to each Noteholder
and the Indenture Trustee a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
(c) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Indenture Trustee, the Indenture Trustee shall, upon written notice from
the Servicer of the amounts, if any, that the Credit Enhancer has paid in
respect of the Notes under the Note Policy or otherwise which has not been
reimbursed to it, deliver such surrendered Notes to the Credit Enhancer to the
extent not previously cancelled or destroyed.
SECTION 2.7. Cancellation. Subject to Section 2.6(d), all
Notes surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. Subject to Section 2.6(d), the Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
Subject to Section 2.6(d), all canceled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.8. Release of Collateral. The Indenture Trustee
shall, on or after the Termination Date, release any remaining portion of the
Trust Property (except for the Spread Account which release shall be subject to
Section 2.05 of the Insurance Agreement) from the lien created by this Indenture
and deposit in the Collection Account any funds then on deposit in any other
Trust Account. The Indenture Trustee shall release property from the lien
created by this Indenture pursuant to this Section 2.8 only upon receipt of an
Issuer Request by it accompanied by an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA) Independent Certificates in accordance with
TIA ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1.
SECTION 2.9. Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company or its
custodian, the initial Clearing Agency, by, or on behalf of, the Issuer. Such
Notes shall initially be registered on the Note Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Note Owner will receive
a Definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.11. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.11:
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(i) the provisions of this Section shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until Definitive Notes are
issued pursuant to Section 2.11, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Indenture Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Indenture Trustee at the Corporate Trust Office.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.11, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Servicer advises
the Indenture Trustee in writing that the Clearing Agency is no longer willing
or able to properly discharge its responsibilities with respect to the Notes,
and the Servicer is unable to locate a qualified successor, (ii) the Servicer at
its option advises the Indenture Trustee in writing that it elects to terminate
the book-entry system through the Clearing Agency or (iii) after the occurrence
of a Rapid Amortization Event, Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Notes advise
the Indenture Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing
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Agency is no longer in the best interests of the Note Owners, then the Clearing
Agency shall notify all Note Owners and the Indenture Trustee of the occurrence
of any such event and of the availability of Definitive Notes to Note Owners
requesting the same. Upon surrender to the Indenture Trustee of the typewritten
Note or Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the Holders of the Definitive Notes as Noteholders.
ARTICLE III.
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer
will duly and punctually pay the principal of and interest on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, the Issuer will cause to be distributed all amounts on deposit in the
Collection Account on a Distribution Date deposited therein pursuant to the Sale
and Servicing Agreement (i) for the benefit of the Class A Notes, to Class A
Noteholders and (ii) for the benefit of the Class S Notes, to Class S
Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will
maintain in Chicago, Illinois, an office or agency where Notes may be
surrendered for registration, transfer or exchange of the Notes, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. The
Issuer will cause each Note Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Credit Enhancer an
instrument in which such Note Paying Agent shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so
agrees), subject to the provisions of this Section, that such Note Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid
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to such Persons or otherwise disposed of as herein provided and pay
such sums to such Persons as herein provided;
(ii) give the Indenture Trustee written notice of any default
by the Issuer (or any other obligor upon the Notes) of which it has
actual knowledge in the making of any payment required to be made with
respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Note Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Indenture Trustee all sums held
in trust by such Note Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which the sums were held by such Note
Paying Agent; and upon such a payment by any Note Paying Agent to the Indenture
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Indenture Trustee or any Note Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Issuer on Issuer Request, and
shall be deposited by the Indenture Trustee in the Collection Account; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Note
Paying Agent with respect to such trust money shall thereupon cease.
SECTION 3.4. Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect
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the validity and enforceability of this Indenture, the Trust Property, the
Notes, and each other instrument or agreement included in the Trust Property.
SECTION 3.5. Protection of Trust Property. The Issuer intends
the security interest granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Property,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Indenture Trustee, for the benefit of the Issuer Secured Parties, a first
lien on and a first priority, perfected security interest in the Trust Property.
The Issuer will from time to time prepare (or shall cause to be prepared),
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Property;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Indenture Trustee for the benefit
of the Issuer Secured Parties created by this Indenture or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Property and the
rights of the Indenture Trustee in such Trust Property against the
claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon
the Trust Property when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section;
provided that, such designation shall not be deemed to create a duty in the
Indenture Trustee or the Indenture Trustee to monitor the compliance of the
Issuer with respect to its duties under this Section 3.5 or the adequacy of any
financing statement, continuation statement or other instrument prepared by the
Issuer.
SECTION 3.6. Opinions as to Trust Property. (a) On the Closing
Date, the Issuer shall furnish to the Indenture Trustee and the Credit Enhancer
an Opinion of Counsel stating that, in the opinion of such counsel, such actions
have been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the first priority
lien and security interest in favor of the Indenture Trustee, for the benefit of
the Issuer Secured Parties, created by this Indenture.
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(b) Within 90 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than six months after the
Closing Date, the Issuer shall furnish to the Indenture Trustee and the Credit
Enhancer, an Opinion of Counsel either stating that, in the opinion of such
counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel, no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture.
SECTION 3.7. Performance of Obligations; Servicing of HELOCs.
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from any
of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Property or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to
the Credit Enhancer to assist it in performing its duties under this Indenture,
and any performance of such duties by a Person identified to the Indenture
Trustee and the Credit Enhancer in an Officer's Certificate of the Issuer shall
be deemed to be action taken by the Issuer. Initially, the Issuer has contracted
with the Servicer to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Property, including, but
not limited, to preparing (or causing to be prepared) and filing (or causing to
be filed) all UCC financing statements and continuation statements required to
be filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Indenture Trustee, the Credit Enhancer or the
Holders of at least a majority of the Outstanding Amount of the Notes.
(d) If a Responsible Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicing Termination under
the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Credit Enhancer and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If an Event of Servicing Termination shall
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arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the HELOCs,
the Issuer shall take all reasonable steps available to it to remedy such
failure.
(e) The Issuer agrees that it will not waive timely
performance or observance by the Servicer or the Sponsor of their respective
duties under the Basic Documents (x) without the prior consent of the Credit
Enhancer or (y) if the effect thereof would adversely affect the Holders of the
Notes.
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in
the Trust Property, without the consent of the Credit Enhancer (which
consent may not be unreasonable withheld; provided, that if a Credit
Enhancer Default has occurred and is continuing, the Noteholders
representing 66-2/3% of the Noteholders may direct the Indenture
Trustee to sell or dispose of the Trust Property if the Indenture
Trustee receives the Liquidation Price, as described in Section 12.1.
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Property; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee created by this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created
on or extend to or otherwise arise upon or burden the Trust Property or
any part thereof or any interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other liens that arise by
operation of law, in each case on a Mortgaged Property and arising
solely as a result of an action or omission of the related Obligor),
(C) permit the lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or other
lien) security interest in the Trust Property or (D) amend, modify or
fail to comply with the provisions of the Basic Documents without the
prior written consent of the Credit Enhancer, which consent may not be
unreasonable withheld.
SECTION 3.9. Annual Statement as to Compliance. The Issuer
will deliver to the Indenture Trustee and the Credit Enhancer, within 90 days
after the end of each fiscal year of
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the Issuer (commencing with the fiscal year ended December 31, 1997), and
otherwise in compliance with the requirements of TIA Section 314(a)(4) an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer May Not Consolidate or Transfer Assets.
(a) The Issuer may not consolidate or merge with or into any other Person.
(b) Except as otherwise provided in the Sale and Servicing
Agreement, the Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Property, to any
Person.
SECTION 3.11. No Other Business. The Issuer shall not engage
in any business other than purchasing, owning, selling and managing the HELOCs
and other assets in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto. After the Funding Period, the
Issuer shall not fund the purchase of any additional HELOCs (other than
Additional Balances).
SECTION 3.12. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Credit Enhancer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Basic Documents. The proceeds of
the Notes and the Certificates shall be used exclusively to fund the Issuer's
purchase of the HELOCs and the other assets specified in the Sale and Servicing
Agreement, to fund the Funding Account, the Deferred Interest Account and the
Spread Account and to pay the Issuer's organizational, transactional and
start-up expenses.
SECTION 3.13. Servicer's Obligations. The Issuer shall cause
the Servicer to comply with Sections 3.10 and 4.01 of the Sale and Servicing
Agreement and Section 8.5 herein.
SECTION 3.14. Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire
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(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any other
Person.
SECTION 3.15. Capital Expenditures. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.16. Compliance with Laws. The Issuer shall comply
with the requirements of all applicable laws, the non-compliance with which
would, individually or in the aggregate, materially and adversely affect the
ability of the Issuer to perform its obligations under the Notes, this Indenture
or any Basic Document.
SECTION 3.17. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Indenture Trustee and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement, this Indenture, or Trust
Agreement. The Issuer will not, directly or indirectly, make payments to or
distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
SECTION 3.18. Notice of Rapid Amortization Events and Events
of Servicing Termination. Upon a Responsible Officer of the Owner Trustee having
actual knowledge thereof, the Issuer agrees to give the Indenture Trustee, the
Credit Enhancer and the Rating Agencies prompt written notice of each Rapid
Amortization Event hereunder or Event of Servicing Termination under the Sale
and Servicing Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of
the Indenture Trustee or the Credit Enhancer, the Issuer will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 3.20. Amendments of Sale and Servicing Agreement and
Trust Agreement. The Issuer shall not agree to any amendment to Section 9.01 of
the Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to
eliminate the requirements thereunder that the Indenture Trustee, the Credit
Enhancer or the Holders of the Notes consent to amendments thereto as provided
therein.
SECTION 3.21. Income Tax Characterization. For purposes of
federal income, state and local income and franchise and any other income taxes,
the Issuer will treat the Notes as indebtedness of the Sponsor and hereby
instructs the Indenture Trustee to treat the Notes as indebtedness of the
Sponsor for federal and state tax reporting purposes.
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ARTICLE IV.
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. Upon
payment in full of the Notes, this Indenture shall cease to be of further effect
with respect to the Notes except as to (i) rights of registration of transfer
and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes,
(iii) rights of Noteholders to receive payments of principal thereof and
interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13, 3.20 and
3.21, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.7 and
the obligations of the Indenture Trustee under Section 4.2) and (vi) the rights
of Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.4 and (ii) Notes for
which payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation and the Note
Policy has terminated and been returned to the Credit Enhancer for
cancellation and all amounts owing to the Credit Enhancer have been
paid in full; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their respective
Final Scheduled Distribution Dates within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer,
and in the case of (i), (ii) or (iii) above
(A) the Issuer, has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash or direct obligations of
or obligations guaranteed by the United States of America (which will mature
prior to the date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for cancellation when due on the
Final
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Scheduled Distribution Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all Credit Enhancer Issuer
Secured Obligations and all Indenture Trustee Issuer Secured Obligations; and
(C) the Issuer has delivered to the Indenture Trustee and the Credit
Enhancer an Officer's Certificate, an Opinion of Counsel and if required by
the TIA, the Indenture Trustee or the Credit Enhancer an Independent
Certificate from a firm of certified public accountants, each meeting the
applicable requirements of Section 11.1(a) and each stating that all conditions
precedent herein provided relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.2. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Note Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Notes for
the payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest.
SECTION 4.3. Repayment of Monies Held by Note Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all monies then held by any Note Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes
shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held
and applied according to Section 3.3 and thereupon such Note Paying Agent
shall be released from all further liability with respect to such monies.
ARTICLE V.
Remedies
SECTION 5.1. Rights Upon a Rapid Amortization Event. If a Rapid
Amortization Event as described in Article XII shall have occurred and be
continuing, the Rapid Amortization Period shall immediately commence and the
Class A Noteholders shall be entitled on each Distribution Date to an amount
equal to the Maximum Principal Payment. The rights contained in this Article V
are in addition to any rights which the Noteholders possess pursuant to
Article XII.
SECTION 5.2. Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Rapid Amortization Event;
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(ii) the Holders of not less than 25% of the Outstanding Amount of the
Notes have made written request to the Indenture Trustee to institute such
proceeding in respect of such Rapid Amortization Event in its own name as
Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such proceedings;
(v) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60day period by the Holders of a majority
of the Outstanding Amount of the Notes; and
(vi) a Credit Enhancer Default shall have occurred and be continuing;
it being understood and intended that no Holders of Notes shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Notes or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.3. Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.4. Restoration of Rights and Remedies. If the Controlling Party
or any Noteholder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such proceeding had been instituted.
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SECTION 5.5. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders 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. 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 5.6. Delay or Omission Not a Waiver. No delay or omission of the
Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Rapid Amortization Event shall impair any such
right or remedy or constitute a waiver of any such Default or Rapid Amortization
Event or an acquiescence therein. Every right and remedy given by this Article V
or by law to the Indenture Trustee or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee
or by the Noteholders, as the case may be.
SECTION 5.7. Control by Noteholders. If the Indenture Trustee is the
Controlling Party, the Holders of a majority of the Outstanding Amount of the
Notes, with the consent of the Credit Enhancer, shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee pursuant to Section 12.1 with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or with
this Indenture;
(ii) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.8. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on
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any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.9. Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.10. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Property or upon any
of the assets of the Issuer.
SECTION 5.11. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Servicer's expense, the Issuer agrees to take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Sponsor and the Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Indenture Trustee, including the transmission of notices of default on
the part of the Sponsor or the Servicer thereunder and the institution of legal
or administrative actions or proceedings to compel or secure performance by the
Sponsor or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Indenture Trustee is a Controlling Party and if an Rapid
Amortization Event has occurred and is continuing, the Indenture Trustee may,
and, at the written direction of the Holders of 662/3% of the Outstanding
Amount of the Notes shall, exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Sponsor or the Servicer under or in connection
with the Sale and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the Sponsor or the
Servicer of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.
SECTION 5.12. Subrogation. The Indenture Trustee shall receive as
attorneyinfact of each Noteholder any Note Policy Claim Amount from the Credit
Enhancer. Any and all Note Policy Claim Amounts disbursed by the Indenture
Trustee from claims made under the
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Note Policy shall not be considered payment by the Trust or from the Spread
Account with respect to such Notes, and shall not discharge the obligations of
the Trust with respect thereto. The Credit Enhancer shall, to the extent it
makes any payment with respect to the Notes, become subrogated to the rights of
the recipient of such payments to the extent of such payments. Subject to and
conditioned upon any payment with respect to the Notes by or on behalf of the
Credit Enhancer, the Indenture Trustee shall assign to the Credit Enhancer all
rights to the payment of interest or principal with respect to the Notes which
are then due for payment to the extent of all payments made by the Credit
Enhancer, and the Credit Enhancer may exercise any option, vote right, power or
the like with respect to the Notes to the extent that it has made payment
pursuant to the Note Policy.
SECTION 5.13. Preference Claims. (a) In the event that the Indenture
Trustee has received a certified copy of an order of the appropriate court that
any payment on a Note has been avoided in whole or in part as a preference
payment under applicable bankruptcy law, the Indenture Trustee shall so notify
the Credit Enhancer, shall comply with the provisions of the Note Policy to
obtain payment by the Credit Enhancer of such avoided payment, and shall, at the
time it provides notice to the Credit Enhancer, notify Holders of the Notes by
mail that, in the event that any Noteholder's payment is so recoverable, such
Noteholder will be entitled to payment pursuant to the terms of the Note Policy.
The Indenture Trustee shall furnish to the Credit Enhancer at its written
request, the requested records it holds in its possession evidencing the
payments of principal of and interest on Notes, if any, which have been made by
the Indenture Trustee and subsequently recovered from Noteholders, and the dates
on which such payments were made. Pursuant to the terms of the Note Policy, the
Credit Enhancer will make such payment on behalf of the Noteholder to the
receiver, conservator, debtorinpossession or trustee in bankruptcy named in
the Final Order (as defined in the Note Policy) and not to the Indenture Trustee
or any Noteholder directly.
(b) The Indenture Trustee shall promptly notify the Credit Enhancer of any
proceeding or the institution of any action (of which the Indenture Trustee has
actual knowledge) seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Indenture Trustee hereby agree that so
long as a Credit Enhancer Default shall not have occurred and be continuing, the
Credit Enhancer may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim including, without limitation, (i) the direction of any appeal of any
order relating to any Preference Claim and (ii) the posting of any surety,
supersedes or performance bond pending any such appeal at the expense of the
Credit Enhancer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.12, the Credit Enhancer shall be subrogated to, and each Noteholder
and the Indenture Trustee hereby delegate and assign, to the fullest extent
permitted by law, the rights of the Indenture Trustee and each Noteholder in the
conduct of any proceeding with respect to a 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.
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ARTICLE VI.
The Indenture Trustee
SECTION 6.1. Duties of Indenture Trustee. (a) If a Rapid Amortization Event
has occurred and is continuing, the Indenture Trustee shall exercise the rights
and powers vested in it by this Indenture and the Basic Documents and use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs;
provided, however, that if the Indenture Trustee is acting as Servicer, it shall
use the same degree of care and skill as is required of the Servicer under the
Sale and Servicing Agreement.
(b) Except during the continuance of a Rapid Amortization Event:
(i) The Indenture Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Indenture Trustee and conforming to the requirements of this Indenture;
however, the Indenture Trustee shall examine the certificates and opinions
to determine whether or not they conform on their face to the requirements
of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12; and
(iv) the Indenture Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clauses (i) and (ii) of Section 5.01 of the Sale and
Servicing Agreement unless a Responsible Officer of the Indenture Trustee
at the Corporate Trust Office obtains actual knowledge of such failure or
occurrence or the Indenture Trustee receives written notice of such failure
or occurrence from the Servicer, the Credit Enhancer or the Holders of
Notes evidencing Voting Rights aggregating not less than 51%.
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(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or indemnity reasonably satisfactory to it against such risk or
liability is not reasonably assured to it.
(f) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(g) The Indenture Trustee shall, upon one Business Day's prior written
notice to the Indenture Trustee, permit any representative of the Credit
Enhancer, during the Indenture Trustee's normal business hours, to examine all
books of account, records, reports and other papers of the Indenture Trustee
relating to the Notes, to make copies and extracts therefrom and to discuss the
Indenture Trustee's affairs and actions, as such affairs and actions relate to
the Indenture Trustee's duties with respect to the Notes, with the Indenture
Trustee's officers and employees responsible for carrying out the Indenture
Trustee's duties with respect to the Notes.
(h) The Indenture Trustee shall, and hereby agrees that it will, perform
all of the obligations and duties required of it under the Sale and Servicing
Agreement.
(i) The Indenture Trustee shall, and hereby agrees that it will, hold the
Note Policy in trust, and will hold any proceeds of any claim on the Note Policy
in trust solely for the use and benefit of the Noteholders.
(j) In no event shall The First National Bank of Chicago, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
SECTION 6.2. Rights of Indenture Trustee. (a) The Indenture Trustee may
rely on any document reasonably believed by it to be genuine and to have been
signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee.
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(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Notes or
the Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders of Notes or the Controlling Party shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; provided, however, that the
Indenture Trustee shall, upon the occurrence of a Rapid Amortization Event or
Event of Servicing Termination as defined in the Sale and Servicing Agreement
(that has not been cured or waived), exercise the rights and powers vested in it
by this Indenture or the Sale and Servicing Agreement with reasonable care and
skill.
(g) The Indenture Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Credit
Enhancer or by the Holders of Notes evidencing not less than 25% of the
Outstanding Amount thereof; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Indenture Trustee may require indemnity
reasonably satisfactory to it against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee shall be reimbursed by the Person making such request upon demand.
(h) The Indenture Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of the
Servicer until such time as the Indenture Trustee may be required to act as
Servicer.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Note Paying Agent, Note
Registrar, coregistrar or copaying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
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SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Trust Property or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If a Rapid Amortization Event or an Event
of Servicing Termination occurs and is continuing and if it is either known by,
or written notice of the existence thereof has been delivered to, a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder of such event within 90 days after such knowledge or notice occurs.
Except in the case of a Default in payment of principal of or interest on any
Note, the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. Upon written request,
the Note Paying Agent or the Servicer shall on behalf of the Issuer deliver to
each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns required by law.
SECTION 6.7. Compensation and Indemnity. (a) Pursuant to Section 8.3 and
subject to Section 6.18 herein, the Issuer shall, or shall cause the Servicer
to, pay to the Indenture Trustee from time to time compensation for its
services. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall or shall
cause the Servicer to reimburse the Indenture Trustee for all reasonable
outofpocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall
or shall cause the Servicer to indemnify the Indenture Trustee and its
respective officers, directors, employees and agents against any and all loss,
liability or expense (including attorneys' fees and expenses) incurred by each
of them in connection with the acceptance or the administration of this trust
and the performance of its duties hereunder. The Indenture Trustee shall notify
the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Servicer shall not relieve the Issuer of its obligations hereunder or the
Servicer of its obligations under Article VIII of the Sale and Servicing
Agreement. The Issuer shall or shall cause the Servicer to defend the claim, the
Indenture Trustee may have separate counsel and the Issuer shall or shall cause
the Servicer to pay the fees and expenses of such counsel. Neither the Issuer
nor the Servicer need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. Notwithstanding
anything else set forth in this Indenture or the Basic Documents, the Indenture
Trustee agrees that the obligations of the
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Issuer (but not the Servicer) to the Indenture Trustee hereunder and under the
Basic Documents shall be recourse to the Trust Property only and specifically
shall not be recourse to the assets of the Issuer or any Securityholder. In
addition, the Indenture Trustee agrees that its recourse to the Issuer, the
Trust Property, the Sponsor and amounts held in the Spread Account, the Deferred
Interest Account, and the Funding Account shall be limited to the right to
receive the distributions referred to in Section 8.3 herein.
SECTION 6.8. Replacement of Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer and the Credit Enhancer by written
notice. Upon receiving such notice of resignation, the Issuer shall promptly
appoint a successor Indenture Trustee (approved in writing by the Credit
Enhancer, so long as such approval is not unreasonably withheld) by written
instrument, in duplicate, one copy of such instrument shall be delivered to the
resigning Indenture Trustee (who shall deliver a copy to the Servicer) and one
copy to the successor Trustee; provided, however, that any such successor
Indenture Trustee shall be subject to the prior written approval of the
Servicer. The Issuer may and, at the request of the Credit Enhancer shall,
remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering the
windingup or liquidation of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under any federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
other similar official) for the Indenture Trustee or for any substantial
part of the Indenture Trustee's property, or makes any assignment for the
benefit of creditors or fails generally to pay its debts as such debts
become due or takes any corporate action in furtherance of any of the
foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein
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as the retiring Indenture Trustee), the Issuer shall promptly appoint a
successor Indenture Trustee acceptable to the Credit Enhancer. If the Issuer
fails to appoint such a successor Indenture Trustee, the Credit Enhancer may
appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, to the Credit Enhancer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the retiring Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its succession
to Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the
Notes may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee acceptable to the Credit Enhancer.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Credit Enhancer.
Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to Section 6.8 and payment of all fees and expenses
owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's and the Servicer's indemnity obligations under Section 6.7
shall continue for the benefit of the retiring Indenture Trustee and the
Servicer shall pay any amounts owing to the Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and
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in all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Indenture Trustee
with the consent of the Credit Enhancer shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon
the Indenture Trustee shall be conferred or imposed upon and exercised or
performed by the Indenture 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 Indenture 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 the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any act
or omission of any other trustee hereunder, including acts or omissions of
predecessor or successor trustees; and
(iii) the Indenture Trustee and the Servicer acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of an Event of Servicing Termination,
the Indenture Trustee acting alone may accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. 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
Indenture Trustee or separately,
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as may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Indenture
Trustee. Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture 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, dissolve, become insolvent, 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 Indenture Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
(e) The Servicer shall be responsible for the fees of any co-trustee or
separate trustee appointed hereunder.
SECTION 6.11. Eligibility: Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition. The Indenture Trustee
shall provide copies of such reports to the Credit Enhancer upon request. The
Indenture Trustee shall comply with TIA ss.310(b), including the optional
provision permitted by the second sentence of TIA ss.310(b)(9); provided,
however, that there shall be excluded from the operation of TIA ss.310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA
ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss.311(a) to the extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and conditions
hereof, each of the Issuer Secured Parties hereby appoints The First National
Bank of Chicago as the Indenture Trustee with respect to the Collateral, and The
First National Bank of Chicago hereby accepts such appointment and agrees to act
as Indenture Trustee with respect to the Trust Property for the Issuer Secured
Parties, to maintain custody and possession of such Trust Property (except as
otherwise provided hereunder) and to perform the other duties of the Indenture
Trustee in accordance with the provisions of this Indenture and the other Basic
Documents. Each Issuer Secured Party hereby authorizes the Indenture Trustee to
take such action on its behalf, and to exercise such rights, remedies, powers
and privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Indenture Trustee by the terms
hereof, together with such actions, rights, remedies, powers and privileges as
are reasonably incidental thereto. The Indenture Trustee shall act upon and in
compliance with the written instructions of the Controlling Party delivered
pursuant to this Indenture promptly following receipt of such written
instructions; provided that the Indenture
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Trustee shall not act in accordance with any instructions (i) which are not
authorized by, or in violation of the provisions of, this Indenture or (ii)
for which the Indenture Trustee has not received reasonable indemnity. Receipt
of such instructions shall not be a condition to the exercise by the Indenture
Trustee of its express duties hereunder, except where this Indenture provides
that the Indenture Trustee is permitted to act only following and in
accordance with such instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee shall have
no duties or responsibilities except those expressly set forth in this Indenture
and the other Basic Documents to which the Indenture Trustee is a party or as
directed by the Controlling Party in accordance with this Indenture. The
Indenture Trustee shall not be required to take any discretionary actions
hereunder except at the written direction and with the indemnification of the
Controlling Party. The Indenture Trustee shall, and hereby agrees that it will,
perform all of the duties and obligations required of it under the Sale and
Servicing Agreement.
SECTION 6.15. Limitation on Liability. Neither the Indenture Trustee nor
any of its directors, officers, employees and agents shall be liable for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Indenture Trustee shall be liable for its negligence,
bad faith or willful misconduct; nor shall the Indenture Trustee be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Issuer of this Indenture or any of the Trust Property (or any part thereof).
SECTION 6.16. Reliance Upon Documents. In the absence of negligence, bad
faith or willful misconduct on its part, the Indenture Trustee shall be entitled
to rely on any communication, instrument, paper or other document reasonably
believed by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons and shall have no liability in acting, or omitting to
act, where such action or omission to act is in reasonable reliance upon any
statement or opinion contained in any such document or instrument.
SECTION 6.17. Representations and Warranties of the Indenture Trustee. The
Indenture Trustee represents and warrants to the Issuer and to each Issuer
Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States and is duly authorized and licensed under applicable
law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Trustee has all requisite right, power
and authority to execute and deliver this Indenture and to perform all of its
duties as the Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the Indenture Trustee
of this Indenture and the other Basic Documents to which it is a party, and the
performance by the Indenture Trustee of its duties hereunder and thereunder,
have been duly authorized by all necessary corporate proceedings, are required
for the valid execution
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and delivery by the Indenture Trustee, or the performance by the Indenture
Trustee, of this Indenture and such other Basic Documents.
(d) Valid and Binding Indenture. The Indenture Trustee has duly executed
and delivered this Indenture and each other Basic Document to which it is a
party, and each of this Indenture and each such other Basic Document constitutes
the legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization and
similar laws relating to or affecting the enforcement of creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
SECTION 6.18. Waiver of Setoffs. The Indenture Trustee hereby expressly
waives any and all rights of setoff that the Indenture Trustee may otherwise at
any time have under applicable law with respect to any Trust Account and agrees
that amounts in the Trust Accounts shall at all times be held and applied solely
in accordance with the provisions hereof.
SECTION 6.19. Control by the Controlling Party. The Indenture Trustee shall
comply with notices and instructions given by the Issuer only if accompanied by
the written consent of the Controlling Party.
SECTION 6.20. Trustee May Enforce Claims Without Possession of Notes. All
rights of action and claims under this Agreement or the Notes may be prosecuted
and enforced by the Indenture Trustee without the possession of any of the Notes
or the production thereof in any proceeding relating thereto, and such
proceeding instituted by the Indenture Trustee shall be brought in its own name
or in its capacity as Indenture Trustee. Any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursement
and advances of the Indenture Trustee, its agents and counsel, be for the
ratable benefit of the Noteholders in respect of which such judgment has been
recovered.
SECTION 6.21. Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Servicer or the Sponsor hereunder shall
occur and be continuing, the Indenture Trustee, if the Controlling Party (and if
not the Controlling Party, with the consent of the Credit Enhancer), may proceed
to protect and enforce its rights and the rights of the Noteholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Indenture Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Indenture Trustee and the
Noteholders.
SECTION 6.22. Mortgagor Claims. In connection with any offset defenses, or
affirmative claim for recovery, asserted in legal actions brought by Mortgagors
under one or more HELOCs based upon provisions therein or upon other rights or
remedies arising from any requirements of law applicable to the HELOCs:
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(a) The Indenture Trustee is the holder of the HELOCs only as trustee on
behalf of the holders of the Notes, and not as a principal or in any
individual or personal capacity.
(b) The Indenture Trustee shall not be personally liable for, or obligated
to pay Mortgagors, any affirmative claims asserted thereby, or responsible to
holders of the Notes for any offset defense amounts applied against HELOC
payments, pursuant to such legal actions.
(c) The Indenture Trustee will pay, solely from available Trust money,
affirmative claims for recovery by Mortgagors only pursuant to final judicial
orders or judgments, or judiciallyapproved settlement agreements, resulting
from such legal actions.
(d) The Indenture Trustee will comply with judicial orders and judgments
which require its actions or cooperation in connection with Mortgagors' legal
actions to recover affirmative claims against holders of the Notes.
(e) The Indenture Trustee will cooperate with and assist the Servicer, the
Sponsor, or holders of the Notes in their defense of legal actions by
Mortgagors to recover affirmative claims if such cooperation and assistance
is not contrary to the interests of the Indenture Trustee as a party to such
legal actions and if the Indenture Trustee is satisfactorily indemnified for
all liability, costs and expenses arising therefrom.
(f) The Issuer hereby agrees to indemnify, hold harmless and defend the
Indenture Trustee from and against any and all liability, loss, costs and
expenses of the Indenture Trustee resulting from any affirmative claims for
recovery asserted or collected by Mortgagors under the HELOCs.
ARTICLE VII.
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished. The Indenture Trustee or, if the Indenture Trustee is
not the Note Registrar, the Issuer shall furnish to the Credit Enhancer or the
Issuer in writing upon their written request and at such other times as the
Credit Enhancer or the Issuer may request a copy of the list.
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SECTION 7.2. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders contained in the most recent
list furnished to the Indenture Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Indenture Trustee in its capacity as
Note Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIAss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIAss.312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports
and copies of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Indenture Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIAss.313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA ss.313(a),
within 60 days after each August 31, beginning with August 31, 1998, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss.313(c) a
brief report dated as of such date that complies with TIA ss.313(a). The
Indenture Trustee also shall comply with TIA ss.313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE VIII.
Payments and Statements to Noteholders and Certificateholders; Accounts,
Disbursements and Releases
SECTION 8.1. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture and the Sale and
Servicing Agreement. The Indenture Trustee shall apply all such money received
by it as provided in this Indenture and the Sale and Servicing Agreement. Except
as otherwise expressly provided in this Indenture or in the Sale and Servicing
Agreement, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of the Trust Property, the
Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
SECTION 8.2. Release of Trust Property. (a) Subject to Section 8.9 and the
payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee
may, and when required by the Issuer and the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture or the Sale and Servicing Agreement. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 and
to the Credit Enhancer pursuant to the Insurance Agreement have been paid,
release any remaining portion of the Trust Property that secured the Notes from
the lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Trust Accounts (except that
the release of the Spread Account shall be subject to Section 2.05 of the
Insurance Agreement). The Indenture Trustee shall release property from the lien
of this Indenture pursuant to this Section 8.2(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA ss.ss.
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.3. Distributions of Noteholders' Interest Collections and
Investment Proceeds.
(a) Distributions. On each Distribution Date, the Indenture Trustee or the
Note Paying Agent, as the case may be, shall distribute out of the Collection
Account to the extent of (x) Noteholders' Interest Collections collected during
the related Collection Period, including any amounts transferred from the
Funding Account pursuant to Section 8.7(c)(i), (y) any amounts transferred from
the Deferred Interest Account pursuant to Section 8.8 and (z) the amounts
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transferred from the Spread Account as determined pursuant to Section 4.03(b) of
the Sale and Servicing Agreement, the following amounts and in the following
order of priority to the following Persons (based on the information set forth
in the Servicing Certificate):
(i) the Class A Note Interest for such Distribution Date to the Class A
Noteholders and the Unpaid Class A Note Interest Shortfall, if any, for
such Distribution Date to the Class A Noteholders plus, to the extent
legally permissible, interest thereon at the Class A Note Rate;
(ii) the Class S Note Interest for such Distribution Date to the Class S
Noteholders and the Unpaid Class S Note Interest Shortfall, if any, for
such Distribution Date plus, to the extent legally permissible, interest
thereon at the Class S Note Rate;
(iii) the Noteholders' Loss Amount for such Collection Period to the Class
A Noteholders as principal in reduction of the Class A Note Principal
Balance;
(iv) to Class A Noteholders as principal in reduction of the Class A Note
Principal Balance the aggregate amount of the Loss Reduction Amounts, if
any, for previous Distribution Dates that have not been previously
reimbursed to Class A Noteholders pursuant to this clause (iv);
(v) as payment to the Insurer for the monthly premium for the Policy;
(vi) to reimburse the Credit Enhancer for previously unreimbursed Credit
Enhancement Draw Amounts together with interest thereon at the applicable
rate set forth in the Insurance Agreement;
(vii) to the Indenture Trustee for deposit to the Spread Account up to
0.50% of the Original Pool Balance;
(viii) the Accelerated Principal Distribution Amount, if any, to the Class
A Noteholders;
(ix) to pay any other amounts owed the Insurer pursuant to the Insurance
Agreement;
(x) to each of the Indenture Trustee and the Owner Trustee, their
respective accrued and unpaid trustee's fees and expenses;
(xi) any amount required to be paid to the Servicer pursuant to Section
5.03 of the Sale and Servicing Agreement which has not been previously paid
to the Servicer;
(xii) to pay Deferred Interest on the Class A Notes and interest thereon at
the Class A Note Rate;
(xiii) to pay to the Manager of the Trust, the Management Fee; and
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(xiv) any remaining amount to the holders of the Certificates, which shall
initially be the Sponsor, to the extent permitted.
(b) Distribution of Principal Collections. On each Distribution Date
during the Funding Period, the Scheduled Principal Collections Distribution
Amount shall be deposited into the Funding Account and shall not be distributed
to the Class A Noteholders. On each Distribution Date following the termination
of the Funding Period, the Indenture Trustee shall distribute out of the
Collection Account to the Class A Noteholders the Scheduled Principal
Collections Distribution Amount (together with amounts transferred to the
Collection Account from the Spread Account pursuant to Section 4.03(b) of the
Sale and Servicing Agreement relating to principal up to but not in excess of
the Class A Note Principal Balance). In addition, on the last Distribution Date
of the Funding Period, the Indenture Trustee shall distribute out of the
Collection Account to the Class A Noteholders the amount required to be so
distributed pursuant to Section 8.7(c)(iii). On the Distribution Date in August
2024, the Indenture Trustee shall distribute to Class A Noteholders, Principal
Collections up to the Class A Note Principal Balance.
(c) Application of Certificate Subordinated Amount. If, after applying
Noteholders' Interest Collections and funds available in the Deferred Interest
Account pursuant to Section 8.8 as provided in Section 8.3(a) above, any amounts
specified in clauses (i) through (iv) remain unpaid, the Indenture Trustee
shall, based on information set forth in the Servicing Certificate for such
Distribution Date, apply Certificateholders' Available Funds to make such
payments and the Certificate Subordinated Amount shall be reduced in accordance
with clause (i) of the definition thereof to the extent of such application. If
Certificateholders' Available Funds applied in the order specified in Section
8.3(a) are insufficient to cover the aggregate Loss Amount for such Distribution
Date, then the remaining aggregate Loss Amount (but only to the extent of the
remaining Certificateholders' Subordinated Amount) shall be reallocated to the
Certificate Principal Balance (after giving effect to the Certificateholders'
portion of the Loss Amount) and shall not be allocated to the Class A Notes and
the Certificateholders' Subordinated Amount shall be reduced, as described in
clause (ii) of the definition thereof, by the amount so reallocated.
(d) Distribution of the Credit Enhancement Draw Amount. With respect to any
Distribution Date, to the extent that Noteholders' Interest Collections, amounts
available in the Deferred Interest Account pursuant to Section 8.8, amounts
transferred from the Funding Account pursuant to Section 8.7(c)(iii) and amounts
transferred from the Spread Account on the related Distribution Date in respect
of the amount determined pursuant to Section 4.03(b)(i) of the Sale and
Servicing Agreement after allocation of Certificateholders' Available Funds in
accordance with Section 8.3(c) are insufficient to make distributions as
provided in clauses (i) and (ii) of Section 8.3(a) above, the Indenture Trustee
will make such payments (the "Deficiency Amount") from the amount drawn under
the Policy for such Distribution Date pursuant to Section 4.02 of the Sale and
Servicing Agreement. For any Distribution Date as to which there is a Guaranteed
Principal Distribution Amount, the Indenture Trustee shall distribute the
Guaranteed Principal Distribution Amount to Noteholders from the amount drawn
under the Policy for such Distribution Date pursuant to Section 4.02 of the Sale
and Servicing Agreement.
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The aggregate amount of principal distributed to the Class A Noteholders
under this Agreement shall not exceed the Original Class A Note Principal
Balance.
(e) Method of Distribution. The Indenture Trustee shall make distributions
in respect of a Distribution Date to each Noteholder of record on the related
Record Date (other than as provided in Section 10.2 respecting the final
distribution) by check or money order mailed to such Noteholder at the address
appearing in the Note Register, or upon written request by a Noteholder
delivered to the Indenture Trustee at least five Business Days prior to such
Record Date, by wire transfer (but only if such Noteholder is the Sponsor or
such Noteholder owns of record one or more Notes having principal denominations
aggregating at least $1,000,000 and satisfactory wire instructions have been
provided), or by such other means of payment as such Noteholder and the
Indenture Trustee shall agree. Distributions among Noteholders shall be made in
proportion to the Percentage Interests evidenced by the Notes held by such
Noteholders.
(f) Distributions on Book-Entry Securities. Each distribution with respect
to a Book-Entry Security shall be paid to the Depository, which shall credit the
amount of such distribution to the accounts of its Depository Participants in
accordance with its normal procedures. Each Depository Participant shall be
responsible for disbursing such distribution to the Note Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm shall be responsible for disbursing funds to the Note Owners that it
represents. All such credits and disbursements with respect to a Book-Entry
Security are to be made by the Depository and the Depository Participants in
accordance with the provisions of the Notes. None of the Indenture Trustee, the
Note Paying Agent, the Certificate Registrar, the Sponsor, the Credit Enhancer
or the Servicer shall have any responsibility therefor.
(g) Distributions to Holders of Certificates. On each Distribution Date,
the Indenture Trustee shall, based upon the information set forth in the
Servicing Certificate for such Distribution Date, distribute to the holders of
the certificates by wire transfer or by such other means of payment as the
Indenture Trustee and the Sponsor shall agree (i) the Certificateholders'
Interest Collections for the related Collection Period and (ii) the portion, if
any, of Certificateholders' Principal Collections for the related Collection
Period in excess of Additional Balances created during such Collection Period to
the extent such amounts are not required to be distributed to the Class A
Noteholders pursuant to Section 8.3(c); provided that collections allocable to
the Certificates will be distributed to the holders of certificates only to the
extent that such distribution will not reduce the amount of the Certificate
Principal Balance as of the related Distribution Date below the Minimum
Certificateholders' Interest. Amounts not distributed to the holders of
certificates because of such limitations will be retained in the Collection
Account until the Certificate Principal Balance exceeds the Minimum
Certificateholders' Interest, at which time such excess shall be released to the
Certificateholders to the extent that such distribution will not reduce the
amount of the Certificate Principal Balance below the Minimum
Certificateholders' Interest. If any such amounts are still retained in the
Collection Account upon the commencement of the Rapid Amortization Period, such
amounts will be paid to the Class A Noteholders as a reduction of the Class A
Note Principal Balance.
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SECTION 8.4. Calculation of the Class A Note Rate. On the second LIBOR
Business Day immediately preceding each Distribution Date, the Indenture Trustee
shall determine LIBOR for the Interest Period commencing on such Distribution
Date and inform the Servicer (at the facsimile number given to the Indenture
Trustee in writing) of such rates. On each Determination Date, the Servicer
shall determine the applicable Class A Note Rate for the related Distribution
Date.
SECTION 8.5. Statements to Noteholders. Concurrently with each distribution
to Noteholders, the Indenture Trustee shall forward to each Noteholder, the
Servicer and each Rating Agency a statement prepared by the Servicer pursuant to
Section 4.01 of the Sale and Servicing Agreement with respect to such
distribution setting forth:
(i) the aggregate amount of collections received on the HELOCs on or prior
to the Determination Date in respect of such Collection Period;
(ii) the aggregate amount of (a) Interest Collections and (b) Principal
Collections for such Collection Period;
(iii) the Floating Allocation Percentage and the Fixed Allocation
Percentage for such Collection Period;
(iv) the Noteholders' Interest Collections and Principal Collections
allocated to the Notes for such Collection Period;
(v) the Certificateholders' Interest Collections and Certificateholders'
Principal Collections for such Collection Period;
(vi) Class A Note Interest, the Class A Note Rate and the Class S Note
Interest for the related Interest Period;
(vii) the amount, if any, of such Class A Note Interest or Class S Note
Interest that is not payable on account of insufficient Noteholders'
Interest Collections;
(viii) the portion of the Unpaid Class A Note Interest Shortfall and the
portion of the Unpaid Class S Note Interest Shortfall, if any and the
amount of interest on such shortfall at the Note Rate applicable from time
to time (separately stated) to be distributed on such Distribution Date;
(ix) the Unpaid Class A Note Interest Shortfall and the Unpaid Class S Note
Interest Shortfall, if any, to remain after the distribution on such
Distribution Date;
(x) the Accelerated Principal Distribution Amount and the portion thereof
that will be distributed pursuant to Section 8.3(a) (viii);
(xi) the Scheduled Principal Collections Distribution Amount, separately
stating the components thereof;
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(xii) the amount of any Transfer Deposit Amount paid by the Sponsor
pursuant to Section 2.03 or 2.05 of the Sale and Servicing Agreement;
(xiii) any accrued and unpaid Servicing Fees for previous Collection
Periods and the Servicing Fee for such Collection Period;
(xiv) the Loss Amount for such Collection Period;
(xv) the aggregate amount, if any, of Loss Reduction Amounts for previous
Distribution Dates that have not been previously reimbursed to Class A
Noteholders pursuant to 8.3(a) (iv);
(xvi) the Pool Balance as of the end of the preceding Collection Period and
as of the end of the second preceding Collection Period;
(xvii) the Invested Amount as of the end of the preceding Collection
Period;
(xviii) the Class A Note Principal Balance, the Class S Notional Amount and
Pool Factor after giving effect to the distribution on such Distribution
Date and to any reduction on account of the Loss Amount;
(xix) the Certificate Principal Balance after giving effect to the
distribution on such Distribution Date;
(xx) the aggregate amount of Additional Balances created during the
previous Collection Period;
(xxi) the number and aggregate Asset Balances of HELOCs (x) as to which the
Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days and 90 or
more days, respectively and (y) that have become REO, in each case as of
the end of the preceding Collection Period;
(xxii) whether a Rapid Amortization Event has occurred since the prior
Determination Date, specifying each such Rapid Amortization Event if one
has occurred;
(xxiii) whether an Event of Servicing Termination has occurred since the
prior Determination Date, specifying each such Event of Servicing
Termination if one has occurred;
(xxiv) the amount to be distributed to the Credit Enhancer pursuant to
Section 8.3(a)(vi) and Section 8.3(a)(ix), stated separately;
(xxv) the amount to be distributed to the Spread Account pursuant to
Section 8.3(a)(vii);
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(xxvi) the Guaranteed Principal Distribution Amount, if any, for such
Distribution Date;
(xxvii) the Credit Enhancement Draw Amount, if any, for such Distribution
Date;
(xxviii) the amount to be distributed to the holders of certificates
pursuant to Section 8.3(a)(xiv);
(xxix) the amount to be paid to the Servicer pursuant to Section
8.3(a)(xi);
(xxx) the Maximum Rate for the related Collection Period and the Weighted
Average Net Loan Rate;
(xxxi) the total amount of funds on deposit in the Spread Account, the
amount to be transferred from the Spread Account to the Collection Account
pursuant to Section 4.03(b) of the Sale and Servicing Agreement and the
applicable Spread Account Maximum;
(xxxii) the number and Asset Balances of any HELOCs retransferred to the
Sponsor pursuant to Section 2.07 of the Sale and Servicing Agreement;
(xxxiii) the amount of Principal Collections to be deposited in the Funding
Account in respect of such Distribution Date pursuant to Section 8.7(a);
(xxxiv) the amount on deposit in the Funding Account as of such
Distribution Date and transfers of fund required by Section 8.7(c);
(xxxv) the aggregate of the Asset Balances of the Subsequent HELOCs
purchased on the related Subsequent Transfer Dates; and
(xxxvi) whether the Distribution Date following the next Determination Date
is expected to be a Subsequent Transfer Date and a reasonable management
estimate of the aggregate Asset Balances of such intended Subsequent
HELOCs.
In the case of information furnished pursuant to clauses (vii), (viii) and
(ix) in respect of Class A Note Interest above, the amounts shall be expressed
as a dollar amount per Note with a $1,000 denomination.
Within 60 days after the end of each calendar year, the Servicer shall
prepare or cause to be prepared and shall forward to the Indenture Trustee the
information set forth in clause (vi) above aggregated for such calendar year.
Such obligation of the Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer or a Note Paying Agent pursuant to any requirements of the Code.
SECTION 8.6. Rights of Securityholders. The Notes shall represent
obligations of the Trust, secured by the Trust Property, including the
Collection Account and the
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right to receive Noteholders' Interest Collections, Principal Collections, if
any, and other amounts at the times and in the amounts specified in this
Agreement; the Certificates shall represent the interest of the Trust (other
than the Deferred Interest Account, the Spread Account, the Policy and the
Funding Account).
SECTION 8.7. Funding Account. (a) The Indenture Trustee shall establish and
maintain with itself a separate trust account (the "Funding Account") entitled
"The First National Bank of Chicago as Indenture Trustee, in trust for the
registered holders of Headlands Home Equity Loan Trust 1997-1, Revolving Home
Equity Loan Asset Backed Notes, Series 1997-1 Funding Account." The Funding
Account shall be an Eligible Account. On each Distribution Date during the
Funding Period, the Indenture Trustee shall withdraw from the Collection Account
and deposit to the Funding Account the Scheduled Principal Collections
Distribution Amount for such Distribution Date.
(b) The Servicer may cause the institution maintaining the Funding Account
to invest any funds in the Funding Account in Eligible Investments which shall
mature or otherwise be available not later than the Business Day next preceding
the Distribution Date or, with the approval of the Credit Enhancer and the
Rating Agencies, on the Distribution Date next following the date of such
investment (except that any investment in an obligation of the institution with
which the Funding Account is maintained may mature on or before 12:00 noon, New
York time, on such Distribution Date) and shall not be sold or disposed of prior
to its maturity. At any time when the Indenture Trustee is maintaining the
Funding Account, any request by the Servicer to invest funds on deposit in the
Funding Account shall be in writing, shall be delivered to the Indenture Trustee
at or before 10:30 a.m., New York time, if such investment is to be made on such
day, and shall certify that the requested investment is an Eligible Investment
which matures at or prior to the time required hereby. Any such investment shall
be registered in the name of the Indenture Trustee as trustee hereunder or in
the name of its nominee, and to the extent such investments are certificated
they shall be maintained in the possession of the Indenture Trustee in the state
of its Corporate Trust Office. All income and gain realized from any such
investment shall be included as Interest Collections. The amount of any losses
incurred in respect of the principal amount of any such investment shall be
deposited in the Funding Account by the Servicer out of its own funds
immediately as realized. Any investment earnings on the Funding Account shall be
treated as owned by the Sponsor for federal and state income tax purposes.
(c) From time to time withdrawals shall be made from the Funding Account by
the Indenture Trustee as follows:
(i) on each Distribution Date during the Funding Period, to deposit to the
Collection Account all income realized from Eligible Investments during the
related Interest Period on Principal Collections on deposit in the Funding
Account for distribution as Interest Collections in accordance with Section
8.3(a);
(ii) on each Distribution Date prior to the last Distribution Date during
the Funding Period, any amounts in respect of Principal Collections on
deposit in the
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Funding Account shall be withdrawn and applied (a) as payment to the
Sponsor of an amount equal to the Additional Balances previously acquired
by the Trust and for which the Sponsor has not previously been paid and (b)
from any remaining amount on deposit in the Funding Account, to purchase
the Subsequent HELOCs, if any, transferred to the Trust pursuant to Section
2.10 of the Sale and Servicing Agreement; and
(iii) on the last Distribution Date of the Funding Period, any amounts in
respect of Principal Collections on deposit in the Funding Account that
have not been so applied shall be withdrawn and distributed to the
Collection Account, for distribution to the Class A Noteholders pursuant to
Section 8.3(b).
SECTION 8.8. Deferred Interest Account. The Indenture Trustee shall
establish and maintain with itself a separate trust account (the "Deferred
Interest Account") entitled "The First National Bank of Chicago, as Indenture
Trustee, in trust for the registered holders of Headlands Home Equity Loan Trust
1997-1, Revolving Home Equity Loan AssetBacked Notes, Series 1997-1 Deferred
Interest Account." The Deferred Interest Account shall be an Eligible Account.
On the Closing Date an amount equal to $600,809.53 will be deposited, and on
each date on which any Eligible Substitute HELOC is transferred to the Trust and
on each Subsequent Transfer Date an amount calculated by the Sponsor necessary
to pay an amount equal to the sum of (x) the difference between (i) the interest
that would accrue at the fully indexed rate on the applicable Asset Balance of
each "Teaser" HELOC transferred on such date and (ii) the interest that would
accrue at the nonfully indexed rate on the applicable Asset Balance of each
"Teaser" HELOC transferred on such date during the Teaser Period during the
lifetime of the related HELOC and (y) the product of (i) 10% and the amount
described in the foregoing clause (x) will be deposited in the Deferred Interest
Account. On each Distribution Date, amounts in the Deferred Interest Account in
an amount equal to the Required Deferred Interest Amount for such Distribution
Date will be deposited into the Collection Account and applied in accordance
with Section 8.3. Any amounts remaining in the Deferred Interest Account on the
later of (i) the Distribution Date following the end of the Funding Period and
(ii) the Distribution Date following the date on which all Teaser HELOCs have
become fully indexed, will be paid to the Sponsor. Amounts on deposit in the
Deferred Interest Account shall be invested in Eligible Investments at the
direction of the Servicer.
SECTION 8.9. Opinion of Counsel. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.2(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require as a condition to such action, an
Opinion of Counsel, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders or the Credit Enhancer in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Property. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX.
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with the consent of the
Credit Enhancer, as evidenced to the Indenture Trustee, the Issuer and the
Indenture Trustee, when authorized by an Issuer Order, at any time and from time
to time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Indenture Trustee, for any
of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the Holders
of the Notes, or to surrender any right or power herein conferred upon the
Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision herein or
in any supplemental indenture which may be inconsistent with any other
provision herein or in any supplemental indenture or to make any other
provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
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(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
the prior written consent of the Credit Enhancer and with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Indenture Trustee, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies, with the consent of the Credit
Enhancer and with the consent of the Holders of not less than a majority of the
Outstanding Amount of the Notes, by Act of such Holders delivered to the Issuer
and the Indenture Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that, subject to the express rights of the Credit Enhancer under the
Basic Documents, no such supplemental indenture shall, without the consent of
the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Property to payment of principal
of or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Notes on or after the respective due dates thereof (or, in the case
of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iv) modify or alter the provisions of the proviso to the definition of the
term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes required
to direct the Indenture Trustee to direct the Issuer to sell or liquidate
the Trust Property pursuant to Section 12.1;
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(vi) modify any provision of this Section except to increase any percentage
specified herein or to provide that certain additional provisions of this
Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation); or
(viii) permit the creation of any lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Trust Property
or, except as otherwise permitted or contemplated herein or in any of the
Basic Documents, terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture.
The Indenture Trustee may determine whether or not any Notes would be
adversely affected by any supplemental indenture upon receipt of an Opinion of
Counsel to that effect and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel (and, if requested, an Officer's Certificate) stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby,
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and the respective rights, limitations of rights, obligations, duties,
liabilities and immunities under this Indenture of the Indenture Trustee, the
Issuer and the Holders of the Notes shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
SECTION 9.5. Conformity With Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X.
Redemption of Notes
SECTION 10.1. Redemption. The Notes are subject to redemption in whole, but
not in part, at the direction of the Sponsor pursuant to Section 7.01(b) of the
Sale and Servicing Agreement, on any Distribution Date on which the Sponsor
exercises its option to purchase the Trust Property pursuant to said Section
7.01(b), for a purchase price equal to the Redemption Price. The Servicer or the
Issuer shall furnish the Credit Enhancer notice of such redemption. If the Notes
are to be redeemed pursuant to this Section 10.1(a), the Servicer or the Issuer
shall furnish notice of such election to the Indenture Trustee not later than 35
days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Collection Account the Redemption Price of the Notes
not less than five Business Days prior to the Redemption Date whereupon all such
Notes shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 10.2.
SECTION 10.2. Surrender of Notes. (a) Notice of any termination, specifying
the Distribution Date (which shall be a date that would otherwise be a
Distribution Date) upon which the Noteholders may surrender their Notes to the
Indenture Trustee for payment of the final distribution and cancellation, shall
be given promptly by the Indenture Trustee (upon receipt of written directions
from the Sponsor, if the Sponsor is exercising its right to transfer of the
HELOCs, given not later than the first day of the month preceding the month of
such final distribution) to the Credit Enhancer and to the Servicer and by
letter to Noteholders mailed not earlier than the 15th day and not later than
the 25th day of the month next preceding the month
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of such final distribution specifying (i) the Distribution Date upon which final
distribution of the Notes will be made upon presentation and surrender of Notes
at the office or agency of the Indenture Trustee therein designated, (ii) the
amount of any such final distribution and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Notes at the office or agency of the
Indenture Trustee therein specified. In the event written directions are
delivered by the Sponsor to the Indenture Trustee as described in the preceding
sentence, the Sponsor shall deposit in the Collection Account on or before the
Distribution Date for such final distribution in immediately available funds an
amount which, when added to the funds on deposit in the Collection Account that
are payable to the Noteholders, will be equal to the retransfer amount for the
HELOCs computed as above provided, together with all amounts due and owing to
the Credit Enhancer for unpaid premiums and unreimbursed draws on the Policy and
all other amounts due and owing to the Credit Enhancer pursuant to the Insurance
Agreement, together with interest thereon as provided under the Insurance
Agreement.
(b) Upon presentation and surrender of the Notes, the Indenture Trustee
shall cause to be distributed to the Holders of Notes on the Distribution Date
for such final distribution, in proportion to the Percentage Interests of their
respective Notes and to the extent that funds are available for such purpose, an
amount equal to (i) if such final distribution is not being made pursuant to the
transfer to the Sponsor pursuant to Section 7.01(a)(B)(i) of the Sale and
Servicing Agreement, the amount required to be distributed to Noteholders
pursuant to Section 5.01 of the Sale and Servicing Agreement for such
Distribution Date and (ii) if such final distribution is being made pursuant to
such retransfer, the amount specified in Section 7.01(a)(B)(i) of the Sale
Servicing Agreement. The distribution on such final Distribution Date pursuant
to a retransfer pursuant to Section 7.01(a)(B)(i) of the Sale and Servicing
Agreement shall be in lieu of the distribution otherwise required to be made on
such Distribution Date in respect of the Notes. On the final Distribution Date
prior to having made the distributions called for above, the Indenture Trustee
shall, based upon the information set forth in the Servicing Certificate for
such Distribution Date, withdraw from the Collection Account and remit to the
Credit Enhancer the lesser of (x) the amount available for distribution on such
final Distribution Date, net of any portion thereof necessary to pay the amounts
described in clauses (i) and (ii) above and (y) the unpaid amounts due and owing
to the Credit Enhancer for unpaid premiums and unreimbursed draws on the Policy
and all other amounts due and owing to the Credit Enhancer pursuant to the
Insurance Agreement, together with interest thereon as provided under the
Insurance Agreement.
(c) In the event that all of the Noteholders shall not surrender their
Notes for final payment and cancellation on or before such final Distribution
Date, the Indenture Trustee shall on such date cause all funds in the Collection
Account not distributed in final distribution to Noteholders to be withdrawn
therefrom and credited to the remaining Noteholders by depositing such funds in
a separate escrow account for the benefit of such Noteholders and the Sponsor
(if the Sponsor has exercised its right to transfer the HELOCs) or the Indenture
Trustee (in any other case) and shall give a second written notice to the
remaining Noteholders to surrender their Notes for cancellation and receive the
final distribution with respect thereto. If within one year after the second
notice all the Notes shall not have been surrendered for cancellation, the
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Indenture Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Noteholders concerning surrender of
their Notes, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
SECTION 10.3. Form of Redemption Notice. Notice of redemption supplied to
the Indenture Trustee by the Servicer under Section 10.1(a) shall be given by
the Indenture Trustee by facsimile or by firstclass mail, postage prepaid,
transmitted or mailed prior to the applicable Redemption Date to each Holder of
Notes of record, as of the close of business on the date which is not less than
5 days prior to the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption Date is
not applicable and that payments shall be made only upon presentation and
surrender of such Notes at the place where such Notes are to be surrendered
for payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.2); and
(iv) that interest on the Notes shall cease to accrue on the Redemption
Date.
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.4. Notes Payable on Redemption Date. The Notes to be redeemed
shall, following notice of redemption as required by Section 10.2, on the
Redemption Date become due and payable at the Redemption Price and (unless the
Issuer shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period after the date to which accrued
interest is calculated for purposes of calculating the Redemption Price.
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ARTICLE XI.
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Credit Enhancer if the application or request is made to the
Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, 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 Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has read
or has caused to be read such covenant or condition and the definitions
herein relating thereto;
(ii) 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;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory such
condition or covenant has been complied with.
SECTION 11.2. Form of Documents Delivered to Indenture 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.
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Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such 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 or her certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, the Sponsor or the Issuer, stating that the information with respect
to such factual matters is in the possession of the Servicer, the Sponsor or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to conclusively rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of Noteholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents 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 Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders 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 Indenture and (subject to Section 6.1)
conclusive in favor of the Indenture Trustee and the Issuer, 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 in any customary manner of the Indenture Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
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(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4. Notices, etc. to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed firstclass and shall be deemed to have been duly
given upon receipt to the Indenture Trustee at its Corporate Trust Office and
any notice delivered by facsimile shall be addressed to the Corporate Trust
Office, telecopy number (312) 407-1708, or
(b) The Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
facsimile or overnight courier or mailed first class, and shall deemed to have
been duly given upon receipt to the Issuer addressed to: Headlands Home Equity
Loan Trust 1997-1, in care of Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, DE 19890-0001 Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Indenture Trustee by Issuer. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
(c) The Credit Enhancer by the Issuer or the Indenture Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by firstclass mail
personally delivered or telecopied to the recipient as follows:
To the Credit Enhancer: Capital Markets Assurance Corporation
885 Third
New York, NY 10022
Telecopy: (212) 891-1456
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or first class or via facsimile to (i)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10004, Fax No: (212) 533-0355 and
(ii) in the case of S&P, at the following address: Standard & Poor's Ratings
Group, 26 Broadway (15th Floor), New York, New York 10004, Attention: Asset
Backed Surveillance Department, Fax No: (212) 412-0224; or as to each of the
foregoing, at such other address as shall be designated by written notice to
the other parties.
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SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture provides
for notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
firstclass, postage prepaid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Noteholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
Where this Indenture 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 Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a 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 Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder.
SECTION 11.6. Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Note Paying Agent to such
Holder, that is different from the methods provided for in this Indenture for
such payments or notices, provided that such methods are reasonable and
consented to by the Indenture Trustee (which consent shall not be unreasonably
withheld). The Issuer will furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
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SECTION 11.8. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors.
SECTION 11.10. Separability. In case any provision in this Indenture or in
the Notes 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 11.11. Benefits of Indenture. The Credit Enhancer and its
successors and assigns shall be a thirdparty beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Notes, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Credit Enhancer and the Noteholders, and any other
party secured hereunder, and any other person with an ownership interest in any
part of the Trust Property, any benefit or any legal or equitable right, remedy
or claim under this Indenture. The Credit Enhancer may disclaim any of its
rights and powers under this Indenture (in which case the Indenture Trustee may
exercise such right or power hereunder), but not its duties and obligations
under the Note Policy, upon delivery of a written notice to the Indenture
Trustee.
SECTION 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment 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 on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture 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 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trust or any other counsel reasonably acceptable to
the Indenture Trustee and the Credit Enhancer) to the effect that such recording
is necessary either for the protection of the Noteholders or any other person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
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SECTION 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Sponsor, the
Servicer, the Owner Trustee or the Indenture Trustee on the Notes or under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith, against (i) the Sponsor, the Servicer, the Indenture Trustee or
the Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Sponsor, the Servicer, the Indenture Trustee
or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Sponsor, the Servicer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Sponsor, the Servicer,
the Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Sponsor, or the Issuer, or
join in any institution against the Sponsor, or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or of the
Credit Enhancer, during the Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.
SECTION 11.19. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein
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contained shall be construed as creating any liability on Wilmington Trust
Company individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties to this Agreement and by any person claiming by, through or under
them and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaking by the Issuer under this Agreement or any related
documents.
ARTICLE XII.
Rapid Amortization Events
SECTION 12.1. Rapid Amortization Events. The following shall constitute
Rapid Amortization Events:
(a) failure on the part of the Sponsor, the Servicer or the Company, as the
case may be, (i) to make any payment or deposit required by the terms of this
Agreement, the Sale and Servicing Agreement or the Insurance Agreement,
within two Business Days after such payment or deposit is required to be
made, or (ii) duly to observe or perform in any material respect the
covenants of the Sponsor set forth in Section 2.05(a) of the Sale and
Servicing Agreement, as the case may be, or (iii) duly to observe or
perform in any material respect any other covenants or agreements of the
Sponsor, the Servicer or the Company, as the case may be, set forth in this
Agreement, the Sale and Servicing Agreement or the Insurance Agreement,
which failure, in each case, materially and adversely affects the interests
of the Noteholders or the Credit Enhancer and which, in the case of clause
(iii), continues unremedied and continues to affect materially and
adversely the interests of the Noteholders or the Credit Enhancer for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Sponsor, the
Servicer or the Company, as the case may be, by the Indenture Trustee, or
to the Sponsor, the Servicer or the Company, as the case may be, and the
Indenture Trustee by the Credit Enhancer or Holders of Notes evidencing
Voting Rights aggregating not less than 51%;
(b) any representation or warranty made by the Sponsor, the Servicer or the
Company, as the case may be, in this Agreement, the Sale and Servicing
Agreement or the Insurance Agreement shall prove to have been incorrect in
any material respect when made, as a result of which the interests of the
Noteholders or the Credit Enhancer are materially and adversely affected
and which continues to be incorrect in any material respect and continues
to affect materially and adversely the interests of the Noteholders or the
Credit Enhancer for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Sponsor, the Servicer or the Company, as the case may be, by
the Indenture Trustee, or to the Sponsor, the Servicer or the Company, as
the case may be, and the Indenture Trustee by either the Credit Enhancer or
the Holders of Notes evidencing Voting Rights aggregating not less than
51%; provided, however, that a Rapid Amortization Event pursuant to this
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subparagraph (b) shall not be deemed to have occurred hereunder if the
Sponsor has accepted retransfer of the related HELOC or HELOCs during such
period (or such longer period (not to exceed an additional 60 days as the
Indenture Trustee may specify with the consent of the Credit Enhancer) in
accordance with the provisions hereof;
(c) the Company, the Sponsor or the Trust or any of their Subsidiaries or
Affiliates shall voluntarily go into liquidation, consent to the appointment
of a conservator or receiver or liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Company, the Sponsor, or the
Trust or of or relating to all or substantially all of such Person's
property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the windingup or liquidation of its affairs, shall have
been entered against the Company, the Sponsor of the Trust and such decree
or order shall have remained in force undischarged or unstayed for a period
of 30 days; or the Company, the Sponsor or the Trust shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations;
(d) the Trust shall become subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended;
(e) the aggregate of all draws under the Note Policy exceeds 1% of the
Original Date Pool Balance;
(f) if any of the Basic Documents shall cease to be in full force and
effect or the security interest of the Indenture Trustee in the Trust shall
cease to be a first priority perfected security interest;
(g) the occurrence of a Change in Control with respect to the Company;
(h) the occurrence of any material breach by Company of the provisions of
its Credit Agreements during the term of the Trust;
(i) failure by the Servicer, if the Servicer is Headlands Mortgage Company,
to maintain a minimum volume in its mortgage servicing portfolio of $2
billion, calculated by outstanding principal balances of mortgage loans
serviced, in accordance with the Servicer's credit and collection policy;
(j) at the end of each calendar quarter commencing on September 30, 1997,
failure by the Company to maintain (a) "shareholder's equity" according to
GAAP, of $15 million or (b) a maximum ratio of total liabilities to
shareholder's equity according to GAAP of 20 to 1;
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(k) the failure by the Company or the Servicer to implement the CPI
servicing system or a servicing system mutually acceptable to the Servicer
and the Credit Enhancer within 90 days after the availability of the system;
(l) for each Distribution Date commencing on the third Distribution Date,
the percentage equivalent of a fraction the numerator of which is equal to
the average of the aggregate Asset Balances on such date of all HELOCs with
respect to which principal or interest are at least 60 days delinquent as
of the last day of each of the three immediately preceding Collection
Periods, and the denominator of which is equal to the average of the Pool
Balance as of the last day of each of the three immediately preceding
Collection Periods shall exceed 4%; or
(m) for each Distribution Date commencing on the third Distribution Date,
the percentage equivalent of a fraction, the numerator of which is equal to
the average of the aggregate Asset Balances on such date of all defaulted
HELOCs (excluding Liquidated HELOCs) as to which (i) collection procedures
are ongoing and (ii) the Servicer has charged off all or a portion of the
related Asset Balance as of the last day of each of the three immediately
preceding Collection Periods, and the denominator of which is equal to the
average of the Pool Balance as of the last day of each of the three
immediately preceding Collection Periods shall exceed 2%.
(n) default in payment of any interest, principal or any installment of
principal on any Note when the same becomes due and payable, and such default
shall continue for a period of five days;
(o) default in the observance or performance of any covenant or agreement
of the Issuer made herein, or any representation or warranty of the Issuer
made herein or in any certificate in connection therewith proving to have
been incorrect in any material respect as of the time when the same shall
have been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days (or for such longer period, not in excess of 90
days, as may be reasonably necessary to remedy such default; provided that
such default is capable of remedy within 90 days or less and the Servicer,
on behalf of the Owner Trustee, delivers an Officer's Certificate to the
Indenture Trustee to the effect that the Issuer has commenced, or will
promptly commence and diligently pursue, all reasonable efforts to remedy
such default) after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Credit Enhancer or Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder.
A Rapid Amortization Event will be deemed to have occurred only if, after
the applicable grace period, if any, described in the foregoing clauses, either
(i) the Indenture Trustee or Noteholders holding Notes evidencing in the
aggregate more than 51% of the Voting
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Rights, with the consent of the Credit Enhancer, or (ii) the Credit Enhancer (so
long as there is no default by the Credit Enhancer in the performance of its
obligations under the Policy), by written notice to the Servicer (and to the
Indenture Trustee, if given by the Noteholders) declare that a Rapid
Amortization Event has occurred as of the date of such notice; provided that
with respect to clauses (c), (d), (e) and (n) a Rapid Amortization Event shall
occur immediately upon the occurrence of such, without any such notice.
In addition, the Credit Enhancer may declare a Rapid Amortization Event to
have occurred as of the date of notice thereof upon the occurrence of a Trigger
Event other than as set forth at Sections 6.01(ii), (iv) or (v) of the Insurance
Agreement.
If the Sponsor voluntarily files a bankruptcy petition or goes into
liquidation or any person is appointed a receiver or bankruptcy trustee of the
Sponsor, on the day of any such filing or appointment no further Additional
Balances will be transferred to the Trust, the Sponsor will immediately cease to
transfer Additional Balances to the Trust and the Sponsor will promptly give
notice to the Indenture Trustee and the Credit Enhancer of any such filing or
appointment. Within 15 days, the Indenture Trustee will publish a notice of the
liquidation or the filing or appointment stating that the Indenture Trustee
intends to sell, dispose of or otherwise liquidate the HELOCs in a commercially
reasonable manner and to the best of its ability. Unless otherwise instructed
within a specified period by Noteholders evidencing in the aggregate more than
51% of the Voting Rights, the Indenture Trustee will sell, dispose of or
otherwise liquidate the HELOCs to a purchaser in a commercially reasonable
manner and on commercially reasonable terms; provided, however, that the Credit
Enhancer's consent to the terms of any such sale shall be required, which
consent shall not be unreasonably withheld. The proceeds of such sale shall be
applied first to the Outstanding Amount due on the Class A Notes plus accrued
and unpaid interest on the Notes, second, to the Credit Enhancer for any and all
amounts owing to the Credit Enhancer and third to the Certificateholders.
Upon the occurrence of the events described in Section 12.1(n) and if the
Controlling Party is the Indenture Trustee, the Holders of 66 2/3% of the
Outstanding Amount of the Notes, with the consent of the Credit Enhancer (which
consent shall not be unreasonably withheld), shall have the right to direct the
Indenture Trustee to sell or liquidate the Trust Property; provided, however,
that no consent of the Credit Enhancer shall be required if the Indenture
Trustee is able to sell the Trust Property for a price (the "Liquidation Price")
which equals the Outstanding Amount due on the Class A Notes plus accrued and
unpaid interest on the Notes plus any and all amounts owing to the Credit
Enhancer. The Indenture Trustee shall deliver a certificate from a prospective
purchaser stating the Liquidation Price to the Credit Enhancer prior to such
sale.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
HEADLANDS HOME EQUITY LOAN TRUST 1997-1,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee,
By: /s/ Donald G. MacKelcan
-----------------------------
Name: Donald G. MacKelcan
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Indenture
Trustee,
By: /s/ Richard Tarnas
------------------------------
Name: Richard Tarnas
Title: Vice President
<PAGE>
EXHIBIT A
[Form of Note]
REGISTERED $189,065,000
No. A
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 422093AC8
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note 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.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HEADLANDS HOME EQUITY LOAN TRUST 19971
CLASS A VARIABLE RATE ASSET BACKED NOTES
Headlands Home Equity Loan Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of ($189,065,000), such amount payable on
each Distribution Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is $189,065,000 and the denominator of
which is $189,065,000 by (ii) the aggregate amount, if any, payable from the
Collection Account in respect of principal on the Class A Notes pursuant to
Section 8.3 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the August, 2024,
Distribution Date (the "Final Scheduled Distribution Date"). The Issuer will pay
interest on this Note at the rate per annum provided in the Indenture on each
Distribution Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Distribution Date (after giving effect to all payments of principal made on the
preceding Distribution Date). Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
A-1
<PAGE>
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from August 21, 1997. Interest will be computed on the basis of the
actual number of days elapsed in a 360day year. Such principal of and interest
on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Capital Markets Assurance Corporation (the
"Credit Enhancer"), pursuant to which the Credit Enhancer has unconditionally
guaranteed payments of the Class A Note Interest and Guaranteed Principal
Distribution Amount on each Distribution Date, all as more fully set forth in
the Indenture.
For purposes of federal income, state and local income and franchise and
any other income taxes, the Issuer will treat the Notes as indebtedness of the
Issuer and hereby instructs the Indenture Trustee to treat the Notes as
indebtedness of the Issuer for federal state tax reporting purposes.
Each Noteholder or Note Owner, by acceptance of this Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Sponsor, the Servicer, the Indenture Trustee, or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any owner, beneficiary, agent, officer, director
or employee of the Sponsor, the Servicer, the Indenture Trustee, or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Sponsor, the Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Sponsor, the Servicer, the Indenture Trustee,
or the Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: August 21, 1997 HEADLANDS HOME EQUITY LOAN TRUST 1997-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:
----------------------------------
Name:
Title:
A-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
withinmentioned Indenture.
Date: August 21, 1997 THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Indenture
Trustee,
By:------------------------------------------
Authorized Signatory
A-4
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A Variable Rate Asset Backed Notes (herein called the
"Class A Notes"), all issued under an Indenture dated as of August 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and The First National Bank of Chicago, as trustee (the
"Indenture Trustee", which term includes any successor Indenture Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A Notes and the Class S Notes (together, the "Notes") are and
will be equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Distribution Date in
an amount described on the face hereof. "Distribution Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing September 15, 1997. The term "Distribution
Date," shall be deemed to include the Final Scheduled Distribution Date.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Scheduled Distribution Date and
the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable if a Credit Enhancer Default shall have occurred and be
continuing, on the date on which a Rapid Amortization Event as described in
Section 12.1(n) shall have occurred and be continuing and the Indenture Trustee
or the Holders of the Notes representing at least 66 2/3% of the Outstanding
Amount of the Notes, with the consent of the Credit Enhancer (which consent
shall not be unreasonably withheld) shall have the right to direct the Indenture
Trustee to sell or liquidate the Trust Property as provided in Section 12.1 of
the Indenture. All principal payments on the Class A Notes shall be made pro
rata to the Class A Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
A-5
<PAGE>
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Distribution Date by
notice mailed prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.
The Issuer shall pay interest on overdue installments of interest at the
Class A Note Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.1(a) of the Indenture, in whole, but not in part, at the option of the
Sponsor (with the consent of the Credit Enhancer under certain circumstances),
on any Distribution Date on or after the date on which the Class A Note
Principal Balance is less than or equal to 10% of the Original Class A Note
Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which requirements
include membership or participation in Securities Transfer Agents Medallion
Program ("Stamp") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, Stamp,
all in accordance with the Exchange Act, and (ii) accompanied by such other
documents as the Indenture Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Sponsor, the Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any owner, beneficiary, agent, officer, director
or employee of the Sponsor, the Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial
A-6
<PAGE>
interest in the Issuer, the Sponsor, the Servicer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Sponsor, the Servicer,
the Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Sponsor, or the Issuer or join in any institution
against the Sponsor, or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and the Credit Enhancer and any agent of the
Issuer, the Indenture Trustee or the Credit Enhancer may treat the Person in
whose name this Note (as of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Credit Enhancer and of the Holders of
Notes representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. Any such consent or waiver by the Holder of this Note (or any one
of more Predecessor Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note 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 Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder but with the consent of the Credit Enhancer.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
A-7
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Wilmington Trust
Company in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Issuer for the sole purposes of binding the interests of the Issuer in
the assets of the Issuer. The Holder of this Note by the acceptance hereof
agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Rapid Amortization Event under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing contained herein
shall be taken to prevent recourse to, and enforcement against, the assets of
the Issuer for any and all liabilities, obligations and undertakings contained
in the Indenture or in this Note.
A-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
------------------------------ ----------------------------------(1)
Signature Guaranteed:
- ------------------------------------ -------------------------------------
- ----------
(1) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-9
<PAGE>
EXHIBIT B
[Form of Note]
REGISTERED
No. S-1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 422093AD6
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note 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.
HEADLANDS HOME EQUITY LOAN TRUST 1997-1
CLASS S 1.25% ASSET BACKED NOTES
Headlands Home Equity Loan Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, interest payments only on each Distribution Date, as
hereinafter described, which shall be calculated based on a notional principal
balance equal to the aggregate outstanding principal balance of the Class A
Notes. Interest on this Note will accrue for each Distribution Date from the
most recent Distribution Date on which interest has been paid to but excluding
such Distribution Date or, if no interest has yet been paid, from August 21,
1997. Interest will be computed on the basis of the actual number of days
elapsed in a 360-day year. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The interest on this Note is payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. No principal payments shall be paid on the Note
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Capital Markets Assurance Corporation (the
"Credit Enhancer"), pursuant to which the Credit Enhancer has unconditionally
guaranteed payments of the Class S Note Interest on each Distribution Date, all
as more fully set forth in the Indenture.
B-1
<PAGE>
For purposes of federal income, state and local income and franchise and
any other income taxes, the Issuer will treat the Notes as indebtedness of the
Issuer and hereby instructs the Indenture Trustee to treat the Notes as
indebtedness of the Issuer for federal state tax reporting purposes.
Each Noteholder or Note Owner, by acceptance of this Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Sponsor, the Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any owner, beneficiary, agent, officer, director
or employee of the Sponsor, the Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Sponsor, the Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Sponsor, the Servicer, the Indenture Trustee
or the Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
B-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
HEADLANDS HOME EQUITY LOAN TRUST 1997-1
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee under the Trust
Agreement
By: ----------------------------------
Name:
Title:
B-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: August 21, 1997 THE FIRST NATIONAL BANK OF CHICAGO, not in
its individual capacity but solely as
Indenture Trustee,
By:
---------------------------------
Authorized Signatory
B-4
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class S 1.25% Asset Backed Notes (herein called the "Class S
Notes"), all issued under an Indenture dated as of August 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and The First National Bank of Chicago, as trustee (the
"Indenture Trustee", which term includes any successor Indenture Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A Notes and the Class S Notes (together, the "Notes") are and
will be equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture.
Interest only of the Class S Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing September 15, 1997.
As described above, the entire unpaid interest amount of this Note shall be
due and payable on the earlier of the Final Scheduled Distribution Date and the
Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Notwithstanding the foregoing, the entire unpaid interest amount of the Notes
shall be due and payable if a Credit Enhancer Default shall have occurred and be
continuing, on the date on which a Rapid Amortization Event as described in
Section 12.1(n) shall have occurred and be continuing and the Indenture Trustee
or the Holders of the Notes representing at least 66-2/3% of the Outstanding
Amount of the Notes, with the consent of the Credit Enhancer (which consent
shall not be unreasonably withheld) shall have the right to direct the Indenture
Trustee to sell or liquidate the Trust Property as provided in Section 12.1 of
the Indenture. All interest payments on the Class S Notes shall be made pro rata
to the Class S Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, to the extent not in full payment of this Note, shall be made by check
mailed to the Person whose name appears as the Holder of this Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment. Any reduction in the interest amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Distribution Date shall be binding upon all future Holders of this Note
and of any
B-5
<PAGE>
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid interest amount of this Note on a Distribution Date, then the
Indenture Trustee, in the name of and on behalf of the Issuer, will notify the
Person who was the Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed prior to such Distribution Date and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class S Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Sponsor, on any Distribution Date on or after the date on which the Class A
Note Principal Balance is less than or equal to 10% of the Original Class A Note
Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which requirements
include membership or participation in Securities Transfer Agents Medallion
Program ("Stamp") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, Stamp,
all in accordance with the Exchange Act, and (ii) accompanied by such other
documents as the Indenture Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Sponsor, the Servicer, the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any owner, beneficiary, agent, officer, director
or employee of the Sponsor, the Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Sponsor, the Servicer, the Owner Trustee or the Indenture Trustee
or of any successor or assign of the Sponsor, the Servicer, the Indenture
Trustee or the Owner Trustee
B-6
<PAGE>
in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any
such owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Sponsor, or the Issuer or join in any institution
against the Sponsor, or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and the Credit Enhancer and any agent of the
Issuer, the Indenture Trustee or the Credit Enhancer may treat the Person in
whose name this Note (as of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Credit Enhancer and of the Holders of
Notes representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. Any such consent or waiver by the Holder of this Note (or any one
of more Predecessor Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note 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 Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder, but with the consent of the Credit Enhancer.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional,
B-7
<PAGE>
to pay the interest on this Note at the times, place, and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Wilmington Trust
Company in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of interest on, or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Issuer for the sole purposes of binding the interests of the Issuer in
the assets of the Issuer. The Holder of this Note by the acceptance hereof
agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Rapid Amortization Event under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
B-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- -------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
------------------------------ --------------------------- (2)
Signature Guaranteed:
- ------------------------------------ ---------------------------
- ----------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
B-9
<PAGE>
EXECUTION COPY
TRUST AGREEMENT
between
HEADLANDS MORTGAGE SECURITIES INC.
Sponsor
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of August 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions............................................. 1
SECTION 1.1. Capitalized Terms..................................... 1
SECTION 1.2. Other Definitional Provisions......................... 3
SECTION 1.3. Action by or Consent of Noteholders and
Certificateholders................................... 4
ARTICLE II. Organization............................................ 4
SECTION 2.1. Name.................................................. 4
SECTION 2.2. Office................................................ 4
SECTION 2.3. Purposes and Powers................................... 4
SECTION 2.4. Appointment of Owner Trustee.......................... 5
SECTION 2.5. Initial Capital Contribution of Trust Estate.......... 5
SECTION 2.6. Declaration of Trust.................................. 5
SECTION 2.7. Liability............................................. 5
SECTION 2.8. Title to Trust Property............................... 5
SECTION 2.9. Situs of Trust........................................ 6
SECTION 2.10 Representations and Warranties of the Sponsor......... 6
SECTION 2.11 Federal Income Tax Allocations........................ 7
SECTION 2.12 Covenants of the Sponsor.............................. 7
SECTION 2.13 Covenants of the Certificateholders................... 8
ARTICLE III. Certificates and Transfer of Interests................. 9
SECTION 3.1. Initial Ownership..................................... 9
SECTION 3.2. The Certificates...................................... 9
SECTION 3.3. Authentication of Certificates........................ 9
SECTION 3.4. Registration of Transfer and Exchange of
Certificates.......................................... 9
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates..... 10
SECTION 3.6. Persons Deemed Certificateholders..................... 10
SECTION 3.7. Access to List of Certificateholders' Names
and Addresses........................................ 10
SECTION 3.8. Maintenance of Office or Agency....................... 11
SECTION 3.9. ERISA Restrictions.................................... 11
SECTION 3.10 Restrictions on Transfer of Certificates.............. 11
SECTION 3.11 Acceptance of Obligations............................. 12
ARTICLE IV. Voting Rights and Other Actions......................... 12
SECTION 4.1 Prior Notice to Holders with Respect to
Certain Matters....................................... 12
SECTION 4.2. Action by Certificateholders with Respect to
Certain Matters....................................... 13
SECTION 4.3. Action by Certificateholders with Respect
to Bankruptcy........................................ 13
SECTION 4.4. Restrictions on Certificateholders' Power............. 13
SECTION 4.5. Majority Control...................................... 14
SECTION 4.6. Rights of Credit Enhancer............................. 14
ARTICLE V. Certain Duties.......................................... 14
i
<PAGE>
SECTION 5.1. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others........................................... 14
SECTION 5.2. Signature on Returns; Tax Matters Partner............. 15
SECTION 5.3. Underwriting Agreement................................ 15
ARTICLE VI. Authority and Duties of Ownerr Trustee.................. 15
SECTION 6.1. General Authority..................................... 15
SECTION 6.2. General Duties........................................ 15
SECTION 6.3. Action upon Instruction............................... 16
SECTION 6.4. No Duties Except as Specified in this Agreement or
in Instructions...................................... 16
SECTION 6.5. No Action Except under Specified Documents or
Instructions......................................... 17
SECTION 6.6. Restrictions.......................................... 17
ARTICLE VII. Concerning the Owner Trustee............................. 17
SECTION 7.1. Acceptance of Trusts and Duties....................... 17
SECTION 7.2. Furnishing of Documents............................... 18
SECTION 7.3. Representations and Warranties........................ 18
SECTION 7.4. Reliance; Advice of Counsel........................... 19
SECTION 7.5. Not Acting in Individual Capacity..................... 19
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Mortgage Loan......................................... 19
SECTION 7.7. Owner Trustee May Own Certificates and Notes.......... 19
SECTION 7.8. Payments from Owner Trust Estate...................... 20
SECTION 7.9. Doing Business in Other Jurisdictions................. 20
ARTICLE VIII. Compensation of Owner Trustee........................... 20
SECTION 8.1. Owner Trustee's Fees and Expenses..................... 20
SECTION 8.2. Indemnification....................................... 20
SECTION 8.3. Payments to the Owner Trustee......................... 21
SECTION 8.4. Non-recourse Obligations.............................. 21
ARTICLE IX. Termination of Trust Agreement.......................... 21
SECTION 9.1. Termination of Trust Agreement........................ 21
ARTICLE X. Successor Owner Trustees and Additional Owner Trustees.. 22
SECTION 10.1. Eligibility Requirements for Owner Trustee............ 22
SECTION 10.2. Resignation or Removal of Owner Trustee............... 22
SECTION 10.3. Successor Owner Trustee............................... 23
SECTION 10.4. Merger or Consolidation of Owner Trustee.............. 23
SECTION 10.5. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.................................... 24
ARTICLE XI. Miscellaneous........................................... 25
SECTION 11.1. Supplements and Amendments............................ 25
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders.................................... 26
SECTION 11.3. Limitations on Rights of Others....................... 26
SECTION 11.4. Notices............................................... 26
SECTION 11.5. Severability.......................................... 26
SECTION 11.6. Separate Counterparts................................. 26
SECTION 11.7. Assignments; Credit Enhancer.......................... 26
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SECTION 11.8. No Petition........................................... 27
SECTION 11.9. No Recourse........................................... 27
SECTION 11.10. Headings.............................................. 27
SECTION 11.11. GOVERNING LAW......................................... 27
SECTION 11.12. Servicer.............................................. 27
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
<PAGE>
TRUST AGREEMENT dated as of August 1, 1997 between HEADLANDS MORTGAGE
SECURITIES INC., a Delaware corporation (the "Sponsor"), and WILMINGTON
TRUST COMPANY, a Delaware banking corporation as Owner Trustee.
ARTICLE I.
Definitions
SECTION 1.1. Capitalized Terms. For the purposes of this Agreement, the
following terms shall have the meanings set forth below. All other capitalized
terms used herein but not defined shall have the meanings set forth in the Sale
and Servicing Agreement.
"Affiliate" shall mean with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, or owns, directly or indirectly,
50% or more of, the Person specified.
"Agreement" shall mean this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Certificate of Trust, the
Sale and Servicing Agreement, the Indemnification Agreement, the Insurance
Agreement, the Indenture and the other documents and certificates delivered in
connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section 3.9.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et. seq. as the same may be amended from time to
time.
"Certificate" means a trust certificate evidencing the beneficial ownership
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the register
maintained and the registrar appointed pursuant to Section 3.4.
"Collection Account" shall mean the account designated as such as
established and maintained pursuant to the Sale and Servicing Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Company" shall mean Headlands Mortgage Company.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration, or at such other address as the Owner Trustee
may designate by notice to the Certificateholders and the Sponsor, or the
principal corporate trust office of any successor Owner Trustee (the address of
which the successor owner trustee will notify the Certificateholders and the
Sponsor).
<PAGE>
"Credit Enhancer" shall mean Capital Markets Assurance Corporation, or its
successor in interest.
"Definitive Certificates" shall mean Certificates issued in certificated,
fully registered form.
"ERISA" shall have the meaning assigned to such term in Section 3.9.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Certificate is registered on the Certificate Register.
"Indemnification Agreement" shall mean the Indemnification Agreement dated
as of August 18, 1997 among the Credit Enhancer, the Company, the Sponsor and
Greenwich Capital Markets Inc.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture dated as of August 1, 1997, among the
Issuer and The First National Bank of Chicago, as Indenture Trustee, as the same
may be amended and supplemented from time to time.
"Indenture Trustee" shall mean, initially The First National Bank of
Chicago, in its capacity as indenture trustee, including its successors in
interest, until and unless a successor Person shall have become the Indenture
Trustee pursuant to the Sale and Servicing Agreement and thereafter "Indenture
Trustee" shall mean such successor Person.
"Instructing Party" shall have the meaning assigned to such term in Section
6.3.
"Insurance Agreement" shall mean the Insurance and Reimbursement Agreement
dated as of August 1, 1997 among the Credit Enhancer, the Sponsor, the Servicer,
the Indenture Trustee and the Company.
"Issuer" shall mean Headlands Home Equity Loan Trust 1997-1.
"Management Agreement" shall mean the agreement by and between Headlands
Mortgage Company and Headlands Home Equity Loan Trust 1997-1, substantially in
the form annexed as Exhibit E hereto, as such agreement may be amended or
supplemented.
"Manager" means the Person acting in such capacity pursuant to the
Management Agreement or its successors or assigns, which shall initially be
Headlands Mortgage Company.
"Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Sale and Servicing Agreement, all funds on deposit from time to time in
the Trust Accounts and the Collection Account and all other property of the
Trust from time to time, including any rights of the Owner Trustee and the Trust
pursuant to the Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
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"Record Date" shall mean with respect to any Distribution Date, the close
of business on the last Business Day immediately preceding such Distribution
Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
among the Trust, Headlands Mortgage Securities Inc., as Sponsor, Headlands
Mortgage Company, as Servicer and the Indenture Trustee, dated as of August 1,
1997, as the same may be amended and supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Security Majority" means a majority by principal amount of the Noteholders
so long as the Notes are outstanding and a majority by principal amount of the
Certificateholders thereafter.
"Servicer" shall mean the Company, in its capacity as Servicer.
"Sponsor" shall mean Headlands Mortgage Securities Inc. in its capacity as
Sponsor hereunder.
"Spread Account" shall mean the Spread Account established and maintained
pursuant to the Sale and Servicing Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Accounts" shall have the meaning ascribed thereto in the Sale and
Servicing Agreement.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Sale and Servicing Agreement or, if not defined
therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision
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of this Agreement; Section and Exhibit references contained in this Agreement
are references to Sections and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3. Action by or Consent of Noteholders and Certificateholders.
Whenever any provision of this Agreement refers to action to be taken, or
consented to, by Noteholders or Certificateholders, such provision shall be
deemed to refer to the Certificateholder or Noteholder, as the case may be, of
record as of the Record Date immediately preceding the date on which such action
is to be taken, or consent given, by Noteholders or Certificateholders. Solely
for the purposes of any action to be taken, or consented to, by Noteholders or
Certificateholders, any Note or Certificate registered in the name of the
Sponsor or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Indenture Trustee is entitled to rely upon any such action or consent, only
Notes or Certificates which the Owner Trustee, or the Indenture Trustee,
respectively, knows to be so owned shall be so disregarded.
ARTICLE II.
Organization
SECTION 2.1. Name. There is hereby formed a trust to be known as "Headlands
Home Equity Loan Trust 1997-1", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders and the
Sponsor.
SECTION 2.3. Purposes and Powers. (a) The purpose of the Trust is, and the
Trust shall have the power and authority, to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement, and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to fund the Spread
Account, Funding Account and the Deferred Interest Account and to pay the
organizational, start-up and transactional expenses of the Trust and to pay the
balance to the Sponsor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the Owner
Trust Estate to the Indenture Trustee on behalf of the Noteholders and for the
benefit of the Credit Enhancer and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the Sale and Servicing Agreement any
portion of the Owner Trust Estate released from the Lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic Documents to
which it is a party;
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(v) to engage in those activities, including entering into agreements, that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the Owner
Trust Estate and the making of distributions to the Certificateholders and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the Basic Documents.
SECTION 2.4. Appointment of Owner Trustee. The Sponsor hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. The Sponsor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt
in trust from the Sponsor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Owner Trust Estate and shall be deposited in
the Collection Account. On or prior to the Closing Date, the Owner Trustee will
also, upon receipt thereof, acknowledge on behalf of the Trust receipt of the
Mortgage Loans pursuant to the HELOC Purchase Agreement. The Sponsor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income tax purposes, the Trust shall be treated as a branch; provided, however,
that in the event Certificates are owned by more than one Certificateholder, it
is the intention of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall then be treated as a partnership and that, unless
otherwise required by appropriate tax authorities, only after such time the
Trust will file or cause to be filed annual or other necessary returns, reports
and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and to the
extent not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
SECTION 2.7. Liability. No Holder shall have any personal liability for any
liability or obligation of the Trust.
SECTION 2.8. Title to Trust Property. (a) Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees,
in which case title shall be deemed to be vested in the Owner Trustee,
a co-trustee and/or a separate trustee, as the case may be.
(b) The Holders shall not have legal title to any part of the Trust
Property. The Holders shall be entitled to receive distributions with respect
to their undivided ownership interest
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therein only in accordance with Article IX. No transfer, by operation of law or
otherwise, of any right, title or interest by any Certificateholder of its
ownership interest in the Owner Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Trust Property.
SECTION 2.9. Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. Payments will be received by the Trust only in Delaware or New York
and payments will be made by the Trust only from Delaware or New York. The
Trust shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee, the
Servicer or any agent of the Trust from having employees within or without the
State of Delaware. The only office of the Trust will be at the Corporate Trust
Office in Delaware.
SECTION 2.10. Representations and Warranties of the Sponsor. The
Sponsor makes the following representations and warranties on which the Owner
Trustee relies in accepting the Owner Trust Estate in trust and issuing the
Certificates and upon which the Credit Enhancer relies in issuing the Policy.
(a) The Sponsor is duly organized and validly existing as a Delaware
corporation with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted and is proposed to be conducted pursuant to this Agreement and the
Basic Documents;
(b) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this Agreement and the
Basic Documents requires such qualification;
(c) The Sponsor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Sponsor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with the Trust and the Sponsor has duly authorized such sale and
assignment and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Sponsor by all necessary corporate action;
(d) No consent, license, approval or authorization or registration or
declaration with, any Person or with any governmental authority, bureau or
agency is required in connection with the execution, delivery or performance of
this Agreement and the Basic Documents, except for such as have been obtained,
effected or made;
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Sponsor, or any material indenture, agreement or
other instrument to which the Sponsor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Sponsor's knowledge, any order, rule or regulation applicable to the
Sponsor of any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Sponsor or its properties; and
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(f) There are no proceedings or investigations pending or, to
its knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the issuance of
the Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the Notes
or the Certificates.
SECTION 2.11. Federal Income Tax Allocations. In the event that the
Trust is treated as a partnership for Federal income tax purposes, net income of
the Trust for any month as determined for Federal income tax purposes (and each
item of income, gain, loss, credit and deduction entering into the computation
thereof) shall be allocated:
(a) to the extent of available net income, among the Certificateholders
as of the first Record Date following the end of such month, in proportion to
their ownership of principal amount of Certificates on such date; and
(b) to the Sponsor, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in clause (b). Net
losses of the Trust, if any, for any month as determined for Federal income tax
purposes (and each item of income, gain, loss, credit and deduction entering
into the computation thereof) shall be allocated among the Certificateholders as
of the Record Date in proportion to their ownership percentage of principal
amount of Certificates on such Record Date until the principal balance of the
Certificates is reduced to zero. The Sponsor is authorized to modify the
allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income, gain or
loss to the Certificateholders, or as otherwise required by the Code.
SECTION 2.12. Covenants of the Sponsor. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Credit Enhancer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Basic Documents;
(b) it shall not, for any reason, institute proceedings for the
Trust to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(c) it shall obtain from each counterparty to each Basic
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.1(e) such counterparty shall not institute against, or
join any other Person in instituting
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against, it or the Trust, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under the
laws of the United States or any state of the United States; and
(d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against it, or file a petition seeking or consenting
to reorganization or relief under any applicable federal or state law relating
to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
SECTION 2.13. Covenants of the Certificateholders. Each Certificateholder
agrees:
(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee, the Credit Enhancer and all other
Certificateholders present and future;
(b) to hereby appoint the Sponsor as such Certificateholder's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of the Trust, if any, and agree that, if requested by the Trust, it will
sign such federal income tax information return in its capacity as holder of an
interest in the Trust. Each Certificateholder also hereby agrees that in its
tax returns it will not take any position inconsistent with those taken in any
tax returns that may be filed by the Trust;
(c) if such Certificateholder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales on Form
1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within 30 days of the date of the transfer; and
(d) until the completion of the events specified in Section 9.1(e),
not to, for any reason, institute proceedings for the Trust or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Sponsor or
the Trust or a substantial part of its property, or cause or permit the Sponsor
or the Trust to make any assignment for the benefit of its creditors, or admit
in writing its inability to pay its debts generally as they become due, or
declare or effect a moratorium on its debt or take any action in furtherance of
any such action.
Except as provided in Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder other
than the Sponsor in its capacity as the "Sponsor" shall be deemed to have
adopted, be bound by, or succeed in any way to any representation by, or
duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.12, 3.6, 8.2 or elsewhere herein.
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ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership. Upon the formation of the Trust
by the contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of the Trust, to the Sponsor, one (1) or more Certificates
representing in the aggregate a 100% interest in the Trust, and has registered
such Certificate(s) on the Certificate Register in the name of the Sponsor. The
Sponsor shall be the sole beneficiary of the Trust. Such Certificate(s) are duly
authorized, validly issued, and entitled to the benefits of this Agreement. For
so long as the Sponsor shall own such 100% interest in the Trust, the Sponsor
shall be the sole beneficial owner of the Trust. The Sponsor shall at all times
keep and own a Certificate or Certificates representing no less than 1%
interest, and at no time will the Sponsor sell or alienate its interest
represented by Certificate(s) in such a way as to reduce its aggregate
beneficial ownership in the Trust to less than 1%.
SECTION 3.2. The Certificates. The Certificates shall be issued
in denominations of $1,000 and integral multiples of $1000 in excess thereof.
The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates. A transferee of a Certificate shall become a Certificateholder,
and shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder, upon due registration of such Certificate in such
transferee's name pursuant to Section 3.4.
SECTION 3.3. Authentication of Certificates. Concurrently with
the initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Certificates to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Sponsor, signed by its chairman of the board, its president
or any vice president, its treasurer or any assistant treasurer without further
corporate action by the Sponsor, in authorized denominations. No Certificate
shall entitle its holder to any benefit under this Agreement, or shall be valid
for any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 3.4. Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
In furtherance of and not in limitation of the foregoing, each
Certificateholder, by acceptance of its Certificate, specifically acknowledges
that it has no right to or interest in any monies at any time held in the
Deferred Interest Account, the Spread Account or the Funding Account or prior to
the release of such monies pursuant to Section 8.3(a)(xiv) of the Indenture,
such monies being held in trust for the benefit of the Noteholders and the
Credit Enhancer. Notwithstanding the foregoing, in the event that it is ever
determined that the monies held in the Deferred Interest Account, the Spread
Account or the
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Funding Account constitute a pledge of collateral, then the provisions of the
Sale and Servicing Agreement shall be considered to constitute a security
agreement and the Sponsor and the Certificateholders hereby grant to the
Indenture Trustee and the Credit Enhancer a first priority perfected security
interest in such amounts. In addition, each Certificateholder, by acceptance of
its Certificate, hereby appoints the Sponsor as its agent to pledge a first
priority perfected security interest in the Deferred Interest Account, the
Spread Account and the Funding Account, and any amounts held therein from time
to time to the Indenture Trustee and the Credit Enhancer and agrees to execute
and deliver such instruments of conveyance, assignment, grant, confirmation,
etc., as well as any financing statements, in each case as the Credit Enhancer
shall consider reasonably necessary in order to perfect the Indenture Trustee's
security interest in the Mortgage Loans.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
shall be delivered to the Certificate Registrar, the Owner Trustee and the
Credit Enhancer such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Certificate shall
have been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner 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 denomination. In
connection with the issuance of any new Certificate under this Section, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute conclusive evidence of an ownership interest in the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by
virtue of becoming a Certificateholder in accordance with this Agreement and the
rules and regulations of the Certificate Registrar shall be deemed to be bound
by the terms of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee, the Certificate Registrar and the
Credit Enhancer and any agent of the Owner Trustee, the Certificate Registrar
and the Credit Enhancer, may treat the Person in whose name any Certificate
shall be registered in the Certificate Register as the owner of such Certificate
for the purpose of receiving distributions pursuant to the Sale and Servicing
Agreement and the Indenture and for all other purposes whatsoever, and none of
the Owner Trustee, the Certificate Registrar or the Credit Enhancer nor any
agent of the Owner Trustee, the Certificate Registrar or the Credit Enhancer
shall be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Sponsor or the Credit Enhancer, within 15 days after receipt by
the Owner Trustee of a request therefor from such Person in writing, a list, of
the names and addresses of the Certificateholders as of the most recent Record
Date. If three or more Holders of Certificates or one or more Holders of
Certificates evidencing not less than 25% by Percentage Interest apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Sponsor, the Servicer, the Owner Trustee or the Credit Enhancer or
any agent thereof accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
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SECTION 3.8. Maintenance of Office or Agency. The Owner Trustee
shall maintain in Wilmington, Delaware an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Basic Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Credit Enhancer of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.9. ERISA Restrictions. The Certificates may not be acquired
by or for the account of (i) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1985, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding its beneficial ownership interest in its Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
SECTION 3.10. Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.
(b) No transfer of a Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except for the initial issuance of the
Certificate to the Sponsor and the pledge thereof by the Sponsor in connection
with its Yield Maintenance Certificates, Series 1997-1, the Indenture Trustee
shall require (i) the transferee to execute an investment letter acceptable to
and in form and substance satisfactory to the Indenture Trustee and the Credit
Enhancer certifying to the Indenture Trustee and the Credit Enhancer the facts
surrounding such transfer, which investment letter shall not be an expense of
the Indenture Trustee or the Credit Enhancer or (ii) if the investment letter is
not delivered, a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Indenture Trustee, the Credit Enhancer and the
Sponsor that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor from said Act or is being made
pursuant to said Act, which Opinion of Counsel shall not be an expense of the
Indenture Trustee, the Credit Enhancer or the Sponsor. The Holder of a
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Sponsor and the Credit Enhancer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
(c) Except for the pledge by the Sponsor in connection with its
Yield Maintenance Certificates, Series 1997-1, the Certificates and any interest
therein shall not be transferred except upon satisfaction of the following
conditions precedent: (i) the Person that acquires a Certificate shall (A) be
organized and existing under the laws of the United States of America or any
state thereof or the District of Columbia; (B) expressly assume, by an agreement
supplemental hereto, executed and delivered to the Indenture Trustee and the
Credit Enhancer, the performance of every covenant and obligation of the Sponsor
hereunder and (C) as part of its acquisition of a Certificate, acquire all
rights of the Sponsor or any transferee under this Section 3.10(c) to amounts
payable to such Sponsor or such transferee under Sections 8.3(a)(xii) and 8.3(g)
of the Indenture; (ii) the Holder of the Certificates shall deliver to the
Indenture Trustee and the Credit Enhancer an Officer's Certificate stating that
such transfer and such supplemental agreement comply with this Section 3.10(c)
and that all conditions precedent provided by this Section 3.10(c) have been
complied with and an Opinion of Counsel stating that all conditions precedent
provided by this Section 3.10(c) have been complied with, and the Indenture
Trustee may conclusively rely on such Officer's Certificate, shall have no duty
to make inquiries with regard to the matters set forth therein and shall incur
no liability in so relying; (iii) the Holder of the Certificates shall
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deliver to the Indenture Trustee and the Credit Enhancer a letter from each
Rating Agency confirming that its rating of the Notes, after giving effect to
such transfer, will not be reduced or withdrawn without regard to the Policy;
(iv) the transferee of the Certificates shall deliver to the Indenture Trustee
and the Credit Enhancer an Opinion of Counsel to the effect that (a) such
transfer will not adversely affect the treatment of the Notes after such
transfer as debt for federal and applicable state income tax purposes, (b) such
transfer will not result in the Trust being subject to tax at the entity level
for federal or applicable state tax purposes, (c) such transfer will not have
any material adverse impact on the federal or applicable state income taxation
of a Noteholder or any Certificateholder and (d) such transfer will not result
in the arrangement created by this Agreement or any "portion" of the Trust,
being treated as a taxable mortgage pool as defined in Section 7701(i) of the
Code; (v) all filings and other actions necessary to continue the perfection of
the interest of the Trust in the Mortgage Loans and the other property conveyed
hereunder shall have been taken or made and (vi) the Credit Enhancer shall have
consented to such transfer. Notwithstanding the foregoing, the requirement set
forth in subclause (i)(A) of this Section 3.10(c) shall not apply in the event
the Indenture Trustee shall have received a letter from each Rating Agency
confirming that its rating of the Notes, after giving effect to a proposed
transfer to a Person that does not meet the requirement set forth in subclause
(i)(A), shall not be reduced or withdrawn without regard to the Policy.
Notwithstanding the foregoing, the requirements set forth in this paragraph (c)
shall not apply to the initial issuance of the Certificates to the Sponsor.
(d) Except for the initial issuance of the Certificate to the
Sponsor and the pledge thereof by the Sponsor in connection with its Yield
Maintenance Certificates, Series 1997-1, no transfer of a Certificate shall be
made unless the Indenture Trustee and the Credit Enhancer shall have received a
representation letter from the transferee of such Certificate, acceptable to and
in form and substance satisfactory to the Indenture Trustee and the Credit
Enhancer, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA, nor a Person acting on behalf of or using the
assets of any such plan, which representation letter shall not be an expense of
the Indenture Trustee or the Credit Enhancer.
(e) No transfer or pledge of the Certificates shall result in more than
98 other holders of Certificates.
SECTION 3.11. Acceptance of Obligations. The Sponsor, by its acceptance
of the Certificates, agrees to be bound by and to perform all the duties of the
Sponsor set forth in this Agreement.
SECTION 3.12. Distributions on Certificates. The Holders of the
Certificates will be entitled to distributions on each Distribution Date, as
provided in the Sale and Servicing Agreement and the Indenture.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters.
With respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Certificateholders shall not have notified the Owner Trustee in writing
prior to the 30th day after such notice is given that such Certificateholders
have withheld consent or provided alternative direction:
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(a) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Holders);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
or
(d) except pursuant to Section 9.01 of the Sale and Servicing Agreement,
the amendment, change or modification of the Sale and Servicing Agreement,
except to cure any ambiguity or defect or to amend or supplement any provision
in a manner that would not materially adversely affect the interests of the
Certificateholders.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Note Registrar, or Certificate Registrar within five
Business Days thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters.
(a) The Owner Trustee shall not have the power, except upon the direction of the
Credit Enhancer, to (i) remove the Servicer under the Sale and Servicing
Agreement or (ii) except as expressly provided in the Basic Documents, sell the
Mortgage Loans after the termination of the Indenture. The Owner Trustee shall
take the actions referred to in the preceding sentence only upon written
instructions signed by the Credit Enhancer or the Securityholders, as the case
may be, and the furnishing of indemnification satisfactory to the Owner Trustee
by the Certificateholders.
(b) Upon the written request of any Certificateholder (a "Proposer"),
the Owner Trustee shall distribute promptly to all Certificateholders any
request for action or consent of Certificateholders submitted by such Proposer,
with a copy to the Manager. The Owner Trustee shall provide a reasonable method
for collecting responses to such request and shall tabulate and report the
results thereof to the Certificateholders and the Manager. The Owner Trustee
shall have no responsibility or duty to determine if any such proposed action or
consent is permitted under the terms of this Agreement or applicable law.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
Until one year and one day following the day on which the Notes have been
paid in full, the Owner Trustee shall not have the power to, and shall not,
commence any proceeding or other actions contemplated by Section 2.12(b)
relating to the Trust without the prior written consent of the Credit Enhancer.
Until one year and one day following the day on which the Notes have been paid
in full, all amounts due to the Credit Enhancer under the Insurance Agreement
have been paid in full, the Policy has terminated and the Indenture Trustee has
surrendered the Policy to the Credit Enhancer, the Owner Trustee shall not have
the power to, and shall not, commence any proceeding or other actions
contemplated by Section 2.12(b) relating to the Trust without the prior written
consent of all of the Certificateholders and the delivery to the Owner Trustee
by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 or otherwise contrary to law nor
shall the Owner Trustee be obligated to follow any such direction, if given.
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(b) No Certificateholder (other than the Sponsor as sole
Certificateholder) shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any Basic
Document, unless the Certificateholders are the Instructing Party pursuant to
Section 6.3 and unless a Certificateholder previously shall have given to the
Owner Trustee a written notice of default and of the continuance thereof, as
provided in this Agreement, and also unless Certificateholders evidencing not
less than 25% by Percentage Interest shall have made written request upon the
Owner Trustee to institute such action, suit or proceeding in its own name as
Owner Trustee under this Agreement and shall have offered to the Owner Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
days after its receipt of such notice, request, and offer of indemnity, shall
have neglected or refused to institute any such action, suit, or proceeding, and
during such 30-day period no request or waiver inconsistent with such written
request has been given to the Owner Trustee pursuant to and in compliance with
this Section or Section 6.3; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5. Majority Control. No Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust except as expressly provided in this Agreement. Except
as expressly provided herein, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority interest in the Trust. Except
as expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by
Certificateholders evidencing not less than a majority interest in the Trust at
the time of the delivery of such notice.
SECTION 4.6. Rights of Credit Enhancer. Notwithstanding anything to the
contrary in the Basic Documents, without the prior written consent of the Credit
Enhancer the Owner Trustee shall not (i) remove the Servicer, (ii) initiate any
claim, suit or proceeding by the Trust or compromise any claim, suit or
proceeding brought by or against the Trust, other than with respect to the
enforcement of any Mortgage Loan or any rights of the Trust thereunder, (iii)
authorize the merger or consolidation of the Trust with or into any other
business trust or other entity, (iv) amend the Certificate of Trust or (v) amend
this Agreement in accordance with Section 11.1 of this Agreement.
ARTICLE V.
Certain Duties
SECTION 5.1. Accounting and Records to the Noteholders, Certificateholders,
the Internal Revenue Service and Others. Subject to Sections 8.01(b)(iii) and
8.01(c) of the Sale and Servicing Agreement, the Sponsor shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis on the
accrual method of accounting, including, without limitation, the allocations of
net income under Section 2.11 hereof, (b) deliver (or cause to be delivered) to
each Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1, if
applicable) to enable each Certificateholder to prepare its Federal and state
income tax returns, (c) file or cause to be filed, if necessary, such tax
returns relating to the Trust
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(including a partnership information return, Form 1065), and direct the Owner
Trustee or the Servicer, as the case may be, to make such elections as may from
time to time be required or appropriate under any applicable state or Federal
statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a branch, or if applicable, as a partnership, for Federal
income tax purposes and (d) collect or cause to be collected any withholding tax
as described in and in accordance with Section 8.01(b)(ii) of the Sale and
Servicing Agreement with respect to income or distributions to
Certificateholders and the appropriate forms relating thereto. The Owner Trustee
or the Servicer, as the case may be, shall make all elections pursuant to this
Section as directed in writing by the Sponsor. The Owner Trustee shall sign all
tax information returns, if any, filed pursuant to this Section 5.1 and any
other returns as may be required by law, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Sponsor or the Servicer. The Owner Trustee shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Mortgage Loans. The Owner Trustee shall not make the
election provided under Section 754 of the Code.
SECTION 5.2. Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that the Trust is
characterized as a partnership, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by the Sponsor.
(b) In the event that the Trust is characterized as a partnership, the
Sponsor shall be the "tax matters partner" of the Trust pursuant to the Code.
SECTION 5.3. Underwriting Agreement. The Servicer is hereby authorized
to execute and deliver the Underwriting Agreement with respect to the Notes and
the Yield Maintenance Purchase Agreement with respect to the Certificates.
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority. The Owner Trustee is authorized
and directed to execute and deliver the Basic Documents to which the Trust is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is named as a party
and any amendment thereto, in each case, in such form as the Sponsor shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and
on behalf of the Trust, to direct the Indenture Trustee to authenticate and
deliver Class A Notes in the aggregate principal amount of $189,065,000 and
Class S Notes in the aggregate notional amount of $189,065,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Basic Documents. The
Owner Trustee is further authorized from time to time to take such action as the
Instructing Party recommends with respect to the Basic Documents so long as such
activities are consistent with the terms of the Basic Documents. The Owner
Trustee may rely on the Manager to carry out any action that the Owner Trustee
is authorized or directed to perform hereunder, to the extent permitted by the
Management Agreement.
SECTION 6.2. General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and to administer the Trust in the
interest of the Holders, subject to the Basic Documents and in accordance with
the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the Servicer has agreed in
the Sale and Servicing Agreement to perform any act or to discharge any duty of
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the Trust or the Owner Trustee hereunder or under any Basic Document, and the
Owner Trustee shall not be liable for the default or failure of the Servicer to
carry out its obligations under the Sale and Servicing Agreement or the failure
of the Manager to carry out its obligations under the Management Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to
Article IV, the Credit Enhancer (the "Instructing Party") shall have the
exclusive right to direct the actions of the Owner Trustee in the management of
the Trust, so long as such instructions are not inconsistent with the express
terms set forth herein or in any Basic Document. The Instructing Party shall
not instruct the Owner Trustee in a manner inconsistent with this Agreement or
the Basic Documents. Inacting in accordance with the direction of the Credit
Enhancer pursuant to this Section or pursuant to Article IV, the Owner Trustee
shall not be deemed to (i) owe any fiduciary obligation to the Credit Enhancer
or (ii) have violated any fiduciary responsibility to the Certificateholders.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders, and shall have no liability to
any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this
Agreement or in Instructions. The Owner Trustee shall not have any duty or
obligation to manage, make any payment with respect to, register, record, sell,
dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party, except as expressly
provided by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.3; and no
implied duties or obligations shall be read into this Agreement or any Basic
Document against the Owner Trustee.
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The Owner Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Commission filing for the Trust or to record
this Agreement or any Basic Document. The Owner Trustee nevertheless agrees that
it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any Liens on any part of the Owner Trust Estate that
result from actions by, or claims against, the Owner Trustee (solely in its
individual capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5. No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
and (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take
any action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation or a publicly traded
partnership for Federal income tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.
ARTICLE VII.
Concerning the Owner Trustee
----------------------------
SECTION 7.1. Acceptance of Trust and Duties. The Owner
Trustee accepts the trust hereby created and agrees to perform its duties
hereunder with respect to such trust but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Owner Trust Estate upon the terms of the Basic
Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own willful misconduct, bad faith or gross negligence, (ii)
in the case of the inaccuracy of any representation or warranty contained in
Section 7.3 expressly made by the Owner Trustee in its individual capacity,
(iii) for liabilities arising from the failure of the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section 6.4
hereof, (iv) for any investments issued by the Owner Trustee or any branch or
affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any
error of judgment, not constituting gross negligence, made by a Responsible
Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to
any action taken or omitted to be taken by it if such action or omission is in
accordance with the instructions of the Instructing Party, the Sponsor, the
Servicer or any Certificateholder pursuant to the terms hereof;
(c) no provision of this Agreement or any Basic Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;
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(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Sponsor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Certificates, and the Owner Trustee shall
in no event assume or incur any liability, duty or obligation to the Sponsor,
the Credit Enhancer, Indenture Trustee, any Certificateholder, other than as
expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Sponsor, the Credit Enhancer, the Indenture Trustee, or the
Servicer under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations under this
Agreement or the Basic Documents that are required to be performed by the
Sponsor under this Agreement, by the Indenture Trustee under the Indenture or
the Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement or any Basic Document, at the request, order or
direction of the Instructing Party or any of the Certificateholders, unless such
Instructing Party or Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its negligence, bad faith
or willful misconduct in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee
shall furnish to the Certificateholders promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Owner Trustee under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner
Trustee hereby represents and warrants, in its individual capacity, to the
Sponsor and the Holders (which shall have relied on such representations and
warranties in issuing the Policy), that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
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SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which
is not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer, secretary or other authorized officers of the relevant party,
as to such fact or matter, and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations under this
Agreement or the Basic Documents, the Owner Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements entered into with any of
them, and (ii) may consult with counsel, accountants and other skilled persons
to be selected with reasonable care and employed by it. The Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and according to such opinion not contrary to this
Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Owner Trustee on the
Certificates) shall be taken as the statements of the Sponsor and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes, or of
any Mortgage Loan or related documents. The Owner Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity
and enforceability of any Mortgage Loan, or the perfection and priority of any
security interest created by any Mortgage Loan or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Mortgage Loan; the existence and enforceability of any insurance thereon; the
existence and contents of any Mortgage Loan on any computer or other record
thereof; the validity of the assignment of any Mortgage Loan to the Trust or of
any intervening assignment; the completeness of any Mortgage Loan; the
performance or enforcement of any Mortgage Loan; the compliance by the Sponsor,
the Servicer or any other Person with any warranty or representation made under
any Basic Document or in any related document or the accuracy of any such
warranty or representation or any action of the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates or Notes and may deal with the Sponsor, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
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SECTION 7.8. Payments from Owner Trust Estate. All payments
to be made by the Owner Trustee under this Agreement or any of the Basic
Documents to which the Trust or the Owner Trustee is a party shall be made only
from the income and proceeds of the Owner Trust Estate and only to the extent
that the Owner Trust shall have received income or proceeds from the Owner Trust
Estate to make such payments in accordance with the terms hereof. Wilmington
Trust Company, or any successor thereto, in its individual capacity, shall not
be liable for any amounts payable under this Agreement or any of the Basic
Documents to which the Trust or the Owner Trustee is a party.
SECTION 7.9. Doing Business in Other Jurisdictions.
Notwithstanding anything contained to the contrary, neither Wilmington Trust
Company or any successor thereto, nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will, even after the appointment of a co-trustee or
separate trustee in accordance with Section 10.5 hereof, (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by Wilmington Trust Company (or
any successor thereto); or (iii) subject Wilmington Trust Company (or any
successor thereto) to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company (or any successor
thereto) or the Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Company and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Sponsor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder and under the Basic Documents.
SECTION 8.2. Indemnification. The Sponsor shall be liable
as primary obligor for, and shall indemnify the Owner Trustee (in its individual
and trust capacities) and its officers, directors, successors, assigns, agents
and servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may (in its trust or individual capacities) at
any time be imposed on, incurred by, or asserted against the Owner Trustee or
any Indemnified Party in any way relating to or arising out of this Agreement,
the Basic Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Sponsor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section and the rights under Section 8.1 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Sponsor which approval shall not be unreasonably
withheld.
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SECTION 8.3. Payments to the Owner Trustee. Any amounts
paid to the Owner Trustee pursuant to this Article VIII shall be deemed not to
be a part of the Owner Trust Estate immediately after such payment.
SECTION 8.4. Non-recourse Obligations. Notwithstanding
anything in this Agreement or any Basic Document, the Owner Trustee agrees in
its individual capacity and in its capacity as Owner Trustee for the Trust that
all obligations of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Owner Trust Estate only and
specifically shall not be recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement. (a) This
Agreement and the Trust shall terminate and be of no further force or effect
upon the later of (i) the maturity or other liquidation of the last Mortgage
Loan (including the purchase by the Sponsor at its option of the corpus of the
Trust as described in Section 7.01(b) of the Sale and Servicing Agreement) and
the subsequent distribution of amounts in respect of such Mortgage Loans as
provided in the Basic Documents or (ii) the payment to Certificateholders of all
amounts required to be paid to them pursuant to this Agreement and the payment
to the Credit Enhancer of all amounts payable or reimbursable to it pursuant to
the Sale and Servicing Agreement and the Insurance Agreement; provided, however,
that the rights to indemnification under Section 8.2 and the rights under
Section 8.1 shall survive the termination of the Trust. The Servicer shall
promptly notify the Owner Trustee and the Credit Enhancer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Sponsor
nor any other Certificateholder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 7.01(c) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Indenture Trustee therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Indenture Trustee therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar (if other than the Owner Trustee) and
the Indenture Trustee at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates, the Indenture Trustee shall
cause to be distributed to Certificateholders amounts distributable on such
Distribution Date pursuant to Section 8.3(a)(xiv) of the Indenture.
In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six months after the
date specified in the above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certificateholders to
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surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that shall remain subject to this Agreement. Any funds
remaining in the Trust after exhaustion of such remedies shall be distributed,
subject to applicable escheat laws, by the Owner Trustee to the Sponsor and
Holders shall look solely to the Sponsor for payment.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Sponsor.
(e) Upon the winding up of the Trust and its termination,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation (i) satisfying the
provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized to
exercise corporate trust powers; (iii) having a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by Federal or
State authorities; (iv) having (or having a parent which has) a rating of at
least Baa3 by Moody's or A- 1 by Standard & Poors; and (v) acceptable to the
Credit Enhancer in its sole discretion. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Sponsor (or in the event that
the Sponsor is not the sole Certificateholder, the Holders of Certificates
evidencing not less than a majority in interest in the Trust), the Credit
Enhancer and the Servicer. Upon receiving such notice of resignation, the
Sponsor shall promptly appoint a successor Owner Trustee, meeting the
qualifications set forth in Section 10.1 herein, by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee, provided that the
Sponsor shall have received written confirmation from each of the Rating
Agencies that the proposed appointment will not result in an increased capital
charge to the Credit Enhancer by either of the Rating Agencies. If no successor
Owner Trustee shall have been so appointed and have accepted appointment within
30 days after the giving of such notice of resignation, the resigning Owner
Trustee or the Credit Enhancer may petition any court of competent jurisdiction
for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation
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or liquidation, then the Certificateholder with the consent of the Credit
Enhancer may remove the Owner Trustee. If the Certificateholder shall remove the
Owner Trustee under the authority of the immediately preceding sentence, the
Sponsor shall promptly appoint a successor Owner Trustee, meeting the
qualifications set forth in Section 10.1 herein, by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed, one copy to the Credit Enhancer and one copy to the
successor Owner Trustee and the Sponsor shall pay all fees owed to the outgoing
Owner Trustee, if not previously paid by the Trust.
Any resignation or removal of the Owner Trustee and appointment
of a successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3 and payment of all fees and expenses owed
to the outgoing Owner Trustee. The Sponsor shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
Notwithstanding any other provision of this Agreement, and in
addition to any other method of removal of the Owner Trustee contained herein,
upon a proposal made pursuant to Section 4.2(b) and the subsequent consent of
Certificateholders representing no less than a 66-2/3% interest in the Trust,
the Owner Trustee may be removed as Owner Trustee , subject to the consent of
the Credit Enhancer, which consent is not to be unreasonably withheld. In the
event the Owner Trustee is removed pursuant to this paragraph, the provisions of
this Agreement, including Article X herein, shall apply as if the Owner Trustee
had resigned hereunder.
SECTION 10.3. Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Sponsor, the Servicer, the Credit Enhancer and to its predecessor
Owner Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Sponsor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided
in this Section unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Servicer shall mail notice of the successor of
such Owner Trustee to all Certificateholders, the Indenture Trustee, the
Noteholders and the Rating Agencies. If the Servicer shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Servicer.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of
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any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Owner Trustee or Separate
Owner 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 Owner Trust Estate or any Mortgaged Property may at the
time be located, the Servicer and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee and the Credit Enhancer to act as
co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Servicer and the Owner 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, the
Owner Trustee subject to the approval of the Credit Enhancer (which approval
shall not be unreasonably withheld) shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner 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 Owner 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, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Servicer and the Owner 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 Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Credit Enhancer.
Any separate trustee or co-trustee may at any time appoint the
Owner 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,
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remedies and trusts shall vest in and be exercised by the Owner Trustee, to the
extent permitted by law, without the appointment of a new or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1. Supplements and Amendments. (a) This Agreement
may be amended by the Sponsor and the Owner Trustee, with the prior written
consent of the Credit Enhancer and with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders or, in the event that
the Sponsor is not the sole Certificateholder, the Certificateholders, (i) to
cure any ambiguity or defect or (ii) to correct, supplement or modify any
provisions in this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel which may be based upon a certificate of the
Servicer, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from
time to time, with the prior written consent of the Credit Enhancer by the
Sponsor and the Owner Trustee, with prior written notice to the Rating Agencies,
and, to the extent such amendment materially and adversely affects the interests
of the Noteholders, with the consent of the Noteholders evidencing not less than
a majority of the Outstanding Amount of the Notes and, the consent of the
Certificateholders evidencing not less than a majority interest in the Trust
(which consent of any Holder of a Certificate or Note given pursuant to this
Section or pursuant to any other provision of this Agreement shall be conclusive
and binding on such Holder and on all future Holders of such Certificate or Note
and of any Certificate or Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made upon
the Certificate or Note) for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Credit Enhancer
under the Basic Documents, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Mortgage Loans or distributions that shall be required to be made
for the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the
Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of Trust, the
Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
Prior to the execution of any amendment to this Agreement or
the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may,
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but shall not be obligated to, enter into any such amendment which affects the
Owner Trustee's own rights, duties or immunities under this Agreement or
otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Article IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Sponsor, the Certificateholders, the Servicer and, to the
extent expressly provided herein, the Credit Enhancer, the Indenture Trustee and
the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt, if
to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Sponsor, addressed to Headlands Mortgage Securities Inc., 700 Larkspur Landing
Circle, Suite 240, Larkspur, California 94939; if to the Credit Enhancer,
addressed to Credit Enhancer, Capital Markets Assurance Corporation, 885 Third
Avenue, New York, New York 10022, Attention: Surveillance Department, Telecopy
No.: (212) 755-5462; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given
to a Certificateholder shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7. Assignments; Credit Enhancer. (a) This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. This Agreement shall also
inure to the benefit of the Credit Enhancer. Without limiting the generality of
the foregoing, all covenants and agreements in this Agreement which confer
rights upon the Credit Enhancer shall be for the benefit of and run directly to
the Credit Enhancer, and the Credit Enhancer shall be entitled to rely on and
enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Basic Documents. The Credit Enhancer may
disclaim any
26
<PAGE>
of its rights and powers under this Agreement (but not its duties and
obligations under the Policy) upon delivery of a written notice to the Owner
Trustee.
(b) In accepting instructions from the Credit Enhancer
pursuant to Article IV or Section 6.3 of this Agreement, and with respect to any
other obligations of the Owner Trustee to the Credit Enhancer under this
Agreement, the Owner Trustee undertakes to perform or observe only its express
obligations under this Agreement, and no implied obligations with respect to the
Credit Enhancer shall be read into this Agreement against the Owner Trustee.
The Owner Trustee shall not be deemed to owe any fiduciary duty to the Credit
Enhancer and it is expressly understood and agreed by the Credit Enhancer that
the Owner Trustee shall not be personally liable or responsible for the payment
of any amount owing on or with respect to the Basic Documents or for the failure
of the Trust to perform its obligations under the Basic Documents or any other
agreement with respect thereto.
SECTION 11.8. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against the
Sponsor, or join in any institution against the Sponsor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, this
Agreement or any of the Basic Documents.
SECTION 11.9. No Recourse. Each Certificateholder by
accepting a Certificate acknowledges that such Certificateholder's Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Credit Enhancer or any Affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Certificates or the
Basic Documents.
SECTION 11.10. Headings. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.12. Servicer. The Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust or Owner Trustee to prepare, file or deliver
pursuant to the Basic Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Servicer a limited power of attorney appointing the
Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
WILMINGTON TRUST COMPANY
Owner Trustee
/s/ Donald G. MacKelcan
By --------------------------------
Name: Donald G. MacKelcan
Title: Assitant Vice President
HEADLANDS MORTGAGE SECURITIES INC.
Sponsor
/s/ Becky Poisson
By --------------------------------
Name: Becky Poisson
Title: Vice President
Acknowledged and Agreed:
HEADLANDS MORTGAGE COMPANY
Servicer
By:________________________________
Name: Kristen Decker
Title: Sr. Vice President
<PAGE>
CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, 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 3.10 OF THE TRUST AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE TRANSFEREE PROVIDES A
REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH CERTIFICATE, ACCEPTABLE TO
AND IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE
CREDIT ENHANCER, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OF ERISA, NOR A PERSON ACTING ON BEHALF
OF OR USING THE ASSETS OF ANY SUCH PLAN, WHICH REPRESENTATION LETTER SHALL
NOT BE AN EXPENSE OF THE INDENTURE TRUSTEE OR THE CREDIT ENHANCER.
NO TRANSFER OF A CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE
WITH SAID ACT AND LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF THE CERTIFICATE
TO THE SPONSOR AND THE PLEDGE THEREOF BY THE SPONSOR IN CONNECTION WITH THE
YIELD MAINTENANCE CERTIFICATES, SERIES 1997-1, THE INDENTURE TRUSTEE SHALL
REQUIRE (i) THE TRANSFEREE TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND
IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE CREDIT
ENHANCER CERTIFYING TO THE INDENTURE TRUSTEE AND THE CREDIT ENHANCER THE
FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL NOT BE AN
EXPENSE OF THE INDENTURE TRUSTEE OR THE CREDIT ENHANCER OR (ii) IF THE
INVESTMENT LETTER IS NOT DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE
TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE, THE
CREDIT ENHANCER AND THE SPONSOR THAT SUCH TRANSFER MAY BE MADE PURSUANT TO
AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR,
FROM SAID ACT OR IS BEING MADE PURSUANT TO SAID ACT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE INDENTURE TRUSTEE, THE CREDIT
ENHANCER OR THE SPONSOR. THE HOLDER OF A CERTIFICATE DESIRING TO EFFECT SUCH
TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR AND THE
CREDIT ENHANCER 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.
EXCEPT FOR THE PLEDGE BY THE SPONSOR IN CONNECTION WITH ITS YIELD
MAINTENANCE CERTIFICATES, SERIES 1997-1, THE CERTIFICATES AND ANY INTEREST
THEREIN SHALL NOT BE TRANSFERRED EXCEPT UPON SATISFACTION OF THE FOLLOWING
CONDITIONS PRECEDENT: (I) THE PERSON THAT ACQUIRES A CERTIFICATE SHALL (A)
BE ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR
ANY STATE OR THE DISTRICT OF COLUMBIA THEREOF, (B) EXPRESSLY ASSUME, BY AN
AGREEMENT SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO THE INDENTURE
TRUSTEE AND THE CREDIT ENHANCER, THE PERFORMANCE OF EVERY COVENANT AND
OBLIGATION OF THE SPONSOR UNDER THE TRUST AGREEMENT AND (C) AS PART OF ITS
ACQUISITION OF A CERTIFICATE, ACQUIRE ALL RIGHTS OF THE SPONSOR OR ANY
TRANSFEREE UNDER SECTION 3.10 OF THE TRUST AGREEMENT TO AMOUNTS PAYABLE TO
THE CERTIFICATE OR SUCH TRANSFEREE UNDER SECTIONS 8.3(A)(XIV) AND 8.3(g) OF
THE INDENTURE; (II) THE HOLDER OF THE CERTIFICATES SHALL DELIVER TO THE
INDENTURE TRUSTEE AND THE CREDIT ENHANCER AN OFFICER'S CERTIFICATE STATING
THAT SUCH TRANSFER AND SUCH SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION
3.10(C) OF THE TRUST AGREEMENT AND THAT ALL CONDITIONS PRECEDENT PROVIDED BY
SECTION 3.10(C) OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH AND AN
OPINION OF COUNSEL STATING THAT ALL CONDITIONS PRECEDENT PROVIDED BY SECTION
3.10(C) OF THE TRUST AGREEMENT HAVE BEEN COMPLIED WITH, AND THE INDENTURE
TRUSTEE MAY CONCLUSIVELY RELY ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO
DUTY TO MAKE INQUIRIES WITH REGARD TO THE MATTERS SET FORTH THEREIN AND
SHALL INCUR NO LIABILITY IN SO RELYING; (III) THE HOLDER OF THE CERTIFICATES
SHALL DELIVER TO THE INDENTURE TRUSTEE AND THE CREDIT ENHANCER A LETTER FROM
EACH RATING AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING
EFFECT TO SUCH TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN WITHOUT REGARD TO
THE POLICY; (IV) THE TRANSFEREE OF THE CERTIFICATES SHALL DELIVER TO THE
INDENTURE TRUSTEE AND THE CREDIT ENHANCER AN OPINION OF COUNSEL TO THE
EFFECT THAT (A) SUCH TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE
NOTES AFTER SUCH TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME
TAX PURPOSES, (B) SUCH TRANSFER WILL NOT RESULT IN THE TRUST BEING SUBJECT
TO TAX AT THE ENTITY LEVEL FOR FEDERAL OR APPLICABLE STATE TAX PURPOSES, (C)
SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE FEDERAL OR
APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER OR ANY NOTE OWNER AND (D)
SUCH TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST
AGREEMENT OR ANY "PORTION" OF THE TRUST, BEING TREATED AS A TAXABLE MORTGAGE
POOL AS DEFINED IN SECTION 7701(I) OF THE CODE; (V) ALL FILINGS AND OTHER
ACTIONS NECESSARY TO CONTINUE THE PERFECTION OF THE INTEREST OF THE TRUST IN
THE MORTGAGE LOANS AND THE OTHER PROPERTY CONVEYED UNDER THE TRUST AGREEMENT
SHALL HAVE BEEN TAKEN OR MADE AND (VI) THE CREDIT ENHANCER SHALL HAVE
CONSENTED TO SUCH TRANSFER.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
HEADLANDS HOME EQUITY LOAN TRUST
1997-1 CERTIFICATE
Percentage Interest: 100%
Date of Cut-Off Date:
July 31, 1997
First Distribution Date: Issue Date: August 21, 1997
September 15, 1997
No. 1
---------------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by:____________________________________
Authenticating Agent
The Trust was created pursuant to a Trust Agreement dated as of
August 1, 1997 (the "Trust Agreement"), between the Sponsor and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as Headlands Home Equity Loan "Asset Backed Certificates" (herein
called the "Certificates"). Also issued under the Indenture dated as of August
1, 1997, among the Trust and The First National Bank of Chicago, as indenture
trustee (the "Indenture Trustee") are two classes of Notes designated as Class A
Notes (the "Class A Notes") and Class S Notes (the "Class S Notes", together
with the Class A Notes, (the "Notes"). These Certificates are issued under and
are subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes a pool of adjustable-rate home equity revolving credit line loans
secured by first or second deeds of trust or Mortgages on primarily one-to-four
family residential properties.
Under the Trust Agreement, there will be distributed on the
15th day of each month or, if such 15th day is not a Business Day, the next
Business Day (the "Distribution Date"), commencing on September 15, 1997, to the
Person in whose name this Certificate is registered at the close of business on
the Business Day preceding such Distribution Date (the "Record Date") such
Certificateholder's Percentage Interest in the amount to be distributed to
Certificateholders on such Distribution Date.
The holder of this Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Certificate are subordinated
to the rights of the Noteholders as described in the Sale and Servicing
Agreement, the Indenture and the Trust Agreement, as applicable.
The holder of this Certificate, by acceptance of this
Certificate, specifically acknowledges that it has no right to or interest in
any monies at any time held pursuant to the Spread Account, Deferred Interest
Account, the Funding Account or prior to the release of such monies pursuant to
Section 8.3(a)(xiv) of the Indenture, such monies being held in trust for the
benefit of the Noteholders and the Credit Enhancer. Notwithstanding the
foregoing, in the event that it is ever determined that the monies held in the
Spread Account, Deferred Interest Account, the Funding Account constitute a
pledge of collateral, then the provisions of the Sale and Servicing Agreement
shall be considered to constitute a security agreement and the holder of this
Certificate hereby grants to the Indenture Trustee and the Credit Enhancer a
first priority perfected security interest in such amounts. In addition, each
Certificateholder, by acceptance of its Certificate, hereby appoints the Sponsor
as its agent to pledge a first priority perfected security interest in the
Spread Account, the Deferred Interest Account and the Funding Account and agrees
to execute and deliver such instruments of conveyance, assignment, grant,
confirmation, etc., as well as any financing statements, in each case as the
Credit Enhancer shall consider reasonably necessary in order to perfect the
Indenture Trustee's security interest in the Trust Property.
It is the intent of the Sponsor, the Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust or the Sponsor, or join in any institution against the Trust or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Certificate will be made as provided in
the Sale and Servicing Agreement and the Indenture by the Indenture Trustee by
wire transfer or check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Certificate to be duly
executed.
HEADLANDS HOME EQUITY LOAN
TRUST 1997-1
By: WILMINGTON TRUST COMPANY not
in its individual capacity but
solely as Owner Trustee
Dated: August 21, 1997
By: __________________________________
Name:
Title:
<PAGE>
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an
interest in, the Company, the Sponsor, the Servicer, the Credit Enhancer, the
Owner Trustee or any Affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Trust Agreement, the Indenture or the Basic
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Mortgage Loans, as more specifically set forth
herein, in the Sale and Servicing Agreement and in the Indenture. A copy of each
of the Sale and Servicing Agreement and the Trust Agreement may be examined
during normal business hours at the principal office of the Sponsor, and at such
other places, if any, designated by the Sponsor, by any Certificateholder upon
written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Sponsor and the rights of the Certificateholders under the
Trust Agreement at any time by the Sponsor and the Owner Trustee with the prior
written consent of the Credit Enhancer and with the consent of the holders of
the Notes and the Certificates evidencing not less than a majority of the
outstanding Notes and the Certificates. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Certificates (other than the Sponsor or the Credit
Enhancer).
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.
Except for Certificates issued to the Sponsor, the Certificates
are issuable only as registered Certificates without coupons in denominations of
$1,000 or integral multiples of $1,000 in excess thereof. As provided in the
Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates in authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Credit
Enhancer and any agent of the Owner Trustee, the Certificate Registrar, the
Credit Enhancer or the Credit Enhancer may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar, the Credit Enhancer nor any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement, the Indenture and the Sale and Servicing Agreement and the
disposition of all property held as part of the Trust. The Sponsor may at its
option purchase the corpus of the Trust at a price specified in the Sale and
Servicing Agreement, and such purchase of the Mortgage Loans and other property
of the Trust will effect a transfer of the Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only on any
Distribution Date on or after the Distribution Date immediately prior to which
the Class A Note Principal Balance is less than 10% of the Original Class A Note
Principal Balance and all amounts due and owing to the Credit Enhancer for
unpaid premiums and unreimbursed draws on the Policy and all other amounts due
and owing to the Credit Enhancer pursuant to the Insurance Agreement, together
with interest thereon as provided under the Insurance Agreement, have been paid.
The recitals contained herein shall be taken as the statements
of the Sponsor or the Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_____________________________________ Attorney to transfer said Certificate on
the books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
_________________________________*
Signature Guaranteed:
_________________________________*
- -------------------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
HEADLANDS HOME EQUITY LOAN TRUST 1997-1
This Certificate of Trust of Headlands Home Equity Loan Trust
1997-1 (the "Trust"), dated as of August __, 1997, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as trustee,
to form a business trust under the Delaware Business Trust Act (12 Del. Code,
ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is
Headlands Home Equity Loan Trust 1997-1.
2. Delaware Trust. The name and business address of the
Owner Trustee of the Trust in the State of Delaware is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001.
Attn: Corporate Trust Administration.
3. This Certificate of Trust will be effective August __,
1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee of the Trust.
By:_________________________________
Name:
Title:
<PAGE>
EXECUTION COPY
HEADLANDS MORTGAGE SECURITIES INC.,
Sponsor,
HEADLANDS MORTGAGE COMPANY,
Servicer,
HEADLANDS HOME EQUITY LOAN TRUST 1997-1,
Issuer,
and
THE FIRST NATIONAL BANK OF CHICAGO,
Indenture Trustee
-----------------------
SALE AND SERVICING AGREEMENT
Dated as of August 1, 1997
----------------------
Revolving Home Equity Loan Asset-Backed Notes
Series 1997-1
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS ..................................................... 1
SECTION 1.01. DEFINITIONS............................................... 1
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS............................. 19
SECTION 1.03. INTEREST CALCULATIONS..................................... 20
ARTICLE II CONVEYANCE OF HELOCS; ORIGINAL ISSUANCE OF NOTES;
TAX TREATMENT................................................ 20
SECTION 2.01. CONVEYANCE OF HELOCS; RETENTION OF OBLIGATION
TO FUND ADVANCES UNDER CREDIT LINE AGREEMENTS.......... 20
SECTION 2.02. FURTHER ENCUMBRANCE OF TRUST PROPERTY..................... 23
SECTION 2.03. ACCEPTANCE BY INDENTURE TRUSTEE; RETRANSFER OF HELOCS..... 24
SECTION 2.04. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER
AND THE SPONSOR........................................ 26
SECTION 2.05. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR REGARDING
THE HELOCS; RETRANSFER OF CERTAIN HELOCS............... 28
SECTION 2.06. COVENANTS OF THE SPONSOR.................................. 33
SECTION 2.07. RETRANSFERS OF HELOCS AT ELECTION OF SPONSOR.............. 34
SECTION 2.08. EXECUTION AND AUTHENTICATION OF NOTES..................... 35
SECTION 2.09. TAX TREATMENT............................................. 35
SECTION 2.10. CONVEYANCE OF THE SUBSEQUENT HELOCS....................... 35
ARTICLE III ADMINISTRATION AND SERVICING OF HELOCS......................... 37
SECTION 3.01. THE SERVICER.............................................. 37
SECTION 3.02. COLLECTION OF CERTAIN HELOCS PAYMENTS..................... 39
SECTION 3.03. WITHDRAWALS FROM THE COLLECTION ACCOUNT................... 41
SECTION 3.04. MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION
EXPENSES............................................... 41
SECTION 3.05. ASSUMPTION AND MODIFICATION AGREEMENTS.................... 42
SECTION 3.06. REALIZATION UPON DEFAULTED HELOCS; REPURCHASE OF CERTAIN
HELOCS................................................. 42
SECTION 3.07. INDENTURE TRUSTEE TO COOPERATE............................ 43
SECTION 3.08. SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES
BY SERVICER............................................ 44
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE......................... 44
SECTION 3.10. ANNUAL SERVICING REPORT................................... 45
SECTION 3.11. ANNUAL OPINION OF COUNSEL................................. 45
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE HELOCS............................................. 45
SECTION 3.13. MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES....... 45
SECTION 3.14. REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION......... 46
SECTION 3.15. TAX RETURNS............................................... 46
SECTION 3.16. INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE
GENERALLY AND REPORTS OF FORECLOSURES AND ABANDONMENTS
OF MORTGAGED PROPERTY.................................. 46
ARTICLE IV SERVICING CERTIFICATE........................................... 47
SECTION 4.01. SERVICING CERTIFICATE..................................... 47
SECTION 4.02. CLAIMS UPON THE POLICY.................................... 49
SECTION 4.03. SPREAD ACCOUNT............................................ 50
SECTION 4.04. EFFECT OF PAYMENTS BY THE CREDIT ENHANCER; SUBROGATION.... 51
i
<PAGE>
ARTICLE V THE SERVICER AND THE SPONSOR..................................... 51
SECTION 5.01. LIABILITY OF THE SERVICER AND THE SPONSOR................. 51
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER OR THE SPONSOR............ 51
SECTION 5.03. LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS........ 52
SECTION 5.04. SERVICER NOT TO RESIGN.................................... 52
SECTION 5.05. DELEGATION OF DUTIES...................................... 53
SECTION 5.06. INDEMNIFICATION OF THE TRUST BY THE SERVICER.............. 53
SECTION 5.07. INDEMNIFICATION OF THE TRUST BY THE SPONSOR............... 53
SECTION 5.08. LIMITATION ON LIABILITY OF THE SPONSOR.................... 54
ARTICLE VI SERVICING TERMINATION........................................... 54
SECTION 6.01. EVENTS OF SERVICING TERMINATION........................... 54
SECTION 6.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR........ 56
SECTION 6.03. NOTIFICATION TO SECURITYHOLDERS........................... 57
ARTICLE VII TERMINATION.................................................... 57
SECTION 7.01. TERMINATION............................................... 57
ARTICLE VIII ADMINISTRATIVE DUTIES OF THE SERVICER......................... 58
SECTION 8.01. ADMINISTRATIVE DUTIES..................................... 58
SECTION 8.02. RECORDS................................................... 60
SECTION 8.03. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER...... 60
ARTICLE IX MISCELLANEOUS PROVISIONS........................................ 60
SECTION 9.01. AMENDMENT................................................. 60
SECTION 9.02. RECORDATION OF AGREEMENT.................................. 62
SECTION 9.03. LIMITATION ON RIGHTS OF NOTEHOLDERS....................... 62
SECTION 9.04. GOVERNING LAW............................................. 63
SECTION 9.05. NOTICES................................................... 63
SECTION 9.06. SEVERABILITY OF PROVISIONS................................ 63
SECTION 9.07. ASSIGNMENT................................................ 63
SECTION 9.08. THIRD-PARTY BENEFICIARIES................................. 63
SECTION 9.09. COUNTERPARTS.............................................. 63
SECTION 9.10. EFFECT OF HEADINGS AND TABLE OF CONTENTS.................. 64
SECTION 9.11. INSURANCE AGREEMENT....................................... 64
SECTION 9.12. NONPETITION COVENANT...................................... 64
EXHIBITS
EXHIBIT A - HELOC SCHEDULE................................................. A-1
EXHIBIT B - FORM OF OPINION OF COUNSEL..................................... B-1
EXHIBIT C - OFFICER'S CERTIFICATES......................................... C-1
EXHIBIT D - FORM OF CREDIT LINE AGREEMENT.................................. D-1
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SALE AND SERVICING AGREEMENT, dated as of August 1, 1997, among HEADLANDS HOME
EQUITY LOAN TRUST 1997-1, a Delaware business trust (the "Issuer"), HEADLANDS
MORTGAGE SECURITIES INC., a Delaware corporation (the "Sponsor"), HEADLANDS
MORTGAGE COMPANY, a California corporation (the "Servicer"), and THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association (the "Indenture
Trustee")
WHEREAS, the Issuer desires to purchase a portfolio of Initial
HELOCs arising in connection with Loan Agreements acquired by Headlands Mortgage
Company;
WHEREAS, the Sponsor has purchased such HELOCs from Headlands
Mortgage Company and is willing to sell such HELOCs to the Issuer;
WHEREAS, the Issuer desires to purchase Subsequent HELOCs
arising in connection with Loan Agreements to be acquired by Headlands Mortgage
Company;
WHEREAS, the Sponsor has an agreement to purchase such
Subsequent HELOCs from Headlands Mortgage Company and is willing to sell such
Subsequent HELOCs to the Issuer;
WHEREAS, the Servicer is willing to service all such HELOCs;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accelerated Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, required to reduce the Class A Note
Principal Balance (after giving effect to the distribution of all other amounts
actually distributed on the Class A Notes on such Distribution Date) so that the
Invested Amount (immediately following such Distribution Date) exceeds the Class
A Note Principal Balance (as so reduced) by the Required Overcollateralization
Amount.
Additional Balance: As to any HELOC and day, the aggregate amount of all
Draws conveyed to the Trust pursuant to Section 2.01.
Adjustment Date: With respect to any HELOC and Interest Period, the second
LIBOR Business Day preceding the first day of such Interest Period.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through
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ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
Agreement: This Sale and Servicing Agreement and all amendments hereof and
supplements hereto.
Alternative Principal Payment: As to any Distribution Date, the amount
(but not less than zero) equal to Principal Collections for such Distribution
Date less the aggregate of Draws under the Credit Line Agreements during the
related Collection Period.
Appraised Value: As to any Mortgaged Property, the value established by
either a full appraisal or a drive by inspection of such Mortgaged Property made
to establish compliance with the underwriting criteria then in effect in
connection with the application for the HELOC secured by such Mortgaged
Property.
Asset Balance: As to any HELOC, other than a Liquidated HELOC, and day,
the related Cut-Off Date Asset Balance, plus (i) any Additional Balances minus
(ii) all collections credited as principal against the Asset Balance of any such
HELOC in accordance with the related Loan Agreement. For purposes of this
definition, a Liquidated HELOC shall be deemed to have an Asset Balance equal to
the Asset Balance of the related HELOC immediately prior to the final recovery
of related Liquidation Proceeds and an Asset Balance of zero thereafter.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Indenture Trustee, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the HELOCs secured by Mortgaged
Properties located in the same jurisdiction.
Basic Documents: This Agreement, the Purchase Agreement, the Indenture,
the Trust Agreement, the Insurance Agreement, the Indemnification Agreement and
other documents delivered in connection therewith.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or if at any time after the execution of this instrument the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Billing Cycle: With respect to any HELOC and Collection Period, the
billing period specified in the related Loan Agreement and with respect to which
amounts billed are received during such Collection Period.
Book-Entry Note: means a beneficial interest in a note, ownerships and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.9 of the Indenture.
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Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the State of New York, California, Delaware or
the State in which the Corporate Trust Office is located are required or
authorized by law to be closed.
Certificate Principal Balance: As of any date of determination, the amount
equal to (i) the Pool Balance at the end of the day next preceding such date of
determination plus (ii) the amount of Principal Collections on deposit in the
Funding Account, minus (iii) the Invested Amount.
Certificateholder: The Holder of the Certificates, which shall initially
be Headlands Mortgage Securities Inc.
Certificateholders' Collections: As to any period, the sum of
Certificateholders' Interest Collections and Certificateholders' Principal
Collections for such period.
Certificateholders' Interest: As of any Distribution Date, the excess, if
any of (x) the Trust Collateral Value as of such Distribution Date over (y) the
Invested Amount as of such Distribution Date (after taking into account
reductions therein on such Distribution Date).
Certificateholders' Interest Collections: Interest Collections that are
not Noteholders' Interest Collections.
Certificateholders' Principal Collections: On any Distribution Date,
Principal Collections received during the related Collection Period minus the
amount of such Principal Collections required to be distributed to Class A
Noteholders pursuant to Section 8.3(b) of the Indenture or required to be
deposited to the Funding Account pursuant to Section 8.7 of the Indenture.
Certificateholders' Subordinated Amount: At the time of reference thereto,
$3,859,110.37 less the sum of (i) the aggregate amount of Certificateholders'
Collections previously applied pursuant to Section 8.3(c) of the Indenture and
(ii) the aggregate amount of Loss Amounts that have previously been reallocated
to the Certificate Principal Balance pursuant to the second sentence of Section
8.3(c) of the Indenture; provided that the Certificate Subordinated Amount shall
not be less than zero.
Certificates: As defined in the Trust Agreement.
Class A Note: Any Class A Note executed and authenticated by the Indenture
Trustee.
Class A Note Interest: With respect to any Distribution Date, interest for
the related Interest Period at the applicable Class A Note Rate on the Class A
Note Principal Balance as of the first day of such Interest Period (after giving
effect to the distributions made on the first day of such Interest Period).
Class A Note Principal Balance: With respect to any Distribution Date, (a)
the Original Class A Note Principal Balance less (b) the aggregate of amounts
actually distributed as principal on the Class A Notes.
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Class A Note Rate: With respect to the first Interest Period, 5.805 %, and
for any subsequent Interest Period, the sum of (a) LIBOR as of the second LIBOR
Business Day prior to the first day of such Interest Period and (b) .18%;
provided, however, that in no event shall the Class A Note Rate with respect to
any Interest Period exceed the Maximum Rate for such Interest Period.
Class A Noteholder: The Holder of a Class A Note.
Class S Note: Any Class S Note executed and authenticated by the Indenture
Trustee.
Class S Note Interest: With respect to any Distribution Date, interest for
the related Interest Period at the Class S Note Rate on the Class S Notional
Amount as of the first day of such Interest Period (after giving effect to
distributions made on the first day of such Interest Period).
Class S Note Rate: 1.25%.
Class S Noteholder: The Holder of a Class S Note.
Class S Notional Amount: With respect to any Distribution Date, the Class
A Note Principal Balance for such Distribution Date (before giving effect to
distributions made on such Distribution Date).
Closing Date: August 21, 1997.
Code: The Internal Revenue Code of 1986, as the same may be amended from
time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Noteholders and the Credit Enhancer pursuant
to Section 3.02(b). The Collection Account shall be an Eligible Account.
Collection Period: With respect to any Distribution Date and any HELOC,
the calendar month preceding such Distribution Date.
Combined Loan-to-Value Ratio: With respect to any HELOC as of any date,
the percentage equivalent of the fraction, the numerator of which is the sum of
(i) the Credit Limit and (ii) the outstanding principal balance as of the date
of execution of the related original Credit Line Agreement (or any subsequent
date as of which such outstanding principal balance may be determined in
connection with an increase in the Credit Limit for such HELOC) of any mortgage
loan or mortgage loans that are senior or equal in priority to the HELOC and
that is or are secured by the same Mortgaged Property and the denominator of
which is the Appraised Value of the related Mortgaged Property.
Company: Headlands Mortgage Company, a closely-held California corporation
and any successor thereto.
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Corporate Trust Office: The principal corporate trust office of the
Indenture Trustee at which, at any particular time, its corporate trust business
shall be administered, which office at the date hereof is located at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate
Trust Services Division, except if the place of payment of any Note is New York
City, then such term shall mean the office or agency of the Indenture Trustee in
the Borough of Manhattan, the City of New York, which office at the date hereof
is located at First Chicago Trust Company of New York, 14 Wall Street, Eighth
Floor, New York, New York 10005.
Credit Enhancement Draw Amount: As to any Distribution Date, an amount
equal to the sum of (1) the amount by which (a) the amount to be distributed to
Noteholders pursuant to Sections 8.3(a)(i) and 8.3(a)(ii) of the Indenture
exceeds (b) the sum of (i) the amount of Noteholders' Interest Collections on
deposit in the Collection Account on the Business Day preceding such
Distribution Date that is available to be applied therefor, (ii) the amount
transferred to the Collection Account from the Deferred Interest Account
pursuant to Section 8.8 of the Indenture, and (iii) any amount transferred from
the Spread Account to the Collection Account pursuant to Section 4.03, all after
giving effect to the allocation of Certificateholders' Interest and Principal
Collections in accordance with Section 8.3(c) of the Indenture, (2) the
Guaranteed Principal Distribution Amount and (3) any Preference Claim for such
Distribution Date.
Credit Enhancer: Capital Markets Assurance Corporation, a New York
monoline stock insurance company.
Credit Enhancer Default: The failure by the Credit Enhancer to make a
payment required under the Policy in accordance with the terms thereof.
Credit Limit: As to any HELOC, the maximum Asset Balance permitted under
the terms of the related Credit Line Agreement.
Credit Limit Utilization Rate: As to any HELOC, the percentage equivalent
of a fraction the numerator of which is the Cut-Off Date Asset Balance for such
HELOC and the denominator of which is the related Credit Limit.
Credit Line Agreement: With respect to any HELOC, the related credit line
account agreement and promissory note executed by the related Mortgagor and any
amendment or modification thereof.
Custodial Agreement: Any Custodial Agreement between any Custodian and the
Indenture Trustee, which is reasonably acceptable in form and substance to the
Credit Enhancer, relating to the custody of the HELOCs and the Related
Documents.
Custodian: Any custodian acceptable to the Credit Enhancer and appointed
by the Indenture Trustee under a Custodial Agreement to maintain all or a
portion of the Mortgage Files pursuant to Section 2.01.
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Cut-Off Date: With respect to each Initial HELOC, July 31, 1997 and with
respect to each Subsequent HELOC, the date on which such Subsequent HELOC was
transferred to the Trust.
Cut-Off Date Asset Balance: With respect to any HELOC, the unpaid
principal balance thereof as of the Cut-Off Date.
Cut-Off Date Pool Balance: The Pool Balance calculated as of the
applicable Cut-Off Date.
Defective HELOC: A HELOC subject to retransfer pursuant to Section 2.03
or 2.05.
Deferred Interest Account: As defined in Section 8.8 of the Indenture.
Definitive Notes: As defined in Section 2.9 of the Indenture.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of Class A Notes
evidencing $189,065,000 in initial aggregate principal amount of the Class A
Notes and as the registered Holder of Class S Notes evidencing $189,065,000 in
initial aggregate notional amount of the Class S Notes. The Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(3) of the UCC
of the State of New York.
Determination Date: With respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
Distribution Date: The fifteenth day of each month, or if such day is not
a Business Day, then the next Business Day, beginning in the month immediately
following the month of the initial issuance of the Notes.
Draw: With respect to any HELOC, an additional borrowing by the Mortgagor
subsequent to the Cut-Off Date in accordance with the related Mortgage Note.
Electronic Ledger: The electronic master record of home equity credit line
mortgage loans maintained by the Servicer.
Eligible Account: An account that is either (i) maintained with a
depository institution whose short-term debt obligations throughout the time of
any deposit therein are rated in the highest short-term debt rating category by
Standard & Poor's and Moody's, (ii) an account or accounts maintained with a
depository institution with a minimum long term unsecured debt rating by
Standard & Poor's and Moody's which is at least investment grade provided that
the deposits in such account or accounts are fully insured by either the BIF or
the SAIF, or (iii) a segregated trust account maintained with the corporate
trust department of the Indenture Trustee in its fiduciary capacity, or (iv) an
account otherwise acceptable to each Rating Agency and the Credit Enhancer, as
evidenced at closing by delivery of a rating letter by each Rating Agency and
thereafter by delivery of a letter from each Rating Agency and the Credit
Enhancer to the Indenture Trustee, within 30 days of receipt of notice of such
deposit.
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Eligible Investments: One or more of the following (excluding any callable
investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition thereof,
provided that the short-term unsecured debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating category (which is A-1+ for
Standard & Poor's and P-1 for Moody's);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if Moody's is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, provided that the unsecured short-term debt
obligations of such depository institution or trust company at the date
of acquisition thereof have been rated by each of Moody's and Standard
& Poor's in its highest unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of not more than
270 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been rated
by Standard & Poor's and Moody's in their highest short-term debt rating
categories;
(v) short term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by Standard & Poor's and Moody's in their respective highest
applicable rating category; and
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has a rating of Aaa by Moody's and either
AAAm or AAAm-G by Standard & Poor's or such lower rating as will not result
in the qualification, downgrading or withdrawal of the then-current rating
assigned to the Notes by each Rating Agency without regard to the Policy;
(vii) other obligations or securities that are acceptable to each
Rating Agency and the Credit Enhancer as an Eligible Investment hereunder
and will not result in a reduction in the then current rating of the Notes
without regard to the Policy, as evidenced by a letter to such effect from
such Rating Agency and the Credit Enhancer and with respect to which the
Servicer has received confirmation that, for tax purposes, the investment
complies with the last clause of this definition;
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provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to its stated maturity; and provided, further, that all
instruments described hereunder must mature at least 1 Business Day prior to
each Distribution Date .
Eligible Substitute HELOC: A HELOC substituted by the Sponsor for a
Defective HELOC which must, on the date of such substitution, (i) have an
outstanding Asset Balance (or in the case of a substitution of more than one
HELOC for a Defective HELOC, an aggregate Asset Balance) not greater than 115%
of the Transfer Deficiency, if any, relating to such Defective HELOC; (ii)
except for Teaser HELOCs during the Teaser Period, have a Loan Rate not less
than the Loan Rate of the Defective HELOC and not more than 4.00% in excess of
the Loan Rate of such Defective HELOC; (iii) with respect to each HELOC, have a
Loan Rate based on the same Index with adjustments to such Loan Rate made on the
same Interest Rate Adjustment Date as that of the Defective HELOC; (iv) except
for Teaser HELOCs during the Teaser Period, with respect to each HELOC, have a
Gross Margin that is not less than the Gross Margin of the Defective HELOC and
not more than 100 basis points higher than the Gross Margin for the Defective
HELOC; (v) have a Mortgage of the same or higher level of priority as the
Mortgage relating to the Defective HELOC at the time such Mortgage was
transferred to the Trust; (vi) have a remaining term to maturity not more than
120 days earlier and not more than 180 days later than the remaining term to
maturity of the Defective HELOC; (vii) comply with each representation and
warranty set forth in Section 2.05 (deemed to be made as of the date of
substitution); and (viii) have an original Combined Loan-to-Value Ratio not
greater than that of the Defective HELOC. More than one Eligible Substitute
HELOC may be substituted for a Defective HELOC if such Eligible Substitute
HELOCs meet the foregoing attributes in the aggregate and such substitution is
approved in writing in advance by the Credit Enhancer.
Event of Servicing Termination: As defined in Section 6.01.
Final Scheduled Distribution Date: With respect to the Class A Notes and
the Class S Notes, the Distribution Date is August, 2024.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fixed Allocation Percentage: 98%.
Floating Allocation Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the Invested
Amount at the close of business on the preceding Distribution Date (or at the
Closing Date in the case of the first Distribution Date) and the denominator of
which is the sum as of the beginning of the related Collection Period of (a) the
Pool Balance and (b) the amount of Principal Collections on deposit in the
Funding Account.
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Foreclosure Profit: With respect to a Liquidated HELOC, the amount, if
any, by which (i) the aggregate of its Net Liquidation Proceeds exceeds (ii) the
related Asset Balance (plus accrued and unpaid interest thereon at the
applicable Loan Rate from the date interest was last paid through the last day
in the related Collection Period) of such Liquidated HELOC immediately prior to
the final recovery of its Liquidation Proceeds.
Funding Account: The custodial account or accounts established and
maintained with the Indenture Trustee for the benefit of the Noteholders
pursuant to Section 8.7 of the Indenture. The Funding Account shall be an
Eligible Account.
Funding Period: The period commencing on the Closing Date and ending on
the earlier of (i) the close of business on the twelfth Distribution Date, and
(ii) the commencement of the Rapid Amortization Period.
Gross Margin: As to any HELOC, the percentage set forth as the "Gross
Margin" for such HELOC on Exhibit A hereto.
Guaranteed Distribution: With respect to any Distribution Date, the sum of
the (i) the Guaranteed Principal Distribution Amount and (ii) the amount to be
distributed to Class A and Class S Noteholders pursuant to Sections 8.3(a)(i)
and 8.3(a)(ii) of the Indenture for such Distribution Date.
Guaranteed Principal Distribution Amount: With respect to (i) any
Distribution Date on or after which the Certificateholders' Subordinated Amount
has been reduced to zero, the amount, if any, required to reduce the Class A
Note Principal Balance (after giving effect to the distributions of Interest
Collections and Principal Collections that are allocable to principal on the
Class A Notes on such Distribution Date) to the Invested Amount for such
Distribution Date (after giving effect to distributions of principal, if any,
and allocation of Loss Amounts on such Distribution Date) and (ii) the
Distribution Date in August, 2024, the amount by which the outstanding Class A
Note Principal Balance (after giving effect to all other amounts allocable to
and distributable as principal on the Class A Notes on such Distribution Date)
exceeds the sum of the amounts on deposit in the Collection Account available to
be distributed to the Class A Noteholders pursuant to Section 8.3(b) of the
Indenture.
HELOCs: The mortgage loans originated pursuant to a Credit Line Agreement
and, including any Additional Balances with respect thereto, that are
transferred and assigned to the Indenture Trustee pursuant to Section 2.01 and
Section 2.10, together with the Related Documents, exclusive of mortgage loans
that are retransferred to the Sponsor or the Servicer from time to time pursuant
to Section 2.03, 2.05, 2.07 or 3.06 as from time to time are held as a part of
the Trust. The mortgage loans originally so held are identified in the HELOC
Schedule delivered on the Closing Date. The HELOCs shall also include any
Eligible Substitute HELOCs substituted by the Sponsor for a Defective HELOC
pursuant to Sections 2.03 and 2.05.
HELOC Schedule: With respect to any date, the schedule of HELOCs included
in the Trust on such date. The schedule of Initial HELOCs as of the Initial
Cut-Off Date is the schedule set forth herein as Exhibit A, which schedule sets
forth as to each such HELOC, to the extent applicable, (i) the Cut-Off Date
Asset Balance, (ii) the Credit Limit, (iii) the Gross
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Margin, (iv) the Lifetime Rate Cap, (v) the account number, (vi) the current
Loan Rate, (vii) the Combined Loan-to-Value Ratio, (viii) a code specifying the
property type, (ix) a code specifying documentation type and (x) a code
specifying lien position. The HELOC Schedule will be deemed to be amended from
time to time to reflect Additional Balances, Eligible Substitute HELOCs and
Subsequent HELOCs.
Indemnification Agreement: The Indemnification Agreement dated as of
August 18, 1997 among the Company, the Sponsor, the Credit Enhancer and
Greenwich Capital Markets, Inc.
Indenture: The Indenture dated as of August 1, 1997, between the Issuer
and The First National Bank of Chicago, as Indenture Trustee, as the same may be
amended and supplemented from time to time.
Indenture Trustee: The First National Bank of Chicago under the Indenture,
its successors in interest and any successor trustee under the Indenture.
Index: With respect to each Interest Rate Adjustment Date for a HELOC, the
highest "prime rate" as published in the "Money Rates" table of The Wall Street
Journal as of the last business day of the previous Billing Cycle.
Initial Cut-Off Date: July 31, 1997.
Initial Cut-Off Date Pool Balance: $192,924,110.37.
Initial HELOC: Each HELOC transferred and assigned to the Indenture
Trustee on the Closing Date.
Insurance Agreement: The insurance and reimbursement agreement dated as of
August 1, 1997 among the Sponsor, the Servicer, the Indenture Trustee and the
Credit Enhancer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the Credit
Enhancer) pursuant to any insurance policy covering a HELOC, or amounts required
to be paid by the Servicer pursuant to the last sentence of Section 3.04, net of
any component thereof (i) covering any expenses incurred by or on behalf of the
Servicer in connection with obtaining such proceeds, (ii) that is applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
Mortgagor in accordance with the Servicer's normal servicing procedures or (iv)
required to be paid to any holder of a mortgage senior to such HELOC.
Interest Collections: As to any Distribution Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
interest (including, without limitation, such portion of Insurance Proceeds and
Net Liquidation Proceeds as is allocable to interest on the applicable HELOC)
collected by the Servicer under the HELOCs (excluding any fees (including annual
fees) or late charges or similar administrative fees paid by Mortgagors) during
the related Collection Period and any deposits made to the Collection Account
during such Collection Period pursuant to Section 8.7(c)(i) of the Indenture
minus the Servicing Fee payable
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to the Servicer with respect to the related Collection Period. The terms of the
related Loan Agreement shall determine the portion of each payment in respect of
such HELOC that constitutes principal or interest.
Interest Period: With respect to any Distribution Date other than the
first Distribution Date, the period beginning on the preceding Distribution Date
and ending on the day preceding such Distribution Date, and in the case of the
first Distribution Date, the period beginning on the Closing Date and ending on
the day preceding the first Distribution Date.
Interest Rate Adjustment Date: With respect to each HELOC, any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
Invested Amount: With respect to any Distribution Date, an amount equal
to the Original Invested Amount minus (i) the amount of Principal Collections
previously distributed to Class A Noteholders (including amounts previously
distributed to Class A Noteholders from Principal Collections on deposit in the
Funding Account), amounts allocable to the Certificates and Noteholders'
Interest Collections that are used to reimburse Loss Amounts and amounts
distributed as Guaranteed Principal Distribution Amounts funded by withdrawals
from the Spread Account or draws under the Policy and minus (ii) an amount equal
to the Loss Amounts not previously absorbed by the Overcollateralization Amount,
funded by collections allocable to the Certificateholders' Interest or
reallocated to the Certificateholders' Interest (up to the Certificateholders'
Subordinated Amount) or funded by withdrawals from the Spread Account or draws
on the Policy.
LIBOR: As to any date, the rate for United States dollar deposits for one
month which appear on the Telerate Screen LIBOR Page 3750 as of 11:00 A.M.,
London time. If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Sponsor after consultation with the Indenture Trustee), the rate
will be the Reference Bank Rate. If no such quotations can be obtained and no
Reference Bank Rate is available, LIBOR will be LIBOR applicable to the
preceding Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the State of New York or in the city of
London, England are required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section 5.02 hereof shall not be deemed
to constitute a Lien.
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Lifetime Rate Cap: With respect to each HELOC with respect to which the
related Mortgage Note provides for a lifetime rate cap, the maximum Loan Rate
permitted over the life of such HELOC under the terms of the related Credit Line
Agreement previously delivered to the Indenture Trustee.
Liquidated HELOC: As to any Distribution Date, any HELOC in respect of
which the Servicer has determined, in accordance with the servicing procedures
specified herein, as of the end of the related Collection Period, that all
Liquidation Proceeds which it expects to recover with respect to the disposition
of such HELOC or the related REO have been recovered.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
which are incurred by the Servicer in connection with the liquidation of any
HELOC and not recovered under any insurance policy, including, without
limitation, legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including, without limitation, amounts advanced to correct
defaults on any mortgage loan which is senior to such HELOC and amounts advanced
to keep current or pay off a mortgage loan that is senior to such HELOC)
respecting the related HELOC and any related and unreimbursed expenditures with
respect to real estate property taxes, water or sewer taxes, condominium
association dues, property restoration or preservation or insurance against
casualty, loss or damage.
Liquidation Loss Amount: With respect to any Distribution Date and any
HELOC that becomes a Liquidated HELOC during the related Collection Period, the
unrecovered Asset Balance thereof at the end of such Collection Period, after
giving effect to the Net Liquidation Proceeds applied in reduction of such Asset
Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in
connection with the liquidation of any HELOC or related REO, whether through
trustee's sale, foreclosure sale or otherwise.
Loan Agreement: With respect to any HELOC, the related Credit Line
Agreement.
Loan Purchase Price: With respect to any HELOC purchased from the Trust
on a Determination Date pursuant to Section 3.06 hereof, an amount equal to the
Asset Balance of such HELOC as of the date of purchase, plus one month's
interest on the outstanding Asset Balance thereof as of the beginning of the
preceding Collection Period computed at the Loan Rate, if any, together with,
without duplication, the aggregate amount of (i) all delinquent interest and
(ii) any Credit Enhancement Draw Amounts not previously repaid to the Credit
Enhancer relating to such HELOC.
Loan Rate: With respect to any HELOC and as of any day, the per annum rate
of interest applicable under the related Credit Line Agreement to the
calculation of interest for such day on the Asset Balance of such HELOC.
Loan Rate Cap: With respect to each HELOC, the lesser of (i) the Lifetime
Rate Cap, if any, or (ii) the applicable state usury ceiling, if any.
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Loss Amount: With respect to any Distribution Date, the amount equal to
the product of (i) the Floating Allocation Percentage for such Distribution Date
and (ii) the aggregate of the Liquidation Loss Amounts for such Distribution
Date.
Loss Reduction Amount: With respect to any Distribution Date, the portion,
if any, of the Loss Amount for such Distribution Date and all prior Distribution
Dates that has not been (a) distributed to Class A Noteholders on such
Distribution Date pursuant to Section 8.3(a)(iii) or 8.3(a)(iv) of the Indenture
or by way of the Credit Enhancement Draw Amount or (b) reallocated to the
Certificate Principal Balance pursuant to Section 8.3(c) of the Indenture.
Managed Amortization Period: The period from the termination of the
Funding Period to the Rapid Amortization Commencement Date.
Maximum Principal Payment: With respect to any Distribution Date, the
Fixed Allocation Percentage of the Principal Collections for such Distribution
Date.
Maximum Rate: As to any Interest Period, the Weighted Average Net Loan
Rate for the Collection Period during which such Interest Period begins
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Collection Period commencing in the
month in which such Interest Period commences and a year assumed to consist of
360 days).
Minimum Certificateholders' Interest: With respect to any date, an amount
equal to the lesser of (a) 4% of the Pool Balance on such date and (b) the
Certificate Principal Balance as of the Closing Date.
Minimum Monthly Payment: With respect to any HELOC and any month, the
minimum amount required to be paid by the related Mortgagor in that month.
Moody's: Moody's Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a first
or second lien on an estate in fee simple interest in real property securing a
HELOC.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular HELOC and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.
Mortgage Note: With respect to a HELOC, the Credit Line Agreement pursuant
to which the related Mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including any real property
and improvements thereon, securing a HELOC.
Mortgagor: The obligor or obligors under a Loan Agreement.
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Net Liquidation Proceeds: With respect to any Liquidated HELOC,
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: With respect to any HELOC and as to any day, the Loan Rate
less the Servicing Fee Rate, the Class S Note Rate, the Premium Fee Rate, the
Trustee Fee Rate and the Owner Trustee Fee Rate.
Note Owner: The Person who is the beneficial owner of a Book-Entry Note or
following the issuance of Definitive Notes, the registered owner of the Notes.
Note Policy Claim Amount: As defined in Section 4.02 herein.
Noteholders: The holders of the Notes.
Noteholders' Collections: As to any period, the sum of Noteholders'
Interest Collections and Noteholders' Principal Collections.
Noteholders' Interest Collections: As to any Distribution Date, the
product of (i) the Interest Collections during the related Collection Period and
(ii) the Floating Allocation Percentage for such Distribution Date.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a Vice President, an Assistant Vice
President, the Treasurer, Assistant Treasurer, Controller or Assistant
Controller of the Sponsor or the Servicer, as the case may be, and delivered to
the Indenture Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the
Indenture Trustee, who may be in-house counsel for the Sponsor or the Servicer
(except that any opinion pursuant to Section 2.09 or relating to taxation must
be an opinion of independent outside counsel) and who, in the case of opinions
delivered to the Credit Enhancer and any Rating Agency, is reasonably acceptable
to it.
Original Class A Note Principal Balance: $189,065,000.
Original Invested Amount: $189,065,000.
Overcollateralization Amount: At the time of reference thereto, the
amount, if any, by which the Invested Amount exceeds the Class A Note Principal
Balance.
Owner Trustee: Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement, its successors in
interest or any successor Owner Trustee under the Trust Agreement.
Owner Trustee Fee: A fee which is separately agreed to between the
Servicer and the Owner Trustee.
Owner Trustee Fee Rate: The per annum rate at which the Owner Trustee Fee
is calculated.
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Percentage Interest: As to any Note, the percentage obtained by dividing
the principal denomination (or notional amount) of such Note by the aggregate of
the principal denominations (or notional amounts) of all Notes of the same
class.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy: The financial guaranty insurance policy number SB12015, dated as
of the Closing Date, issued by the Credit Enhancer to the Indenture Trustee for
the benefit of the Noteholders.
Pool Balance: With respect to any date, the aggregate of the Asset
Balances of all HELOCs as of such date.
Pool Factor: With respect to any Distribution Date, the percentage,
carried to seven places, obtained by dividing the Class A Note Principal Balance
for such Distribution Date by the Original Class A Note Principal Balance.
Preference Claim: As defined in Section 4.02.
Premium Fee Rate: As described in the Insurance Agreement.
Principal Collections: As to any Distribution Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
principal (including, but not limited to, any portion of Insurance Proceeds or
Net Liquidation Proceeds allocable to principal in respect of the applicable
HELOC, and Transfer Deposit Amounts, but excluding Foreclosure Profits)
collected by the Servicer under the HELOCs during the related Collection
Period. The terms of the related Loan Agreement shall determine the portion of
each payment in respect of a HELOC that constitutes principal or interest.
Purchase Agreement: The HELOC Purchase Agreement, dated as of August 1,
1997, between the Company and the Sponsor, with respect to the HELOCs.
Rapid Amortization Commencement Date: The earlier of (i) the Distribution
Date in September, 2003 and (ii) the Distribution Date next succeeding the
Collection Period in which a Rapid Amortization Event is deemed to occur
pursuant to Section 12.01 of the Indenture.
Rapid Amortization Event: As defined in Section 12.01 of the Indenture.
Rapid Amortization Period: The period commencing on the Rapid Amortization
Commencement Date and continuing until the termination of the Trust pursuant to
Section 7.01.
Rating Agency: Moody's and Standard & Poor's. If such agency or a
successor is no longer in existence, "Rating Agency" shall be such statistical
credit rating agency, or other comparable Person, designated by the Sponsor and
the Credit Enhancer, notice of which designation shall be given to the Indenture
Trustee. References herein to the highest short term unsecured rating category
of a Rating Agency shall mean A-1+ or better in the case of Standard
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& Poor's and P-1 or better in the case of Moody's and in the case of any other
Rating Agency shall mean the ratings such other Rating Agency deems equivalent
to the foregoing ratings. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of Standard & Poor's
and "Aaa" in the case of Moody's and in the case of any other Rating Agency, the
rating such other Rating Agency deems equivalent to the foregoing ratings.
Record Date: The last day preceding the related Distribution Date;
provided, however, that following the date on which Definitive Notes are
available the Record Date shall be the last day of the calendar month preceding
the month in which the related Distribution Date occurs.
Reference Bank Rate: As to any Interest Period as follows: the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of
a percent) of the offered rates for United States dollar deposits for one month
which are offered by the Reference Banks as of 11:00 A.M., London time, on the
second LIBOR Business Day prior to the first day of such Interest Period to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Class A Note Principal Balance; provided
that at least two such Reference Banks provide such rate. If fewer than two
offered rates appear, the Reference Bank Rate will be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected by the
Sponsor after consultation with the Indenture Trustee, as of 11:00 A.M., New
York City time, on such date for loans in U.S. Dollars to leading European banks
for a period of one month in amounts approximately equal to the outstanding
Class A Note Principal Balance. If no such quotations can be obtained, the
Reference Bank Rate shall be LIBOR applicable to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Sponsor after consultation with the Indenture
Trustee.
Reimbursement Amount: As defined in Section 2.07 herein.
Related Documents: As defined in Section 2.01.
REO: A Mortgaged Property that is acquired by the Trust in foreclosure or
by deed in lieu of foreclosure.
Required Overcollateralization Amount: As of any Distribution Date, an
amount equal to the excess of (a) the "Spread Account Maximum" (as defined in
the Insurance Agreement) as of such Distribution Date over (b) the sum of (i)
the Certificateholders' Subordinated Amount as of such Distribution Date and
(ii) the amount of funds on deposit in the Spread Account as of such
Distribution Date.
Responsible Officer: When used with respect to the Indenture Trustee, any
officer of the Indenture Trustee with direct responsibility for the
administration of this Agreement and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
Retransfer Date: As defined in Section 2.07.
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Retransfer Notice Date: As defined in Section 2.07.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Scheduled Principal Collections Distribution Amount: With respect to any
Distribution Date during the Funding Period or the Managed Amortization Period
and the Class A Notes, an amount equal to the lesser of (i) the Maximum
Principal Payment and (ii) the Alternative Principal Payment. With respect to
any Distribution Date in respect of the Rapid Amortization Period, the Maximum
Principal Payment.
Securityholders: The Noteholders and the Certificateholders.
Servicer: Headlands Mortgage Company, a closely-held California
corporation, any successor thereto and, after its termination as Servicer, any
successor hereunder.
Servicing Certificate: A certificate completed and executed by a Servicing
Officer in accordance with Section 4.01.
Servicing Fee: With respect to any Distribution Date, the product of (i)
the Servicing Fee Rate divided by 12 and (ii) the aggregate Asset Balance of the
HELOCs on the first day of the Collection Period preceding such Distribution
Date (or at the Cut-Off Date with respect to the first Distribution Date).
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the HELOCs whose name and specimen
signature appear on a list of servicing officers furnished to the Indenture
Trustee (with a copy to the Credit Enhancer) by the Servicer on the Closing
Date, as such list may be amended from time to time.
Sponsor: Headlands Mortgage Securities Inc. or its successor in interest.
Spread Account: The account created pursuant to Section 4.03 and
maintained pursuant to the Insurance Agreement.
Spread Account Maximum: As defined in the Insurance Agreement.
Standard & Poor's: Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc., or its successor in interest.
Subsequent HELOC: Each HELOC acquired pursuant to Section 2.10 with funds
on deposit in the Funding Account during the Funding Period on the related
Subsequent Transfer Date.
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Subsequent Transfer Date: With respect to Subsequent HELOCs, any
Distribution Date during the Funding Period on which Subsequent HELOCs are
transferred to the Trust.
Teaser HELOCs: Those HELOCs with a Loan Rate that has not become fully
indexed.
Teaser Period: With respect to any HELOC, the payment period provided
under the related Credit Line Agreement during which time the interest rate on
the HELOC has not been fully indexed.
Teaser Rate: With respect to any HELOC, the Loan Rate applicable under the
related Credit Line Agreement during the Teaser Period of the HELOC.
Telerate Screen LIBOR Page 3750: The display designated as page 3750 on
the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London inter-bank offered rates of major
banks).
Transfer Date: With respect to each Subsequent HELOC, the Subsequent
Transfer Date, and with respect to each Eligible Substitute HELOC, the date on
which such Eligible Substitute HELOC shall have been transferred to the Trust.
Transfer Deficiency: As defined in Section 2.03.
Transfer Deposit Amount: As defined in Section 2.03.
Trust: The Issuer.
Trust Agreement: The Trust Agreement dated as of August 1, 1997, between
the Sponsor and the Owner Trustee, as the same may be amended and supplemented
from time to time.
Trust Collateral Value: As of any Distribution Date, the sum of (i) the
Pool Balance at the end of the prior calendar month, (ii) the aggregate Asset
Balances as of the related Cut-Off Dates of all Subsequent HELOCs previously
assigned to the Trust during the calendar month in which such Distribution Date
occurs and (iii) the amounts, if any, on deposit in the Funding Account at the
close of business on such Distribution Date.
Trust Property: The property and proceeds conveyed pursuant to Section
2.01, and certain other rights under this Agreement.
Trustee Fee: A fee which is separately agreed to between the Servicer and
the Indenture Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
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Unpaid Class A Note Interest Shortfall: With respect to any Distribution
Date, the aggregate amount, if any, of Class A Note Interest that was accrued in
respect of a prior Distribution Date and has not been distributed to Class A
Noteholders.
Unpaid Class S Note Interest Shortfall: With respect to any Distribution
Date, the aggregate amount, if any, of Class S Note Interest that was accrued in
respect of a prior Distribution Date and has not been distributed to Class S
Noteholders.
Voting Rights: The portion of the aggregate voting rights of all the Notes
evidenced by a Class of Notes. At all times during the term of this Agreement,
98% of all of the Voting Rights shall be allocated among Holders of the Class A
Notes and the Holders of the Class S Notes shall be entitled to 2% of all of the
Voting Rights. Voting Rights allocated to a Class of Notes shall be allocated
among the Notes of each such Class in accordance with their respective
Percentage Interests.
Weighted Average Net Loan Rate: As to any Collection Period, the average
of the daily Net Loan Rate for each HELOC for each day during the related
Billing Cycle, weighted on the basis of the daily average of the related Asset
Balances outstanding for each day in such Billing Cycle for each HELOC as
determined by the Servicer in accordance with the Servicer's normal servicing
procedures.
Section 1.02. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture, or, if not defined therein, in
the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Agreement or in any such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles as in effect on the date of this Agreement or any
such instrument, certificate or other document, as applicable. To the extent
that the definitions of accounting terms in this Agreement or in any such
instrument, certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such instrument, certificate or other
document shall control.
(d) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
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Section 1.03. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Asset Balance of a HELOC shall be made
on a daily basis using a 360-day year. All calculations of interest on the
Notes shall be made on the basis of the actual number of days in an Interest
Period and a year assumed to consist of 360 days. The calculation of the
Servicing Fee shall be made on the basis of the actual number of days elapsed in
a 360-day year. All dollar amounts calculated hereunder shall be rounded to the
nearest penny with one-half of one penny being rounded down.
ARTICLE II
Conveyance of HELOCs;
Original Issuance of Notes;
Tax Treatment
Section 2.01. Conveyance of HELOCs; Retention of Obligation to Fund
Advances Under Credit Line Agreements. In consideration of the Issuer's delivery
to or upon the order of the Sponsor on the Closing Date of the net proceeds from
the sale of the Notes and Certificates and the other amounts to be distributed
from time to time to the Sponsor in accordance with the terms of this Agreement,
the Sponsor, concurrently with the execution and delivery of this Agreement,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Issuer,
without recourse (subject to Sections 2.03 and 2.05), all of its right, title
and interest in and to (i) each Initial HELOC, including its Asset Balance and
all collections in respect thereof received on or after the Initial Cut-Off Date
(except with respect to interest payments on the Initial HELOCs, an amount equal
to 25 days' interest on the Original Pool Balance calculated at the weighted
average loan rate); (ii) property that secured an Initial HELOC that is acquired
by foreclosure or deed in lieu of foreclosure; (iii) all of the Sponsor's rights
under the Purchase Agreement (including all representations and warranties of
the Company contained therein); (iv) the Sponsor's rights under the hazard
insurance policies; (v) the Spread Account; (vi) the Policy; (vii) the Funding
Account; (viii) the rights to certain funds in the Deferred Interest Account and
(ix) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of Securityholders; provided, however,
neither the Indenture Trustee nor the Trust assumes the obligation under any
Credit Line Agreement that provides for the funding of future advances to the
Mortgagor thereunder, and neither the Trust nor the Indenture Trustee shall be
obligated or permitted to fund any such future advances. With respect to the
HELOCs, Additional Balances shall be part of the related Asset Balance and are
hereby transferred to the Trust on the Closing Date pursuant to this Section
2.01, and therefore part of the Trust Property. On or prior to the Closing Date,
the Sponsor shall cause the Credit Enhancer to deliver the Policy to the
Indenture Trustee for the benefit of the Noteholders. It is the intention of the
Sponsor that the transfer and assignment contemplated by this Agreement shall
constitute a sale of the HELOCs and other Trust Property from the Sponsor to the
Issuer and the beneficial interest in and title to the HELOCs and the other
Trust Property shall not be part of the Sponsor's estate in the event of the
filing of a bankruptcy petition by or against the Sponsor under any bankruptcy
law. In the event that, notwithstanding the intent of the Sponsor, the transfer
and assignment contemplated hereby is held not to be a sale, this Agreement
shall constitute a grant of a security interest in the property referred to in
this Section 2.01 for the benefit of the Securityholders and the Credit
Enhancer.
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Each of the Company and the Sponsor agrees to take or cause to be taken
such actions and execute such documents (including, without limitation, the
filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of California and Delaware, respectively, (which
shall have been filed on or as of the Closing Date) describing the Cut-Off Date
Asset Balances and Additional Balances and naming (i) the Company as debtor and
the Sponsor as secured party, and (ii) the Sponsor as debtor and the Issuer as
secured party and any amendments to UCC-1 financing statements required to
reflect a change in the name or corporate structure of the Company or the
Sponsor or the filing of any additional UCC-1 financing statements due to the
change in the principal office of the Company or the Sponsor (within 10 days of
any event necessitating such filing) as are necessary to perfect and protect the
Noteholders' and Credit Enhancer's interests in each Cut-Off Date Asset Balance
and Additional Balance and the proceeds thereof (other than maintaining
possession by the Indenture Trustee of the HELOCs and the Mortgage Files).
In connection with such transfer and assignment, the Servicer shall deliver
to the Indenture Trustee the following documents or instruments (each a "Related
Document" and together for each HELOC, the "Mortgage File") with respect to each
Initial HELOC on the Closing Date and will deliver with respect to each
Subsequent HELOC on the related Subsequent Transfer Date:
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in recordable form;
(iii) the original recorded Mortgage or, if, in connection with
any HELOC, the original recorded Mortgage with evidence of recording
thereon cannot be delivered on or prior to the Closing Date because of a
delay caused by the public recording office where such original Mortgage
has been delivered for recordation or because such original Mortgage has
been lost, the Sponsor shall deliver or cause to be delivered to the
Indenture Trustee, a true and correct copy of such Mortgage, together with
(i) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Sponsor stating that such original Mortgage
has been dispatched to the appropriate public recording official or (ii) in
the case of an original Mortgage that has been lost, a certificate by the
appropriate county recording office where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the
Indenture Trustee or, if any such original Intervening Assignment has not
been returned from the applicable recording office or has been lost, a true
and correct copy thereof, together with (i) in the case of a delay caused
by the public recording office, an Officer's Certificate of the Sponsor
stating that such original Intervening Assignment has been dispatched to
the appropriate public recording official for recordation or (ii) in the
case of an original Intervening Assignment that has been lost, a
certificate by the appropriate county recording office where such Mortgage
is recorded;
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(v) either a title policy, a title search or guaranty title with
respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation or
substitution agreement, if any, relating to the HELOC; and
(viii) any security agreement, chattel mortgage or equivalent instrument
executed in connection with the Mortgage;
provided, however, that as to any HELOC, if (a) as evidenced by an Opinion of
Counsel delivered to and in form and substance satisfactory to the Indenture
Trustee and the Credit Enhancer, (x) an optical image or other representation of
the Related Documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such HELOC to transfer its interest in such HELOC,
and (b) the retention of such documents in such format will not result in a
reduction in the then current rating of the Notes, without regard to the Policy,
such optical image or other representation may be delivered by the Servicer, to
the Indenture Trustee in lieu of the physical documents specified above.
The Sponsor hereby confirms to the Indenture Trustee that it has caused
the portions of the Electronic Ledgers relating to the Initial HELOCs as of the
Closing Date, and that it will cause such Electronic Ledgers with respect to
each Subsequent HELOC as of the related Subsequent Transfer Date, to be clearly
and unambiguously marked, and has made, or will make, the appropriate entries in
its general accounting records to indicate that such HELOCs have been
transferred to the Trust. The Servicer hereby confirms to the Indenture Trustee
that it has clearly and unambiguously made appropriate entries in its general
accounting records indicating that such HELOCs constitute part of the Trust and
are serviced by it on behalf of the Trust in accordance with the terms hereof.
The Servicer hereby confirms to the Indenture Trustee that it will clearly and
unambiguously make appropriate entries in its general accounting records
indicating that each Subsequent HELOC constitutes part of the Trust and is
serviced by it on behalf of the Trust in accordance with the terms hereof as of
the related Subsequent Transfer Date.
Notwithstanding the characterization of the Class A Notes and the Class S
Notes as debt for Federal, state and local income and franchise tax purposes,
the parties hereto intend to treat the transfer of the HELOCs to the Trust as
provided herein as a sale, for certain non-tax purposes, of all the Sponsor's
right, title and interest in and to the HELOCs, whether now existing or
hereafter created, and the other property described above and all proceeds
thereof. In the event such transfer is deemed not to be a sale for such
purposes, the Sponsor grants to the Trust, a security interest in all of such
party's right, title and interest in, to and under the HELOCs, whether now
existing or hereafter created, and the other property described above and all
proceeds thereof; and this Agreement shall constitute a security agreement under
applicable law.
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Within 90 days following delivery of the Mortgage Files to the Indenture
Trustee pursuant to this Section, the Indenture Trustee shall review each such
Mortgage File to ascertain that all required documents set forth in this Section
2.01 have been executed and received, and that such documents relate to the
HELOCs identified on the HELOC Schedule and in so doing the Indenture Trustee
may rely on the purported due execution and genuineness of any signature
thereon. If within such 90-day period the Indenture Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the HELOCs identified in said HELOC Schedule or, if in the
course of its review, the Indenture Trustee determines that such Mortgage File
is otherwise defective in any material respect, the Indenture Trustee shall
promptly upon the conclusion of its review notify the Sponsor and the Credit
Enhancer, and the Sponsor shall have a period of 90 days after such notice
within which to correct or cure any such defect.
The Indenture Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in this Section 2.01. In reviewing
any Mortgage File pursuant to this Section, the Indenture Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except, if applicable, to determine if the Indenture Trustee is the
assignee or endorsee), 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, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded.
The Sponsor shall take all necessary steps to prepare and submit for
recordation an Assignment or Mortgage in the name of the Indenture Trustee for
each Initial HELOC within 30 days after the Closing Date and for each Subsequent
HELOC, within 30 days after the Subsequent Transfer Date.
Section 2.02. Further Encumbrance of Trust Property (a) Immediately
upon the conveyance to the Trust by the Sponsor of any item of the Trust
Property pursuant to Section 2.01, all right, title and interest of the Sponsor
in and to such item of Trust Property shall terminate, and all such right, title
and interest shall vest in the Trust, in accordance with the Trust Agreement and
Sections 3802 and 3805 of the Delaware Business Trust Act (12 Del. Code, Section
3801 et seq.).
(b) Immediately upon the vesting of the Trust Property in the Trust, the
Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture and contemporaneously with such property
vesting in the Trust pursuant to (a) above, the Trust shall grant a security
interest in the Trust Property to secure the repayment of the Notes. The
Certificates shall represent the beneficial ownership interest in the Trust
Property, and the Certificateholders shall be entitled to receive distributions
with respect thereto as set forth herein.
(c) Prior to the payment in full on the Notes, the payment of all amounts
due to the Credit Enhancer under the Insurance Agreement, the termination of the
Policy (as defined
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therein) and the surrender of the Policy by the Indenture Trustee to the Credit
Enhancer, the Indenture Trustee shall hold the Trust Property on behalf of the
Noteholders and the Credit Enhancer. Following the payment in full of the Notes
and the release and discharge of the Indenture, all covenants of the Issuer
under Article III of the Indenture shall, until payment in full of the
Certificates, remain as covenants of the Issuer for the benefit of the
Certificateholders, enforceable by the Certificateholders to the same extent as
such covenants were enforceable by the Noteholders prior to the discharge of the
Indenture. Any rights of the Indenture Trustee under Article III of the
Indenture, following the discharge of the Indenture, shall vest in the
Certificateholders.
(d) The Indenture Trustee shall, at such time as there are no Securities
outstanding and all sums due to (i) the Indenture Trustee or any agent or
counsel thereof pursuant to the Indenture, (ii) the Indenture Trustee pursuant
to this Agreement and (iii) the Credit Enhancer pursuant to the Insurance
Agreement, have been paid, release any remaining portion of the Trust Property
to the Sponsor; provided, that the release of the Spread Account is subject to
Section 2.05 of the Insurance Agreement.
Section 2.03. Acceptance by Indenture Trustee; Retransfer of HELOCs. (a)
The Trust hereby acknowledges its receipt of the Policy and the HELOCs, and
declares that the Indenture Trustee holds and will hold such instrument, and to
the extent that any documents are delivered to it pursuant to Section 2.01, will
hold such documents, and all amounts received by it thereunder and hereunder, in
trust, upon the terms herein set forth, for the use and benefit of all present
and future Securityholders and the Credit Enhancer. If the time to cure any
defect in respect of any HELOC of which the Indenture Trustee has notified the
Sponsor following the review pursuant to Section 2.01 has expired or if at any
time any loss is suffered by the Indenture Trustee on behalf of the Noteholders
or the Credit Enhancer, in respect of any HELOC as a result of (i) a defect in
any document constituting a part of its Mortgage File or (ii) an Assignment of
Mortgage to the Indenture Trustee not having been recorded as required by
Section 2.01, then on the next succeeding Business Day upon the deposit to the
Collection Account of the Transfer Deposit Amount (as defined below) or
substitution of an Eligible Substitute HELOC, if any, and upon satisfaction of
the applicable conditions described herein, all right, title and interest of the
Trust in and to such HELOC shall be deemed to be retransferred, reassigned and
otherwise reconveyed, without recourse, representation or warranty, to the
Sponsor on such Business Day and the Asset Balance of such HELOC shall be
deducted from the Pool Balance; provided, however, that interest accrued on the
Asset Balance of such HELOC to the end of the related Collection Period shall be
the property of the Trust. The Indenture Trustee shall determine if the
reduction of such Asset Balance from the Pool Balance in accordance with the
preceding sentence would cause the Certificate Principal Balance to be less than
the Minimum Certificateholders' Interest (a "Transfer Deficiency"), in which
event the Indenture Trustee shall deliver written notice of such deficiency to
the Sponsor, and within five Business Days after the Business Day of such
retransfer the Sponsor shall either (i) substitute an Eligible Substitute HELOC
or (ii) deposit into the Collection Account an amount (the "Transfer Deposit
Amount") in immediately available funds equal to the Transfer Deficiency
including all unpaid and accrued interest in the amount by which the Principal
Balance of the Defective HELOC exceeds the Principal Balance of the Eligible
Substitute HELOC or a combination of both (i) and (ii) above. Such reduction or
substitution and the actual payment of any Transfer Deposit Amount, if any,
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shall be deemed to be payment in full for such HELOC. Upon receipt of any
Eligible Substitute HELOC or of written notification signed by a Servicing
Officer to the effect that the Transfer Deposit Amount in respect of a Defective
HELOC has been deposited into the Collection Account or, if the Certificate
Principal Balance is not reduced below the Minimum Certificateholders' Interest
as a result of the deemed retransfer of a Defective HELOC, then as promptly as
practicable following such deemed transfer, the Indenture Trustee shall execute
such documents and instruments of transfer presented by the Sponsor, in each
case without recourse, representation or warranty, and take such other actions
as shall reasonably be requested by the Sponsor to effect such transfer by the
Trust of such Defective HELOC pursuant to this Section. It is understood and
agreed that the obligation of the Sponsor to accept a transfer of a Defective
HELOC and to either convey an Eligible Substitute HELOC or to make a deposit of
any related Transfer Deposit Amount into the Collection Account shall constitute
the sole remedy respecting such defect available to Securityholders, the
Indenture Trustee and the Credit Enhancer against the Sponsor.
The Servicer, promptly following the transfer of a Defective HELOC from or
to the Trust pursuant to this Section, shall amend the HELOC Schedule and make
appropriate entries in its general account records to reflect such transfer.
The Servicer shall, following such retransfer, appropriately mark its records to
indicate that it is no longer servicing such HELOC on behalf of the Trust. The
Sponsor, promptly following such transfer, shall appropriately mark its
Electronic Ledger and make appropriate entries in its general account records to
reflect such transfer.
Notwithstanding any other provision of this Section, a retransfer of a
Defective HELOC to the Sponsor pursuant to this Section that would cause the
Certificate Principal Balance to be less than the Minimum Certificateholders'
Interest shall not occur if either the Sponsor fails to convey an Eligible
Substitute HELOC or to deposit into the Collection Account any related Transfer
Deposit Amount required by this Section with respect to the transfer of such
Defective HELOC.
(b) As to any Eligible Substitute HELOC or HELOCs, the Sponsor shall
deliver to the Indenture Trustee with respect to such Eligible Substitute HELOC
or HELOCs such documents and agreements as are required to be held by the
Indenture Trustee in accordance with Section 2.01. For any Collection Period
during which the Sponsor substitutes one or more Eligible Substitute HELOCs, the
Servicer shall determine the Transfer Deposit Amount which amount shall be
notified to and deposited by the Sponsor in the Collection Account at the time
of substitution. All amounts received in respect of the Eligible Substitute
HELOC or HELOCs during the Collection Period in which the circumstances giving
rise to such substitution occur shall not be a part of the Trust and shall not
be deposited by the Servicer in the Collection Account. All amounts received by
the Servicer during the Collection Period in which the circumstances giving rise
to such substitution occur in respect of any Defective HELOC so removed by the
Trust shall be deposited by the Servicer in the Collection Account. Upon such
substitution, the Eligible Substitute HELOC or HELOCs shall be subject to the
terms of this Agreement in all respects, and the Sponsor shall be deemed to have
made with respect to such Eligible Substitute HELOC or HELOCs, as of the date of
substitution, the covenants, representations and warranties set forth in Section
2.05. The procedures applied by the Sponsor in selecting each Eligible
Substitute HELOC shall not be materially adverse to the interests of the
Indenture Trustee, the Noteholders and the Credit Enhancer.
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Section 2.04. Representations and Warranties Regarding the Servicer and the
Sponsor. The Servicer represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date and as of each Subsequent Transfer
Date:
(i) The Servicer is a closely-held California corporation, validly
existing and in good standing under the laws of the State of California,
and has the corporate power to own its assets and to transact the business
in which it is currently engaged. The Servicer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or any
properties owned or leased by it requires such qualification and in which
the failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Servicer;
(ii) The Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) The Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consent, license,
approval or authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
the Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Servicer
or any provision of the Certificate of Incorporation or Bylaws of the
Servicer, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Servicer is a party or by which
the Servicer may be bound; and
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement or the Notes.
The representations and warranties set forth in this Section 2.04(a) shall
survive the sale and assignment of the HELOCs to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Noteholders or the Credit Enhancer, the person
discovering such breach shall give prompt written notice to the other parties
and to the Credit Enhancer. Within 90 days of its discovery or its receipt of
notice of breach, or, with the prior written consent of a Responsible Officer of
the Indenture Trustee and
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the Credit Enhancer such longer period specified in such consent, the Servicer
shall cure such breach in all material respects.
(b) The Sponsor represents and warrants to the Indenture Trustee and the
Credit Enhancer that as of the Closing Date and as of each Subsequent Transfer
Date:
(i) The Sponsor is a Delaware corporation, validly existing and in
good standing under the laws of the State of Delaware, and has the
statutory power to own its assets and to transact the business in which it
is currently engaged. The Sponsor is duly qualified to do business as a
foreign limited liability company and is in good standing in each
jurisdiction in which the character of the business transacted by it or any
properties owned or leased by it requires such qualification and in which
the failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Sponsor;
(ii) The Sponsor has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Sponsor enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) The Sponsor is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement;
(iv) The execution, delivery and performance of this Agreement by
the Sponsor will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Sponsor or
any provision of the Certificate of Incorporation or bylaws of the Sponsor,
or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Sponsor is a party or by which the Sponsor may
be bound; and
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Sponsor threatened, against the Sponsor or any of its
properties or with respect to this Agreement or the Notes.
The representations and warranties set forth in this Section 2.04(b) shall
survive the sale and assignment of the HELOCs to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Noteholders or the Credit Enhancer, the person
discovering such breach shall give prompt written notice to the other parties
and to the Credit Enhancer. Within 90 days of its discovery or its receipt of
notice of breach, or, with the prior written consent of a Responsible Officer of
the Indenture Trustee and
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the Credit Enhancer, such longer period specified in such consent, the Sponsor
shall cure such breach in all material respects.
Section 2.05. Representations and Warranties of the Sponsor Regarding the
HELOCs; Retransfer of Certain HELOCs. (a) The Sponsor hereby makes the
following representations and warranties as to the HELOCs on which the Issuer is
deemed to have relied in acquiring the HELOCs and upon which the Credit Enhancer
is deemed to rely in issuing the Policy. Such representations and warranties
speak as of the execution and delivery of this Agreement and as of the Closing
Date in the case of the Initial HELOCs and as of the related Transfer Date in
the case of the Subsequent HELOCs, but shall survive the sale, transfer, and
assignment of the HELOCs to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture,
(i) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC and as of the date any Additional Balance is
created, the information set forth in the HELOC Schedule for such HELOCs is
true and correct in all material respects;
(ii) The applicable Cut-Off Date Asset Balance has not been
assigned or pledged, and the Sponsor is the sole owner and holder of such
Cut-Off Date Asset Balance free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority, under
all governmental and regulatory bodies having jurisdiction over the
ownership of the applicable HELOC, to sell, assign or transfer the same
pursuant to this Agreement;
(iii) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, the related Mortgage Note and the Mortgage
with respect to each HELOC have not been assigned or pledged, and the
Sponsor is the sole owner and holder of the HELOC free and clear of any and
all liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature, and has full right
and authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable HELOCs, to sell and
assign the same pursuant to this Agreement;
(iv) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOCs and
any Eligible Substitute HELOC, the related Mortgage is a valid and
subsisting first or second lien, as set forth on the HELOC Schedule with
respect to each related Mortgaged Property, and as of the applicable
Cut-Off Date the related Mortgaged Property is free and clear of all
encumbrances and liens having priority over the first or second lien, as
applicable, of such Mortgage except for liens for (i) real estate taxes and
special assessments not yet delinquent; (ii) any first mortgage loan
secured by such Mortgaged Property and specified on the HELOC Schedule;
(iii) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording that are
acceptable to mortgage lending institutions generally; and (iv) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage;
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(v) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, there is no valid offset, defense or
counterclaim of any obligor under any Loan Agreement or Mortgage;
(vi) To the best knowledge of the Sponsor, as of the Closing
Date with respect to the Initial HELOCs and the applicable Transfer Date
with respect to any Subsequent HELOC and any Eligible Substitute HELOC,
there is no delinquent recording or other tax or fee or assessment lien
against any related Mortgaged Property;
(vii) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, there is no proceeding pending or, to the
best knowledge of the Sponsor, threatened for the total or partial
condemnation of the related Mortgaged Property, and such property is free
of material damage;
(viii) To the best knowledge of the Sponsor, as of the Closing
Date with respect to the Initial HELOCs and the applicable Transfer Date
with respect to any Subsequent HELOC and any Eligible Substitute HELOC,
there are no mechanics' or similar liens or claims which have been filed
for work, labor or material affecting the related Mortgaged Property which
are, or may be, liens prior or equal to the lien of the related Mortgage,
except liens which are fully insured against by the title insurance policy
referred to in clause (xiii);
(ix) No Minimum Monthly Payment is more than 60 days delinquent
(measured on a contractual basis); and with respect to the Initial HELOCs
none were delinquent;
(x) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, for each HELOC, the related Mortgage File
contains each of the documents and instruments specified to be included
therein;
(xi) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws, including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the HELOC;
(xii) On the Closing Date with respect to the Initial HELOCs
and, to the extent not already included in such filing, on the applicable
Transfer Date with respect to any Subsequent HELOC and any Eligible
Substitute HELOC, the Sponsor has filed UCC-1 financing statements with
respect to such HELOCs.
(xiii) Either a lender's title insurance policy or binder was
issued on the date of origination of the HELOC and each such policy is
valid and remains in full force and effect, or a title search or guaranty
of title customary in the relevant jurisdiction was obtained with respect
to a HELOC as to which no title insurance policy or binder was issued;
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(xiv) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, none of the Mortgaged Properties is a mobile
home or a manufactured housing unit;
(xv) As of the Cut-Off Date for the Initial HELOCs no more than
1.75% of such HELOCs (by Initial Cut-Off Date Pool Balance), are secured by
Mortgaged Properties located in one United States postal zip code;
(xvi) The Combined Loan-to-Value Ratio for each HELOC was not in
excess of 100%;
(xvii) No selection procedure reasonably believed by the Sponsor
to be adverse to the interests of the Securityholders or the Credit
Enhancer was utilized in selecting the HELOCs;
(xviii) The Sponsor has not transferred the HELOCs to the Trust
with any intent to hinder, delay or defraud any of its creditors;
(xix) The Minimum Monthly Payment with respect to any HELOC is
not less than the interest accrued at the applicable Loan Rate on the
average daily Asset Balance during the interest period relating to the date
on which such Minimum Monthly Payment is due;
(xx) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, each Loan Agreement and each HELOC is an
enforceable obligation of the related Mortgagor, except as the
enforceability thereof may be limited by the bankruptcy, insolvency or
similar laws affecting creditors' rights generally;
(xxi) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, the Sponsor has not received a notice of
default of any senior mortgage loan related to a Mortgaged Property that
has not been cured by a party other than the Servicer;
(xxii) The definition of "prime rate" in each Credit Line
Agreement relating to a HELOC does not differ materially from the
definition in the form of Credit Line Agreement in Exhibit D;
(xxiii) The weighted average remaining term to maturity of the
Initial HELOCs on a contractual basis as of the Cut-Off Date is
approximately 231.8 months. On each date that the Loan Rates relating to
HELOCs have been adjusted, interest rate adjustments on the HELOCs were
made in compliance with the related Mortgages and Credit Line Agreement and
applicable law. Over the term of each HELOC, the Loan Rate may not exceed
the related Loan Rate Cap, if any. With respect to the Initial HELOCs, the
Loan Rate Cap is 18.00%. With respect to the Initial HELOCs, the margins
range between 0%
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and 5.75% and the weighted average margin is approximately
3.08% as of the related Cut-Off Date. The Loan Rates on the Initial HELOCs
range between 5.875% and 14% and the weighted average Loan Rate is
approximately 7.30%;
(xxiv) As of the Closing Date with respect to the Initial HELOCs
and the applicable Transfer Date with respect to any Subsequent HELOC and
any Eligible Substitute HELOC, each Mortgaged Property consists of a single
parcel of real property with a one-to-four unit single family residence
erected thereon, or an individual condominium unit, planned unit
development unit or townhouse;
(xxv) No more than 19.39% (by Initial Cut-Off Date Pool Balance)
of the Initial HELOCs are secured by real property improved by individual
condominium units, planned development units, townhouses or two-to-four
family residences erected thereon, and approximately 80.61% (by Initial
Cut-Off Date Pool Balance) of the Initial HELOCs are secured by real
property with a detached one-family residence erected thereon;
(xxvi) The Credit Limits on the Initial HELOCs range between
$8,700 and $500,000 with an average of $50,014.75. As of the applicable
Cut-Off Date, no Initial HELOC had a principal balance in excess of
approximately $300,000 and the average principal balance of the Initial
HELOCs is equal to approximately $39,308.09 and the average Credit Limit
Utilization Rate (weighted by credit line) of the Initial HELOCs is 74.87%;
(xxvii) 100% of the Initial HELOCs are second liens;
(xxviii) Either (A) this Agreement constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the Sponsor in
and to the Cut-Off Date Asset Balances with respect to the applicable
HELOCs, all monies due or to become due with respect thereto (excluding
payments in respect of accrued interest due prior to the Cut-Off Date and
with respect to interest payments on the Initial HELOCs, an amount equal to
25 days' interest on the Original Pool Balance, calculated at the weighted
average Loan Rate), and all proceeds of such Cut-Off Date Asset Balances
with respect to the HELOCs and such funds as are from time to time
deposited in the Collection Account (excluding any investment earnings
thereon) and all other property specified in the definition of "Trust" as
being part of the corpus of the Trust conveyed to the Trust, and upon
payment for the Additional Balances, will constitute a valid transfer and
assignment to the Indenture Trustee of all right, title and interest of the
Sponsor in and to the Additional Balances, all monies due or to become due
with respect thereto, and all proceeds of such Additional Balances and all
other property specified in the definition of "Trust" relating to the
Additional Balances or (B) this Agreement constitutes a grant of a security
interest (as defined in the UCC as in effect in New York) in such property
to the Indenture Trustee on behalf of the Trust. If this Agreement
constitutes the grant of a security interest to the Trust in such property,
and if the Indenture Trustee obtains and maintains possession of the
Mortgage File for each HELOC, the Trust shall have a first priority
perfected security interest in such property, subject to the effect of
Section 9-306 of the UCC with respect to collections on the HELOCs that are
deposited in the Collection Account in accordance with the next to last
paragraph of Section 3.02(b); and
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(xxix) Each Mortgagor as of the Closing Date with respect to the Initial
HELOCs or the Transfer Date with respect to any Subsequent HELOC is not
insolvent or bankrupt.
With respect to the representations and warranties set forth in this Section
2.05 that are made to the best of the Sponsor's knowledge or as to which the
Sponsor has no knowledge, if it is discovered by the Sponsor, the Servicer, the
Credit Enhancer or a Responsible Officer of the Indenture Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related HELOC then,
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
(b) It is understood and agreed that the representations and warranties set
forth in this Section 2.05 shall survive delivery of the respective Mortgage
Files to the Indenture Trustee pursuant to Section 2.01 and the termination of
the rights and obligations of the Servicer pursuant to Section 5.04 or 6.02.
Upon discovery by the Sponsor, the Servicer, the Credit Enhancer or a
Responsible Officer of the Indenture Trustee of a breach of any of the foregoing
representations and warranties, without regard to any limitation set forth
therein concerning the knowledge of the Sponsor as to the facts stated therein,
which materially and adversely affects the interests of the Trust or the
Noteholders or the Credit Enhancer in the related HELOC, the party discovering
such breach shall give prompt written notice to the other parties and the Credit
Enhancer. Within 90 days of its discovery or its receipt of notice of such
breach, the Sponsor shall use all reasonable efforts to cure such breach in all
material respects or shall, not later than the Business Day next preceding the
Distribution Date in the month following the Collection Period in which any such
cure period expired (or such later date that is acceptable to the Indenture
Trustee and the Credit Enhancer as evidenced by their written consents), either
(a) accept a transfer of such HELOC from the Trust or (b) substitute an Eligible
Substitute HELOC, each in the same manner and subject to the same conditions as
set forth in Section 2.03; provided, however, that the cure for any breach of a
representation and warranty relating to the characteristics of the HELOCs in the
aggregate shall be a repurchase of or substitution for only the HELOCs necessary
to cause such characteristics to be in compliance with the related
representation and warranty. Upon accepting such transfer and making any
required deposit into the Collection Account or substitution of an Eligible
Substitute HELOC, as the case may be, the Sponsor shall be entitled to receive
an instrument of assignment or transfer from the Indenture Trustee to the same
extent as set forth in Section 2.03 with respect to the transfer of HELOCs under
that Section.
It is understood and agreed that the obligation of the Sponsor
to accept a retransfer of a HELOC as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute HELOC, as the case may be, shall constitute
the sole remedy against the Sponsor respecting such breach available to
Noteholders, the Indenture Trustee on behalf of Noteholders and the Credit
Enhancer; provided, however, that the Sponsor shall defend and indemnify the
Indenture Trustee, the Credit Enhancer and the Noteholders against all
reasonable costs and expenses, and all losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel and the amount of any
settlement entered into with the consent of the Sponsor (such consent not to be
unreasonably withheld), which may be asserted against or incurred by any of them
as a result of
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any third-party action arising out of any breach of any such representation
and warranty. Notwithstanding the foregoing, with regard to any breach of
the representation and warranty set forth in Section 2.05(a)(xxviii), the
sale and assignment of the affected HELOCs to the Trust shall be deemed void
and the Sponsor shall pay to the Trust the sum of (i) the amount of the related
Asset Balances, plus unpaid accrued interest on each such Asset Balance at the
applicable Loan Rate to the date of payment, (ii) the amount of any loss
suffered by the Noteholders or the Credit Enhancer with respect to the affected
HELOCs and (iii) all amounts owing to the Credit Enhancer pursuant to the
Insurance Agreement.
Section 2.06. Covenants of the Sponsor. The Sponsor hereby covenants that:
(a) Security Interests. Except for the transfer hereunder and the pledge of
the Certificate in connection with the Sponsor's Yield Maintenance Certificates,
Series 1997-1, the Sponsor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
HELOC, whether now existing or hereafter created, or any interest therein; the
Sponsor will notify the Indenture Trustee and the Credit Enhancer of the
existence of any Lien on any HELOC immediately upon discovery thereof; and the
Sponsor will defend the right, title and interest of the Trust in, to and under
the HELOCs, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Sponsor; provided, however, that
nothing in this Section 2.06(a) shall prevent or be deemed to prohibit the
Sponsor from suffering to exist upon any of the HELOCs any Liens for municipal
or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the Sponsor
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(b) UCC-1 Financing Statements. On the Closing Date with respect to the
Initial HELOCs and, to the extent not already included in such filing, on the
applicable Transfer Date with respect to any Subsequent HELOC and any Eligible
Substitute HELOC, the Sponsor will file UCC-1 financing statements with respect
to such HELOCs.
(c) Negative Pledge. The Sponsor hereby agrees not to transfer, assign,
exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Certificates except in accordance with Sections 5.05 and
6.02 hereof and in accordance with the Insurance Agreement and the Trust
Agreement and the pledge of the Certificate in connection with the Sponsor's
Yield Maintenance Certificates, Series 1997-1.
(d) Downgrading. The Sponsor will not engage in any activity which would
result in a downgrading or withdrawal of the ratings on the Notes.
(e) Amendment to Certificate of Incorporation. The Sponsor will not
amend its Certificate of Incorporation without prior written notice to the
Indenture Trustee and the Rating Agencies and the prior written consent of
the Credit Enhancer which consent shall not be unreasonably withheld.
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(f) Principal Place of Business. The Sponsor's principal place of
business is in California, and the Sponsor will not change its principal
place of business without prior written notice to the Indenture Trustee, the
Rating Agencies and to the Credit Enhancer.
Section 2.07. Retransfers of HELOCs at Election of Sponsor. Subject to
the conditions set forth below and Section 8.2 of the Indenture, the Sponsor
may, but shall not be obligated to, require the retransfer of HELOCs from the
Trust to the Sponsor as of the close of business on a Distribution Date (each,
a "Retransfer Date"). On the fifth Business Day (the "Retransfer Notice Date")
prior to the Retransfer Date designated in such notice, the Sponsor shall give
the Indenture Trustee, the Credit Enhancer and the Servicer a notice of the
proposed retransfer that contains a list of the HELOCs to be retransferred.
Such retransfers of HELOCs shall be permitted upon satisfaction of the
following conditions:
(i) The Rapid Amortization Period shall not have commenced;
(ii) On the Retransfer Date the Certificateholders' Interest
(after giving effect to the removal from the Trust of the HELOCs
proposed to be retransferred) is at least equal to the Minimum
Certificateholders' Interest;
(iii) The transfer of any HELOCs on any Retransfer Date during
the Managed Amortization Period shall not, in the reasonable belief
of the Sponsor, cause a Rapid Amortization Event to occur or an event
which with notice or lapse of time or both would constitute a Rapid
Amortization Event;
(iv) On or before the Retransfer Date, the Sponsor shall have
delivered to the Indenture Trustee a revised HELOC Schedule,
reflecting the proposed transfer and the Retransfer Date, and the
Servicer shall have marked the Electronic Ledger to show that the
HELOCs retransferred to the Sponsor are no longer owned by the Trust;
(v) The Sponsor shall represent and warrant that no selection
procedures reasonably believed by the Sponsor to be adverse to the
interests of the Noteholders or the Credit Enhancer were utilized in
selecting the HELOCs to be removed from the Trust;
(vi) In connection with each such retransfer of HELOCs pursuant
to this Section, each Rating Agency shall have received on or prior
to the related Retransfer Notice Date notice of such proposed
retransfer of HELOCs and, prior to the Retransfer Date, shall have
notified the Indenture Trustee and the Credit Enhancer in writing
that such retransfer of HELOCs would not result in a reduction or
withdrawal of its then current rating of the Notes without regard to
the Policy; and
(vii) The Sponsor shall have delivered to the Indenture Trustee
and the Credit Enhancer an Officer's Certificate certifying that the
items set forth in subparagraphs (i) through (vi), inclusive, have
been performed or are true and correct, as the case may be. The
Indenture Trustee may conclusively rely on such Officer's
Certificate, shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.
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In certain circumstances where the removal of such HELOCs results in
the Certificateholders' Interest being reduced below the Minimum
Certificateholders' Interest the Sponsor shall be permitted to remove such
HELOCs only if the Sponsor deposits an amount equal to the excess of the Minimum
Certificateholders' Interest over the Certificateholders' Interest (the
"Reimbursement Amount") in the Collection Account; provided, that, the Sponsor
shall not remove such HELOCs if the Reimbursement Amount would exceed $100,000.
Upon receiving the requisite information from the Sponsor, the Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Retransfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the Mortgage
File for each HELOC being so transferred, and the Indenture Trustee shall
execute and deliver to the Sponsor such other documents prepared by the Sponsor
as shall be reasonably necessary to transfer such HELOCs to the Sponsor. Any
such retransfer of the Trust's right, title and interest in and to HELOCs shall
be without recourse, representation or warranty by or of the Indenture Trustee
or the Trust to the Sponsor.
Section 2.08. Execution and Authentication of Notes. The Indenture
Trustee, on behalf of the Trust, has caused to be executed, authenticated and
delivered to or upon the order of the Sponsor, in exchange for the Trust,
concurrently with the sale, assignment and conveyance to the Indenture Trustee
of the Trust, Notes representing indebtedness of the Trust in authorized
denominations and the Certificates, evidencing the ownership of the Trust.
Section 2.09. Tax Treatment. It is the intention of the Sponsor and the
Certificateholders that the Notes will be indebtedness of the Sponsor for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income. The Sponsor, the Indenture
Trustee and each Noteholder (or Note Owner) by acceptance of its Note (or, in
the case of a Note Owner, by virtue of such Note Owner's acquisition of a
beneficial interest therein) agrees to treat the Notes (or beneficial interest
therein), for purposes of federal, state and local income or franchise taxes and
any other tax imposed on or measured by income, as indebtedness of the Sponsor
secured by the assets of the Trust and to report the transactions contemplated
by this Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Noteholder agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Agreement as to treatment of
the Notes as indebtedness for federal, state and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income. The
Indenture Trustee will prepare and file all tax reports required hereunder
consistent with this Agreement except as may be required by or provided in
Section 3.15.
Section 2.10. Conveyance of the Subsequent HELOCs. (a) Subject to the
satisfaction of the conditions set forth in Section 2.01 and paragraph (b)
below, in consideration of the Indenture Trustee's delivery on a Subsequent
Transfer Date to or upon the order of the Sponsor of all or a portion of the
amount in respect of Principal Collections in the Funding Account the Sponsor
shall, to the extent of the availability thereof, on the related Subsequent
Transfer Date transfer, assign, set over and otherwise convey to the Trust
without recourse (subject to Sections 2.03 and 2.05) all of its right, title and
interest in and to the Asset Balances of the Subsequent HELOCs and all Interest
Collections and Principal Collections in respect thereof received after the
Cut-Off Date for the Subsequent HELOCs (excluding payments in respect of accrued
interest
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due prior to the related Transfer Date) or, with respect to any Additional
Balances with respect thereto, on or after the date of transfer to the
Trust. Future advances made to a Mortgagor under a Loan Agreement relating
to a Subsequent HELOC shall be part of the related Asset Balance and transferred
to the Trust pursuant to this Section 2.10, and, therefore, part of the Trust
Property upon the sale thereof to the Sponsor under the Purchase Agreement.
On each Subsequent Transfer Date, the Indenture Trustee shall
acknowledge that the Sponsor has conveyed its right, title and interest in and
to each Subsequent HELOC and to the corresponding Related Documents and certain
other rights to the Indenture Trustee pursuant to this Agreement, and the
Indenture Trustee shall hold such documents hereunder for the benefit of the
Noteholders.
(b) The obligation of the Indenture Trustee to accept the transfer of the
Subsequent HELOCs and the other property and rights related thereto described
in paragraph (a) above is subject to the satisfaction of each of the following
conditions on or prior to the Subsequent Transfer Date:
(i) the Indenture Trustee shall have been provided with a letter
from the Credit Enhancer consenting to such transfer of the Subsequent
HELOCs (which consent shall not be unreasonably withheld or delayed);
(ii) the Indenture Trustee shall have been provided with a
HELOC Schedule, listing the Subsequent HELOCs delivered or to be
delivered on such Subsequent Transfer Date;
(iii) the Sponsor shall have deposited in the Collection Account
all Principal Collections and Interest Collections in respect of such
Subsequent HELOCs received after the Cut-Off Date (excluding payments in
respect of accrued interest due prior to the related Transfer Date) for
the Subsequent HELOCs;
(iv) the representations and warranties of the Sponsor in
Section 2.05 hereof, to the extent such representations and warranties
do not pertain exclusively to the Initial HELOCs, are true and correct
with respect to the Subsequent HELOCs as of the related Subsequent
Transfer Date;
(v) the Indenture Trustee shall have been provided with a letter
from each Rating Agency (except from Moody's on a quarterly basis only)
confirming that the transfer of the Subsequent HELOCs shall not result
in a reduction or withdrawal of its then-current rating of the Notes;
(vi) the Servicer shall acknowledge in writing that it has
delivered the related Mortgage Files to the Indenture Trustee and
complied with all other requirements with respect to the assignment of
the related Mortgages specified therein;
(vii) the Servicer shall represent and warrant that no selection
procedures reasonably believed by the Servicer to be adverse to the
interests of the Noteholders or the Credit Enhancer were utilized in
selecting the Subsequent HELOCs; and
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(viii) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b).
(c) The obligation of the Trust to purchase any Subsequent HELOCs on a
Subsequent Transfer Date is subject to the following requirements: (i) the
remaining term to maturity of each such Subsequent HELOC may not exceed 300
months; (ii) the weighted average margin of the Subsequent HELOCs (by aggregate
Cut-Off Date Asset Balance with respect to such Subsequent HELOCs) plus any
Subsequent HELOCs that were previously transferred to the Trust is at least
2.00%; (iii) the weighted average Combined Loan-to-Value Ratio of the Subsequent
HELOCs (by aggregate Cut-Off Date Asset Balance with respect to such Subsequent
HELOCs) plus any Subsequent HELOCs previously transferred to the Trust is not
more than 90.00%; (iv) no such Subsequent HELOC will have a Cut-Off Date Asset
Balance in excess of $240,000; (v) at least 100% of such Subsequent HELOCs plus
any Subsequent HELOCs previously transferred to the Trust (by aggregate Cut-Off
Date Asset Balance with respect to such Subsequent HELOCs) are not more than 30
days delinquent (on a contractual basis) in the payment of a Minimum Monthly
Payment as of the Cut-Off Date for such Subsequent HELOCs; and (vi) any
Subsequent HELOC more than 30 days delinquent that is so purchased by the Trust
shall not have had its Credit Limit terminated or suspended prior to the
Subsequent Transfer Date with respect to such HELOC. On the last Distribution
Date of the Funding Period, the Sponsor shall have provided the Indenture
Trustee, the Rating Agencies and the Credit Enhancer with an Opinion of Counsel
to the effect that the transfers of the Subsequent HELOCs during the Funding
Period constitute a sale of the Asset Balances of the Subsequent HELOCs to the
Sponsor and a sale of or grant of a security interest in the Subsequent HELOCs
to the Indenture Trustee; provided, however, that in the event of a change of
law during the Funding Period that materially affects the method of perfecting
the security interest in the Subsequent HELOCs, the Sponsor shall (i) provide
the Indenture Trustee, the Rating Agencies and the Credit Enhancer with an
Opinion of Counsel to the effect that such transfer constitutes a sale of the
Asset Balances of the Subsequent HELOCs to the Sponsor and a sale of or grant of
a security interest in the Subsequent HELOCs to the Indenture Trustee, and (ii)
take such action as is necessary to perfect the interests of the Trust in the
Subsequent HELOCs.
ARTICLE III
Administration and Servicing
of HELOCs
Section 3.01. The Servicer. (a) The Servicer is hereby authorized to act as
agent for the Trust and in such capacity shall manage, service, administer and
make collections on the HELOCs and perform the other actions under this
Agreement. The Servicer shall service and administer the HELOCs in a manner
consistent with the terms of this Agreement and with general industry practice
and shall have full power and authority, acting alone or through a subservicer,
to do any and all things in connection with such servicing and administration
which it may deem necessary or desirable, it being understood, however, that the
Servicer shall at all times remain responsible to the Indenture Trustee, the
Securityholders and the Credit Enhancer for the performance of its duties and
obligations hereunder in accordance with the terms hereof. Any amounts received
by any subservicer in respect of a HELOC shall be deemed to have been
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received by the Servicer whether or not actually received by it. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered by the Trust, to execute and deliver, on
behalf of the Trust, 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 HELOCs and with respect to the Mortgaged
Properties and to make deposits to and withdrawals from the Collection Account.
The Indenture Trustee and the Owner Trustee shall, upon the written request of
a Servicing Officer, furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder. The Servicer in such
capacity may also consent to the placing of a lien senior to that of any
Mortgage on the related Mortgaged Property, provided that
(i) such Mortgage succeeded to a first lien position after the
related HELOC was conveyed to the Trust and, immediately following
the placement of such senior lien, such Mortgage is in a second lien
position and the outstanding principal amount of the mortgage loan
secured by such subsequent senior lien is no greater than the
outstanding principal amount of the senior mortgage loan secured by
the Mortgaged Property as of the date the related HELOC was
originated; or
(ii) the Mortgage relating to such HELOC was in a second lien
position as of the Cut-Off Date and the new senior lien secures a
mortgage loan that refinances an existing first mortgage loan and
the outstanding principal amount of the replacement first mortgage
loan immediately following such refinancing is not greater than the
outstanding principal amount of such existing first mortgage loan at
the date of origination of such HELOC;
provided, further, that such senior lien does not secure a note that provides
for negative amortization.
The Servicer may also, without prior approval from the Rating Agencies
or the Credit Enhancer, increase the Credit Limits on HELOCs provided that (i)
new appraisals are obtained and the Combined Loan-to-Value Ratios of the HELOCs
after giving effect to such increase are less than or equal to the Combined
Loan-to-Value Ratios of the HELOCs as of the Cut-Off Date and (ii) such
increases are consistent with the Servicer's credit and collection policies. No
material change or departure from the Servicer's credit and collection policies
with respect to any HELOCs as in effect as of the Closing Date shall be
permitted without the prior written consent of the Credit Enhancer.
In addition, the Servicer may agree to changes in the terms of a HELOC
at the request of the Mortgagor; provided that (i) such changes do not
materially and adversely affect the interests of Securityholders or the Credit
Enhancer, (ii) such changes are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer and (iii) the Rating Agencies
are promptly notified of the changes.
In addition to the foregoing, the Servicer may solicit Mortgagors to
change any other terms of the related HELOCs; provided that such changes (i) do
not materially and adversely affect the interest of Securityholders or the
Credit Enhancer and (ii) are consistent with prudent
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and customary business practice as evidenced by a certificate signed by a
Servicing Officer delivered to the Indenture Trustee and the Credit Enhancer.
Nothing herein shall limit the right of the Servicer to solicit Mortgagors
with respect to new loans (including mortgage loans) that are not HELOCs.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Indenture Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
(b) In the event that the rights, duties and obligations of the Servicer
are terminated hereunder, any successor to the Servicer in its sole discretion
may, to the extent permitted by applicable law, terminate the existing
subservicer arrangements with any subservicer or assume the terminated
Servicer's rights under such subservicing arrangements which termination or
assumption will not violate the terms of such arrangements.
Section 3.02. Collection of Certain HELOCs Payments. (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of the HELOCs, and shall, to the extent such procedures shall be
consistent with this Agreement, follow such collection procedures as it follows
with respect to home equity loans in its servicing portfolio comparable to the
HELOCs. Consistent with the foregoing, and without limiting the generality of
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or any assumption fees or other fees which may be collected in the
ordinary course of servicing such HELOC and (ii) arrange with a Mortgagor a
schedule for the payment of interest due and unpaid; provided that such
arrangement is consistent with the Servicer's policies with respect to the home
equity loans it owns or services; provided, further, that notwithstanding such
arrangement such HELOCs will be included in the information regarding delinquent
HELOCs set forth in the Servicing Certificate and monthly statement to
Noteholders pursuant to Section 4.01.
(b) The Indenture Trustee shall establish and maintain a trust account (the
"Collection Account") titled "The First National Bank of Chicago as Indenture
Trustee, in trust for the registered holders of Revolving Home Equity Loan
Asset-Backed Notes, Series 1997-1 and Capital Markets Assurance Corporation."
The Collection Account shall be an Eligible Account. The Servicer shall on the
Closing Date deposit into the Collection Account any amounts representing
payments on, and any collections in respect of, the Initial HELOCs received
after the applicable Cut-Off Date and prior to the Closing Date (exclusive of
payments in respect of accrued interest due on or prior to such Cut-Off Date and
with respect to interest payments on the Initial HELOCs, an amount equal to 25
days' interest on the Original Pool Balance, calculated at the weighted average
Loan Rate), and thereafter the Servicer, or the Sponsor, as the case may be,
shall deposit into the Collection Account within two Business Days following
receipt thereof the following payments and collections received or made by it
(without duplication):
(i) all collections on and in respect of the HELOCs;
(ii) the amounts, if any, deposited to the Collection Account
pursuant to Section 3.04;
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(iii) Net Liquidation Proceeds;
(iv) Insurance Proceeds (including, for this purpose, any
amount required to be credited by the Servicer pursuant to the
last sentence of Section 3.04 and excluding the portion thereof,
if any, that has been applied to the restoration or repair of the
related Mortgaged Property or released to the related Mortgagor in
accordance with the normal servicing procedures of the Servicer);
(v) any amounts required to be deposited therein pursuant to
Section 7.01;
(vi) any amounts transferred from the Deferred Interest Account
pursuant to Section 8.8 of the Indenture;
(vii) amounts transferred from the Funding Account pursuant to
Sections 8.7(c)(i) and 8.7(c)(iii)(C) of the Indenture;
(viii) any Transfer Deposit Amounts; and
(ix) any amounts drawn under the Policy pursuant to Section 4.02;
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the HELOCs,
the Servicing Fee for such Collection Period. The foregoing requirements
respecting deposits to the Collection Account are exclusive, it being understood
that, without limiting the generality of the foregoing, the Servicer need not
deposit in the Collection Account amounts representing Foreclosure Profits, fees
(including annual fees) or late charge penalties payable by Mortgagors, or
amounts received by the Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments, excess pay off
amounts and similar items. The Servicer shall remit all Foreclosure Profits to
the Sponsor.
The Indenture Trustee shall hold amounts deposited in the Collection
Account as trustee for the Noteholders and for the Credit Enhancer. The
Servicer shall notify the Indenture Trustee and the Credit Enhancer in writing
on each Determination Date of the amount of payments and collections in the
Collection Account allocable to Interest Collections and Principal Collections
for the related Distribution Date. Following such notification, the Servicer
shall be entitled to withdraw from the Collection Account and retain any
amounts that constitute income and gain realized from the investment of such
payments and collections.
At the direction of the Servicer, the Indenture Trustee shall invest
funds in the Collection Account in Eligible Investments. All income and gain
realized from any investment in Eligible Investments of funds in the Collection
Account shall be for the benefit of the Servicer and shall be subject to its
withdrawal from time to time. The amount of any losses incurred in respect of
the principal amount of any such investments shall be deposited in the
Collection Account by the Servicer out of its own funds immediately as realized.
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Section 3.03. Withdrawals from the Collection Account. From time to time,
withdrawals may be made from the Collection Account by the Servicer for the
following purposes:
(i) If not received by the Servicer pursuant to Section 3.02(b),
to the Servicer as payment for its Servicing Fee pursuant to
Section 3.08;
(ii) To pay to the Servicer amounts on deposit in the Collection
Account that are not to be included in the distributions and payments
pursuant to Section 8.3 of the Indenture to the extent provided by
the second to the last and the last paragraph of Section 3.02(b);
(iii) To make or to permit the Paying Agent to make
distributions and payments pursuant to Section 8.3 of the Indenture;
(iv) Prior to the Collection Period preceding the Rapid
Amortization Commencement Date, to pay to the Sponsor the amount of
any Additional Balances as and when created during the related
Collection Period, provided, that the aggregate amount so paid to the
Sponsor in respect of Additional Balances at any time during any
Collection Period shall not exceed the amount of Principal Collections
theretofore received for such Collection Period;
(v) To make deposits to the Funding Account pursuant to
Section 8.7 of the Indenture;
(vi) To pay to the Servicer any Liquidation Expenses not
reimbursed prior to the deposit of Net Liquidation Proceeds to the
Collection Account;
(vii) Upon termination of the Trust, to make any payments
required by Section 7.01.
If the Servicer deposits in the Collection Account any amount not
required to be deposited therein or any amount in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or other
reason for non-payment it may at any time withdraw such amount from the
Collection Account, and any such amounts shall not be included in the amounts to
be deposited in the Collection Account pursuant to Section 3.02(b), any
provision herein to the contrary notwithstanding.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each HELOC hazard
insurance naming the Servicer or the related subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
HELOC from time to time or (ii) the combined principal balance owing on such
HELOC and any mortgage loan senior to such HELOC from time to time. The Servicer
shall also maintain on property acquired upon foreclosure, or by deed in lieu of
foreclosure, hazard insurance with extended coverage in an amount which is at
least equal to the lesser of (i) the maximum insurable value from time to time
of the improvements which are a part of such
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property or (ii) the combined principal balance owing on such HELOC
and any mortgage loan senior to such HELOC at the time of such foreclosure
or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Liquidation Expenses to be incurred
in connection therewith. Amounts collected by the Servicer under any such
policies shall be deposited in the Collection Account to the extent
called for by Section 3.02. In cases in which any Mortgaged Property is
located in a federally designated flood area, the hazard insurance to be
maintained for the related HELOC shall include flood insurance. All such flood
insurance shall be in such amounts as are required under applicable guidelines
of the Federal Flood Emergency Act. The Servicer shall be under no obligation to
require that any Mortgagor maintain earthquake or other additional insurance and
shall be under no obligation itself to maintain any such additional insurance on
property acquired in respect of a HELOC, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. If the Servicer shall obtain and maintain a blanket policy
consistent with prudent industry standards insuring against hazard losses on all
of the HELOCs in an aggregate amount prudent under industry standards, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.04 and if there shall have been a loss which
would have been covered by such policy, deposit in the Collection Account, as
the case may be, the amount not otherwise payable under the blanket policy
because of any deductible clause.
Section 3.05. Assumption and Modification Agreements. In any case in which
a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall exercise its right to accelerate the maturity of such HELOC
consistent with the then current practice of the Servicer and without regard to
the inclusion of such HELOC in the Trust. If it elects not to enforce its right
to accelerate or if it is prevented from doing so by applicable law, the
Servicer (so long as such action conforms with the underwriting standards
generally acceptable in the industry at the time for new origination) is
authorized to take or enter into an assumption and modification agreement from
or with the Person to whom such Mortgaged Property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Loan Agreement
and, to the extent permitted by applicable law, the Mortgagor remains liable
thereon. The Servicer shall notify the Indenture Trustee that any assumption and
modification agreement has been completed by delivering to the Indenture Trustee
an Officer's Certificate signed by a Servicing Officer certifying that such
agreement is in compliance with this Section 3.05 and by forwarding to the
Indenture Trustee or to the applicable Custodian, as agent for the Indenture
Trustee, the original copy of such assumption and modification agreement. Any
such assumption and modification agreement shall, for all purposes, be
considered a part of the related Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. No change in the terms of
the related Loan Agreement may be made by the Servicer in connection with any
such assumption to the extent that such change would not be permitted to be made
in respect of the original Loan Agreement pursuant to the fourth paragraph of
Section 3.01(a). Any fee collected by the Servicer for entering into any such
agreement will be retained by the Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted HELOCs; Repurchase of Certain
HELOCs. The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the HELOCs as come into and
continue in default when, in the
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opinion of the Servicer based upon the practices and procedures referred to in
the following sentence, no satisfactory arrangements can be made for collection
of delinquent payments pursuant to Section 3.02;
provided that if the Servicer has actual knowledge or reasonably believes
that any Mortgaged Property is affected by hazardous or toxic wastes or
substances and that the acquisition of such Mortgaged Property would not be
commercially reasonable, then the Servicer will not cause the Trust to acquire
title to such Mortgaged Property in a foreclosure or similar proceeding. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default) and procedures as
it shall deem necessary or advisable and as shall be normal and usual in its
general mortgage servicing activities. The foregoing is subject to the proviso
that the Servicer shall not be required to incur any Liquidation Expenses or to
otherwise expend its own funds in connection with any foreclosure or towards the
correction of any default on a related senior mortgage loan or restoration of
any property unless it shall determine that such expenditure will increase Net
Liquidation Proceeds.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, or to its nominee on behalf of the
Trust.
The Servicer, in its sole discretion, shall have the right but not the
obligation to purchase for its own account from the Trust any HELOC which is 91
days or more delinquent. The price for any HELOC purchased hereunder (which
shall be at a purchase price equal to the Loan Purchase Price thereof), shall be
deposited in the Collection Account and the Indenture Trustee, upon receipt of a
certificate from the Servicer in the form of Exhibit C-1 hereto, shall release
or cause to be released to the Servicer the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment prepared by the
Servicer, in each case without recourse, representation or warranty, as shall be
necessary to vest in the purchaser of such HELOC any HELOC released pursuant
hereto and the Servicer shall succeed to all the Indenture Trustee's right,
title and interest in and to such HELOC and all security and documents related
thereto. Such assignment shall be an assignment outright and not for security.
The Servicer shall thereupon own such HELOC, and all security and documents,
free of any further obligation to the Indenture Trustee, the Credit Enhancer or
the Securityholders with respect thereto.
Section 3.07. Indenture Trustee to Cooperate. On or before each
Distribution Date, the Servicer will notify the Indenture Trustee of the payment
in full of the Asset Balance of any HELOC during the preceding Collection
Period, which notification shall be by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Collection Account
pursuant to Section 3.02 have been so deposited or credited) of a Servicing
Officer. Upon any such payment in full, the Servicer is authorized to execute,
pursuant to the authorization contained in Section 3.01, if the assignments of
Mortgage have been recorded as required hereunder, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Servicer if required by applicable law and be delivered to the
Person entitled thereto. It is understood and agreed that no expenses incurred
in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Collection Account. If the Indenture
Trustee is holding the Mortgage Files, from time to time and as appropriate for
the servicing or foreclosure of any HELOC, or in connection with the payment in
full of the Asset
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Balance of any HELOC, the Indenture Trustee shall, upon request of the
Servicer and delivery to the Indenture Trustee of a Request for Release
substantially in the form attached hereto as Exhibit C signed by a Servicing
Officer, release the related Mortgage File to the Servicer and the
Indenture Trustee shall execute such documents, in the forms provided by the
Servicer, as shall be necessary to the prosecution of any such proceedings or
the taking of other servicing actions. Such trust receipt shall obligate the
Servicer to return the Mortgage File to the Indenture Trustee when the need
therefor by the Servicer no longer exists unless the HELOC shall be liquidated,
in which case, upon receipt of a certificate of a Servicing Officer similar to
that hereinabove specified, the trust receipt shall be released by the Indenture
Trustee or such Custodian to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
HELOC that is in default following recordation of the Assignments of Mortgage in
accordance with the provisions hereof, the Indenture Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Indenture Trustee by the Servicer to assign such HELOC for
the purpose of collection to the Servicer or to the related subservicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only), and, upon such assignment, the Servicer will
thereupon bring all required actions in its own name and otherwise enforce the
terms of the HELOC and deposit the Net Liquidation Proceeds, exclusive of
Foreclosure Profits, received with respect thereto in the Collection Account. In
the event that all delinquent payments due under any such HELOC are paid by the
Mortgagor and any other defaults are cured, then the Servicer shall promptly
reassign such HELOC to the Indenture Trustee and return the related Mortgage
File to the place where it was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the HELOCs. Moreover, additional servicing compensation in the form of late
payment charges or other receipts not required to be deposited in the Collection
Account (other than Foreclosure Profits) shall be retained by the Servicer. The
Servicer shall be required to pay all expenses incurred by it in connection with
its activities hereunder (including payment of all other fees and expenses not
expressly stated hereunder to be for the account of the Securityholders) and
shall not be entitled to reimbursement therefor except as specifically provided
herein. Liquidation Expenses are reimbursable to the Servicer solely from
related Liquidation Proceeds.
Section 3.09. Annual Statement as to Compliance.
(a) The Servicer will deliver to the Indenture Trustee, the Credit Enhancer
and the Rating Agencies, on or before May 31 of each year, beginning May 31,
1998, an Officer's Certificate stating that (i) a review of the activities of
the Servicer during the preceding fiscal year (or such shorter period as is
applicable in the case of the first report) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
of its material obligations under this Agreement throughout such fiscal year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
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(b) The Servicer shall deliver to the Indenture Trustee, the Credit
Enhancer and each of the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with
the giving of notice or the lapse of time or both, would become an Event of
Servicing Termination.
Section 3.10. Annual Servicing Report. On or before May 31 of each year,
beginning May 31, 1998, the Servicer, at its expense, shall cause a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer) to furnish a report to the Indenture Trustee, the
Credit Enhancer and each Rating Agency to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans during
the most recent fiscal year then ended under pooling and servicing agreements
(substantially similar to this Agreement, including this Agreement), that such
examination was conducted substantially in compliance with the audit guide for
audits of non-supervised mortgagees approved by the Department of Housing and
Urban Development for use by independent public accountants (to the extent that
the procedures in such audit guide are applicable to the servicing obligations
set forth in such agreements) and that such examination has disclosed no items
of noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.
Section 3.11. Annual Opinion of Counsel. On or before May 31 of each
year, beginning May 31, 1998, the Sponsor, at its expense, shall deliver
to the Indenture Trustee and the Credit Enhancer the applicable Opinion of
Counsel specified in Exhibit B hereto.
Section 3.12. Access to Certain Documentation and Information Regarding the
HELOCS. (a) The Servicer shall provide to the Indenture Trustee, the Credit
Enhancer, any Noteholders that are federally insured savings and loan
associations, the Office of Thrift Supervision, successor to the Federal Home
Loan Bank Board, the FDIC and the supervisory agents and examiners of the Office
of Thrift Supervision access to the documentation regarding the HELOCs required
by applicable regulations of the Office of Thrift Supervision and the FDIC
(acting as operator of the SAIF or the BIF), such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer. Nothing in this Section 3.12 shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section 3.12 as a result of such obligation
shall not constitute a breach of this Section 3.12.
(b) The Servicer shall supply information in such form as the Indenture
Trustee shall reasonably request to the Indenture Trustee and the Paying Agent,
on or before the start of the Determination Date preceding the related
Distribution Date, as is required in the Indenture Trustee's reasonable
judgment to enable the Paying Agent or the Indenture Trustee, as the case may
be, to make required distributions and to furnish the required reports to
Noteholders and to make any claim under the Policy.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance
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covering errors and omissions in the performance of its obligations as
master servicer hereunder and (ii) a fidelity bond in respect of its officers,
employees or agents. Each such policy or policies and bond together shall
comply with the requirements from time to time of the Federal National
Mortgage Association for persons performing servicing for mortgage loans
purchased by such Association.
Section 3.14. Reports to the Securities and Exchange Commission. The
Indenture Trustee shall, on behalf of the Trust, cause to be filed with the
Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Securities and Exchange Commission thereunder.
Upon the request of the Indenture Trustee, each of the Servicer and the
Sponsor shall cooperate with the Indenture Trustee in the preparation of any
such report and shall provide to the Indenture Trustee in a timely manner all
such information or documentation as the Indenture Trustee may reasonably
request in connection with the performance of its duties and obligations under
this Section.
Section 3.15. Tax Returns. In accordance with Section 2.09 hereof, the
Servicer shall prepare and file any Federal, State or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust as provided in Article V
of the Trust Agreement, including, without limitation, forms 1099 and 1065. The
Sponsor shall treat the HELOCs as its property for all Federal, State or local
tax purposes and shall report all income earned thereon (including amounts
payable as fees to the Servicer) as its income for income tax purposes. In the
event the Trust shall be required pursuant to an audit or administrative
proceeding or change in applicable regulations to file Federal, State or local
tax returns, the Servicer shall prepare and file or shall cause to be prepared
and filed any tax returns required to be filed by the Trust; the Indenture
Trustee shall promptly sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Indenture Trustee shall also prepare or shall cause to be prepared all tax
information required by law to be distributed to Noteholders. In no event shall
the Indenture Trustee or the Servicer be liable for any liabilities, costs or
expenses of the Trust, the Noteholders, the Certificateholders or the Note
Owners arising under any tax law, including, without limitation, Federal, state
or local income and franchise or excise taxes or any other tax imposed on or
measured by income (or any interest or penalty with respect thereto or arising
from a failure to comply therewith).
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Servicer shall make reports of foreclosures and abandonments
of any mortgaged property for each year beginning in 1998, the Servicer shall
file reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on behalf of the Indenture Trustee acquires an
interest in any Mortgaged Property through foreclosure or other comparable
conversion in full or partial satisfaction of a HELOC, or (ii) knows or has
reason to know that any Mortgaged Property has been abandoned. The reports from
the Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J.
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ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Servicer shall deliver (a) to the Indenture Trustee, the Statement to
Noteholders required to be prepared pursuant to Section 8.5 of the Indenture and
(b) to the Indenture Trustee, the Sponsor, the Paying Agent, the Credit Enhancer
and each Rating Agency a Servicing Certificate (in written form or the form of
computer readable media or such other form as may be agreed to by the Indenture
Trustee and the Servicer), together with an Officer's Certificate to the effect
that such Servicing Certificate is true and correct in all material respects,
stating the related Collection Period, Distribution Date, the series number of
the Notes, the date of this Agreement, and:
(i) the aggregate amount of collections received on the HELOCs
on or prior to the Determination Date in respect of such Collection
Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for such Collection Period;
(iii) the Floating Allocation Percentage and the Fixed
Allocation Percentage for such Collection Period;
(iv) the Noteholders' Interest Collections and Principal
Collections allocated to the Notes for such Collection Period;
(v) the Certificateholders' Interest Collections and
Certificateholders' Principal Collections for such Collection Period;
(vi) Class A Note Interest, the Class A Note Rate and the
Class S Note Interest for the related Interest Period;
(vii) the amount, if any, of such Class A Note Interest or
Class S Note Interest that is not payable on account of insufficient
Noteholders' Interest Collections;
(viii) the portion of the Unpaid Class A Note Interest
Shortfall and the portion of the Unpaid Class S Note Interest
Shortfall, if any, and the amount of interest on such shortfall at
the Note Rate applicable from time to time (separately stated) to be
distributed on such Distribution Date;
(ix) the Unpaid Class A Note Interest Shortfall and the Unpaid
Class S Note Interest Shortfall, if any, to remain after the
distribution on such Distribution Date;
(x) the Accelerated Principal Distribution Amount and the
portion thereof that will be distributed pursuant to
Section 8.3(a)(viii) of the Indenture;
(xi) the Scheduled Principal Collections Distribution Amount,
separately stating the components thereof;
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(xii) the amount of any Transfer Deposit Amount paid by the
Sponsor pursuant to Section 2.03 or 2.05;
(xiii) any accrued and unpaid Servicing Fees for previous
Collection Periods and the Servicing Fee for such Collection Period;
(xiv) the Loss Amount for such Collection Period;
(xv) the aggregate amount, if any, of Loss Reduction Amounts
for previous Distribution Dates that have not been previously
reimbursed to Class A Noteholders pursuant to 8.3(a)(iv) of the
Indenture;
(xvi) the Pool Balance as of the end of the preceding
Collection Period and as of the end of the second preceding
Collection Period;
(xvii) the Invested Amount as of the end of the preceding
Collection Period;
(xviii) the Class A Note Principal Balance, the Class S
Notional Amount and Pool Factor after giving effect to the
distribution on such Distribution Date and to any reduction on
account of the Loss Amount;
(xix) the Certificate Principal Balance after giving effect to
the distribution on such Distribution Date;
(xx) the aggregate amount of Additional Balances created during
the previous Collection Period;
(xxi) the number and aggregate Asset Balances of HELOCs (x) as
to which the Minimum Monthly Payment is delinquent for 30-59 days,
60-89 days and 90 or more days, respectively and (y) that have
become REO, in each case as of the end of the preceding Collection
Period;
(xxii) whether a Rapid Amortization Event has occurred since
the prior Determination Date, specifying each such Rapid
Amortization Event if one has occurred;
(xxiii) whether an Event of Servicing Termination has occurred
since the prior Determination Date, specifying each such Event of
Servicing Termination if one has occurred;
(xxiv) the amount to be distributed to the Credit Enhancer
pursuant to Section 8.3(a)(v), Section 8.3(a)(vi) and
Section 8.3(a)(ix) of the Indenture, stated separately;
(xxv) the amount to be distributed to the Spread Account
pursuant to Section 8.3(a)(vii) of the Indenture;
(xxvi) the Guaranteed Principal Distribution Amount, if any,
for such Distribution Date;
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(xxvii) the Credit Enhancement Draw Amount, if any, for such
Distribution Date;
(xxviii) the amount to be distributed to the Certificateholders
pursuant to Section 8.3(a)(xiv) of the Indenture;
(xxix) the amount to be paid to the Servicer pursuant to
Section 8.3(a)(xi) of the Indenture;
(xxx) the Maximum Rate for the related Collection Period and
the Weighted Average Net Loan Rate;
(xxxi) the total amount of funds on deposit in the Spread
Account, the amount to be transferred from the Spread Account to the
Collection Account pursuant to Section 4.03(b) and the applicable
Spread Account Maximum;
(xxxii) the Overcollateralization Amount after giving effect to
the distribution to be made on such Distribution Date;
(xxxiii) the number and Asset Balances of any HELOCs
retransferred to the Sponsor pursuant to Section 2.07;
(xxxiv) the amount of Principal Collections to be deposited
in the Funding Account in respect of such Distribution Date pursuant
to Section 8.7(a) of the Indenture;
(xxxv) the amount on deposit in the Funding Account as of such
Distribution Date and transfers of funds required by Section 8.7(c)
of the Indenture;
(xxxvi) the aggregate of the Asset Balances of the Subsequent
HELOCs purchased on the related Subsequent Transfer Dates; and
(xxxvii) whether the Distribution Date following the next
Determination Date is expected to be a Subsequent Transfer Date and
a reasonable management estimate of the aggregate Asset Balances of
such intended Subsequent HELOCs.
The Indenture Trustee shall conclusively rely upon the information contained in
a Servicing Certificate for purposes of making distributions pursuant to Section
8.3 of the Indenture, shall have no duty to inquire into such information and
shall have no liability in so relying. The format and content of the Servicing
Certificate may be modified by the mutual agreement of the Servicer, the
Indenture Trustee and the Credit Enhancer. The Servicer shall give notice of any
such change to the Rating Agencies.
Section 4.02. Claims upon the Policy. (a) If, by the close of business on
the Determination Date prior to a Distribution Date, the sum of Noteholders'
Interest Collections, Principal Collections distributable to Noteholders,
amounts available from the Deferred Interest Account, the Funding Account and
amounts on deposit in the Spread Account are insufficient after the allocation
of Certificateholders' Interest Collections and Certificateholders' Principal
Collections in accordance with Section 8.3(c) of the Indenture to pay the
Guaranteed Distribution on such Distribution Date, then the Indenture Trustee
shall give notice (the "Note Policy Claim
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Amount") to the Credit Enhancer by telephone or telecopy of the amount equal
to the Credit Enhancement Draw Amount. Such notice of such sum shall be
confirmed in writing to the Credit Enhancer at or before 2:00 p.m., New York
City time, on the Business Day immediately following such Determination Date.
Following receipt by the Credit Enhancer of such notice in such form, the
Credit Enhancer will pay to the Indenture Trustee for deposit into the
Collection Account the amount payable under the Policy on the later to occur
of (i) 11:00 a.m. New York City time, on the Business Day next succeeding
receipt of such notice and (ii) 11:00 a.m., New York City time, the Business
Day immediately preceding the Distribution Date to which such deficiency
relates.
(b) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Note from monies
received under the Policy. The Credit Enhancer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Indenture Trustee.
(c) The Indenture Trustee shall promptly notify the Credit Enhancer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Indenture Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Notes. Each Noteholder by its purchase of such Notes, the Servicer, the Sponsor
and the Indenture Trustee hereby agree that, the Credit Enhancer (so long as no
Credit Enhancer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Credit Enhancer shall be subrogated to
the rights of the Servicer, the Sponsor, the Indenture Trustee and each
Noteholder in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
Section 4.03. Spread Account. (a) The Indenture Trustee shall establish and
maintain a separate trust account (the "Spread Account") titled "The First
National Bank of Chicago, as Indenture Trustee, in trust for the registered
holders of Revolving Home Equity Loan Asset Backed Notes, Series 1997-1, Class A
and Class S Notes and Capital Markets Assurance Corporation" The Spread Account
shall be an Eligible Account. Amounts on deposit in the Spread Account will, at
the direction of the Servicer, be invested in Eligible Investments as required
pursuant to Section 2.05(a) of the Insurance Agreement maturing no later than
the day before the next Distribution Date.
All income and gain realized from any investment of funds in the Spread
Account shall be considered part of the Spread Account. The Sponsor will
report for Federal, state and local income tax purposes the income, if any,
represented by the Spread Account.
(b) On each Determination Date the Indenture Trustee shall determine (i)
the extent to which Noteholders' Interest Collections and amounts available in
the Deferred Interest Account pursuant to Section 8.8 of the Indenture are
insufficient after the allocation of Certificateholders'
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Interest Collections and Certificateholders' Principal Collections in
accordance with Section 8.3(c) of the Indenture to make distributions
as provided in clauses (i) and (ii) of Section 8.3(a) of the Indenture
and (ii) the Guaranteed Principal Distribution Amount for the related
Distribution Date. On each Distribution Date the Indenture Trustee shall
withdraw from the Spread Account and deposit into the Collection Account
the lesser of the amount on deposit in the Spread Account and an amount equal
to the sum of the amounts, if any, determined in clauses (i) and (ii) of
the preceding sentence as per the Servicing Certificate for such Distribution
Date.
(c) Following the termination of the Trust pursuant to Section 7.01
hereof or Section 12.1 of the Indenture, the Indenture Trustee shall withdraw
all amounts then on deposit in the Spread Account pursuant to Section 2.05 of
the Insurance Agreement. If on any Distribution Date the amount on deposit
in the Spread Account exceeds the Spread Account Maximum, the Indenture Trustee
shall withdraw such excess and distribute it to the Sponsor.
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on any of the Notes which is made with monies received
pursuant to the terms of the Policy shall not (for purposes of this subrogation
provision only) be considered payment of such Notes 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 Notes within the meaning of Section 8.3 of the Indenture. The
Sponsor, the Servicer and the Indenture Trustee acknowledge, and each Holder by
its acceptance of a Note agrees, that without the need for any further action on
the part of the Credit Enhancer, the Sponsor, the Servicer, the Indenture
Trustee or the Certificate Registrar (a) to the extent the Credit Enhancer makes
payments, directly or indirectly, on account of principal of or interest on any
Notes to the Holders of such Notes, the Credit Enhancer will be fully subrogated
to the rights of such Holders to receive such principal and interest from the
Trust and (b) the Credit Enhancer shall be paid such principal and interest but
only from the sources and in the manner provided herein for the payment of such
principal and interest.
The Indenture Trustee and the Servicer shall cooperate in all respects
with any reasonable request by the Credit Enhancer for action to preserve or
enforce the Credit Enhancer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Noteholders and
Certificateholders as otherwise set forth herein.
ARTICLE V
The Servicer and the Sponsor
Section 5.01. Liability of the Servicer and the Sponsor. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Servicer herein. The Sponsor
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Sponsor.
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or the Sponsor. Any corporation into which the Servicer or the
Sponsor may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to
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which the Servicer or the Sponsor shall be a party, or any corporation
succeeding to the business of the Servicer or the Sponsor, shall be the
successor of the Servicer or the Sponsor, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 5.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Securityholders for
any action taken or for refraining from the taking of any action by the Servicer
in good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties of the
Servicer or by reason of reckless disregard of obligations and duties of the
Servicer hereunder. The Servicer and any director or officer or employee or
agent of the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Servicer and any director or officer or employee or agent
of the Servicer shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the Notes, other than any loss, liability or expense
related to any specific HELOC or HELOCs (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
its reckless disregard of obligations and duties hereunder. The Servicer shall
not be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to duties to service the HELOCs in accordance with this
Agreement, and which in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may in its sole discretion undertake any
such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests of
the Securityholders hereunder. In such event, the reasonable legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust and the Servicer shall only be entitled to be
reimbursed therefor pursuant to Section 8.3(a)(xi) of the Indenture. The
Servicer's right to indemnity or reimbursement pursuant to this Section 5.03
shall survive any resignation or termination of the Servicer pursuant to Section
5.04 or 6.01 with respect to any losses, expenses, costs or liabilities arising
prior to such resignation or termination (or arising from events that occurred
prior to such resignation or termination).
Section 5.04. Servicer Not to Resign. Subject to the provisions of
Section 5.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and
nature carried on by the Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions: (a) the Servicer has proposed a successor servicer to the
Indenture Trustee and the Credit Enhancer in writing and such proposed
successor servicer is reasonably acceptable to the Indenture Trustee;
(b) each Rating Agency shall have delivered a letter to the Indenture Trustee
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and the Credit Enhancer prior to the appointment of the successor servicer
stating that the proposed appointment of such successor servicer as Servicer
hereunder will not result in the qualification, reduction or withdrawal
of the then current rating of the Notes without regard to the Policy; and (c)
such proposed successor servicer is reasonably acceptable to the Credit
Enhancer, as evidenced by a letter to the Indenture Trustee; provided, however,
that no such resignation by the Servicer shall become effective until the
Indenture Trustee or successor servicer designated by the Servicer as provided
above shall have assumed the Servicer's responsibilities and obligations
hereunder or the Indenture Trustee shall have designated a successor servicer in
accordance with Section 6.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 6.01
and 6.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee and the Credit Enhancer. The Servicer
shall have no claim (whether by subrogation or otherwise) or other action
against any Securityholder for any amounts paid by the Servicer pursuant to any
provision of this Agreement.
Section 5.05. Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in accordance with standards comparable to
those with which the Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 5.04.
Section 5.06. Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust, the Owner Trustee and the Indenture
Trustee from and against any loss, liability, expense, damage or injury suffered
or sustained by reason of the Servicer's activities or omissions in servicing or
administering the HELOCs that are not in accordance with this Agreement,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
5.06 shall survive termination of this Agreement.
Section 5.07. Indemnification of the Trust by the Sponsor. Notwithstanding
anything to the contrary contained herein, the Sponsor (i) agrees to be liable
directly to the injured party for the entire amount of any losses, claims,
damages, liabilities and expenses of the Trust (other than those attributable to
a Noteholder as a result of defaults on the HELOCs) to the extent that the
Sponsor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Sponsor was a general
partner and (ii) shall indemnify and hold harmless the Trust, the Owner Trustee
and the Indenture Trustee from and against any loss, liability, expense, damage,
claim or injury (other than those attributable to a Noteholder as a result of
defaults on the HELOCs) arising out of or based on this Agreement by reason of
any acts, omissions, or alleged acts or omissions arising out of activities of
the Trust, the Owner Trustee or the Indenture Trustee, or the actions of the
Servicer, including, but not limited to, amounts payable to the Servicer
pursuant to Section 5.03, any judgment, award, settlement,
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reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided that the Sponsor shall not indemnify the Owner Trustee or the
Indenture Trustee (but shall indemnify any other injured party) if such loss,
liability, expense, damage or injury is due to the Owner Trustee's or the
Indenture Trustee's willful malfeasance, bad faith or gross negligence or by
reason of the Owner Trustee's or the Indenture Trustee's reckless disregard
of its obligations hereunder. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
Section 5.08. Limitation on Liability of the Sponsor. None of the directors
or officers or employees or agents of the Sponsor shall be under any liability
to the Trust, the Owner Trustee or the Indenture Trustee or the Securityholders,
it being expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the execution of this
Agreement and the issuance of the Notes; provided, however, that this provision
shall not protect any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of the duties hereunder. Except as provided in Section 5.07, the
Sponsor shall not be under any liability to the Trust, the Owner Trustee or the
Indenture Trustee or the Securityholders for any action taken or for refraining
from the taking of any action in its capacity as Sponsor pursuant to this
Agreement whether arising from express or implied duties under this Agreement;
provided, however, that this provision shall not protect the Sponsor against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties hereunder. The Sponsor and any
director or officer or employee or agent of the Sponsor may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
ARTICLE VI
Servicing Termination
Section 6.01. Events of Servicing Termination. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(i) Any failure by the Servicer to deposit in the Collection
Account any deposit required to be made under the terms of this
Agreement which continues unremedied for a period of two Business
Days after the date upon which written notice of such failure shall
have been given to the Servicer by the Indenture Trustee or to the
Servicer and the Indenture Trustee by the Credit Enhancer or Holders
of Notes evidencing Percentage Interests aggregating not less than
25%; or
(ii) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Notes or in this Agreement, which failure
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Servicer by
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the Indenture Trustee or to the Servicer and the Indenture Trustee by
the Credit Enhancer or the Holders of Notes evidencing Percentage
Interests aggregating not less than 25%; or
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(iv) The consent by the Servicer to the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of
or relating to substantially all of its property; or the Servicer shall
admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, either the Indenture
Trustee, the Credit Enhancer or the Holders of Notes evidencing Voting Rights
aggregating not less than 51% in each case with the consent of the Credit
Enhancer, or the Credit Enhancer, by notice then given in writing to the
Servicer (and to the Indenture Trustee if given by the Credit Enhancer or the
Holders of Notes) may terminate all of the rights and obligations of the
Servicer as servicer under this Agreement. Upon the occurrence of a Trigger
Event as defined in the Insurance Agreement, the Credit Enhancer may, in its
reasonable discretion, terminate all of the rights and obligations of the
Servicer pursuant to the terms hereof. Any such notice to the Servicer shall
also be given to each Rating Agency and the Credit Enhancer. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Notes or the HELOCs
or otherwise, shall pass to and be vested in the Indenture Trustee pursuant to
and under this Section 6.01; and, without limitation, the Indenture Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each HELOC and related documents, or
otherwise. The Servicer agrees to cooperate with the Indenture Trustee in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Indenture Trustee
for the administration by it of all cash amounts that shall at the time be held
by the Servicer and to be deposited by it in the Collection Account, or that
have been deposited by the Servicer in the Collection Account or thereafter
received by the Servicer with respect to the HELOCs. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with amending this
Agreement to reflect such succession as Servicer pursuant to this Section 6.01
shall be paid by the predecessor Servicer (or if the predecessor Servicer is the
Indenture Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
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Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) for a period of two Business Days or under Section
6.01(ii) for a period of 60 days, shall not constitute an Event of Servicing
Termination if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Indenture Trustee, the Sponsor, the Credit
Enhancer and the Noteholders and Certificateholders with an Officer's
Certificate giving prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee and the Credit Enhancer in writing of
any Events of Servicing Termination.
Section 6.02. Indenture Trustee to Act; Appointment of Successor. (a) On
and after the time the Servicer receives a notice of termination pursuant to
Section 6.01 or resigns pursuant to Section 5.04, the Indenture Trustee shall be
the successor in all respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof. Notwithstanding the
above, if the Indenture Trustee becomes the Servicer hereunder, it shall have no
responsibility or obligation (i) of repurchase or substitution with respect to
any HELOC, (ii) with respect to any representation or warranty of the Servicer,
and (iii) for any act or omission of either a predecessor or successor Servicer
other than the Indenture Trustee. As compensation therefor, the Indenture
Trustee shall be entitled to such compensation as the Servicer would have been
entitled to hereunder if no such notice of termination had been given. In
addition, the Indenture Trustee will be entitled to compensation with respect to
its expenses in connection with conversion of certain information, documents and
record keeping, as provided in Section 6.7 and 6.8 of the Indenture.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act as
successor Servicer, or (ii) if the Indenture Trustee is legally unable so to
act, the Indenture Trustee may with the consent of the Credit Enhancer (in the
situation described in clause (i)) or shall (in the situation described in
clause (ii)) appoint or petition a court of competent jurisdiction to appoint,
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer with all licenses and permits required to
perform its obligations under this Agreement and having a net worth of not less
than $15,000,000 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; provided that any such successor Servicer shall be acceptable to the
Credit Enhancer, as evidenced by the Credit Enhancer's prior written consent,
which consent shall not be unreasonably withheld; and provided, further, that
the appointment of any such successor Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the Notes by
the Rating Agencies without regard to the Policy. Pending appointment of a
successor to the Servicer hereunder, unless the Indenture Trustee is prohibited
by law from so acting, the Indenture Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on HELOCs in
an amount equal to the compensation which the Servicer would otherwise have
received pursuant to Section 3.08 (or such lesser compensation as the Indenture
Trustee and such
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successor shall agree). The Indenture Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the HELOCs for the benefit of Securityholders and the
Credit Enhancer and (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.13. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy pursuant to Section 3.04), nor shall any successor Servicer be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein.
Section 6.03. Notification to Securityholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VI or
Section 5.04, the Indenture Trustee shall give prompt written notice thereof
to the Securityholders at their respective addresses appearing in the Note
Register, the Certificate Register, the Credit Enhancer and each Rating Agency.
ARTICLE VII
Termination
Section 7.01. Termination. (a) The respective obligations and
responsibilities of the Servicer, the Sponsor and the Indenture Trustee created
hereby (other than the obligation of the Indenture Trustee to make certain
payments to Noteholders after the final Distribution Date and the obligation of
the Servicer to send certain notices as hereinafter set forth) shall terminate
upon the last action required to be taken by the Indenture Trustee on the final
Distribution Date pursuant to this Article VII following the later of (A) the
Distribution Date following payment in full of all amounts owing to the Credit
Enhancer and (B) the earliest of (i) the transfer, under the conditions
specified in Section 7.01(b), to the Sponsor of the Noteholders' interest in
each HELOC and all property acquired in respect of any HELOC remaining in the
Trust for an amount equal to the sum of (w) the Class A Note Principal Balance,
(x) the sum of accrued and unpaid Class A Note Interest and Class S Note
Interest through the day preceding the final Distribution Date, and (y) interest
accrued on any Unpaid Class A Note Interest Shortfall or Unpaid Class S Note
Interest Shortfall, to the extent legally permissible, and all amounts due and
owing the Credit Enhancer, (ii) the day following the Distribution Date on which
the distribution made to Class A Noteholders has reduced the Class A Note
Principal Balance to zero and no other amounts are owed to the Class A
Noteholders or the Class S Noteholders hereunder, (iii) the final payment or
other liquidation of the last HELOC remaining in the Trust (including, without
limitation, the disposition of the HELOCs pursuant to Section 12.1 of the
Indenture) or the disposition of all property acquired upon foreclosure or deed
in lieu of foreclosure of any HELOC and (iv) the Distribution Date in August
2024; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the date of death of the last
surviving descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof. Upon termination in
accordance with clause (B)(i)
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of this Section 7.01, the Indenture Trustee shall execute such documents
and instruments of transfer presented by the Sponsor, in each case
without recourse, representation or warranty, and take such other actions
as the Sponsor may reasonably request to effect the transfer of the
HELOCs to the Sponsor.
(b) The Sponsor shall have the right to exercise the option to effect the
transfer to the Sponsor of each HELOC pursuant to Section 7.01(a) above on any
Distribution Date on or after the Distribution Date immediately prior to which
the Class A Note Principal Balance is less than ten percent (10%) of the
Original Class A Note Principal Balance and all amounts due and owing to the
Credit Enhancer for unpaid premiums and unreimbursed draws on the Policy and all
other amounts due and owing to the Credit Enhancer pursuant to the Insurance
Agreement, together with interest thereon as provided under the Insurance
Agreement, have been paid.
(c) The Sponsor, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the HELOCs are to be released
to the Sponsor, appropriate documents assigning each such HELOC from the
Indenture Trustee to the Sponsor and shall promptly record such assignments.
ARTICLE VIII
Administrative Duties of the Servicer
Section 8.01. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall perform
all its duties and the duties of the Issuer under the Indenture. In addition,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer under the Indenture. The
Servicer shall monitor the performance of the Issuer and shall advise the
Owner Trustee when action is necessary to comply with the Issuer's duties
under the Indenture. The Servicer shall prepare for execution by the Issuer
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to the
Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform
such calculations and shall prepare for execution by the Issuer or the
Owner Trustee or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the
Owner Trustee to prepare, file or deliver pursuant to this Agreement or
any of the Basic Documents or under state and federal tax and
securities laws, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer to take pursuant
to this Agreement or any of the Basic Documents, including, without
limitation, pursuant to Sections 2.6 and 2.11 of the Trust Agreement.
In accordance with the directions of the Issuer or the
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Owner Trustee, the Servicer shall administer, perform or supervise
the performance of such other activities in connection with the
HELOCs (including the Basic Documents) as are not covered by any of
the foregoing provisions and as are expressly requested by the Issuer
or the Owner Trustee and are reasonably within the capability of the
Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the Servicer shall be responsible for
promptly notifying the Owner Trustee and the Indenture Trustee in the
event that any withholding tax is imposed on the Issuer's payments (or
allocations of income) to a Certificateholder (as defined in the Trust
Agreement) as contemplated by this Agreement. Any such notice shall be
in writing and specify the amount of any withholding tax required to be
withheld by the Owner Trustee or the Indenture Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in
Section 5.1(a), (b), (c) and (d) of the Trust Agreement with respect
to, among other things, accounting and reports to Certificateholders
(as defined in the Trust Agreement).
(iv) The Servicer shall perform the duties of the Sponsor
specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner
Trustee, and any other duties expressly required to be performed by
the Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or
dealings shall be in accordance with any directions received from the
Issuer and shall be, in the Servicer's opinion, no less favorable to
the Issuer in any material respect.
(c) Non-Ministerial Matters
. With respect to matters that in the reasonable judgment of the Servicer are
non-ministerial, the Servicer shall not take any action pursuant to this Article
VIII unless within a reasonable time before the taking of such action, the
Servicer shall have notified the Owner Trustee and the Credit Enhancer of the
proposed action and the Owner Trustee and the Credit Enhancer shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
HELOCs);
(C) the amendment, change or modification of this Agreement or
any of the Basic Documents;
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(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent to
the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(d) Exceptions. Notwithstanding anything to the contrary in this Agreement,
except as expressly provided herein or in the other Basic Documents, the
Servicer, in its capacity hereunder, shall not be obligated to, and shall not,
(1) make any payments to the Noteholders or Certificateholders under the Basic
Documents, (2) sell the Trust Property pursuant to Section 12.1 of the
Indenture, (3) take any other action that the Issuer directs the Servicer not to
take on its behalf or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(e) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Servicer under Section 8.01.
Section 8.02. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer
and the Indenture Trustee at any time during normal business hours.
Section 8.03. Additional Information to be Furnished to the Issuer.
The Servicer shall furnish to the Issuer and the Indenture Trustee from time
to time such additional information regarding the HELOCs as the Issuer and the
Indenture Trustee shall reasonably request.
ARTICLE IX
Miscellaneous Provisions
Section 9.01. Amendment. This Agreement may be amended from time to time by
agreement among the Sponsor, the Servicer, and the Indenture Trustee, in each
case without notice to or the consent of any of the Noteholders or
Certificateholders, but only with the consent of the Credit Enhancer (which
consent shall not be unreasonably withheld), (i) to cure any ambiguity, (ii) to
correct any defective provisions or to correct or supplement any provisions
herein that may be inconsistent with any other provisions herein, (iii) to add
to the duties of the Sponsor or the Servicer, (iv) to add any other provisions
with respect to matters or questions arising under this Agreement or the Policy,
as the case may be, which shall not be inconsistent with the provisions of this
Agreement, (v) to add or amend any provisions of this Agreement as required by
any Rating Agency or any other nationally recognized statistical rating
organization in order to maintain or improve any rating of the Notes (it being
understood that, after obtaining the ratings in effect on the Closing Date,
neither the Indenture Trustee, the Sponsor nor the Servicer is obligated to
obtain, maintain or improve any such rating) or (vi) to comply with any
requirement imposed by the Code; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Noteholder or any Certificateholder or the Credit Enhancer; and
provided, further, that the amendment shall be
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deemed not to adversely affect in any material respect the interests of the
Noteholders and the Certificateholders and no opinion referred to in the
preceding proviso shall be required to be delivered if the Person requesting
the amendment obtains a letter from each Rating Agency stating that the
amendment would not result in the downgrading or withdrawal of the respective
ratings then assigned to the Notes without regard to the Policy.
This Agreement also may be amended from time to time by agreement among
the Servicer, the Sponsor and the Indenture Trustee, with the consent of the
Credit Enhancer and the Holders of the Notes evidencing Voting Rights
aggregating not less than 51%, and the Holders of the Certificates evidencing
Voting Rights aggregating not less than 51% (which consent of such Holders of
Notes and Certificates given pursuant to this Section 9.01 or pursuant to any
other provision of this Agreement shall be conclusive and binding on such Holder
and all future Holders of such securities and of any security issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the security) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments on the
Notes or distributions or payments under the Policy which are required to be
made on any Note without the consent of the Holder of such Note or (ii) reduce
the aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all then outstanding Notes and Certificates or (iii)
adversely effect in any material respect the interests of the Credit Enhancer.
Following the execution and delivery of any such amendment hereto or to
the Policy, either the Sponsor, if the Sponsor requested the amendment, or the
Servicer, if the Servicer requested the amendment, shall reimburse the Credit
Enhancer for the reasonable out-of-pocket costs and expenses incurred by the
Credit Enhancer in connection with such amendment.
Prior to the execution of any such amendment, the party hereto
requesting any such amendment shall furnish written notification of the
substance of such amendment to each Rating Agency. In addition, promptly
after the execution of any such amendment made with the consent of the
Noteholders, the Indenture Trustee shall furnish written notification of the
substance of such amendment to each Noteholder and fully executed original
counterparts of the instruments effecting such amendment to the Credit Enhancer.
It shall not be necessary for the consent of Noteholders under this
Section 9.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Securityholders shall be subject
to such reasonable requirements as the Indenture Trustee may prescribe.
In executing any amendment permitted by this Section 9.01, the
Indenture Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that such amendment is authorized or
permitted hereby and that all conditions precedent to the execution and delivery
of such amendment have been satisfied. The Indenture Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Indenture
Trustee's own rights, duties or immunities under this Agreement or otherwise.
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Section 9.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Indenture Trustee, but only upon direction of Noteholders accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Noteholders. The Noteholders requesting
such recordation shall bear all costs and expenses of such recordation. The
Indenture Trustee shall have no obligation to ascertain whether such recordation
so affects the interests of the Noteholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 9.03. Limitation on Rights of Noteholders. No Noteholder shall have
any right to vote (except as provided in Sections 6.01, 7.01, and 9.01 herein
and Section 12.1 of the Indenture) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the Notes, be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder be under any liability to
any third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Noteholder shall have any right by virtue or by availing itself of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Indenture Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Notes evidencing Voting Rights aggregating not less than 51%
shall have made written request upon the Indenture Trustee to institute such
action, suit or proceeding in its own name as Indenture Trustee hereunder and
shall have offered to the Indenture Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Indenture Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Noteholder with every other Noteholder
and the Indenture Trustee, that no one or more Holders of Notes shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the Notes, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Noteholders. For the protection and enforcement of the
provisions of this Section 9.03, each and every Noteholder and the Indenture
Trustee shall be entitled to such relief as can be given either at law or in
equity.
By accepting its Note, each Noteholder agrees that unless a Credit
Enhancer Default exists, the Credit Enhancer shall have the right to exercise
all rights of the Noteholder under this Agreement without any further consent of
the Noteholder.
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Section 9.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS. .
Section 9.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Sponsor, Headlands Mortgage Securities Inc., 700 Larkspur
Landing Circle, Suite 250, Larkspur, California 94939, Attention: Peter T. Paul,
(b) in the case of the Servicer, Headlands Mortgage Company, 700 Larkspur
Landing Circle, Suite 250, Larkspur, California 94939, Attention: Gilbert
MacQuarrie, (c) in the case of the Indenture Trustee, at the Corporate Trust
Office, (d) in the case of the Credit Enhancer, Capital Markets Assurance
Corporation Credit Enhancement, 885 Third Avenue, New York, NY 10022-4834,
Attention: Managing Director (telecopy number (212) 891-1456 or (212) 755-5477),
(e) in the case of Moody's, Residential Loan Monitoring Group, 4th Floor, 99
Church Street, New York, New York 10007, and (f) in the case of Standard &
Poor's, 26 Broadway, New York, New York 10004, or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed to a Noteholder shall
be given by first class mail, postage prepaid, at the address of such Holder as
shown in the Note Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Securityholder receives such notice. Any notice or other document
required to be delivered or mailed by the Indenture Trustee to any Rating Agency
shall be given on a best efforts basis and only as a matter of courtesy and
accommodation and the Indenture Trustee shall have no liability for failure to
deliver such notice or document to any Rating Agency.
Section 9.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or of
the Notes or the rights of the Holders thereof.
Section 9.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.02 and 5.04, this Agreement
may not be assigned by the Sponsor or the Servicer without the prior written
consent of the Credit Enhancer and Holders of the Notes evidencing Percentage
Interests aggregating not less than 66%.
Section 9.08. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Note Owners, the Credit Enhancer and their respective successors and
permitted assigns. Except as otherwise provided in this Agreement, no other
Person will have any right or obligation hereunder.
Section 9.09. 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.
63
<PAGE>
Section 9.10. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 9.11. Insurance Agreement. The Indenture Trustee is authorized
and directed to execute and deliver the Insurance Agreement and to perform
the obligations of the Indenture Trustee thereunder.
Section 9.12. Nonpetition Covenant. Until one year plus one day shall have
elapsed since the termination of the Trust in accordance with Section 7.01, none
of the Sponsor, the Company, the Servicer, nor the Indenture Trustee shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Sponsor or the
Trust under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Sponsor or the Trust or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Sponsor or the Trust.
64
<PAGE>
IN WITNESS WHEREOF, the Sponsor, the Servicer and the
Indenture Trustee have caused this Agreement to be duly executed by their
respective officers all as of the day and year first above written.
HEADLANDS MORTGAGE SECURITIES INC.,
as Sponsor
By /s/Becky Poisson
-----------------------------------
Name: Becky Poisson
Title: Vice President
HEADLANDS MORTGAGE COMPANY,
as Company and Servicer
By /s/ Kristen Decker
-----------------------------------
Name: Kristen Decker
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By /s/ Richard Tarnas
-----------------------------------
Name: Richard Tarbas
Title: Vice President
[Sale and Servicing Agreement]
65
<PAGE>
State of ________ )
) ss.:
County of ________ )
On the ____ day of August, 1997 before me, a notary public in
and for the State of ________, personally appeared _________________, known to
me who, being by me duly sworn, did depose and say that he resides at
______________________; that he is the _____________________ of Headlands
Mortgage Securities Inc., a Delaware corporation, one of the parties that
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Notary Public
[Notarial Seal]
<PAGE>
State of )
) ss.:
County of )
On the ____ day of August, 1997 before me, a notary public in and for the
State of ________, personally appeared _____________________, known to me who,
being by me duly sworn, did depose and say that he resides at _________________,
____________, ________ _____; that he is the ______________ of Headlands
Mortgage Company, a closely-held California corporation, one of the parties that
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
Notary Public
[Notarial Seal]
<PAGE>
State of )
) ss.:
County of )
On the ____ day of August, 1997 before me, a notary public in and for the State
of ________, personally appeared _________________, known to me who, being by me
duly sworn, did depose and say that he resides at _______________,
_______________ _____; that he is the _____________ of The First National Bank
of Chicago, a national banking association, one of the parties that executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A
---------
HELOC SCHEDULE
A-1
<PAGE>
LOAN LINE
NUMBER LAST NAME FIRST NAME AMOUNT
424994 PIERCE LOWELL,DEBORAH 43000
454850 WILLIAMS JEFFREY,JULIE 33000
454893 MARTIN/SCHNEIDE LEE/JEAN 37200
454961 MILLER RONALD,NANCY 31500
454969 JERKUNICA MARINKO 66000
469356 PAULS SANDRA,TERRY 18500
469364 SAMUEL BRIAN,TERESA 19000
469373 BATZER RICHARD,FRANCES 50000
469387 SUMMERS RICHARD 18700
469912 BICKEL DARRYL J. 59800
469918 RONK MICHAEL,CAROL 26200
469982 GARCIA/SAHAGUN ALEJANDRO/ANABE 44750
470003 HAYES PETER,CAROL 40350
470179 JENKINSON BRUCE 24750
470233 EBY WILLARD/SANDRA 18000
473175 SOFFER ROGER 75000
475960 GALIE DAVID 50000
475982 WEITZMAN STANLEY 10000
476048 DAVIS-WHEATLEY CORA 10000
476076 ELSER GLENDA,RUSSELL 25000
476083 CONNICK TOSHIE H. 80000
476084 ALPER WAYNE M. 15000
476102 DELUCIA VIRGINIA 30000
476108 ROBB CARL,TERRI 38000
476113 WILLIAMS EDWARD,GLENDA 26000
476114 LO CLARENCE,GIANG 30000
476127 LUCKY KARIN 50000
476133 BUMANLAG DEE,PERRY 23700
476134 FIDDYMENT JUSTIN,TAMARIE 16000
476155 ZIGOUNAKIS JERRY,ROSEANNA 29000
476163 STEEB GEORGE,BRENDA 18500
476167 HU MARIA 14400
476168 DAGENAIS MIKE,MELANIE 13100
476204 FITE HADLEY D. 23300
476246 CORRICK KENDALL,RHONDA 19300
476253 SAPIENZA PHILIP,FRANCES 25000
476272 YOLTON MARK,KAREN 59900
476277 TURNER LEE,VIRGINIA 25000
476278 LARSEN RAY,GAYLYN 25200
476279 LOCKWOOD MALCOLM,PATRICI 30000
476280 SULLIVAN LEONARD,ELIZABE 35000
476297 YI KU,SUN 36200
476298 VARGHESE PLAVALIL,MARY 20000
476302 MACDONALD DOUGLAS,DIANNE 50000
476313 MULLINS/MULLINS ERSALENE/MICHAE 22300
476315 ALEXANDER TRILBY 100000
476319 KUNNAS DERRELL,NORMA 20000
476323 DALTON MICHAEL,LINDA 40000
476329 CHEQUER GLENN,BARBARA 50000
476332 STOLL JULIAN,MARTHA 30000
476336 SNMDT/SNMDT JAMES/RUTH 26000
476337 JANULAW ALBERT,SHARON 26000
476338 BARRY JUDITH A. 50000
Page 1 of 97
<PAGE>
476342 MATSUHARA GLENN,ELIZABETH 97000
476343 BOYD GROVER,OPAL 10000
476344 KITOWSKI KAREN 20000
476350 MOUNT CHRISTINE 26000
476357 SANTA MARIA RAYMOND,HERTA 30000
476367 GONZALEZ VIRGILIO,DAISY 27700
476387 THOMPSON DANIEL,JANET 8700
476391 SCHELL PATTON,SHARON 32000
476396 BORGMAN KENT/MICHELE 25000
476398 COLE JOHN,ROBINEVE 25000
476399 UBL JOSEPH L. 10000
480588 GEDDES RICHARD C. 28000
480728 BEER RAYMOND 100000
480744 GAISER/MORGAN ELIZABETH 50000
480880 HERRON KIM 34350
480895 WAER GEORGE,DEBORAH 24000
481331 SMITH LARRY D. 37500
481840 MIGDAL MARK 100000
482381 RODRIGUEZ RAMON N,LYDIA 46200
484545 DEL CALVO ALBERTO 40000
484573 ZIRBEL JAY 19000
484614 HEWITT ERIC,CYNTHIA 27700
484643 ROSS RHONDA R. 34500
484657 CAMPOS MARIO R. 68400
484666 DRUGE/POWELL DAWN/JANET 15500
484671 CHOI WON,DIAN 30000
484672 PASSER ANTHONY,SHARI 22500
484682 BROWN ROBERT,KIMBERLY 36000
484689 BOSTWICK DENNIS,MARILYN 31000
484707 HAYES ROGER,PATRICIA 35000
484720 TONELLI MICHAEL 13500
484739 SHAHBAZIAN RICHARD,F.LAMAR 57500
484749 HOWARD TERRI 22700
484783 HERNANDEZ/TELLO SERGIO/ANGEL 25000
484789 KUNKLE BRUCE,STEPHANIE 25500
484794 BENDER ROBERT 20000
484801 VICK WILLIAM,SUSAN 98300
484809 BRIDGES J.KEITH,COLLEEN 20000
484819 JENSEN BILLY,LAURIE 24500
484825 YAHR RAYMOND,KATHY 23200
484834 MIKKELSEN JOHN 75000
484836 MC SKIMMING DAVID B. 36400
484839 ROBLES ERNEST,MARY 31000
485726 POLLARD JEFFREY,ADRIEN 110000
485864 PARDEE KATHRYN E 35000
486602 SNYDER TROY,CAROLYN 16500
487296 DUTRA/HAGEN JOSEPH,MARINA 25000
487527 COLLINS NORMAN,JO 23500
487536 PENNA LOUIS,CHRISTINA 44300
487557 PELTON ROBERT 100000
487565 HAFIZI HESSAMEDDIN 33950
487576 WANDER HARRY,ILSE 37500
487581 LOPEZ BLAZ 19000
487590 RANKIN STEVEN,TERRIE 25000
Page 2 of 97
<PAGE>
487632 WOJCIK EDWIN,ANGELA 30000
487637 RHEAD KEITH,TAMMY 24000
487680 BARTON MICHAEL,KATHRYN 32200
489055 SANTOS ADAM,LINDA 50000
489064 CORTESI NEIL,ROSINA 40000
489065 MORRIS LANGDON,ELIZABE 41000
489231 KIM JONG,HYE 30000
489232 WHITE CHRISTOPER,KRIS 64500
489241 MIDDENDORF MATTHEW,CHRISTI 33000
489250 NATHAN LAWRENCE,RUTH 75000
489282 LEE YIH,SHWU 200000
489293 OWENS RICHARD,VALERIE 46800
489313 HEYING MONTY,DENISE 15000
489344 HETZEL GLENN 35000
489353 LAM GEORGE 50000
489387 COTT BRIAN,SHRILEY 23000
489397 CHAO WILLIAM 54000
489423 WIRTZ KENNETH,MINDY 30000
489484 BRACKETT LAWRENCE,BERENI 100000
489518 QUAN WEYLAND 100000
489520 RICHARDS ELIZABETH 198750
489527 CUNNINGHAM/GLUM MARK,ANTOINETTE 154500
489531 MATSUMOTO KAZUYO 32600
489706 ANDRADE NICHOLAS,ANERID 129000
489718 DABI JAY,MARISSA 35000
489732 PAPPAS JOHN 43000
489783 STOUT JIM,PEGGY 85000
489785 BIESINGER STEPHEN,REBECCA 50000
489827 NADER LORI 40500
489840 CYREK LESTER 46700
489853 CARTER CHARLES,GINA 28590
489873 TARONI MICHAEL,JENNIFE 37300
489887 SMITH ANDREW 29700
490005 CEDARSTROM ERIC,LORI 32000
490018 JANISSE ROBERT C 20700
490024 MARTINO ANTHONY,MARY 60000
490040 WHITSON CHRISTOPHER,SYL 150000
490077 GRUDEN JOSEPH,PATRICIA 37000
490079 MERRITT RAYMOND,SHERYL 24500
490106 HAWRANEK JOSEPH P. 100000
490121 WILLIAMS EDWARD 48500
490135 SHOSTED JAMES L. 24300
490222 PIZURRO GIOVAN B. 18150
490239 MCCLELLAN CRAIG/BECKY 22900
490244 CLARKE MARK/KAREN 50000
490253 BULLOCK JOHN R. 22200
490261 DIBERNARDO TONY,CYNTHIA JO 35000
490280 OVERTON ROBERT,NANCY 20250
490296 MERIDITH CARMEN,EDDIE 24700
490297 TYRA WILLIAM,CAROL 29500
490316 VARHOLDT VANCE,JULIE 30000
490330 PHILLIPS ARLENE,JOHN 11200
490333 DUBOIS JOHN 28900
490334 VALDOVINOS JOSE 12450
Page 3 of 97
<PAGE>
490364 BOYLE THOMAS,NANCY 21780
490528 REYES SONIA 30800
490589 DOYLE/DIXON JOSPEH/JANE 37200
490791 ALTAFI ABDI,LIELY 200000
490795 SMITS-VAN OYEN JOSEPH 35000
490798 GARDENHOUR PATRICK,ANDREA 56000
490828 ANDERSON ROBERT,KATHLEEN 58900
490834 FIRENSHTEIN SIMA 50000
490838 BENDANA LEONIDAS,ANITA 34500
490873 MABANAG HUBERT 29900
490908 HAHN BYUNG,SOPHIA 71000
490916 GIORGIO ANTHONY,LOREN 200000
490930 CHAN/KWOK SUNG,SIU 78100
490935 BARITEAU JOHN,LORETTA 60800
490989 LICURSE DAVID/PATRICIA 90000
491012 SLOSEK MICHAELINDA 85000
491029 POULOS WILLIAM/LAVON 20000
491136 RUTH GREGG 200000
491142 WOO JACKY 32400
491148 RUDERMAN JOAN 100000
491159 OVERFIELD SHERRILL/KENNET 196000
491170 NG YUKLUNG 50100
491174 ALLEN NOLAN 39300
491178 LOFTUS DORIS 100000
491180 O'BRIEN PATRICIA 50000
491183 PHILIP/PIETROSK BRETT,SUSAN 19200
491185 WILLIAMS CURTIS/SHARI 17000
491207 VILLANUEVA ARMANDO,MARIA 60300
491213 GARIGLIO STEVEN,CAROLYN 37500
491215 FORCHELLI JOHN 25900
491217 BAMBURY JOHN,DIANNE 100000
491227 CHILD CARROLL,NICOLE 34000
491234 ANCHUNDO ALEXANDER,CECEL 24700
491237 DOYLE THOMAS 36800
491238 BARCLAY JOHN A 100000
491239 CASTELLI/CASTEL PATRICK,TAMI/DO 18900
491244 KRUEGER/HALPIN CHRISTOPHER,LAU 37000
491266 SMITH CARRIE 18500
491269 WILKINSON WILLIAM,MARLENE 30000
491279 CHRISTENSEN/LEE STEVEN,JOHN 73500
491283 WONG/LEONG LAW YUET KIU/LI 75000
491290 WASIAK HENRY,VICTORIA 40000
491295 NG ARLAN 40500
491304 COHANIM BABAK,REBECCA 35000
491305 BAUM DAVID,MARILYN 200000
491306 CAVANAUGH/AGANO GORDON,ANNE 40000
491307 WINOGRAD FRED 138000
491311 DOYLE ROY,LORETTA 100000
491312 MIRANDA/MARCANO MARTHA/ROSA 70000
491313 STOCK DALE,SUZANNE 110000
491320 LANGLEY/GUYOL JULIET,BRENEN 20000
491321 CLEGG DAVID,LINDA 38500
491336 YUEN HELEN 18000
491339 ENGLEMAN MAURICE,SHIRLEY 50000
Page 4 of 97
<PAGE>
491341 MARTIN ROGER,KIMALA 50000
491363 PRATHER/HENDRIK LAWRENCE/JULIE 60000
491365 CONDON/BRANDT JOHN,CHRISTINE 97800
491367 SCHONKA/MATTHEW RICHARD/SUSAN 80000
491369 WOODWARD JOHN,MARY 50000
491376 OHLY ANNE MARIE 27700
491379 RIESAU SUSAN 20000
491380 WELCH HARRY,JANA 66600
491381 POWERS MATTHEW D 200000
491383 REINHOLD KAREN 100000
491387 ROSSI ANNE MARIE 75000
491390 FOX DAVID 40000
491392 SOLHJOU HOUSHANG,AKRAM 90100
491568 DOWLATSHAHI BAHRAM,MONIQUE 35700
491671 JENKINS WILLIAM,DEBRA 25000
491877 CRAYTHORN ROBERT,TERESA 40000
491979 WRAGG THOMAS,PATRICA 34900
492055 WEISS GEORGE 91500
492163 LARSON SUSAN C 24400
492181 WICKSTROM JAMES,GLENDA 73500
492199 BEEDIE VIRGINIA 12500
492267 MCDONALD/JOHNSN EDWARD,ELIZABEH 100000
492272 JONES STEVEN,GERI 50000
492306 MCLEAN P. SCOTT 160400
492314 DIAZ MANUEL,IRENE 33000
492332 SEDLOFF MICHAEL,JANICE 50000
492358 PARKER DAVE,SARAH 31500
492373 WEAVER/DEANGELO JAMES,MARYANNE 42000
492382 DIAZ PAUL,ARMIDA 30400
492385 FIGONE MARY,DAVID 49700
492388 WILLIAMS BONNIE 50000
492618 WORDEN DALE,ELINOR 47000
492651 ROBERTS JAMES,MARILYN 75000
492887 LI KAM,ANNA 41000
492929 ALVAREZ FREDDY,NORA 41000
493040 OLOW JONATHAN 68000
493068 MORGAN STACEY/KEVIN 27000
493207 SERRATO DAVID,ANN 75700
493210 BOTTFELD JOSH 54000
493348 TALLEY CHARLES,CHRISTN 38000
493455 BROWN SCOTT,LENA 16500
493473 MAHER,SMITH TIMOTHY,SHARON 76000
493496 MCKITTRICK JAMES E 70000
493506 FITCH CHRISTIPHER E. 15000
493529 DAVIS CHRISTOPHER J. 20000
493531 PAYNE PAUL,ANGELLA 32000
493552 CHASE MICHAEL,LINDA 100000
493555 WILSON ROBERT 43000
493596 OLSON TERRENCE 79900
493602 PIERCE PAUL G 40000
493603 BENNETT LOIS J. 25000
493611 DICKINSON ALLAN,CHARLENE 150000
493616 WELSH ROBERT,LESLEY 60000
493627 JERSTAD LUTHER G. 100000
Page 5 of 97
<PAGE>
493631 GUNDERSON WILLIAM,TRACEY 50000
493679 DENNIS LARRY,MARILYN 16400
493774 DODGE ALLEN,SUSAN 26100
493789 FORD WILLIAM A. 15000
493833 IHANDER/DAY FREDERICK 21000
493848 TOMASI BARBARA ROBINS 35000
493856 ROBERTS BRIAN,KRISTI 50000
493859 HAAS JAMES,JANET 10000
493880 OLSON MARK,RHONDA 25000
493900 HOSFORD STEVE,NORMA 20000
493905 HILL ANTHONY,KASEY 11300
493912 BOGUCKI DAVID,KAREN 200000
493959 MAYO ANDREW J. 136000
493966 GARRISON MARK,CYNDI 39300
493993 CROFT STEVEN,DONNA 98700
493995 BARNARD KENNETH RAY 16900
494002 HALL ERIC 30000
494017 OCHSNER KURT D. 15000
494034 HURLBUTT MATHEW 13500
494039 WILLIAMS CHRISTOPHER 22500
494053 BENNETT WILLIAM,PAMELA 20000
494057 SANDERSON ROBERT,BARBARA 25400
494060 MADER SHlRLEY,EDWARD 65000
494091 TARAYLO LYUDVIK 18200
494092 YARNALL LORALYN 39300
494112 BAGGERLY CLAY,LISA 95000
494129 HURLBUTT FRANK,BECKY 56000
494151 CUTTS AARON,DEANNA 37100
494199 MACHUCA FERNANDO,PEGGY 40000
494221 NASCIMENTO PATRICK N. 36700
494233 JACOBSON MICHAEL C 40000
494235 LOVE STANLEY,KAREN 89900
494238 TEXLEY JEROME L. 20500
494241 LOWE WILLIAM ROURKE 31500
494260 BUSS STEVEN R. 47200
494271 SMITH JEFFREY A 50000
494276 HICKS JAMES,CONNIE 100000
494279 PETTIT DOUGLAS,JUDY 21200
494310 RICHARDS WILLIAM,TAMI 31500
494313 RINGER RONALD B. 33600
494314 MEPHAM THAD H. 25000
494315 RODRIGUEZ CARL R. 50000
494338 WILSON AARON G. 39700
494340 KINGERY CATHERINE A. 43900
494351 MARSDEN DIANA LYNN 90000
494358 DIXON RICHARD L. 33500
494361 JONES ADAM L 61400
494364 BLAHUTA LES 110000
494365 ALAYAN AMIR 50000
494371 POLLOCK/BENNETT GORDON/ANNE 27700
494513 RODRIGUEZ MARC,MICHELLE 32700
494520 GIDAYA/BONDAD ERNESTO/CLEOTIL 76800
494875 KAPASI SAIFUDIN,SALMA 25700
494903 NISHIJIM YUKIHIKO,KEOTA 50000
Page 6 of 97
<PAGE>
495021 SAD-SASUD/RAYNE NEDJI/ILANA 41600
495032 MURRAY MARK,PAMELA 74800
495102 ROSS GWENDOLYN 47000
495118 MUGGERUD LARRY 200000
495122 HERKENHOFF LAURA,MARTIN 50000
495155 FLUEGEL DONALD,JULIE 40000
495170 GURNEY DARRELL 31500
495175 KATSENES CHRIS,SUNJA 20800
495181 DUTRO FRANK,LETICIA 23900
495218 RESS GARY,RAISA 45200
495241 VO HAI VAN 26200
495271 UEHARA HISASHI,SAYOKO 59500
495358 COHEN JOSEPH,SARA 37500
495366 LUDTKE JIM,SHARON 15000
495402 RADLO EDWARD 45500
495406 LINDEKUGEL ARTHUR,IVA 10000
495416 MARDESICH JOHN,CHERYL 20000
495417 JAMERO PETER,TERESA 18900
495419 GRAY THOMAS 13000
495424 WILLIAMS THOMAS G. 50000
495427 WELSH ANDREW,SUSAN 20000
495430 HICKS KATHYE 28000
495433 SMITH TODD,KEVY 50000
495440 COLABIANCHI VINCENT,LAURA 50000
495446 THOMPSON BURTON,SUE 20000
495457 CHRISTOFF CARL 40000
495468 MENDELSOHN/CARR BARBARA,KEVIN 40000
495476 BOLTE CARL,WENDY 50000
495477 GAY DAVID,TONI 17000
495480 MCGIVERN KEVIN P. 25000
495481 WALTERS DON P. 11800
495482 LUTON LINDA S. 12000
495485 THOMAS JOHN 10000
495486 BAUGH HENRY,JANE 50000
495489 JENKINS DANIEL,SHARON 43000
495491 STEINMAN IRVING,DIANE 200000
495493 BENNETT MICHAEL,CYNTHIA 15000
495495 ROSENGARDEN MARK 30000
495500 WHITE ANTHONY,LORIE 20000
495501 BYLSMA ROBERT,MARLENE 30000
495504 LOCK/JOVIN JANE/KAREN 10000
495508 HOWIE LARRY,CATHY 28000
495509 CESPEDES LUIS,FLOR 27000
495510 FOWKES KEN 50000
495512 SCHAFER DANIEL,DEBORAH 25000
495517 FISICARO MIKE,TAMMY 18000
495526 STEINBERG/ALEXA ALEXANDER/MARIN 30000
495530 LARRISON DONALD,TRUDI 20000
495531 BLADOW RONALD,IRENE 25600
495532 HENRY ADRIAN,PATRICK 27300
495535 HARRISON LARRY,SANDRA 15000
495536 FARNSWORTH CAROL,JOHN 25000
495538 MCDONALD RALPH,JANET 60000
495543 DERGOSITS MICHAEL,MONICA 68000
Page 7 of 97
<PAGE>
495549 CAZIER DAVID,JULIE 10000
495553 WU CHIH,LISA 50000
495560 LINDBLOM JAMES 10000
495563 JONES MATTHEW,CYNTHIA 30000
495571 MELNICOE JOHN,MARILYN 20000
495572 JAYYUSI GHASSAN,RANDA 30000
495584 SANCHEZ KENNETH 38000
495585 COSTELLO JOHN,LISA 25000
495589 BREW JULIAN,ALEXANDR 69900
495590 DILLARD ROBERT 35000
495591 STRICKLAND BRUCE,ROBERTA 27000
495593 ARENDS CARL,VERONICA 45000
495601 MURPHY DAN 25000
495604 LONDO ROBERT,JULIE 50000
495606 GILCREST STEVEN,DIANE 40000
495607 GIRLING DAVID 100000
495608 TENNANT CARL,SHARON 30000
495610 SCHAFFLER RONALD,NANCY 39000
495614 METZGAR JEAN 25000
495618 TSUI/JOE SAI,SANDRA 39000
495619 CROSS CROSS 38300
495621 WIGHT BARBARA,RICHARD 32000
495623 TRUESDELL WILLIAM,DONNA 42000
495626 MCHAM ROBERT,PAMELA 30000
495627 SINKS DAVID,SANDRA 15000
495628 REEDER/CROSS STEVEN/KENNETH 59300
495629 SMITH WILLIAM,MARIAN 30000
495633 WORTMAN WILLIAM,LAURIE 20000
495636 GARZA RlCHARD,JACKIE 32000
495638 RIGAUD DANE,DEBORAH 25000
495639 MOORE ARLAN,NIKKI 50000
495640 WHITEMAN JOHN,JULIENNE 15000
495641 DANG PRITHVI,TEJINDE 47700
495642 FIORILLO ROBERT,LORI 10000
495646 FAY MADELINE 50000
495647 LAVERGNE ARNETT 26000
495650 GARNER ARNOLD,FERN 15000
495652 TREJO MUCIO,MARTHA 40000
495653 KRELL NICK,CHRISTY 68000
495656 TAHIR KARNA,EMILY 50000
495658 RICK STEVE,BARBARA 10000
495659 ELLIS LARRY,CAROL 31000
495663 SOKOLIK KONSTANTINE,JER 186000
495664 GRINDSTAFF DAVID,JUANICE 23500
495667 KLEIN LINDA 100000
495669 CRANE-PERRY LESLIE,GEORGE 36700
495670 GARCIA MARIO,ANA LIDIA 20000
495671 MULLIGAN/KIESCH MARIE/MEREDITH 150000
495675 KING BOB,ROBERTA 36700
495677 TONG LAWRENCE,PEGGY 15000
495683 RAFTERY COLMAN,BRIDGENE 47000
495684 MARANO RALPH,DORIS 34300
495687 CHANDLER ROBERT,MITZI 19000
495688 GRAHAM WILLIAM,JULIE 25000
Page 8 of 97
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495691 MERCER CHARLES,PAULETT 30000
495696 SLONIKER FRANK 44400
495700 MERRILL NORMAN,JOLAINE 84000
495703 CAPLE-PAYREDER ALAN,NANHUI 35000
495704 KEENEY MARK,DEBORAH 28000
495706 MCBRIDE MICHAEL,REBECCA 62700
495707 RIDD MICHAEL 45600
495708 CALLAHAN COLLEEN 32900
495709 SINKIN/ANTRIM RICHARD,MERRILE 50000
495712 ALTAMIRANO JOE,AMANDA 116000
495721 ULVE WENDY 50000
495723 STEENMAN JOHN,JANINE 20000
495727 BRAND/SOBRASKA JEFFREY,CAROLYN 20000
495728 HEERSINK ROLAND,ELIZABET 56000
495730 ZABIT WILLIAM 127000
495733 GABAI MORAD 40000
495735 ZAHEER IQBAL,NAHEED 100000
495736 HOLMES DEAN,CAROLYN 20700
495737 PHILLIPS ROBERT,JAYME 24300
495777 PSITAS GEORGE 60000
495787 MELTON JAN 25000
495815 LOEFFLER/BLESSU JOAN/CATHY 37100
495842 CHU/HUANG WILLIAM/SHU 30000
496437 MONILLAS INOCENCID,NORM 19400
496504 COLLINGS DONALD,BETH 16500
496514 MOORE/PETTYJOHN DARYL,URSULA/GR 25400
496643 MARTZ MAXWELL,PEGGY 66400
496713 SHELTON ROBERT,LESLIE 47200
496746 ROBERTS KENNETH,JANET 46000
496783 PINES ALVIN,KATHLEEN 23250
496851 MINGE LAWRENCE,LESLE 18800
496872 RICHEY LAURA 30000
496882 RAY FREDERICK,ARLE 79000
496913 HINKOFER JOSE,ELIZABETH 45000
496933 HERMAN LLOYD 39700
496950 ASHLEY CAROL,MICHAEL 33700
496953 ROBERTS STEVEN,LADONNA 70000
496963 DINWIDDIE MARK,DARCY 37500
497003 BARNES/INMAN LARRY,JERRIE 12500
497027 HINTON BRENDA,RICHARD 20000
497068 KNATTERUD KENT,LYNELL 20000
497098 HIRSCHMAN DON,LESA 50000
497101 SHIN GIL,JIN 25000
497108 MALONE JOHNY,THERESA 40000
497116 REASBY HAROLD,RUBY 25000
497120 CHOI WAN,YOUNG 50000
497126 CHENG ALLEN,YEH 50000
497205 RULE W ALEXANDER 34300
497223 CHEIKY ERNEST,LINDA 18000
497262 KRAL KRAVOMIL 50000
497291 BISTLINE ARTHUR,AMY 36000
497380 COSENS KEVIN,JUDY 160400
497451 WALLACE WADE,LYNNE 25000
497472 CEREVANTES/JACA MANUEL/JACA 39300
Page 9 of 97
<PAGE>
497510 KASSEN WILLIAM,SUZANN 45600
497586 NASRAH NASSER I. 10300
497601 SANDOVAL VICTOR 41500
497604 ERBA DENNIS,KATHLEEN 67000
497644 KWONG WILLIAM,IVY 78000
497658 WRIGHT MICHAEL E. 25400
497675 HOFLING BARBARA K. 54600
497686 LEDGERWOOD GAYLE 42400
497689 SPITZER DOUGLAS 41400
497706 DAVIS RICHARD,LISA 25100
497711 DESOUZA NEWERTON,SANDRA 18400
497724 NEELY,MD JOANN 60000
497728 GREWALGREWAL SURJIT/HARBANS 50000
497746 ROWE THOMAS J. 50000
497759 DELLENBACH ROBERT/AMELIA 60600
497773 MOSKOWITZ BARBARA 49500
497830 FINLEY CONSTANCE 58400
497846 COURTNEY-THURMA ANN/THERESE 29000
497852 BENETTI STEVEN,VIRGINIA 50000
497870 BUCHOLTZ ANNA MARIE 33400
497883 WALSH KEVIN 108000
497886 GARCIA NOVAR 20400
497890 PULVINO ROBERT 15000
497911 PRUSS MICHAEL,IRINA 32000
497920 DURRANT/HUMPHRE ROBERT,CHRISTIN 43600
497924 CHAVEZ ROBERT/MARY ANN 42000
497936 STESSMAN AARON,JAN 28500
497937 DEBLOCK ERIC/EVELYN 42500
497970 RONAYNE MARK,BARBARA 70000
497980 STUBBLEFIELD NANCY 37200
498022 RAMOS/MEZA JOSE/SANDRA 12000
498029 PARSONS RYAN,MICHELE 38100
498040 BADRIYEH KHALIL,NAJAT 69800
498044 WALTON DELORES 40000
498056 BENTLEY JEFFREY 19500
498069 BACICH RICHARD/JUDY 50000
498098 COURTNEY JEREMIAH S 22800
498099 SEARLS JEFFREY 28500
498100 KATAGIHARA ELTON/MERCEDES 40500
498117 MILLER DAVID/KIMBERLY 25000
498121 FRIEDMAN/PERRY JEROME,GRAHAME 40000
498129 FERM B.RICHARD,TRACY 65200
498132 HENDERSON LARRY 24700
498144 RATRA BIRINDER,SURIND 28800
498268 WHITE/KRESPI CHRISTINE/MICHE 50000
498300 BOWER ANN 35500
498317 RONALD/BLOOMING SETH/CHRISTINE 42700
498416 SPECTOR SIDNEY,PENNY 95000
498489 IPPOLITO VICTOR,JILL 36500
498503 PARKER RONALD,HOLLY 33000
498509 VENEGAS JEFFREY,WENDY 52500
498534 BROWN TIMOTHY 46000
498544 FIGUEROA DAVID,WANDA 40000
498577 FOSTER ROBERT,PATSY 18500
Page 10 of 97
<PAGE>
498583 MANSFIELD SHELLEY 37500
498617 STANT GEORGE,MAUREEN 88000
498634 GENTZKOW GARY 40200
498647 WOLLONS PETER,KAREN 143000
498653 MCCAFFREY THOMAS,KAREN 13800
498657 KLEBAN MICHAEL,SANDRA 58500
498667 MARTA ALBERTO,MARIA 46900
498710 SAGE KIMBALL,STARLA 36000
498714 WILSON JACK 40000
498726 JOHNSON MICHAEL,ANDREA 14000
498735 RADOMSKI KENNETH,SHERYL 35600
498741 REITMEYER JANICE 59900
498750 GLOCKZIN JANICE,GARY 21900
498753 FRAZIER FRANK,CONNIE 15000
498755 ECKERT DAVID,JANICE 30900
498760 WOLKOYS/MASI RONALD/LORRAINE 26800
498800 ATWOOD DANNY,KATHERINE 39000
498813 APPELCOLLINS HOWARD,LOREEN 138000
498821 BAIRD SCOTT,LINDA 49500
498845 MARADEN RICHARD,MARGARE 25500
498853 POST DAVID 50000
498858 KRUEGER SCOTT,DIANA 32000
498861 BEALE IVOR,JEAN 45000
498862 TANNER HARRY,CHERYL 40000
498864 ANDERSON DOUGLAS 18900
498885 PAEZ JOHN,THERESA 25000
498886 BUTLER WILLIAM,LAURA 33300
498888 SMITH LINDA 35000
498922 SARNO ROMULO 47300
498924 SYKORA MIROSLAV,ANN 100000
498925 SHERMAN BRIAN,JULIE 32000
498927 DAVIS JEANNE 49200
498929 RUPPE DANIEL,STEPHANE 76000
498936 TORRES-FRANKS RACHELLE 19700
498940 WHEELER KENNETH 46300
498946 WILSON DONALD,PATRICIA 33000
498948 LAZZARINO ANTONIO,SANDRA 94200
498955 MORGAN MICHAEL,LOURDES 59000
498962 GURRERO JAMES,THERESA 50000
498969 BLOCK GERALD,JOSEPHIN 100000
498972 WEBER GERALD 48700
498974 MARTINEZ RANDY,CAROL 19000
498975 ELLIOTT DEBORAH 34800
498977 BOW WALLACE 37250
498978 SIMMONS BERT,BETTY 32000
498984 HERRICK JEFFREY 50000
499014 VON OSTEN JAMES,JUDY 26900
499015 BAJOR SANDOR,MARTA 75000
499018 YUTSUS THERESA 24000
499088 EISENHAUER LAWRENCE,TONI 50000
499089 PRICE DENNIS 72500
499103 FELICIANO JOE,ANN 150000
499111 RODRIGUEZ RIGO 25500
499114 BARMER PATRICIA 25400
Page 11 of 97
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499139 MCLELLAN LOUIS,NORMA 59900
499142 BABLA HARISH,VENU 39000
499150 CRUEGER LEIGH,NANCY 200000
499155 BATTLE CARLOS,JOHANA 30000
499162 YOUNG RICHARD,RENEE 25000
499166 ROEHMANN CLAUS,JOAN 21100
499174 WARD JEFFREY,GINA 90000
499178 WHITE AJ,DARLA 16000
499198 GREENWALD LOWELL,ALICIA 59900
499206 DALTON KEVIN,LAURIE 23800
499214 WILES DAVIE,GINA 43400
499224 DOMBROWSKI THOMAS 75000
499229 MORRISS ROBERT,VICKI 50000
499233 MARIEF MUKLES,DELMAR 20000
499236 BARDENHEIER JEAN,ANKE 58800
499243 PORCARO MICHAEL,CHERYL 100000
499247 PLACEK KAREL,LIBUSE 67500
499252 MCANALLY JEFFREY,SUSAN 48900
499265 PAYNE STEPHEN,KATHY 46000
499272 GROVES STEPHEN,JUANITA 30000
499299 BROWN ROBERT 31000
499302 FREGEAU DANIEL,JULIA 44000
499305 STAHOVICH JOE,MARCIA 150000
499309 TAYLOR RHONDA 27000
499315 ENGLISH PATRICK,OLIVIA 30000
499335 FARNEY DONALD,SUSAN 17000
499337 AVALOS M. YOLANDA 31100
499350 ENGLE WILLIAM,NANCI 100000
499396 VAN HAWKINS KENNETH 28000
499403 EPSTEIN JANET 44500
499404 LIANG VICTOR 50000
499414 FLANAGAN PATRICK,GAIL 66000
499415 BURCH RUSSELL 50000
499419 KETCHAM/TYNDALL MICHAEL/DONNA 38000
499426 FERRIOLS AUGUSTO,ARACELI 86500
499429 PEGG CAROLYN L 60000
499431 JOHNSTON KRISTEN 70000
499432 GU/CHEN DANGSHENG/ZHIYI 30000
499437 KARBASSIOON MEHRAN,SHOLEH 50000
499446 STRONG DAVID,SHARON 69000
499451 EVANS MARK,AMY 27500
499452 MORRISON/HEBERT DIANNE/MICHAEL 45000
499456 RENDA FRANK,LARREE 100000
499458 FRIEDLANDER ERNIE,KATHERINE 100000
499460 SERBANESCU DAN,MARGARETA 31900
499464 HU ALFRED 31500
499467 MAIDMAN MARK,ARLENE 50000
499468 HALL THORNE,BARBARA 50000
499474 BROWN GREG,DIANE 16500
499490 HUANG KUANG,YING-KUEI 100000
499494 KABRICH THERON,SEGUN 50000
499496 ROBERTS THOMAS,TERRI 26000
499497 LIPPS RENEE M. 25000
499500 WEED JACK,CATHI 30000
Page 12 of 97
<PAGE>
499503 FALL ROBIN,DONNA 78700
499505 PARK RICHARD 45500
499506 CHAN WALTER,WINNIE 24700
499507 DELLI-SANTI GEORGE 40000
499508 FRANK SANDY,PAMELA 71500
499512 POLSON GLEN,MELISSA 20000
499515 MCKINLEY JOHN,SUSAN 33900
499517 JENSEN RICK,SUSAN 50000
499521 ANDRE MERILYN,DAVID 48000
499522 WILLIAMS BILL,NANCY 31500
499527 MURCH JAMES,JILL 24000
499529 SCHLIWA/LITTLE BRAD/CELIA 29200
499531 CRUZ ANGELA 39800
499533 HUIZAR ELIZABETH 38200
499534 HUSS PATRICK,MARSHA 45000
499541 GAVRILOV,PODPRI EVGENI,MARINA 31300
499543 TOLEDO RAYMOND,FIDELIT 33000
499544 ROSHA UDI,CATHLENE 100000
499545 PONTIOUS GARY,ANGELA 150000
499553 ZUNIC EMILY 50000
499554 CARRINGTON KEVIN,SYLVIA 47800
499560 NORRIS GARY,CATHERINE 75000
499562 OATES GARY,LOUISE 18500
499565 RAFFAELLI KEVIN,ELIZABETH 41400
499571 FRIEDMAN MICHAEL,LINDA 20700
499576 AGIUS TANCRED,VERONIC 76000
499578 LA BROT GEORGE,PAULA 50000
499581 DEAN GEORGE 90000
499582 KOHLER WILLEM,SANDRA 50000
499584 SHERRILL MARCEE 50000
499585 ZIEGLER WILLIAM 150000
499587 KILMARTIN MICHAEL,JOANNE 56000
499588 FRISHER TOM,DEBORAH 24700
499589 MEEKS KEVIN,KATHRYN 50000
499591 BARRISH PAUL,CAROLE 200000
499594 KERSIS PAUL,HOLLY 40000
499595 MURNIN WILLIAM,TAMARA 50000
499599 SONENBERG/MILAN FREDRIC/EMIL 50000
499604 TEGGER CAROLLYNN 25000
499607 DEGNAN/NICHELS CARLA/THOMAS 35000
499609 MARSHALL ROBERT,TAMRA 43500
499610 PETERSEN JAN,DIANE 69800
499611 WYSOCKI EDWARD,LINDA 35500
499612 MORE HEMANT,ARCHANA 55000
499615 CRESSMAN DANIEL,VICTORIA 100000
499617 STARK/BOWERS EDWARD/SUSAN 47000
499623 ZITTERMAN MICHAEL,PAMELA 50000
499627 SHIH/FU JERRY,JENNIFER 40000
499633 CAMARENA NANCY,EMANUEL 15100
499634 PROMES/HAYNOS SUSAN,MARK 50000
499635 BALESTRERI ANTHONY 25000
499637 MILLER THOMAS,SUSAN 50000
499647 KIRSCHNENHEUTER TODD,CHERI 71000
499651 KABUS/HARFORD ROBERT,SANDY 38500
Page 13 of 97
<PAGE>
499653 TANG NAI,TERESA 33400
499655 FAST STEPHEN,RUTH 25000
499659 DEATS ROBERT,LAURALIL 100000
499662 RICHMAN CARY,LISA 100000
499664 RHODES CLAUDE,DANEANE 37100
499665 MENDONCA PAUL,JULIE 35000
499666 IBARRA DAVE 35000
499670 PEREZ NORMA J 20500
499671 CLINTON WILSON,KAREN 73900
499674 GROSBOLL RICHARD 30000
499677 STANDRIDGE DAVID,DEBORAH 49000
499678 MIN JOHN 50000
499679 WONG ALBERT,LANCY 33800
499683 ROORK ARTHUR,AGNES 91700
499684 AVRAHAM NATAN 40500
499685 BUCKLEY/HUTCHIN WILLIAM,JENNIE 35000
499686 PEAKALL/SWAIN SUSAN/JOHN 15000
499687 THOMAS WILLIAM,LORRAIN 80000
499689 KWOK PATRICK,JOYCE 100000
499690 HOFFMANN ROBERT,MARY 38100
499691 LEDEBOER DOUGLAS,COLLEEN 39600
499693 RENNIE STEPHEN,FRANCES 92500
499698 ARROYO RONALD,CECELIA 62000
499701 THOMAS JEFFREY,DANA 100000
499703 MCDONALD PETER 47000
499713 BLAUSTEIN JOHN,ELIZABETH 80000
499714 BRUCE JEFFREY,AURA 100000
499716 WELLS JEFFEREY,SUSAN 49000
499717 TROYANOVSKY LUBA 300000
499722 HOWELL JEREMY,BARBARA 50000
499726 GREASON SAMUEL 200000
499729 FIRESTONE C. HARRY,NANCY 34000
499730 SMITH JAMES 40000
499731 CAREY DAVID,PATRICIA 35200
499746 PIERRET JOSEPH R 50000
499747 BROWN BRADLEY,KAREN 49000
499750 SAUNDERS DAVID,HA 43000
499751 CHEN JAMES,CINDY 59300
499756 MAYS THOMAS,PAMELA 45500
499757 MA/CHAN ADRIAN/CECILIA 49500
499758 BUTLER ROBERT/BARBARA 38700
499759 CARDOZA GARY,LORI 21300
499761 TONEY BRIAN,MARIE 27000
499762 DE LA PENA/HOLI GREGORY/DEBORAH 50000
499763 HANCOCK KENNETH 35000
499764 HURD STANELY,GAYLE 71200
499765 HOFFMAN ANTON 174000
499768 MOON MICHAEL,DENISE 80000
499769 KENT JILL 41000
499773 DEDOMINIC/BERKN JOHN/SONIA 34500
499775 MILETICH THOMAS,MONIKA 85000
499777 PEUSE SHEILA,MICHAEL 40000
499778 BALDWIN BARRY A 150000
499781 DE LA ROSA LOUIS,MARY 89100
Page 14 of 97
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499783 BENNETT SCOTT,LORI 20000
499786 TRAEGER DONALD,SHARON 200000
499787 SHAWMIRIAN VARAZ,KARINA 32500
499788 LANDIS GEORGE,ADRIENNE 39000
499790 LARSON WILLIAM,DANEEN 50000
499791 HORRELL BARBARA 13800
499799 ARELLANO/ARELLN MICHELLE/EDITH 32500
499800 HENDRICKS REBECCA,GREG 16100
499802 HUANG/ZENG XIAOFEI,ZHENG 35000
499807 ARROYO VINCENT 22700
499808 KNIGHT WILLIAM,DEBRA 25000
499811 PYNE/PADGETT THOMAS,SUZANNE 96100
499818 HUNTER CAROL 35000
499825 LOVILL JAMES,HOPE 37500
499827 HOANG/LE QUANG,LOAN 32000
499831 MIZUKI HOWARD 20000
499833 SANDOVAL JOSE,ELISABETH 49000
499835 SHELL JEFFREY 72000
499837 PAULAZZO ANNA 39700
499842 GEISSE JOHN,LISA 47200
499845 TANG CHONG,YEE 80000
499846 SURPUR ASHWINI,ANILKUM 46400
499847 VOGEL RONALD 30000
499848 RIMLINGER JOHN,CHRISTINE 50000
499849 TAVAREZ LOUIS,CAROL 34200
499850 AVAKIAN EDOARDO 25000
499854 HANSRA SURINDER,BALJIT 17400
499856 MORALES DANIEL,CAROL 37500
499858 RIBERA MAXINE 29300
499862 LOPEZ ISABEL 50000
499871 THOMAS STEPHEN,LISA 29500
499872 GLEAVE STANLEY,LISA 20000
499873 DESALVO CARL J 50000
499874 ALY HUSSIN,MAI 100000
499880 HOFFMAN TED,PATRICIA 39300
499884 CALINOFF SHERI 94500
499885 FREASE/PATTERSO JOHN/CRAIG 40000
499891 WEINSTEIN JOSHUA MOSES 87500
499895 DESTABELLE/STEE MICHAEL,JENNIFE 100000
499897 SANDOVAL LINDA L 37450
499898 GURULE DOLORES S 38500
499901 SAETTONE GINA 50000
499902 HUGHES GARY,VICKI 30000
499915 BOLDT JEFF,JOANNE 38000
499917 CARTY GLEN,DENISE 35000
499918 CANNON TIMOTHY,JOANNE 35900
499922 LANTSMAN MARAT,ZOYA 28600
499926 SEYEDZADEH JAVAD 50000
499930 HOBBS KEVIN,BARBARA 33700
499933 KRAMER/LOYOLA MYA,JEFFREY 42900
499938 THIEL RICHARD,ANN 50000
499939 MOORE/HARWOOD KATHLEEN/DANIEL 16000
499940 DIEGO ALFREDO,VILMA 29700
499942 CALOIARO DOMINIK,MAUREEN 50000
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499943 DAVILA AGUSTIN,GLORIA 34000
499944 CORDOVA SHELI 42000
499945 BRACKETT CONSTANCE,JAMES 50000
499949 ARNESON STEVE,INA 35000
499950 SIMMS ROBERT 25000
499952 BESHARITI PARVIS 28100
499953 STOCKTON JON,KAREN 47000
499954 WALTERS CHARLES,LA VERN 50000
499956 VINAL MARION 20000
499958 CLEVELAND KENNETH,MARCIA 100000
499959 VALTR JAN,ANNE 116000
499962 CALICA LEONARDO 50000
499963 STEIN RICHARD,MELODY 45000
499971 TAKAI JOSEPH,PAMELA 50500
499974 STEVENS RODNEY,BARBARA 48500
499975 HERALD/KAHN MICHELLE/MARTIN 50000
499976 NIETLISBACH ALAN,LINDA 28000
499978 RUTLEN CARMEN 100000
499981 MACCONNELL RODERICK,ROSEMA 50000
499985 HUNT ROBERT,DANA 18000
499988 HANEY STEVEN 94000
499990 WILLIAMS THOMAS 37500
499996 DAVIS GARY,SUZANNE 163800
499997 DAE MICHAEL,BERTHA 60000
500004 DEAN ALFERD,SANDRA 35200
500005 HATHORN JOHN,NANCY 100000
500006 MOADEB ELIE,ELEANOR 96000
500009 ESBIN STEPHEN 29000
500010 ABRAMS/LEVIN JAMES/NADINE 150000
500012 YANTIS STANLEY 82000
500014 ALTOMARE VALLEY,DENISE 40000
500017 SOHRT MARVIN DEAN 22500
500018 MENAGE WILLIAM,LINDA 36500
500020 SHARIM RAHIM 100000
500021 LOUGHBOROUGH GEORGE 50000
500024 CHOW/FONG JENN/KAREN 45200
500026 HULLEY STEPHEN 45000
500028 SOLOMON DAVID 50000
500032 HUNT RICHARD,GWENDOL 100000
500034 ROBERTS DOUGLAS,GERALYN 100000
500035 JUDD CAROLYN H 59300
500037 PARRISH ELAINE 52600
500038 ATKINSON/EBNER SUSAN/PATTY 18400
500039 CONVEY MICHAEL,CAROL 25000
500043 SCHNEER DAVID,TAMI 50000
500044 PETERSON BRET,STARLET 30000
500045 ZAGARINO FRANK,ELIZABETH 46800
500049 MC WILLIAMS CLAUDE,MIALMA 27200
500050 SIRHAN MOTASIM 43000
500051 KHATUA TARA,KRISHNA 50000
500059 BRADFORD MARY 50000
500060 SCHOPP TODD,SHAE 25200
500061 ROSS BRADLEY,HELENE 100000
500063 CYPRUS KIP,AMY 100000
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500066 MARGOLIASH ROBERT,BRACHA 86800
500067 CANEPA TONY,LISA 33000
500069 AHN BYUNG,SANG 22000
500070 WOODRUFF WILLIAM 50000
500071 IDSO BARBARA,JEFFREY 36500
500076 DE LA MOTTE RAY,PATRICIA 52500
500077 BAKER WINTHROP,HEIDI 55000
500079 CAVALIER MARK,KATHLEEN 175000
500080 HENNESSEY DAN,LORI 35000
500083 ROSS LEROY,ENID 100000
500084 PAULOS CHARLES 39600
500086 SANTOYO JOSEPH A 67500
500087 CRIBBS DANIEL,ANN MARI 64000
500089 KING KATHERINE 100000
500090 SOLOMON PATRICIA 25000
500091 WILLIAMSON LOWELL,SUSAN 35000
500093 MAIER KURT,JAINA 77500
500094 MAYSE TERRY L 32800
500095 MARTINEZ RAYMOND,TAMMY 34000
500100 SUEN,TANG JOSEPH,LUCIA 40000
500107 HELMONDS RICK,KIM 71200
500109 BRIEN/SMITH LAURA/FRASER 23400
500111 MOROF JEFFREY,FRANCES 50000
500112 SHIRLOCK/VEECK CAROLYN/JAMES 50000
500114 OLIVAS MAGDALENA 12000
500118 HSU JENIFER 18900
500121 MARTIN NOREEN 50000
500122 COOK GEOFFREY,VALENT 50000
500124 MAHONEY DENNIS,RONDA 46400
500127 LEAHY/MORRISSEY FRANK/KRIS 100000
500129 SMITH JACKIE,ANGELA 32500
500130 HESS JAMES M 62000
500131 ROBERTS BOBRI,DALLAS 25500
500133 LEE TRACY,CHI-CHUN 41200
500134 NGUYEN/TRAN PHUOC/LAN 90000
500139 SMITH GARY,JULIET 12000
500147 SARGENTI GARY,JOANNE 46000
500156 DAVIS RICHARD 100000
500160 MAISTER MARC,MANDY 36900
500161 SAVAGE/ARRO JAMES/ROBERT 22400
500164 EVERED ROBIN,MELODI 45500
500165 LAL RAJ,KIRAN 14200
500166 WESTON ANN 49000
500167 CAI/ZHOU DANYING/JIANHUI 45900
500168 STEBBINS DEBORAH 163500
500171 CHU HSIEH,SUNNY 50000
500181 JELIN ARTHUR,SUSAN 14600
500184 IBRAHIMI ABDUL 72000
500185 YOUNG BILL 50000
500186 SCOTT JUDITH 68300
500193 SWAN KEVIN 30000
500194 MIGUEL SAMUEL,SYLVIA 29300
500195 FRITZ RONALD C 30000
500196 FIEN LORRI 43000
Page 17 of 97
<PAGE>
500198 LOFGREN/GEBSTAD CHRISTOPHER,GAL 39900
500201 DOMBROSKI JAMES,SHELLEY 50000
500203 FOSTER WARREN,DEBRA 16300
500210 NEWSOME STEVEN 60000
500220 DE LARA ROBERTO,MADELAI 52000
500222 MARKOWITZ DONALD,DEBRA 50000
500224 YEH DAVID,IRENE 100000
500225 BEERING ANDREW,CAROL 20100
500228 NIROUMANDRAD PAKSAR 15000
500231 LEE SERENA 93300
500235 OTT EDWARD,CATHY 65000
500236 KERLER BRIAN E 38500
500238 VANEK J PHILIP,BONNIE 79000
500240 PERRY MICHAEL,JUDY 50000
500241 YEH HSUEH-LI 50000
500242 HUGHES MARK ANDREW 21000
500243 HUFFMAN MICHAEL,CATHERI 28300
500244 FARNSWORTH KEVIN,PAMELA 48000
500249 NOVIN SHARON 50000
500254 DOSS DONALD,DIANA 42700
500256 BIGGS ANTHONY,JOAN 92100
500260 MANSON SYLVIA 50000
500261 FREE LISA,CHRIS 46000
500264 DE CLARIS WADE,MARCI 50000
500270 RUFFNER/DAVIES RICHARD/HELEN 40000
500275 SCHAEFER RICK,LORI 42000
500276 CARTHEW JEFFREY,TERESA 26500
500277 ENTIN HOWARD,F DEBRA 112500
500279 GRIJALVA RAYMOND,GEORGIA 42000
500280 JURKIEWICZ ROBERT,LEISA 38100
500281 SHIELDS CRAIG,REGINA 48300
500282 PONG PETER WAI-KUEN 100000
500283 PICCOLO DOMINIC,KATHLEE 50000
500284 GRAHAM JAMES,ELIN 74500
500286 ROZZI PAMELA 15700
500289 KIMBALL STEVEN L 22100
500293 BERSON BRIAN,KAREN 60000
500296 BATES SHARYN L 25000
500299 GREEN/MCLEOD KEVIN/KIMBERLY 30500
500300 LAUBER DAN,DEBRA 85000
500302 WILCOX ALBERT P 118400
500303 WHITAKER JOEL 24500
500309 KINAT CAROL 50000
500314 HORSLEY GERALD,SUZANNE 100000
500320 BUNTING J DESMOND,ALISA 32900
500324 KAWAKAMI KENNETH,LANA 48000
500325 MOORE DONALD,ANNA 20000
500327 HUANG GEORGE J 66000
500328 HARTNACK RICHARD,DAIL 94300
500329 BROWN CARA M 28500
500332 HANKIN DAVID,DEVORAH 104500
500337 WILLINGHAM JAMES/LORI 27300
500339 O'HARA SHAWN E. 16000
500341 MC HUGH CRAIG,SUZANNE 200000
Page 18 of 97
<PAGE>
500345 VANAMBURG KEITH,BARBARA 71100
500347 KAO YIN CHIH 25000
500348 LOTT KENNETH,GAY 37000
500349 WAN SHERMAN,BETTY 48000
500351 DOMANN/BOST WILLIAM/JOVANNA 120000
500359 CHELLIS GAYLE 40000
500361 TOUW PAUL,LAURA 100000
500362 HERMAN ALISON J 20800
500365 RAZA ORESTE,KERRY 25000
500368 HO RICHARD P 60000
500369 SPENCE KATY A 30000
500370 WILSON ELEANOR 40000
500371 WANLESS TREVOR,JULIE 26600
500372 HARDMAN CAROLYN,MARK 41500
500373 MOORE JOHN,KIMBERLY 59000
500374 STAFFORD RONALD,MARTHA 200000
500375 KNUTSEN KATHLEEN 50000
500378 BODYFELT KIRK PATRICK 30000
500380 KIM DANIEL,VIVIAN 49700
500381 ARSLANIAN RICKEY,TERRI 52500
500382 JOSEPHS JOHN 40000
500387 FRY JOHN,LAURIE 12200
500389 FONFARA/BURNS PHILIP/KATHLEEN 175000
500390 JACOBS JAMES,OLIVIA 110000
500391 RUDOLPH ANDRA 14000
500392 PRASAD DHARMENDRA 18500
500393 BORCK DAVID,LEA 46000
500395 FUNG PAUL,BERNA 106000
500425 BAHR TRENTON,BARBARA 37500
500440 POWELL LINDA 22000
500472 THOMPSON THOMAS 26500
500480 CAPUCHINO/VAUGH FRANCISCO/JUNE 24500
500492 DERING ROBERT,LEIGH 25200
500519 AHERN JAMES 39000
500531 BORGES DAVID,KAREN 193600
500538 PEABODY EDWIN,BARBARA 10000
500539 COWIE PAUL,NANCY 50000
500561 MCKISSICK MICHAEL,KAREN 38200
500570 SHEARER JOHN,SHANNON 17600
500595 MARX PHILLIP 30000
500606 HOOPS THOMAS,DIANE 50000
500634 LATTER GEORGE,BARBARA 65000
500637 HOLMES JAMES 38000
500643 SODERBERY ROBERT 31000
500683 HOENIG TIM,LORETTA 50000
500691 BOWEN ROBERT,BETTY 34500
500702 ROBERTS BRETT,SILVIA 46900
500741 FAUST KEVIN 20000
500746 LENHART/MCKENZI DANIEL/LAYNE 50000
500756 ZAVALA JOSEPH,VANDA 20000
500758 BOYD MICHAEL,GABRIE 200000
500763 NG THOMAS,RUBY 50000
500778 THORNTON TODD 33500
500809 MONAFO/MONAFO/M GERASIM/GLADYS/ 100000
Page 19 of 97
<PAGE>
500838 BROWNFIELD JEFFREY,ELIZABE 37500
500856 DENTE KATHLEEN 35000
500859 KIBBLE DONNA 21500
500869 MONROE JOHN,DEBRA 17250
500877 MYLIN RICHARD,BARBARA 29250
500895 CREAMER LARRY,JANETTE 10500
500904 CHABOT MICHAEL,JOYCE 25000
500906 DISTEFANO ROBERT,ELAINE 15500
500908 EDWARDS BRENT,JUDITH 13000
500911 KRUG JANIS 24700
500917 SMILEY TERRY,CHRISTINE 20000
500934 EMBREY SHARON 50000
500975 OWENS RALPH,JUNE 50000
500984 OGG SANDRA,JAMES 200000
501000 HULSE ROBERT,CYNTHIA 25000
501003 LEBLANC DENNIS,BRENDA 72000
501007 DAHLBERG JAMES,BARBARA 30000
501030 SCHLEY/KNUDSON SCOTT,VICTORIA 76500
501049 WELTE BRAD 50000
501087 ESCAMILLA JUAN 26400
501089 SOSA GUSTAVO,MARY 130000
501122 GARCIA LUIS,ALISON 35000
501153 GREENWOOD JOHN,DEBORAH 44000
501186 RODWAY CALVERT,ELIZAB 25200
501428 GALLAGHER PAULA,SEAN 42500
501434 CASSIN MARK,CATHRINE 35800
501445 KELLEY JEFFREY 25400
501456 PATEL TRUPTI,UMESH 37900
501462 TORRES PEDRO,DEBRA 31500
501475 CASELLA DANIEL 25000
501517 PROUZININ DIMITRY 50000
501520 MOURRY WAYNE 30000
501552 MENONI ROSALINDA 40000
501572 HIBBARD JOHN,CAROL 30000
501597 OMID HOSSEIN,HENGAMH 100000
501616 GRIGORYAN MOSES 50000
501650 VALENCIA RUBEN 47200
501669 WARD DOUGLAS 26000
501701 REDA JOSEPH,DEBRA 30000
501718 WENDORF KIRK,LESLIE 38300
501729 PHILLIPS DONNA 31500
501743 GUICHARD LESLIE,PHILIPPE 30000
501816 MURPHY CHARLES,CAROLIN 130000
501846 HODSON DEAN 41300
501863 MA KENNETH,LINDA 185400
501876 GREWAL BALJEET,PASHI 34500
501899 COLE/SCHOFIELD MARCUS,CHRISTIN 69700
501906 HARPER LANCE,HIROKO 49500
501936 MYKLEBUST JOHN,SANDRA 39400
501990 NICHOLSON STEVEN 16900
501991 MAJOR PETE,CONNIE 30000
502035 BLOCK/BENNETT STEPHEN/JULIE 46100
502048 SELDEN FRED,CATHRINE 100000
502088 MCCARTER,JR JOHN,BARBARA 24200
Page 20 of 97
<PAGE>
502170 WENTWORTH ERIC 25000
502172 REALS WILLIAM,MARY 34000
502182 ATKINSON PAUL 240000
502186 ROBERTS DIANA 56300
502191 SORTITO KAREN 16000
502193 SUN SHENG,BIN 13300
502194 CUCCINELLO NINO 22400
502196 CARROLL DANIEL,SUZANNE 33900
502198 CAREY SEAN,KIMBERLY 57100
502199 AMIGO HENRI,LAURIE 47000
502206 GOERKE JOHN,LAUREL 44400
502212 CLARK MARLENE 50000
502215 NAKASONE EDDIE 27200
502218 EPSTEIN MARC 89200
502228 MOHAMED JAMEEL,HAYMATTI 65000
502230 SAVARESE GLENN,SUSAN 47500
502233 TIEDEMANN MARK 32000
502238 CIANFRANI MICHAEL 74000
502241 FULLER KURT 31000
502260 WEISBERG WILLIAM,DAMARIS 40000
502266 MAKEEN ALADIN,MAE 65200
502268 EDWARDS JOHN,LUELLEN 45000
502269 DOW GARY 33700
502275 DUBIN/BODIE STEVENICAROL 120000
502280 SHIBAN JOHN,JANET 56500
502281 WAGNER EMILY 43500
502398 HAN GEMMA 19500
502465 KOVAR MARGARET 25000
502483 CROAL JOHN,DOROTHY 32500
502492 MC CLAIN BONNIE 14000
502501 MARTIN ROGER,LAURA 17000
502503 MC MAHAN DONALD,SHARON 30000
502504 ROSACKER GEORGE,JUNE 75000
502535 GANDHI SANDEEP 19800
502556 TETLEY RICHARD,RUTH 22000
502557 KLEIN RICHARD,CAROLYN 15000
502558 ROOZE GUSTMF 17000
502583 COLES ROBERT,CONSTANC 50000
502589 DASNO TERRY,GAIL 32200
502613 WESSLING MARY 41000
502619 MACKENZIE,JR. ALBERT,M.JANE 35200
502650 BARBA CLAUDIA 25500
502665 CIOLFE ANTHONY 30000
502669 PORTER PRENTIS,JUDITH 42700
502682 STOCK RAYMOND,BIRDELL 80000
502685 CHAPIN/MALLOY EDWARD/DEBORAH 90000
502720 MCCOY DANIEL,MARGIE 111600
502722 MITCHELL CHARLES,DIANE 33300
502753 GOINS LENNON 80000
502778 MUNROE BRUCE 76500
502780 FLORES OLIVIA 21800
502798 ALONSO LLOYD,MARY 22500
502799 FAIRBOURN JOHN,SUSAN 10000
502813 JACOBS STANLEY,PATRICI 42700
Page 21 of 97
<PAGE>
502824 CROSS LINDA 30000
502826 EMDE ROBERT,JEANNETT 100000
502937 FORTUNATO GIUSEPPE,ROSETT 30000
502967 BALTZER CHARLES 73300
502985 WOOL MATTHEW 100000
502998 MCMULLEN ROBERT,CHARLENE 50000
503004 HOLLINGSWORTH TOM,DARLENE 38000
503014 WAMBACH MICAHEL,LUZ 30000
503028 MIRELEZ CHRISTOPHER,MAR 15000
503036 KRAUSE JOSEPH,ROXANNE 50000
503076 PARKER JOHN 126700
503105 CHIASERA JOAN 20000
503115 WILLIAMS RUTH 44400
503120 SHARMA SUNDIP,BEENU 23900
503128 OWENS WILLIAM,LYNNE 40500
503165 GREENWELL WALLACE 41500
503220 OEFFINGER LARRY,KAREN 43000
503223 CUNNANE MICHAEL,KATHY 25000
503232 GATES/SNYDER ALAN/KATHLYN 15400
503237 GRACE ROBERT 30500
503239 PASCAL M.D./GIL STEVEN/DANNA 48500
503249 YOCHES GARY,KAREN 30000
503257 CLEARY MICHAEL,NOEL 10000
503266 BOYT RONALD,SUSAN 11600
503275 OLDS,JR. DONALD 37300
503288 DE JONG JEFFERY 24400
503302 PELLEGRINI GUY,ROBIN 20000
503322 HORN EDWARD,COLLEEN 35000
503330 PARKHILL ROBERT,ISABEL 32000
503336 HAMILTON RONALD,BEVERLY 32000
503348 RASMUSSEN LELAND,RHONDA 50000
503360 LEAFFER ARTHUR,BARBARA 65400
503370 RILEY HORTENSIA 30000
503372 ZAMMIT ALENE,OLIVER 35100
503380 ELLISON MARK 20000
503408 HASTINGS JAMES R. 62500
503430 COOPER JOSEPH,LISA 30000
503451 ZIRKLE ROY,MARY 42000
503483 KOJNOK MILAN 45000
503492 FREDERICK MILES,VIRGINIA 50000
503555 BAUMANN ALFRED 50000
503574 FRIESEN TERRY D. 39000
503608 MADERIOUS JOHN,JANICE 100000
503612 NICHOLSON CARL,CONNIE 30000
503623 MUTTERA ROBERT/KATRINA 50000
503680 ANDERSON JOHN,CHERYL 97500
503683 GUGLIELMETTI/CE CRAIG/VICENTE 34700
503690 WEST CHRISTIE 50000
503721 WACHTER RICHARD 50000
503804 HANSEN KENNETH,NADA 27500
503824 SAMMONS JOHN,KRISTIN 99800
503827 DOWNEY DAVID,KATHLEEN 52500
503856 LAWTON ANN 100000
503868 BOADITA/ALMEIDA ERIC,LORETA 62000
Page 22 of 97
<PAGE>
503915 DALY MARK,MICHELLE 42000
503925 MAREK RANDALL,ELIZABE 39600
504012 SANKOWICH LEE 35000
504026 AZZOPARDI JEFFREY 27000
504032 HUNT STEVE,ALLISON 100000
504047 ROSENFIELD HOWARD 20000
504052 HANLON WILLIAM/SMELLY 50000
504054 EVANS RANDALL 30000
504092 HOWVER BRIAN,JANICE 36900
504143 WALKER ALAN,MAUREEN 69000
504146 MASON LINDA 32700
504153 FINNEY/BANKS PAUL/HIRAM 10000
504156 ERICH SUSAN/WILLIAM 43900
504158 ZATZ HAROLD 42700
504163 KASTELMAN JAMES,DORENE 85000
504170 PALANDE ADITYA 23300
504178 GRANT GAIL MARIE 31500
504186 DILGER DERON 16500
504222 SILVA LEONARD 34000
504238 DUBNOFF MICHAEL 37000
504261 LAM/MENDEZ TIN,DEYSI 37500
504266 RHODES GLENN W. 54900
504304 TIAN/ZHANG ZONG-QIANG,LI 65000
504313 CHOVANEC PETER,JANA 37800
504324 HICKS/CAVANAGH DONALD/LINDA 39800
504338 MERRON/BENSON KEITH/TINA 40500
504407 WIESE JANET,DEREK 15000
504472 STUART RONALD,SUSAN 40050
504482 FITZGERALD SCOTT A. 14700
504498 COHEN RICHARD,GAYLE 11500
504507 VAN SICKLE MARK D. 18800
504520 CUMMINGS CHARLES E. 12300
504540 GOODLIFFE GORDON,NANCY 20250
504543 FARMER JOHN,ELAINE 32000
504557 FLANNERY/BROWN PATRICK/PAULA 50000
504565 NICHOLS JOHN R. 36800
504605 PROVOST DAVID,YVONNE 50100
504681 JOHNSON TERESA 25000
504741 ALLEMAN DAVID,SUSAN 71500
504768 HARRINGTON NEAL,DEANNA 25000
504773 MOORE/BLUE MARY/BAY 34500
504788 LAKEY JANICE C. 18900
504789 BROWN KIMBERLY,JANIS 55000
504805 HURT STEVEN 9100
504813 SABATINI MIKE 80000
504814 STUART CAROL 20000
504817 HENNING LAVERNE 35000
504829 WILSON JOSEPH,ANGELLA 10500
504835 LARSON JEAN 20300
504902 GREEN JERRY,JOYCE 35000
504908 HOOKS CARLYSLE 30400
504961 ROSAS JAVIER,XIMENA 37800
504968 CAMPBELL MALCOLM,KATHLEE 34100
505033 OKUDA HIDEKI,MIEKO 47100
Page 23 of 97
<PAGE>
505059 MOSS DONALD,ALEXA 71000
505064 CHINDRIS LIVIU,MARA 79000
505065 CHAVES JOHN 48700
505079 DE LONG GARY,VICKI 28500
505103 BUCKINGHAM GARY,ANITA 44000
505108 ROTH ROBYN 33900
505111 MILLER KENNETH,MARLENE 200000
505119 AMSTUTZ KENNETH,DORIS 35000
505127 WOLF JOHN,KRISTINE 33500
505136 ABRAMSON EDWARD,JUNE 50000
505148 HWANG KYUNG-AE 44300
505154 CLARK FRANK,MARILYNN 125000
505157 VENKATESH BANGALORE,SUJA 29900
505166 DELLORCO CHRISTOPHER 100000
505172 HOLT GARRY 50000
505177 LEWIS DAVID,TIFFANIE 49600
505188 PALMER EDWARD,DEBORAH 75000
505189 BURNINGHAM BRENT,DAWNA 50000
505191 KESSLER BARBARA 30000
505209 MARTINEZ ANTONIO,JACQUEL 38000
505213 GIESER CHARLES 30000
505225 DAVIS JACK,SUSAN 100000
505233 ANDERSON MARK,KAREN 31500
505235 STECKLER KEVIN,TERRY 43700
505239 SOROKIN ADAM,TERESA 36900
505252 GOODMAN CLAUDE,LORAINE 36700
505262 YOTS,JOHNSON JOHN,BARBARA 16700
505275 GHAMARINAZIN NOROLLAH/SHAHNA 44200
505285 STERN ALLEN,LISA 95000
505290 VAN DEN OEVER MARK,DIANE 50000
505293 PENENBERG BRAD,ANNA 160000
505295 LEWIS DAVID,PEPPER 40900
505297 CLODIO LOUISE 62000
505320 AYALA LUCILLE 50000
505331 WILSON BARRY,JENNIFER 48700
505332 WILLIAMS PAUL 43700
505334 MCMASTER SCOTT 30400
505336 ZARRINNEJAD SEPIDEH 44000
505339 KAGAN ROD 100000
505343 MOR MITTRY,CATHERIN 40000
505350 STEINBERG ROBERT,JOY 124000
505360 QUARANTA NICK,RUBY 200000
505366 CANNON ELIZABETH 85000
505375 ZAKARIAN EDWARD,NATALIA 31500
505382 YAMAMOTO MICHAEL 20000
505435 BENNETT MICHAEL 40000
505447 SPIELER NORMAN,MARSHA 122000
505458 WU,LIAO MONGDAH,CARRIE 28800
505470 COOK/PERSON JAMES/ANNE 41800
505476 BLAKE DONALD,KATHRIN 20000
505481 TRAN TRACEY MUI 25000
505491 POGOSYAN AKOP 23000
505521 KING ANDREA 50000
505532 SCHLESINGER ERIC,JOANNE 40000
Page 24 of 97
<PAGE>
505542 WINNER LESLIE 62200
505550 FEEHAN VINCENT 37800
505562 MONTRONE JOSEPH,MICHELE 40700
505568 MARKOWITZ/GOTTL LISA/NAOMI 56100
505587 CASTELLI ALEXANDER 100000
505614 BAKHARZI SAID 39000
505625 HEIL DAVID 50000
505632 CRANE STEVEN,JUDITH 25000
505634 NELSON/CHAN KEVIN/ISABEL 57200
505635 RAPPAPORT ROBERT 100000
505638 BEROOKHIM BEHROUZE,ELIZAB 50000
505639 FRANKLIN RICHARD,ELLEN 15700
505641 LIU REBECCA 72500
505649 LARSEN DAVID,JUDITH 50000
505657 BERGER DONELSON,JANE 90000
505665 LELCHITSKY IGOR,TATYANA 50000
505678 LEE JOHN 24000
505716 HAYDEN KENNETH,PATRICI 85000
505717 GOLDRING RANDALL,LYN 84000
505724 HERSHEY/VAN HOR RUTH/SUSAN 175000
505738 RAMIREZ LORI 40100
505742 NORTH JAMES,LYNETT 17600
505747 MACKEY SHAWN 67500
505753 BYRNE/PULEO RUSSELL,LEESA 135000
505754 TUTHILL GORDON,MARY 200000
505770 PYNE KEVIN,CAROLINE 30500
505780 TIEMAN DANIEL,KARI 40500
505783 CURTIS JOSEPH F. 43000
505793 HOLLAND KEVIN,JOY 52800
505798 BOND LAWRENCE,JENNIF 242000
505801 FORD TERESA 36500
505814 BLUNDELL MICHAEL,BOLETTE 42100
505818 HARDY MARGARETE 52500
505825 TAYLOR PAMELA 17500
505832 WEISS ROBERT 21800
505834 LOSCH RONALD,ELISE 34000
505835 MURPHY MARY 100000
505847 REID ALEX,LISA 29700
505848 SKAFF JOSEPH,EDWINA 200000
505859 FOX GERARD 120400
505865 PITT JACQUELINE 28500
505866 PIER MAURICIO,LIORA 34200
505890 JEFFERS ROBERT,KAREN 108700
505894 YOUNG BARTON,CYNTHIA 92200
505896 WILSON/SULLIVAN SCOTT/ROBERTA 37400
505900 SCHMALTZ/GIANET RONALD,JAN 37800
505904 TESS STEVE 96300
505913 EARLE KATHLEEN 33700
505915 WALSHOK MARY,MARCO 100000
505920 BURNELL WILLIAM,CAROL 39300
505922 CHENG HSIUNG,LUCINA 50000
505923 FLANDERS MICHAEL,CHERYL 40900
505945 TOWERS KENNETH,MARSHA 25000
505963 HYMER DAVID,THERESE 52000
Page 25 of 97
<PAGE>
505977 LIPSKY RONALD,JANE 70000
505997 MACHINSKI GERRY,CAROL 20000
506001 WOODS WILLIAM,MARY 33500
506010 ALBERT DAVID,JERRIE 20600
506038 ARCIDIACONO PETER,KRISTIN 35600
506052 PERRY H. L. 45500
506060 KUNKLE LYNDA 22000
506069 DAVIS JESSE 21500
506075 BURRY MARK,PATRICIA 38000
506080 JERGER TUZO,KRISTEN 20800
506082 BIRCHALL RICHARD,ALTHEA 31200
506085 DIRKSE KENNETH,TERRI 29800
506097 CARIKER JAMES 99900
506110 CALLAWAY KENNETH,IVY 29000
506111 WITTMAYER BRENT,SHARON 19000
506113 ROBERTS KAREN 40000
506115 TAYLOR DONALD,KATHLEEN 28400
506125 MAC CARTHY ALAN 30000
506135 OBRAZTSOV VICTOR,ANNA 21300
506154 CRESTANI JAMES,VICKIE 87700
506161 SAVAGE RAELYNN 30900
506186 ANTHONY JERRY,NAOMI 24700
506194 GOETZ SANDRA,DAYSON 34500
506211 MARTINEZ RICHARDO,GLORIA 33000
506225 DEL RUTH THOMAS,PATRICIA 40000
506227 SAIA/SHOCKLEY RONALD,DEBORAH 39000
506237 DYKENS JAMES,MARGARET 33400
506239 NIGHTINGALE LOIS 50000
506243 LUCKMAN ANTHONY,LYDIA 50000
506250 WRIGHT FREDERICK,VALER 25300
506279 COTA JESSIE,JOANNE 65000
506307 MORRIS VICTOR,JUDY 30000
506309 HOLMAN ELIZABETH,CRAIG 34500
506318 LEVY THOMAS,ALINA 33700
506322 LEWIS MARGO 15000
506331 SMITH DAVID 43000
506336 NEWTON ROBERT 53600
506354 SLANKARD DON 46500
506424 MOORE STANLEY 35000
506448 SEPULVEDA NANCY 24700
506454 LA FATA JOSEPH,FRANCES 35000
506474 ROCKWELL HARRY 104000
506477 ACUNA ROBERT,JENNIFER 49000
506513 PORTER FRED 80000
506536 MEZA GILBERT 26200
506538 FERNANDO GENE,CRYSTAL 100000
506542 ECKIS JAMES 30500
506543 IVY DONALD M. 16800
506544 LEBERT MICHAEL W. 25500
506551 ROACH JAY,CHRISTINE 37800
506558 KARAS STEPHEN,CANDAC 150000
506562 LORINGER PAUL,MARGARET 105600
506564 KOLASINSKI DONALD,TRISHA 24500
506567 DESIMONE ROBERT,SUSAN 100000
Page 26 of 97
<PAGE>
506585 CONRAD BARRY 53500
506605 BEDFORD/EITLAND THOMAS,KRIS 42000
506610 SEBRING RANDALL,RENEE 40800
506614 KITAY HOWARD,KIM 43000
506616 VERGARA NYMPHA 34000
506632 CHILELLI QUIRINO 80000
506648 GODINEZ JUAN,RUBY 50000
506661 MENDLER MITCHELL 16800
506665 WIKSTROM ROLF,INGRID 53000
506673 SKEISVOLL BENTE,FINN 50000
506677 HEIE JOHN,DORINE 62800
506685 HOAR WARREN,ANNE 78600
506694 TAYLOR ARTHUR,CELIA 37100
506713 BREMNER JAMES,DONNA 39400
506738 ENGLUND PHILIP,SANDRA 35700
506768 SMITH SCOTT,DARCY 45000
506777 WALKER MARY 19500
506792 SITTER MAX,DEBRA 25800
506795 BEAULOYE RONALD 23000
506804 MILLER KEVIN,TERRY 50000
506825 CORRAO/MANAKA ANDREA,ROYAL 50000
506826 MAGUIRE WILLIAM 116000
506833 MULLIN PETER,MICHELLE 67000
506837 LUCAS DIANE 20800
506842 FLORES ANSELIMO,FERN 25000
506872 CIANOIMINO JAMES 100000
506875 CRUZ/ADAMOS JOHN,DONA 35000
506883 BURTON DENNY,SHARON 15000
506884 VERA ROSA 18000
506886 TAKAHASHI HOWARD,HESAA 18500
506897 JEDERBERG-ROACH SHEREE 50000
506903 SAWYER THOMAS,HELEN 100000
506904 TEDESCO/TIBBITT STEPHEN,PAMELA 50000
506906 GONZALES OFELIA,ALEXANDE 43000
506908 MCMANUS JOHN,DEBBIE 56200
506911 KOSIREDDY SREENIVASA,SUNI 30300
506913 KLUGER ANDREW M 75000
506915 GERATY JOSEPH 36000
506916 BARENDREGT PAUL,ANNIE 50000
506918 RANNEY JOSEPH,DEBORAH 45300
506919 BURKE WILLIAM,YANELA 150000
506920 WINSLOW/WINSLOW GREGORY/FRANCIS 100400
506923 HEINRICH WOLFGANG,ALEXAN 40700
506928 BEBB WAYNE A 120000
506930 KERBLESKI JOHN,MARIAN 56800
506932 COLE DEBBIE,GERALD 31000
506936 SHALAFELTER RONALD 36200
506937 AHMADI AHMAD,ANN 30000
506941 HSAIO CHANG-LING,TE-H 122900
506942 TASKER MICHAEL,SUSAN 27000
506944 RYAN JACQUELINE,RICH 200000
506945 WAGAR TIMOTHY J 34600
506946 TELLEFSEN DAG,BENTE 300000
506949 DAVIS JIM,DONNA 12000
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506960 PAN,CHEN DONG,ZAJING 31600
506963 BINNS-SMITH CHRIS,SYLVIA 45000
506964 SALEM,MOKHTAR KEVIN,NAHED 100000
506965 FRASER JUDITH,COSMO 100000
506967 ADAM RICHARD,LINDA 60000
506972 SCHUELER,CHRIST WILLIAM,REBECCA 41000
506974 WOO KENNETH C 33000
506977 MYRICK JAMES,DENISE 45000
506978 IRWIN MICHELLE 37600
506979 MORGAN ERIC,EILEEN 38000
506980 DUARTE/DUARTE MAGDALENA,MANUE 15000
506988 LAMENS/DIJKSTRA JOHANNES,SOPHIA 40000
506989 FUNK JOHN,BARBARA 30000
506993 WITTENBRINK CRAIG,DEBRA 28600
506994 POLANCO ADOLFO,ARMINDA 25000
506995 NICKEL DANIEL,PATRICIA 100000
506996 THOMAS WARD,TRACY 37700
506997 GREEN III GASTON A 37000
506999 LAFAYETTE GREGORY,JOLEEN 40000
507004 KHOO HUI 45000
507005 LONG LAWRENCE,CHARLO 50000
507007 ALLEN,PROKOP F RICHARD,DOROT 46400
507009 FRANCO EUGENE,STEPHANI 37500
507010 CHAPMAN SUSAN E 98000
507011 CONKLIN SUSAN 100000
507013 HSU,CHAO RAYMOND,GINGER 90000
507015 ROBERTSON ROBERT,EVERIL 100000
507016 CAMPBELL CLAYTON,SALLY 100000
507017 WRIGHT DAVID,GIULIA 36900
507018 LEE YONG,SOENKYUNG 44000
507019 JURVETSON STEPHEN,KARLA 184800
507021 WRATTEN DARCY 24100
507023 TOBIN LAURENCE,JOAN 100000
507025 INTAGLIATA FRANCESCO 50000
507026 HARSHBARGER WILLIAM,KAREN 48000
507028 TSUMURA KEN 80000
507031 HITTLEMAN GREGORY,PAMELA 100000
507032 MATTOS NICHOLAS,ROBIN 50000
507033 SAGE SHARON 35800
507035 CLYDE HARRY,SUSANNE 25000
507038 JANSSE JOHN,BARBARA 70000
507043 ADAMS HERBERT,GENEVIE 100000
507048 GREENBERG RICK,CHOI 45500
507049 GLASSMEYER GERARD 40000
507056 MERSCHAT MARTY,DARLENE 37200
507058 DAHL JEFFERY,MARY 100000
507068 FLANIGAN MARY 15000
507069 TANN JAMES,MARGO 100000
507070 KUTA JOHN E 42400
507071 WENG,WU SHAOHONG,XIAOYA 20000
507072 BALDWIN JAMES,MAUREEN 50000
507076 FELDMAN LEONARD JAY 200000
507077 ROS JOSE,LAURA 33000
507078 JOHNSON JASON,MARIJANE 30000
Page 28 of 97
<PAGE>
507079 BARR TIMOTHY,SUZANNE 37000
507080 WATHOR DANIEL,DOREEN 17300
507082 WATERS MICHAEL,NORENE 41700
507083 PHILLIPS,TREVIN WILLIAM,REBECCA 100000
507084 HAYES SIMON,DEBORAH 36500
507085 KELLY,NICOLS TERENCE,ALISON 48000
507086 LEONES KATHLEEN,JOHN 100000
507088 LINDGREN BRUCE,KAREN 146000
507097 BEACH RICHARD,LENA 30000
507098 DEMOSS DAVID,CAROLYN 25000
507102 TALIS MICHAEL,ELENA 84600
507103 LYSTER JULIE,JOSEPH 95000
507105 MEYER ABIGAIL G 75000
507107 OLMOS MARIE R 50000
507111 NIJJAR PARAMJIT S 28600
507114 ERIKSON PATRICIA 50000
507116 KRIVANEC EARLE,MARION 31800
507117 FRAZIER JEFFERSON 58000
507119 IYER,KRISHNASWA RAMESH,MEERA 29400
507121 RODRIGUEZ ARMANDO,GUADALU 85000
507122 SOSA GUADELUPE,ANGEL 34200
507124 COOPER RICHARD,TERESA 60500
507125 MAYER HILDEGARD 33000
507126 TWU DAVID,LANY 41000
507128 REYNOSO FRANCISCO,EDELM 20000
507129 CHABRA YASH,KRISHNA 99000
507130 CARLSON DAVID,CAROL 30000
507134 NORTON,MORGAN RICHARD,DEBORAH 43400
507141 GROSSER/HEUBLEI ADAM/LYNN 73400
507143 TAYLOR/TAYLOR JACK/SUZANNE 90000
507144 ANDERSON THEODORE,JANICA 100000
507148 VALENT JOSEPH,JEANNE 100000
507156 TRUITT JAMES,DENISE 50000
507159 KURSE RAVI,SANDHYA 23300
507160 IDNANI/LIU NARESH/IRENE 35000
507161 MEERSMAN THOMAS,SALLY 100000
507163 SASO STEVEN,PATRICIA 25000
507168 LEHR MICHAEL,LORI 44000
507170 THOMAS EDWIN 31000
507171 HAGN DONALD,KATHERIN 90800
507173 ROBERTSON FRANK,JILL 33000
507179 THORNTON HOWARD 100000
507182 CHAN JOANNE 44000
507184 SORRELLS STEPHEN,PAMELA 48800
507186 BRINTON MITCHELL 28900
507188 SHEN,LI CHONGHUI,SHAOLI 34500
507189 YOUNG KENNETH,GERALDI 40000
507195 DER TOROSSIAN GREG,DEBRA 135000
507197 TROMPETER/WECKE PAUL/E. LILY 25000
507199 BIEBER JEANNIE 39000
507200 CHENG REGINA 50000
507207 CAMPANILE DARIO,MICHELE 99000
507209 VAGANES MICHAEL 34500
507213 PINELLI ANTHONY,MARGARE 98000
Page 29 of 97
<PAGE>
507214 SALCIDO ANGELO,TERESA 25000
507216 GLEESON PATRICK,SIDNEE 45000
507218 FOCARAZZO JOHN 32700
507220 KOSAR BRIAN,NICOLE 48500
507223 BENSON EUGENE,ANNE 50000
507224 TOM,DE ST GEORG DAVID,JENNIFER 200000
507227 DANG/SMITH DAVID/JEAN 69000
507228 BENTLEY LYNN,KAREN 150000
507229 PAULSEN STEPHEN,DIANE 30000
507234 NELSON DANE,JULIE 200000
507238 GLAUBER LEONARD 50000
507239 HJELM,GRASSET LAURIE,FREDERIC 40000
507242 MUELLER CONRAD,SUSAN 100000
507248 HUBER MICHAEL,FRANCES 50000
507251 DUNN WEI PONG,YU-TEN 60000
507399 MAYBERRY AINSLEY 100000
507597 GUIRAGOSSIAN JIRIR,SIMA 20000
507905 GOURISHETTY ASHOK,SUNITHA 31700
507908 LEE JAMES 22300
507917 O'CONNOR JOHN,JUDITH 34000
507920 NAKATANI WADE,RUTH 20000
507922 DIAMOND DALE,MARIAN 19700
507925 LIEW JEFFREY 25000
507932 MICONI DAVID,CYNTHIA 20000
507934 FULTON WILLIAM,CHARLEN 25900
507938 RUCKER ARNOLD,MARGARET 68300
507946 REED MARK,JOYCE 24000
507947 JONES LORIN,MARION 31900
507955 SMITH DONALD,NANCY 21000
507956 DRISCOLL/OUNKEO JOHN,CHANTHANOM 35000
507957 HAGERTY MICHAEL,DONNA 89900
507960 LUNA JOHN,DONA 24500
507961 OSBORN TIMOTHY,DONNA 16000
507963 SIDBECK MARY C 58000
507972 BEGLEY CHRIS,SHEILA 25000
507977 KUERBIS PAUL/CATHYANN 86700
507979 PATTEN DOUGLAS,ANNETTE 20000
507980 RYLES ASHLEY 50000
507982 WHALEN KEVIN,MARY LOU 200000
507988 JAMISON LILLIAN,MARC 20000
507989 CENTONI Oscar,Mary 21000
507990 GOLUSZEK DANIEL,MALGORZA 30000
507991 BEYROUTI/ANDERS ALAN,CHRISTIANN 39400
507996 HOHMAN ROBERT 100000
507998 ANDERSON JAMES,DIANE 42000
508002 OVERTON THOMAS,JOHANNA 35000
508003 GUILD GREGORY,LENA 60000
508006 MOXLEY FRANK,HEATHER 50000
508009 WU TIM,SHEILA 45000
508013 BLACKWELL KEITH,JULIE 73200
508016 SCOTT DENNIS,MAUREEN 33000
508018 BARON MARGARET E. 73000
508021 GUTHRIE JAMES,VIRGINIA 35000
508027 LYNCH PAUL,LEIGH 20000
Page 30 of 97
<PAGE>
508028 BECKETT PETER 21000
508031 MOLKENBUHR WILLIAM,SUSAN 50000
508032 MCGRAW ROGER,JANET 13800
508038 VOSS MICHAEL J 20000
508041 AMIRPOUR PARVIZ,FIROUZEH 25000
508042 MALTBY JOSEPH,LESLIE 50000
508043 BRUSH SHERIE 14100
508044 GABITES MARK,DEBRA 30000
508045 BUENAGUA/BUENAG ARMENGOL/GLORIA 30000
508046 CURTIN REATHA,DONALD 25000
508049 LENTZ STEVE,LAURA 49400
508050 FOXALL MARY 18000
508051 PADRID JOSEPH,SUSAN 34000
508052 MATHON PHILIP,JACQUELY 23500
508053 CARR/KOSTER FRANK/RICHARD 23000
508061 GARNER ROBERT,MARY 37600
508062 GALLIGAN JAMES,BARBARA 45000
508067 LIM MAXIMA 40000
508068 SLATTERY KERRY/KAREN 17000
508077 FOURNIER CHRISTOPHER,EIL 24100
508079 CAMPANALE GARY,CASONDRA 21000
508080 LABIODA/ZICCARD JAMES,KATHRYN 125000
508085 MAGID PAUL,REBECCA 10000
508087 MANSUR JR RICHARD 30000
508088 JONES ROGER,LINDA 50000
508089 CANCILLA MICHAEL,GERRI 24900
508091 CHASE DOUGLAS,ROBERTA 100000
508094 INFANTINO NICKOLAS,CATHER 50000
508095 ZIMMERS FRED,CHERYL 20000
508098 PERRITT VELMA 10000
508102 SCARR DOUGLAS,SHELLEY 45000
508106 MYERS STEPHEN,LILIAN 50000
508107 MENDIETA JOHN,DONNA 25000
508108 MCGRADE PAUL,SYLVIA 83000
508112 HUBER MARC 25000
508114 FOGARTY KAY 39400
508115 WEST CAMERON,RONDA 17000
508116 STROMBERG TANYA 25000
508117 BAUER LANCE 11000
508118 DAHMS JAMES 25000
508119 HOUSTON CHARLES,PATRICI 14000
508122 ROCHA JR. PAZ,DEBORAH 50000
508124 SHAPIRO ITZHAK,AHOURA 50000
508125 AMBROSINI ALAN,CATHLEEN 30000
508126 GUARD/DAVIS ERIC/CYNTHIA 25000
508129 JONES HARLEY,SHARON 50000
508131 RIDGWAY HAROLD,KATHRYN 19000
508136 GAGE DEAN,KARLA 23000
508137 MCCULLOCH JOSEPH,LOUISE 40000
508140 LAPAY KATHERINE 50000
508142 GEYER JAMES 50000
508146 GUDER VICTOR,MARIAN 50000
508147 HO RICHARD,NINA 22000
508148 NIES DAVID,CONSTANCE 50000
Page 31 of 97
<PAGE>
508149 MOTE JOAN,DANIEL 100000
508150 MCKOWEN KENNETH,BOBBIE 16800
508163 MAHMOODI/SHORAK ALI/SHAYESTEH 74400
508164 SALA RUSSELL,JANET 48000
508165 RUIZ ELIZABETH 20000
508166 URIE JAMES 100000
508167 LIVELY MELINDA 23000
508168 HEE PATRICK,VERONIC 50000
508172 WEST LAMBERT,KARMEN 15000
508175 ZANE ADAM,STEPHANIE 40000
508176 WESNER RONALD,CRHISTIN 24900
508177 NICHOLSON JUANITA,ROBERT 30000
508180 STRONCK DAVID,FLORENCE 50000
508182 STANG PAUL,JANET 25000
508183 JACQUES BILL,REBECCA 31100
508188 FONTAINE NANCY F. 24000
508189 MODZELEWSKI MATTHEW,ADRENA 16000
508190 HOISINGTON VICTOR 50000
508193 MORSHEDIAN/HAJI ALI,ZOHREH 50000
508194 KLOVDAHL KRIS,LUISA 50000
508197 SAMUELS PAT,CAROL 20000
508209 SPURGEON JEANNE 18000
508210 CASTANEDA CAROL,ROBERT 74000
508218 GHARAVI HOMEIRA 50000
508219 KANNAPPAN/SHANK SHANKAR,CHITRA 25100
508221 GOFF NINA 48000
508222 BURKE JEANNE 31600
508223 BROCK C. SUE 48400
508224 SAFFARI ABOL,VIOLET 15000
508225 DUDAS FRANK,COLLEEN 47600
508229 FONG SIMON 20000
508230 MARTIN GRAHAM,DIANE 10000
508235 SKELLHAM IRA 50000
508236 SCHRAF DONALD 30000
508237 FIALHO ANTHONY,CARMEN 33600
508240 YATES STEVE,HELEN 100000
508242 HALEY JERROLD,LILA 99500
508248 ROTHENBACH TERRY 19500
508250 HOFFMAN HARRIET,KIRKMAN 30000
508251 MUELLER ROBERT,MARY 25000
508253 BUSBY CLIFFORD,SUSAN 45000
508254 PECK DAVID,JUDY 26700
508255 GLEASON DANIEL,CATHY 34000
508256 BAKKE RON,JANET 24000
508257 EDWARDS GREGORY,KAY 25000
508258 HAGGARTY CHARLES,GINA 125000
508262 LEE ROGER,BONNIE 50000
508263 RAMSAY DONALD,GRACE 15000
508266 POWELL RICHARD,GLENDA 48300
508269 BOLENTINI STEVEN C. 40000
508272 LAMPLE HENRY,PATRICIA 42000
508273 PEREZ JOANN,HUMBERTO 12500
508274 BATCHELDER PHILIP,BRENDA 26300
508276 PONESSA GARY,CATHY 20000
Page 32 of 97
<PAGE>
508277 SASEUNG TONGPUK,BRENDA 18800
508278 SEEHUETTER PATRICK,LINDA 38000
508281 QUINTANA DUANE,SUSAN 25000
508282 HERMAN HENRY,ALMA 50000
508283 IWAKO SHINYA,KEIKO 11000
508284 WALLICH KENNETH M. 28000
508285 BLAKE TAMARA 30700
508286 GOULD DONNA 25000
508287 CRITCHFIELD JEFFREY,LAURA 59100
508289 JENSEN JENNIFER J. 11000
508292 CHENEY DAVID K. 14700
508293 HOBBY EUGENE,ANDREA 21200
508300 TERZIEV NICOLAY,MYRA 25000
508302 STREBECK DON,SILVIA 23000
508305 PETERSEN CONSTANCE 75000
508306 KARAGEZIAN GAGIK,LUSINE 42500
508309 KILLIAN NANCY J. 40000
508320 WOELFEL LARRY,DOREEN 17000
508332 RICHARDSON RAUL,LISA 85200
508336 DEANE CRISTA,GAVIN 17000
508337 BLUEMKE FRANCES 10100
508339 NYE JR. ROBERT,JOAN 45000
508343 GRAF FRED,JANICE 50000
508355 BROMBAUGH CAROL 11300
508358 BIGANDO JOHN,JANYCE 20000
508359 HOANG HUY 40000
508360 BAHERI HAMID 50000
508364 CHAVIRA ROSEMARY,ELIAS 40400
508367 FISHER MARK,TRIS 20000
508368 MALINA/HEATH MICHAEL/KAREN 45000
508375 EVANS STEVEN,ANNE 99000
508376 CHAMPLIN GARY,LUANN 27000
508377 BORDEGARY/KOLOW EUGENE/LORRAINE 22500
508389 MCCAULEY PATRICK,LISA 43700
508390 HIRAI MASAKO 50000
508391 GALVIN MICHAEL,LAURA 14400
508393 CASTANEDA REYNALDO,MARCIA 25000
508395 DELOREFICE DAN,PATRICIA 40000
508416 LOVELACE JEFFREY 50000
508417 POWERS JOHN P. 22000
508425 ROBINS DONALD,KAYKO 49000
508427 EATON DAVID L. 45000
508431 CUDNEY RONALD,CANDACE 39200
508432 DIETRICH BRUCE,ANNELIESE 100000
508447 HAY GORDON,TERESA 30000
508450 FELDMAN R.KEVIN,DENISE 26000
508455 HEAD MICHAEL,MICHELE 24700
508458 RAND RANDY,DEIRDRE 50000
508467 RIESKE BRUCE,ROSE 12000
508481 ELLENBOGEN/LURI NANCY/JOEL 55500
508489 GILL/CRAMER ALAN/KATHY 16500
508493 GRAYSON BERNARD,BERNICE 85000
508498 MCKINLEY EDWARD,SUZANNE 26400
508505 OTTOBONI JEFFREY,TERRI 45600
Page 33 of 97
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508512 PAYNE/GOGGIN DELORIS,JOSEPH 29800
508523 SMITH/KOHL TIMOTHY,ADELLE 50000
508540 SEDANO HECTOR,TAMI 23700
508541 MEDDOCK FRANKIE SHARON 25000
508551 DRESSLER/WALDOR HEIDI,MICHAEL 24200
508554 MURPHY LISA 27000
508557 JAMES GRAYSON,KATHRYN 31200
508575 NARDUZI MARIO,DEANNE 41000
508582 TAYLOR/TAYLOR STEPHAN/JOHN 27000
508600 WESTON PETER 45000
508601 SHORT JIM,EDETTE 10000
508606 MCCRYSTLE/SAARI EVELYN/LINDA 12000
508613 CAHILL ANA,ANDRE 75000
508619 MARTINEZ ALLEN A. 16100
508634 STAMPER EDWARD,DIANE 100000
508635 LANG NANCY A. 50000
508637 FASKO IVY 33000
508655 PRATT/MARK KENNI,MARK 50000
508657 MORAVEC HENRY,GLORIA N. 100000
508662 BERFIELD ALEC,BARBARA 45000
508669 NESBITT PETER,OLWYNE 27700
508679 CONNERS JEFFREY,BARBARA 25000
508702 SYMONS R. JAMES,SUSANN 100000
508709 OSBORNE/STRAND JAMES/DONNA 37200
508719 HOWARD DORTHY,THOMAS 42600
508732 VILLA ORLANDO,MARGARE 25000
508735 FRAGER DOUGLAS,JOANNA 18500
508736 PARRY DAVID,SUZANNE 35000
508745 LAMPENFELD MARK 47100
508758 CONGIRLU MAHYAR,BRIGETTE 30000
508760 BEHLER LINDA S. 30000
508765 REYNOLDS MARILYN K. 50000
508766 NGUYEN HUY CHI 50000
508774 ATKIN KAAREN 25000
508819 PRICE SHIRLEY 210000
508826 ARREGUIN JOHN,GUADALUPE 100000
508828 CAYWOOD RICHARD,GAYLE 33000
508832 SMITH ANDREW,BRENDA 33000
508835 DEVRIES NAOMI 18000
508844 SISNEROS ELIZABETH 25400
508849 FIX DANIEL,SUSAN 31000
508860 JOHNSON GARY 32200
508903 KUHN LOWELL,BEVERLY 25000
508910 BOWMAN DAVID 29000
508959 MCCLELLAN MARK 19500
509025 LANDRI FRANK 29650
509088 WOLF HENRY A 32000
509234 BARRY GREGORY,MAY 116000
509281 WASSERMAN STUART 12900
509509 PARMER DENNIS 100000
509809 MORTENSEN JOHN,ELIZABETH 34500
509817 AZIZ WISSAM,FIDA 22000
509828 BULLIS WARREN 25000
509833 HILDEBRAND/COHE PATRICK/JUDITH 64000
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<PAGE>
509839 GLADWELL GEORGE,GINA 33700
509862 BRANDON SCOTT 14500
509872 ANGELES NOE,ANA 22500
509876 YUAN JAMES,XIAO 70700
509879 BRANIGAN MICHAEL,SARAH 74000
509886 SCHUSTER JEROME 25000
509892 MC CARTHY DENNIS,MAUREEN 56800
509904 VERT PAUL,CHARLENE 100000
509907 PUTNEY CLOVIS,SUE 50000
509916 PEMBROOK LLORENS 83500
509919 EGAN LORI 47700
509922 SESSIONS WILLIAM 31200
509924 MOYER TODD,MICHELLE 28100
509928 ENABNIT STEVEN,CAROL 39500
509949 GRAZIANO NADINE,JOSEPH 40400
509967 BAHTIAR ARDIMAN 26200
509989 CHESSER MICHAEL,PEARLY 50000
510037 POTENTI MARY 44800
510038 PEKOW GEORGE,MELINDA 20000
510039 LANG CHRISTOPHER,JOY 35000
510043 TROOP ALAN,TRACEY 100000
510053 CASINO LISA 26000
510059 ERICKSON KEITH,ADRIENNE 100000
510066 DETTMANN STEVEN,JACQUELI 75200
510089 MINER STEPHEN 100000
510092 MASTRANGELO IRMA 21700
510094 LEWIS SIMON 53500
510100 DRYAD ANNE 12400
510108 GOLDSTEIN FRANK 38200
510114 TASAKA MASATOSHI,FUSAK 43300
510118 AVLONITIS PATRICIA 50000
510154 TAKAHASHI TEROU,AYAKO 90000
510165 ARAKELIAN HRITON 21900
510172 LAW ALLAN,BETH 17500
510175 BRADY BERYL 44000
510179 KELLY/CABRERA JAMES/JORGE 46000
510182 SCHNEIDER WENDY 33500
510185 KOIRE/JOSEPH GRETCHEN/DAVID 56800
510194 JARMEL/NUNN MARK/TERRI 50000
510199 KELLY SHANNON 50000
510203 GALVAN ERNESTO RAUL 36800
510208 DELGER MICHAEL 27100
510212 ROCKEY DANA,PEGGY 160000
510216 SCRIBNER ALLEN,JONI 42000
510223 DAKOSKE TOM,JUDIANN 85000
510242 VAN LOON EDUARD,CATHERIN 30000
510252 GHADOUSHI/ELISO KAYVAN/ETI 50000
510257 ROCKETT BARBARA 14700
510287 ANDERSEN DENNIS 48500
510293 SINGH/KAUR SURINDER/IQBAL 32000
510305 PARR GREGORY 23100
510306 SKAFF RICHARD 100000
510317 ATLASMAN DIMITRI 100000
510342 SOLARO JOHN,LYNN 50000
Page 35 of 97
<PAGE>
510344 VAN GUNDY THOMAS,PRISCILL 40000
510346 DE JUTE JANICE 25000
510367 REES ATSUKO,BRIAN 82500
510370 REINING RICHARD,JOANNE 50000
510378 ANDERSON STEPHAN,SIGRID 35000
510382 JACKSON MICHAEL,SUSAN 35000
510401 KAMEDA ROBERTA 81700
510440 BREASHEARS STEPHEN,BARBARA 24200
510446 VANEGAS JESS,ANITA 41400
510450 PESAVANTO DALE,LAURA 28200
510479 PRIDDY JOSEPH/MARY 24900
510491 SWARTHOUT ELLEN,CRAIG 68000
510504 KELLY RICHARD,MEAGHAN 46500
510506 BUCH DANIEL,MAGGIE 30600
510524 BERNSTEN BROCK,DIANA 88000
510544 HINMAN JEFFREY,DEBORA 94500
510581 JOHNSTON RAYMOND,ARLENE 32400
510586 KALK ANTHONY 47800
510604 DAILEY THOMAS,IRENE 36000
510609 SCHWERING GUY 70000
510617 SARIC ZLATKO 35000
510623 KWON JUNG,YONG 35000
510628 LEONG JEROME 20200
510658 PARKER MICHAEL 18000
510672 LOEWENTHAL MARC,NANCY 97500
510685 KASDIN JEREMY,RAKEFET 130000
510704 BEEBE RUTSUTEE 49300
510721 CRUSPERO GABINO 27450
510727 REEDER MATTHEW,KATHY 35800
510740 RUNDE LISA 37000
510741 MC DANIEL/REDM ANDREAS/MARK 59500
510742 DANIELS TIMOTHY,PATRICI 43500
510746 DHILLON AJAY,MADHU 50000
510747 VALENZIANO GREGG,PATRICIA 50000
510751 EBERSPACHER MARTIN,ANNETTE 50000
510753 DUNCAN KURT,KRISTIE 31900
510755 HOWDEN/MOORE/JO JONATHAN/LINDA/ 35000
510765 BONHAG WALTER 55100
510777 MAHER BRIAN DAVID 41400
510779 WARFORD-MILAM SHEILA 50000
510780 LARSON STEVEN,KATHLEEN 100000
510785 GOLDSHTEIN BORIS,EVA 200000
510796 BADGETT ATOUSA,HERMAN 71000
510805 WRIGHT/WILLIAMS ROBERT,DIANA 50000
510817 HASKELL CHRISTOPHER,LIS 29000
510822 RANCADORE DOMINIC,MARGARE 100000
510824 FREESE RONALD,DIANE 24200
510825 BISHOPP LAURIE A 22700
510846 RAMAKARISHNAN KSHETRAPALA 47000
510854 MARRONE RICHARD,ROBIN 43000
510869 LEIGHT GARY 200000
510870 EISNER RONALD 53500
510874 ASHTON PATRICK W 50000
510875 LEE DORA 100000
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<PAGE>
510877 WATTS BETTE E 150000
510878 ZERAVICH NANCY,JOHN 200000
510882 PICKETT BARBARA 37300
510885 IVERSON KENT,JUDIE 42300
510903 MULLINS JOAN 50000
510907 MORGAN BRUCE 26800
510919 FROGNER ROBERT 20000
510921 LOWERY/GENNERT RALPH/JULIE 39700
510929 JAKIEMIEC JOHN,ANNE 27200
510941 NORTHINGTON JOHN,KAYLON 31200
510946 BUI KHANH,JENNIFER 64700
510949 KHAN WAQAR A 20900
510950 CASTRO CARLOS,NORINE 60000
510952 CROUCH,RODDA RICHARD,KANDIS 200000
510956 CURRIE MICHAEL,STEPHAN 31200
510957 WORMHOUDT,HOPPE DANIEL,LESLIE 50000
510958 ROBERTS ROBERT,BETTY 75000
510962 ROHL LOUIS,LAURA 37500
510974 BOTTORFF/RICHAR JAN/ELAINE 42200
510997 SMTHOFF LARRY 38200
511005 BURRI DAVID,KAREN 87000
511020 RODRIGUEZ RITA M 50000
511021 SCHMIDT GREGORY,KRISTIN 40000
511026 DELGADILLO JOSE,CHRISTINE 39000
511028 HOUP RALPH,JULIE 100000
511037 ROTHMAN JEFFERY 83700
511038 NELSON MATTHEW,IRENE 41200
511044 MCCAIN JEFFREY,SUSAN 65400
511078 EISEL MONICA,DAVID 20200
511091 WITT STEPHANIE 50000
511092 HUNTER RICHARD,MIMI 100000
511093 TRAPKIN FRED,JOAN 25000
511094 REESE EVA 22300
511100 MCERLAIN MICHAEL,BECKY 70000
511103 JOHNSON GARY,LINDA 100000
511104 MARSH CAROLYN 29500
511119 FRY ERIC,LESLIE 79200
511123 ZANETTE ANTHONY,MELINDA 72800
511125 SPIELER ROGER,KELLIE 29200
511127 MCLEOD JOHN 34500
511131 GERA ANIL,ANITA 200000
511139 FISHER KIMBERLEY 51000
511141 WILLIAMS ERIK,ANNETTE 26900
511143 HODGES JAMES,PAMELA 54900
511146 YOUNG JASON,VICKI 40000
511149 TEHRANCHI FARHAD,IRENE 28000
511158 HEILDER/CRAIG STEPHEN/HARVEY 27400
511173 MILLER MICHAEL,SUZANNE 100000
511182 RIQUEROS ROD,MELISSA 39500
511183 MANTIA JON A 50000
511187 TROUTMAN DAVID,JUDITH 50000
511188 NAPOLITANO GAETANO,GUISY 42000
511189 LIOU KUO-HSIANG,PI-Y 50000
511204 JOHNSON DANIEL,HEIDI 18700
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511208 SMITH CHARLES,ANN 112500
511216 DEA ALVIN,LU MARLA 41200
511230 HUTCHINSON CRAIG,TERESA 19000
511237 ALVAREZ MANUEL,CECILIA 40500
511243 WOO DARRYL,CELESTE 100000
511247 KELLY PETER,DENISE 48000
511248 MORITZ MARK,TAMERE 46500
511274 YEN/YEN/YEN NANCY/FRANNY/GA 34300
511277 NELSON PHILIP,BARBARA 148000
511425 WILKERSON MARK,KIMBERLY 25000
511434 BARNES JESSE,MARY 50000
511446 KAMADA LEONARD,SUSAN 21000
511460 HEISINGER DOUG,KAREN 17800
511498 VALLEJO KATY 13500
511515 YAMAHATA WAYNE,PAMELA 50000
511533 KING YVONNE 60000
511536 CONNER DENETTE 22800
511560 STRICKER FRANK,CANDACE 45000
511615 ATCHLEY WILLIAM 10500
511624 TAYLOR NANETTE 14200
511630 ROCKER AMY 37400
511631 SMITH STEVEN,KRISTINE 38500
511635 RITTER RONALD 50000
511678 JENSEN BRUCE 23200
511696 HENRY DENA,DAVID 34800
511765 WOLONSKY MARK 55400
511817 MARIN RAY,VALERIE 49000
511830 MCCLUSKEY RICHARD,BARBARA 20200
511876 SUTTERLIN TERRY,JEANNETTE 20000
511885 MCKNIGHT IAN,JEANETTE 25300
511894 SHELTON L.JOE,CATHY 38000
512044 BALDWIN RICHARD,CONSTA 55700
512057 SWITZER SCOTT,CHERI 90000
512064 HART MARY,JAMES 24450
512153 PARRISH MICHAEL,CAROL 21450
512156 MAHIL KULDEEP 35000
512159 LEONARD ANDREW,RONDI 100000
512215 ROLFE JAMES,MARILOU 20000
512239 MCKNIGHT PATRICK,MARILE 78400
512247 RETTMAN PETER,DEBRA 100000
512257 SALKA COREY,LISA 95300
512306 HOWARD F JAMES,LAURIE 20500
512401 GIL FRANCISCO,CELIA 55000
512405 WELLS JOHN,DEBORAH 14900
512409 SNIPES DANIEL,EDRIS 35000
512412 GONZALEZ DAVID 19000
512427 BROW EDITH 17000
512437 BROSLOW DONALD,BONNIE 20700
512443 HORNER KENT,KIM 50000
512467 BULLOCK RICHARD,DONNALE 56000
512476 GIARDINA FRANK 31500
512477 SOMERS PETER,PAULINE 27500
512487 SACKS STEPHEN,ANDREA 45000
512524 MOALLEMI KAMRAM,LISA 200000
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512537 MEYER RICHARD,CYNTHIA 100000
512556 DESIMONE JOSEPH 63000
512557 VOMHOF DANIEL,SHERYL 29000
512562 WALLENSTEIN ROBERT,MARY 50000
512563 HUSSEY JOHN,ELLEN 40000
512572 MECUCCI LAWRENCE,DORIS 20000
512574 VINES WILLIE 25000
512576 LILLY CHARLES,DEBORAH 30000
512590 BRANCH JUDITH 15000
512592 CARR SCOTT 24700
512600 ANDERSON MARC 26000
512607 LOVITT TONY 17500
512621 HINRICHSEN RICK,ANNA 36000
512627 SPANGRUD BRUCE 27700
512634 TONKS/HODGKINSO IAN,CLARE 29600
512639 GOOD KENNETH,FRANCIN 41100
512655 PHILLIPS FREDRICK,CLARIS 100000
512660 TRIBBLE JAMES 14000
512661 MCINDOE BRUCE,SAUNDRA 50000
512664 HOWER PAMELA 65200
512679 MOORE MARC 24000
512681 CLENNY DANIEL,SUSAN 28000
512682 RIDGEWAY/HUMPHR EVA,HJALMAR 23500
512685 MACKAY PETER,LINDA 26500
512710 DANG DI,HUE 48000
512718 SCHIPPER/SCHIPP SIMON/PHILLIP 28000
512721 ALLISON DAVID 42300
512722 SMITH PETER 75000
512728 STRANG DIANE 20000
512733 KOPICKI DARLA 25100
512742 VASQUEZ/FORSGRE FRANK,DAWN 29800
512748 ALEXANDER CYRIAC,ALICE 95000
512795 LUKA DANIEL,SUSAN 33000
512798 CHAPSKI KENNETH 31500
512806 POTTER SHEILA 20200
512818 WELCH MICHAEL,SUSAN 53500
512821 KALEMKIARIAN DAVID 60000
512829 BOSTWICK CARLA 20900
512835 BROWN JANEY 51000
512839 PRANGE RONALD,JULIA 42000
512851 FOSKETT JAMES,SUSANA 56000
512868 MORRIS BRYANT,DEIRDRE 200000
512873 SCHINDLER JEFFREY 40000
512881 TOPP BARBARA 50000
512902 VASQUEZ THOMAS,STACEY 14200
512905 CONGER LAWRENCE,JEANIE 37600
512911 HENTSCHL PAUL,JUDE 78800
512913 WHITE JANET 30000
512921 NICHOLL JAYNE 40000
512927 SCHMIDERER DAVID,JOSEFINA 21000
512935 LOPEZ DAVID,DORA 18600
512950 SMITH PAUL,KAREN 30000
512952 BECKWITH GERALD 94000
512953 MAY THOMAS,SHARON 97000
Page 39 of 97
<PAGE>
512969 FLAUDING/LANGE THOMAS,MARCIA 42400
512971 WELLIVER WILLIAM,CARI 39000
512986 LEWIS EDGAR,MARLENE 35000
513000 GLOVER JAMES,JEAN 85500
513003 LOUGHEED GARY,DIANE 24000
513013 LIVELY JOANNE 23200
513014 BERGIN JOHN,SARAH 50000
513018 LAURIENTI JOHN,SHEILA 100000
513028 HAU CAROLINE 10000
513039 TALIAFERRO PETER,CATHERINE 17100
513042 FANNING WILLIAM,DEBRA 54400
513044 KING MICHAEL 30000
513064 WINDBIGLER RICK,SHERI 47200
513070 RYAN LUKE 39000
513072 JONES PAUL,HEATHER 50100
513087 NAVARA GERALD,PAMELA 61500
513126 MORALES WILLIAM,LISA 95700
513136 DEASE KERRY,PAULA 23000
513137 WHITLEY DANIEL,LINDA 13800
513140 BALLOUZ GEORGES 25000
513171 ARVIZU TERRI 25000
513174 HAWKINSON DALE,LYNNE 72600
513176 MATTHEWS DONALD,JANINE 20800
513184 KUBO TORU,YUKO 83200
513187 MADRUGA JOSEPH,ADELINE 100000
513188 MOSLEY EDWARD,IRENE 46500
513195 MASON JOHN,JACKIE 48300
513206 ISAACSON PATRICIA 35000
513220 DURFEY EDWARD,COREEN 59000
513226 HAYNES ROBERT,LYNDA 35000
513234 DELORENZO NICHOLAS,CHERRY 52500
513247 HAGERTY PAUL,CATHERINE 23700
513252 LEE LEILANI 20000
513261 BELCHER RONALD 60000
513267 SACHER KARY,PAMELA 26000
513269 MCNEIL ANN 18300
513272 SAEZ LUIS 11300
513279 KING/BRAMLETTE SARA,PRISCILLA 30000
513284 GOODALL ROBERT,CHRISTIN 15000
513287 PETRUCCI VINCENT,GRACE 38000
513305 HUGHES ROBERT 200000
513324 HOGUE MICHAEL,CHRISTI 40000
513329 ROSEBERRY STEPHEN,ANNA 25000
513336 WEST MICHAEL,TRACI 26900
513337 PERRY EDGAR,MARION 50000
513344 BARCA RON 30300
513354 FORTSON KEVIN,ERICKA 97500
513364 NHAN LANH 25000
513380 SMITH EDWARD 23900
513387 WILSON DOUGLAS,KATHLEE 63000
513389 HUDA RITA 48000
513391 ROY SUBIR 125000
513393 HINOJOSA MONTY 11100
513428 PONOMARCHUK SERGEY,MARINA 23500
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<PAGE>
513443 CURTIS DELAINE 32800
513445 MCCLELLAN ROBERT,CECELIA 50000
513451 LOSASSO LEONARD,CYNTHI 130000
513456 LEARY ROBERT,STEPHANI 27000
513458 SIEGEL LINDA 53000
513462 EARLY JONATHAN,JACQUE 80000
513471 WEN/HSIAO SHIH-CHIEH,TING 20000
513489 FRASER LARRY 50000
513506 WARREN/POSTON ANDREA/MARY 66500
513516 MCKENNA JOANN 33400
513538 SACHS PAULA 20000
513540 MERNER BRETT,PEGGY 30000
513543 GARWOOD RICHARD,HEIDI 107000
513553 KESHISHIAN MANUEL,ROSETTE 44700
513560 AUMILLER GORDON 24200
513561 LINDGREN JOHN,JANE 200000
513577 YU/YE DA LIANG/XIAO 50000
513579 ISLAVA STEVEN,MARILYN 40000
513586 REZENDES/TANNEH KAREN,JON 50000
513598 EACHUS THOMAS 18300
513621 TORRE MARSHALL,BONNIE 31500
513638 SALE DAVID,NANCY 42000
513646 MURPHY DAVID,MARYANNE 30000
513651 HOLLEY CHARLES,GAY 100000
513661 HINTZ DENNIS,CAROLE 36000
513662 BEASLEY JEROME,JANET 39000
513663 ROLOFF RODNEY,PATRICIA 17000
513722 MCCLURE/STEELE WARREN,PATRICIA 48000
513747 ROGERS CYNTHIA,JOHN 50000
513748 MARSHAL/KELMEN FRANCINE,GARY 64000
513761 BIGHAM ROSEMARIE 14500
513768 IVERSON JEFFREY,CAROLYN 38000
513770 SLEVIN EDWARD,JANET 100000
513809 SCOTT JOSEPH 19000
513813 SAWAMURA SHINICHI 19200
513840 COSTELLO THOMAS,BARRI 22800
513846 NAJMABADI HAJI 100000
513850 LAI JOHN,DIANE 36500
513875 GATELY EDWARD,NORA 17300
513904 BESCHORNER MICHAEL,HELEN 16282
513905 BOND JONATHAN,HELEN 82500
513907 SILVEIRA MANUEL 140000
513921 RIZZO JEFFREY 27500
513941 HOPSON DANIEL,OFELIA 61540
513958 HAUSNER TERRY,SANDRA 125000
513962 BAUR PETER,MARY 83350
513965 DACANAY/WELLMAN LOREN/PEGGY 34900
513987 KARETI/TUPAKULA LAKSHMI/PADMAJA 33500
514000 ROBERTSON IAN,HELEN 48750
514002 STEPHAN BERNIE,JERILYN 42200
514037 PAUL MICHAEL 39500
514096 KESTUR KRISHNA 30900
514105 WINTERS ROBERT,DARLENE 55000
514137 WlNTERMEYER JON,BARBARA 34100
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<PAGE>
514149 KRIKORIAN RAFFY 32500
514400 KALFAYAN RALPH,LORI 46000
514413 FOX MOE,HELEN 75000
514416 SAVITSKY-SAPERS RHONDA 37000
514422 LASTING/JACKS RICHARD/AMY 50000
514432 COSTELLO ROBERT,ROSE 100000
514437 SPENCER NICOLE 16600
514439 SICKLES ROBERT,PAULA 17900
514440 CULLEN DANIEL,KATHY 108000
514454 JOHNSON BRIAN 20000
514459 ROCKNOWSKI JOHN,JOYCE 100000
514485 GHAFFARI TONY,HOLLY 51200
514491 HEEBNER KENNETH,ANNETTE 25500
514493 BUTCHER SCOTT,DIANNA 38000
514506 DORNIN ROBERT 44200
514507 BOYKO WALTER,J. M. 140000
514520 LEE WILLIAM,LUCY 27800
514542 SILBERT STEPHEN 100000
514547 SCHOMER SCOTT,COLLEEN 72000
514552 GARCIA DOLORES 32000
514554 HOUSMAN RONALD 33500
514558 COFFELT TINA 41200
514559 ROJAS JESUS 20000
514574 CHEN HAI-AN,CHY-DIH 100000
514579 GARCIA FRANK 34800
514587 BURT JEFFERY,NANCY 50000
514597 BURAU THOMAS,MARY 40000
514599 FELDSTEIN/BUSBI STEVEN/DANIEL 35000
514611 LEVY DEREK,TAMARA 30000
514614 HEWKO CHRISTOPHER,DEB 28600
514634 MAMMANA CATHERINE 31800
514645 BARKER STEPHEN,MICHELE 70000
514651 ZHENG/DING/ZHEN QIANG,WEI/JING 29400
514661 DRUZ RICHARD 50000
514664 WEINSTEIN GREEGORY 27700
514673 ASKEW DAVID,DAWN 49000
514686 LAI JOHN,JESSIE 36200
514687 MCCOOLO'HARA CLINTON,DONNA 41000
514692 CHWA ODDY,HILDA 23500
514706 WATERS DUANE 90000
514712 WIERSMA RUSSELL,CONNIE 50000
514720 BRACKLEY STEPHEN 150000
514724 LESSIN ROB 92200
514726 BREDICE SUNNY 56700
514730 STUART GARY,MARIA 65000
514736 DARIN THOMAS,MARCIA 50000
514737 PADRICK DENNIS,ADRIENNE 150000
514739 AJERE BOLA 74500
514744 MCDONALD/BARTO DOUG/HILARY 50000
514747 HUANG YANG,NUAN 14200
514768 CHKHEIDZE MARINA 22300
514782 ELLISON DAVID,JUNE 200000
514786 SCARABELLI MICHELE 35000
514797 BIOCHE GILLES,JENNIFER 47600
Page 42 of 97
<PAGE>
514802 WANG DAVID 100000
514812 ROGG/SANDLER RICHARD/ELIZABE 250000
514834 OHMOTO SACHIKO 50000
514852 POMPAN STEVEN,LISA 57000
514863 CLAYMAN DEAN,JENNIFER 41200
514867 SCHWARTZ ROBERT 50000
514872 SHALOM DAVID,MITRA 200000
514874 LIN NANCY 36700
514882 ARMSTRONG GARY,ROBIN 100000
514888 BROOKER NEIL 39000
514910 PETERS HEATHER 77500
514911 CARDINAL PETER,KIM 16700
514914 TURNER CRAIG,KIM 38200
514924 SHAHABIAN JAVAD,FARIDEH 84000
514939 ALPERT CHARLES,BARBARA 100000
514941 GRANAT CAROL 27000
514945 COOK GERALD,MARGARET 28000
514948 BAROS JOSEPH,JULIANA 50000
514953 SHAFT BRUCE 40500
514978 FEINBERG DAVID,ANDREA 25000
514989 BELL LANTZ,NANCY 71500
514992 DECKER NORMAN,NORMA 200000
514997 KASSEM NADIA 56200
515009 OZEAS CHARLES,MELISSA 30000
515019 SAAM HOMAYOON,FARIBA 50000
515041 HABERMAN JEFFERY,ANN 37000
515050 RISVOLD CORY 33000
515060 BROWN GREGORY,DEBORAH 50000
515062 CARUSO ORLANDO,MONICA 30700
515073 BONDS/DELAHOUSS MANVILLE/SANDRA 69100
515074 SULLIVAN KEVIN,GINA 43500
515109 RUELAS GABRIEL,LESLIE 55000
515111 TURK STEPHEN,KATHLEE 46800
515117 LEWIS JOHN 98000
515121 FISCHMAN GUSTAVO 40300
515124 LANDRUM/MORGAN BARTON/FELICIA 28500
515140 TATAVOSIAN KRIST,AIDA 80000
515151 HORWICH/COHEN DAVID/ELISE 35000
515154 KRAM DAVID,ADINA 31000
515156 BELSCHNER STEPHEN 37500
515163 GELMAN ALAN 35400
515166 KARLSEN/LARSEN ANNE/KURT 24000
515172 WEIANT EDWARD,JOAN 38700
515174 ANDLEMAN JOHN,JOY 40000
515181 CHALK ALAN 45500
515185 SANCHEZ JOSE 34000
515198 BAKER KAREN 72900
515204 WEIRICK GREGORY,TRACY 48300
515207 POSTOLOV ANATOLY,LYUSYEN 51700
515215 WECKER JAMES 59400
515234 BAKHTIAR HEDAYAT 50000
515241 GUEST MARILYNE 50000
515248 REES-DAVIES SHEIRA 37300
515255 POURAT/SEDDIGH BIJAN/NELLIE 245000
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<PAGE>
515263 BRINK/TORREY RICHARD/REBECCA 80200
515283 VOLZ MICHAEL,DENNY 29700
515287 COWAN CARLA 43000
515303 GRAHAM/FETTER JOHN,MARGARET 200000
515304 YAMADA/SCHERBAK ARIC,NATALY 250000
515306 ROSEN ALLAN,CANDACE 72000
515307 WALLNER/UTTER JOHN/ANNETTE 46000
515310 YOUNG LAURENCE 90200
515312 CLARK ZACHARY 22500
515314 QUAYLE KENNETH,BARBARA 26200
515401 KWON KWANG,LINDA 35000
515416 PUTRIS GEORGE,NANCY 77000
515425 MURILLO PAUL,KATIANN 30000
515432 JUAREZ LYDIA 15000
515440 LEUNG WING,WINNIE 33000
515442 PAL,KAUR/RAM RAJ,AMARJIT/NAT 26200
515455 GIBNEY KATHERINE,CHRIS 32500
515458 JAMISON/ROBINSO THOMAS,PAULA 44500
515460 WHITING KENNETH,RENEE 46000
515462 WOEST RICHARD,TERESA 23100
515466 BRUCE REY,SHARON 63700
515469 FUNKE LISA,VERNE 79000
515476 KIRIENKO VIKTOR,RIMA 33500
515477 HINTON ROY 27000
515497 RIVERS DANIEL,JUANITA 15000
515507 KENNEDY WILLIAM,CYNTHI 72500
515519 BENTLEY DENNIS,ANNA 37000
515544 ALEXANDER DAI 29200
515556 GONZALEZ MARCO,ZONIA 45000
515560 FRANZ THOMAS,KATHY 48800
515562 BERWALD JOHN,SUZANNE 105000
515565 SANDEJAS INEZ 46400
515568 SMITH JEFFERY,ELIZABE 125000
515584 ARITA SANDRA 41400
515592 KNIGHT JOHN,DIANA 111750
515596 CRISTIANO JOSEPH,JANET 80000
515598 MATHEWS THOMAS V. 50000
515600 CHUBB JAMES,MARTHA 100000
515603 KIM INJIB,SUE 71500
515606 FERNANDEZ ANTHONY,SALLY 100000
515612 GAYNOR ROBERT 25000
515616 JARAMILLO JANET,RONALD 92800
515632 THOMS ART,RUTH 32100
515643 CLYMER SCOTT,NINA 31200
515645 GOULD JAMES,GERALYN 100000
515648 GHIDOSSI JEFFREY P 200000
515650 WILKINS ROBERT,JOANNE 24000
515657 PARK RICHARD,SANDRA 100000
515658 ARMSTRONG MICHAEL,KAYLYN 80000
515660 PACE DAVID,ELEANORE 70000
515662 STEWART VOY,CAROLYN 55000
515676 LOPEZ,YES ARSENIO,MARIA 33300
515678 PULVINO MARILYN 18200
515688 THONG MICHAEL 18000
Page 44 of 97
<PAGE>
515711 CHANG TERRY,BETTY 50000
515713 TILMANT JOSEPH,MERLE 65000
515714 DANFORTH DARIN,DEBBI 30000
515719 TRAUTMAN/RAVITZ SAMUEL/LIZA 32500
515741 SCHMIDT HEIMO,KARA 80000
515743 SORENSEN/BOVE ERIC/FRED 60000
515745 HORICK EDNA P 90000
515749 FAJARDO EMILIO,ARELI 25000
515750 NORIEGA GERARDO,SUSAN 27200
515752 GOODMAN LAURENCE 45700
515759 PESSOA CORNELIA 50000
515765 MICHELA BERNARD,ANGELIC 58400
515768 KRANTZ KENNETH,ANNA 100000
515769 RAGGIO MARK 31300
515780 SALAMY WADIE,AIDA 100000
515785 TSAI-ENG TENNY 100000
515786 HINSE LOES 17000
515790 PETERSON JOHN 70000
515797 ADAMS STEPHEN LEE 132200
515817 MACHENHEIMER FRED,LINDA 15000
515819 CHAPMAN BRUCE,JACQUELYN 70000
515820 BARRETT,BAIGENT WILLIAM,JULIE 100000
515823 MCELYEA STEVE,STACI 21000
515825 BILLHEIMER MYLES,STEPHANIE 27000
515832 YORIO BOB,JOANNE 50000
515836 COX CHERYL,JAY 42000
515838 LE ANDY B 50000
515863 BARNETT MARY 26800
515865 WILLIAMS GARNETT,CONSTAN 200000
515868 NADER BABAK 200000
515869 ROBERTS,CONNELL NANCY,TIMOTHY 100000
515871 FULLER DAVID R 50000
515874 GREGORY DAVID,ELIZABETH 78000
515880 RECTOR DON,MARIE 100000
515892 OSBERG RICHARD,SALLY 70000
515894 SOONG,LIU MILTON,LINDA 75000
515895 BROAD,YAMASHIRO WILLIAM,MARIKO 115000
515923 FORKEY KATHLEEN 25200
515926 FORTIER/VACCARO CYNTHIA/STEPHAN 55000
515928 BULL LESLIE,NANCY 29700
515929 THERBER AUSTIN 19000
515930 GRUNDFOR MARC,LISA 60100
515937 BALLESTRAZZE MICHAEL,ROBERTA 50000
515941 ROY CLAUDE,BARBARA 30000
515967 ADAMS GEORGE 50000
515972 SAXON JANET 10000
515975 STANGROVER MICHAEL,RHONDA 34500
515977 MEHIEL PETER,MARGARET 79000
515978 MCMANUS SCOTT,ELIZABETH 50000
515979 SCHAEFER GREGORY 17600
515980 HATCH R.CURT,SUZANNE 25000
515981 KUHN HUGH,KATHERINE 138700
515983 HURWIN RON,DUFFY 160000
515985 FERRARI VICTOR,MICHELLE 52500
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<PAGE>
515989 FUCHS ANTON 40000
515997 MOEBUS MARGUERITE 22600
515999 MEYER DOUGLAS,SUSAN 30000
516008 WOODHALL EDWARD,KATHRYN 150000
516015 HOKIT CHARLES,TERRI 33300
516017 MUMPER RICHARD,DEBORAH 100000
516020 MAHDAVI FARMARZ,MITRA 53600
516021 WOLKENMUTH EDWARD,KIM-MARI 189000
516090 TOWNE MICHAEL,GAY 26500
516223 FRENCH/WALDERA STEPHEN/WANDA 29900
516256 HALVORSON CYNTHIA 23900
516274 HEDLESTON CARL,CAROL 40000
516401 DANIELLI GORDON,LESLIE 10000
516417 CHURCHMAN BRET,RHONDA 50000
516428 WILKINSON RICK,SUE 15000
516433 KRONE KRISTIN 32400
516448 TUCKER KEN,LINDA 25000
516464 BARON THERESA 20000
516465 DE OCHOA RAQUEL 11200
516494 SHORMAN RICHARD/PAM 50000
516506 DYER JOHN,MARLENE 16600
516510 PETERSON BOBBY/YEN 30000
516513 ALDERETE SAMUEL/INEZ 30000
516514 VAN GUNDY JEFF,ELAINE 96000
516539 EDGERTON MAJORIE 55000
516544 WATTS JOHN 15000
516587 DICICCO JOHN 50000
516600 CUMBERLUND STEVEN 13600
516700 TRUMP DANIEL,DORIS 21000
516706 SCHOOLEY BRIAN,JUDITH 21300
516722 GARRETT GREGORY 30000
516731 INGSTAD KIM,VICKI 27000
516733 WINWARD RICHARD,TAMI 11200
516750 LEE TRUDI 50000
516766 FITZPATRICK FRANK,BARBARA 100000
516768 SIMPSON AMY 50000
516782 JACOBSON JEFF,BRENDA 25000
516790 CROSS DANIEL,ANN MARI 16500
516800 DICK LAWRENCE,MARGAR 50000
516808 HERSCHLEB CAROL 22000
516809 HELZER KEITH,DEBBIE 23000
516828 HANSON DONALD 29000
516829 MAFFEI ROBERT,DAWNELLE 50000
516834 FERREIRA CHRISTINE 22000
516869 SCHMIDT MARK,KIMBERLY 50000
516879 GUIDA FRANK 30800
516906 CECIL LLOYD,CAROLE 19100
516956 LOCKHART VICTOR 40000
516960 TAORMINA THOMAS,MILDRED 43500
516969 DUGO JOSEPH,ROSEANN 109000
516978 LAIRD JAMES,LAURA 50000
516981 MUNOZ ROSALINDA,EDWAR 11000
517000 SILVERIA BRUCE,GINGER 47200
517008 BABBITT THOMAS,JULIE 41000
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517021 PINGOL APOLINARIO,MARI 25600
517024 CLANCY JOHN 50000
517034 WILSON ROBERT 35000
517040 VAILLE DAVID 24000
517066 NESEMANN GAIL 32300
517073 BUTTS GERALD,BETTAMAE 100700
517075 PRESTON DAVID,SUSANNE 20000
517102 HAWK VERN,JOANN 19500
517123 DUPELL DAVID 90000
517130 SMITH JERRY,CARLA 85000
517134 MILLS BRAD,CATHERINE 78000
517142 BRAINARD JAMES,BRIGITTE 145000
517356 WEBSTER GARRET,CAROL 50000
517390 NUNES FRANCISCO,MARIA 42400
517394 GREENE MIKE J. 10300
517412 DEHEN JOHN,BRENDA 100000
517417 BETENBENDER DANIEL K 21600
517434 SCHEUERMANN TRINA ANN 28800
517471 WILKS SUSAN C. 32000
517476 HORCH VICTOR H. 28400
517523 BERRY DANA R. 50000
517528 BURKE/VOCKERT MICHAEL/SUSAN 30000
517538 CHANDLER WILLIAM,CYNTHIA 20000
517542 OSBORN PHYLLIS ANN 50000
517556 PUTNAM GEORGE 61400
517557 MATTSON KATHREN S. 100000
517593 KEETH MARK L. 39300
517598 CRONE TRACY 72000
517610 KLINKER MICHAEL 15450
517614 MITCHELL TERRY R. 53000
517616 HARMON DARREN,MICHELLE 21300
517634 RECORDS JAMES A 60000
517635 FELLIN STEPHEN D. 24000
517636 O'NEAL GEORGE P. 21600
517637 SITTON ARLENE L. 37500
517638 CRESTO GREGORY F. 78000
517644 CALHOON SEAN,NANCY 35000
517651 MILLER JERRY,STEPHANIE 75000
517655 TENTO CHRISTOPHER 32600
517657 UNWIN W. BRIAN/ARDITH 80000
517661 BINSCHUS DENYSE 50000
517687 SHELTON DENNIS W. 117900
517719 ANDERSON CURTIS D. 110000
517816 DONALDSON ROBERT,CAROL 26600
517834 MATTE/STEWARD JONATHAN/HEIDI 50000
517846 SMITH DOUGLAS/RHONDA 100000
517858 BURRELL JACK,EDITH 71000
517865 SISK JA'NIEN 20900
517874 BISHOP BRIAN L. 59000
517878 BLASHISHIN SIMON V. 50000
517888 GAEBEL JAMES R. 21700
517902 LEMIRE ROSS 31000
517962 KISER PHILIP,KATHLEE 41200
517965 BOE DALE 11100
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517982 FELDMAN HENRY,PAULA 50000
518008 GILMORE/HENNE JEFFREY/GARY 19000
518026 PALMGREN MATTHEW,EMILY 25000
518031 STEVENSON CRAIG,CINDI 35000
518094 ING/LUU JOHNNY/NGOC 50000
518130 LANZA GREGG,SHELLEY 125000
518155 CHOI JOHN,MARY 33000
518156 JONES MICHAEL,ELIZAB 18600
518184 SCHMID STANLEY,ELIZAB 25000
518191 LUNA JESSE,SHARON 14500
518193 MAYO MARK,KATHLEEN 33000
518294 HATHAWAY PAMELA 40000
518309 ALLEN RONALD,ANITA 16800
518317 WILLIAMS PATRICIA,DAVID 32000
518334 MATHESON MICHAEL 30000
518340 KELLY THOMAS,SUSAN 55000
518370 DEPANO DANILO,NORMITA 24450
518402 SUMMER WALLEN 123300
518408 TANZI JOESPH 35000
518411 CHACON RIGOBERTO,LUCIL 60000
518412 TOLANI ARUN,NISHA 100000
518413 MC QUEEN DINAH M 32800
518414 KENNEDY CLYDE,MICHELE 48500
518416 PETERSON RANDY,ELLEN 150000
518421 NAGRO JAY,CHERRYL 66000
518426 BAIDWAN/SIPHU BHUPINDER,KAMAL 250000
518451 SILVA MICHAEL,TERI 44400
518453 KAN AKIKO 50000
518461 YANCEY ROBERT,ROBIN 40000
518471 RAIN MICHAEL,ROBIN 73300
518485 GRACE WILLIAM,LINDA 35000
518487 SLOAN CARL 48400
518489 GILBERT BRADLEY,KIM MAT 300000
518504 MORAN DOROTHY 50000
518508 HEHR NOEL 18000
518512 HEGDE GOURI,SHIVARAM 15700
518517 BOON/BRUSTIN ABBE/NOAH 50000
518518 PIEPER FRANK,INGRID 40000
518521 NISWONGER MARK 60000
518525 AUCELLA DAVID,STACEY 150000
518539 GALVIN GARY,KAREN 17400
518545 GHODSIAN SHARHRAM 45000
518546 NIVEN JAMES,ELLEN 110000
518549 HARMAN DOUGLAS,SHELBY 36300
518552 WIXOM DEAN 73400
518554 AMANPOUR TONY 200000
518555 JENSEN JERRY,JANET 17000
518556 SANCHEZ ARNULFO,MARIA 55000
518560 PELLEGRINI/O'DO MARK,ELLEN 43400
518561 SCHLESSELMANN HERMAN,ANNE 25000
518582 FAIGLE MICHAEL,MARY 15000
518592 LIEBERMAN DAVID SCOTT 85800
518601 SMALLWOOD CATHERINE 38400
518602 HUANG PAUL,NORA 100000
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518603 SHETH KAUSHIK,ANUJA 88500
518604 BAIN HOWARD,SANDRA 200000
518606 SABIH JORDONNA 94000
518610 JEFFERS SUZANNE 87000
518615 KURRELL BRADLEY JOHN 30000
518616 DAUER JOSEPH,VICTORIA 30700
518627 GENIS PATRICK,ANITA 61200
518631 GADHIA RAVI 39300
518633 PAJELA ROSALINA 29500
518649 LE MOYNE RICHARD,FRANCES 180000
518650 BARCA ELYSE,DAVID 80000
518651 NELSON WALTER,SANDRA 50000
518656 ROBINS DEVAN,RUBY 50000
518660 CAMERON,WELLER MARK,JEANINE 125000
518661 BOYT DAVID J. 20000
518664 STRONG STEVEN,SANDRA 39000
518668 WRONA JAMES,LYNN 20000
518671 HO/LAU SIMON/LINDA 36600
518673 KIM PAUL,HYUN 46800
518693 BENSON EDWARD 67500
518698 KVITASH VADIM,IVETTA 200000
518700 LAGEMANN ROY,LUCIA 170000
518702 CALLAWAY DAVID,CARRIE 26800
518705 LANE ADRIAN,EMILY 100000
518708 WILLIAMS CASSNDRA 38500
518714 SCHUMACHER JAN 15000
518718 PADGET WALTER,PETRA 46000
518732 DUNNE J KEITH 194000
518733 OLSEN LISA 59200
518735 STAGGS/MUTZ DANIEL,NATALIE 65000
518736 ENSOR MARK,JANE 45500
518740 KANG DAVID,VANIA 13200
518748 UELK/IGARASHI THOMAS,PORTIA 100000
518750 BROWN MARK,KIM 135000
518753 DEVRIES LARRY,KATHLEEN 36700
518758 THORPE KEVIN,STEPHANIE 50000
518759 VOTTO GARY,KIM 35000
518762 HOPKINS DALE,HOPE 50000
518765 CRAIG DWIGHT,BRIGIT 31200
518771 GIMBEL JOANNE 25000
518773 LEVY MICHAEL,KAREN 67500
518778 DUFFY MARGARET 43300
518781 AHEARN TIMOTHY,JILL 50000
518782 JONES LOREN,CRYSTAL 94000
518783 TRAGESER II ROBERT,SANDRA 25500
518788 MILLER RUTH 100000
518789 ACOSTA ANTONIO/DEBORAH 36500
518790 LOEBER JOHN,LOUISE 108000
518791 PARKER DONALD 30000
518797 MILLER JOHN,ROSEANNE 88000
518799 COLOMBATTO GINA 35000
518821 KALBER JIM,CAROL 200000
518823 HILDEBRAND THOMAS,CHRISTIN 21200
518826 KING WILLIAM 89000
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518848 TEMPLE PAUL,NINA 79000
518857 LOCKHART HERBERT,JAMI 54500
518860 LARSON CHRISTOPHER,BET 85000
518865 SKINNER THOMAS,TERI 60000
518870 WILLS MARK,DENISE 40000
518871 FRENNA ROBERT 50000
518874 MCRAE RONAL,ELIZABETH 53600
518876 RUNFOLA JOHN,DIANE 100000
518878 GONZALVES KEVIN,LAURIANNA 29700
518884 STATEN MARY,THOMAS 76400
518886 HANCZAREK MARIAN,ANISOARA 23200
518895 RUDER MARY A 200000
518899 JACOBS MARK,NANCY 32200
518902 GLOVER SHEILAH J 180000
518903 BRACKEN JACKSON,PATRICI 39000
518908 PAN CHENG,CHIOU 58000
518909 SANDOVAL ERNEST 50000
518912 O'NEIL KIMBERLY,STEPHE 50000
518920 WAITE BRADLEY,JESSICA 144400
518931 SEISHAS JAMES,DONNA 51000
518940 EDHOLM/SUNG KAY,MIGHAN 78000
518944 OSORIO NOEL,JENNIFER 46000
518948 JACKSON GLORIA M 67300
518952 MIDDLETON GILBERT 25000
518957 KRAMER/LUDWIG GARY,TRISHA 38000
518960 BALK/BARAKOS THOMAS,ELAINE 45000
518986 COTTER PAULA 100000
518988 BLACK JOHN,CAROL 66500
518993 GALL ROBERT,FLORISA 29300
518994 ROLLE GERRY,PAMELA 68700
518995 DELA CRUZ ELEANOR 25000
518997 WONG/LANE WILBUR/LINDA 27500
518998 BILSE DOUGLAS,MARY 65000
519009 COSTELLO JOHN 54700
519017 FIHE/AAKER BRUCE/KAREN 35500
519023 TISCHBERN EDWARD,ELIZABET 58300
519025 MILLER RICHARD,LOIS 31500
519028 MONTOYA TERESA 10000
519032 WALLACE DONALD 150000
519037 BROWN TIM,ANN 30000
519041 LUNDGREN LESLIE J 85000
519042 GOTTLIEB MICHAEL E 80000
519043 MANI/DRESDEN MATTHEW/TRINA 20700
519045 PHILLIPS ROBERT,JILL 56500
519054 SADEGHI MOHAMMAD,LADAN 63900
519057 MORINIERE LEILA 37000
519066 WOLF/BOGNER HANNA,MARTIN 35100
519075 CRUZ JOHN,ARTHUR 35200
519093 ALEXEEV ALEXANDER,OLGA 49000
519107 MORROW WILL,SU 97000
519108 CONFEHR PETER,JEANNE 50000
519139 HESS SCOTT,SIDNIE 50000
519145 SKILLERN TERRY 22000
519146 TOLMAN/LUCE TOM,SUSAN 33700
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519153 KATZ TOBY/SUSIE 36500
519171 MANICKAM JAYAMANI 32500
519206 PRAZAK DOUGLAS,DOROTHY 42800
519208 WEST BRIAN,GLENDA 37500
519327 DERKSEN DARRYL 17800
519379 DECKER J. ELIZABETH 25200
519900 MONTGOMERY SHAWN 97500
519901 SHARPE/FONTAINE JOHN,PATRICIA 48400
519912 HONIGMAN WILLIAM,CAROLYN 64000
519921 SADEGHI/FARZINE BABAK/MASSY 70000
519930 HIGHAM LINDA 65000
519932 CAMARILLO/MELTO RICARDO/BARBARA 50000
519934 HEINTZ ERIC,MIA 39400
519941 DICAMILLO DENNIS 61000
519942 MCCORD LOREEN 30900
519959 KO ANDREW,SHONG 62500
519984 NOWAK KENNETH,MARILYN 16000
519986 NINH BRYAN,LIEU 32300
519993 HERRING DOUGLAS,JENNIFE 20000
520000 AZABDAFTARI KAMBIZ 34300
520009 BEAL BEVERLY 20100
520031 NORLAND RANDALL,CONNIE 23500
520045 DAUBER LILLIAN 50000
520053 LOCKLIN MICHAEL 23800
520063 BAKER CANDACE 30000
520067 BAMBALYAN MINAS,ANAHIT 27000
520081 COWAN ANTHONY 31000
520089 MORALES VICTOR,JUANITA 29700
520094 SHOOK VICTORIA 90000
520095 ALAMANGOS PHILLIP,CHRISTI 11500
520123 BERGSTEIN BARBARA 50000
520149 MEEPOS RONALD,LUCILLE 100000
520152 OCHOA JAMES,FRANCIS 15400
520153 BLOCH TIMOTHY,CARYL 100000
520160 CANE LAWRENCE,TAMMY 70000
520164 BARNES WILLIAM 24500
520170 WEAVER NORMAN,BARBARA 100000
520192 BURKE MICHAEL,CAROL 60000
520208 OLAGUE ESTEFANITA 30000
520210 DAVENPORT STUART,CLAUDIA 44000
520231 HINDS DESMOND,PATRICI 88500
520244 WOLF FRED,KRISTIN 69500
520253 NEGRETE JUAN,MONICA 40000
520263 LAMPH MARK 55000
520265 YOUNG MARTHA 50000
520269 VAILE CRAIG,ELIZA 20000
520276 TANG/TANG MIN-HUW/PEI-CHE 26200
520278 KNOX MONTGOMERY 30000
520279 HINTON DERRICK,TINA 28900
520306 WELCH STEVEN,BETH 27000
520309 SEARS BRIAN 48300
520314 DONOHO JOHN 86600
520358 PAPARELLI ANGELO,SAGHI 176500
520365 PINUELAS ROSA E 46500
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520366 GORSCH DONALD,LAUREN 100000
520369 SMITH/MOORE MARY/WILLIAM 63000
520376 BLECKER/BLECKER J.RYAN/LEIGH 50000
520383 SNYDER THOMAS,JANICE 13600
520387 SKALAVENITIS NICK 46200
520391 REED,HERNANDEZ FRED,CHERLY 164000
520396 VARTUMYAN SARKIS 46900
520403 DONEN LORRAINE 56200
520408 ASSANTE MARK 27900
520410 LEVINE MELVYN,THELMA 50000
520411 ANDERSON LELA 23500
520413 STOUT CLIFFORD 50000
520416 FREEMAN PHILIP C 22500
520423 MOLSKA JOLANTA 21600
520431 BREWER MARY 25000
520451 NOORMAHMOUD MANOUCHER,MAHAS 143000
520456 ADELMANN CHARLES,PATRICI 66000
520465 RICE DANIEL,LOUISE 27000
520468 PELZIG JOSEF 21000
520472 LEE/YEH ALAN/LISA 32500
520473 HAWLEY ROBERT,MARY JO 61000
520474 FELDMAN NOE,FLORA 100000
520484 WEINBERG DANIEL 100000
520490 LEUNG ORLANDO,BETTY 30500
520494 PAOLETTI CHRISTINE 100000
520496 DUTTON WARD,LORI 35800
520505 CHOI BYEONG,DONG 25000
520511 TATUM CLAY,ANNETTE 50000
520512 ZIMMER/ZIMMER JAMES/PAUL 32200
520513 WILSON MELVIN 21900
520530 SPIREK DANIEL,WENDY 40000
520541 GALBRAITH GLENN,BIRGITT 15000
520552 ESTES LEE 23500
520554 UYEDA LAURENCE T 43500
520565 PANGE RUSSELL,ANN 100000
520575 MCCOMBS JOHN,VONDELLA 30000
520577 WONG NANCY LAI LEE 35000
520579 SHELBY,HUMPHREY PHILIP,DAPHNE 75000
520601 WICKRE DONNA 20000
520622 LIN CAROLYNE 49000
520629 AMIRPOUR DARIOSH 42600
520644 VANDEMORE/KUTSU MICHAEL/PAMELA 46500
520658 PIETRUSZKA/PIET MARVIN/LORI/LIS 200000
520664 MARTINSON DONNA 10400
520678 JEWELINSKI JOHN,VICKI 67800
520681 TONG PINAN 120000
520687 STROBEL WILLIAM,ANNA 53600
520692 FIEDLER LORI 27700
520699 BACCHETTI STEPHEN 100000
520708 CHU JUDY,CAL 35000
520722 KITE DENNIS,ALETA 72000
520727 RAHIMI FRAN 46500
520730 YEUNG/TRUONG CHEONG/TRINH 57000
520731 MITAL ASEEM,KIM 59200
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520741 VO NGOC,HELEN 62400
520748 DIMITRIJEVICH JAMES 21300
520750 ROBINSON PETER 73000
520751 COLONNA VICTORIA 102200
520755 BERNSTEIN PETER,MARILYN 50000
520759 SMITH DAVID 91500
520769 FARAHMAND ZAHRA 78500
520770 MILLER JAYNE,RICHARD 22500
520773 ABBEY/BIALKA JOY/SHIELA 52500
520774 HAWKINS ANDREW,DINA 70000
520776 HOBB MARGO 30000
520779 TSAI/LAM RAYMOND/TRINH 50000
520786 KAPLAN PHILLIP,LISA 75000
520790 BERG SUSAN 50000
520795 AUGUSTINE STEPHEN 28800
520798 CRUMMEY EDWARD 40000
520803 ARMSTRONG CHARLES,MINDY 95000
520808 BOWMAN JACK,VIRGINIA 50000
520815 CLOUGH JAMES,LINDA 104000
520816 WALKER THOMAS 44600
520817 WHITE/HILLS JEFFREY/MARK 25000
520819 MARSHALL JOHN,JANET 95000
520821 MALLORY WILLIAM,SANDRA 42000
520832 CANNON CHRISTOPHER,SHE 89600
520833 THAI/NGUYEN ALISSA/MICHAEL 37200
520842 LINDGREN PETER,KELLY 32600
520861 LEVIN LIONEL 54600
520864 KUHN MILES,GAIL 69600
520868 KOOIMAN/SHAUL MARCEL/LAUREN 35000
520872 SALVATO ANTHONY,STEPHAN 14000
520874 BERNARD RUTH 50000
520876 POWELL LAURIE 40000
520884 WATSON SAM,LUCINDA 75000
520899 ROMERO ALFREDO,MARIA 27000
520906 HOWARD MARK/BARBARA 16650
520927 DILLE/SPITZER CATHERINE/TAMMY 18450
520937 GOSHKARIAN WAYNE,MELISSA 44550
520941 MUIR JAMES 63750
520943 BROWN RONNIE 100000
520945 LLAMAS RICARDO/CONSTAN 13250
520970 DUNLAP JIM,CHARLOTTE 18950
520972 EDSON BRAD 28500
520979 KRAFT WILLARD 50000
521000 DRAKE JEANETTE 20050
521015 COLEMAN JULIE 21750
521019 OTT JOSEPH,LUCIENNE 17400
521024 KAPCI ROBERT,CYNTHIA 49000
521046 KENDALL THOMAS,ABBY 13300
521053 MANN STEVEN,AMY 50000
521061 KING PATRICK 31700
521065 LEGAULT JOSEPH,ISABELLE 13350
521069 SZCZYPIORKOWSKI JANUSZ,KAZIMIER 15000
521070 FRIEBERG/BRACEG EDWARD/DIANA 25550
521085 RYAN CAROLANN,GROVER 50000
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521091 BOYDSTON PATRICIA 10100
521100 KLECZEW,ZAPALOW JAMES/CAROL 90000
521101 BERNARD LAURENE 10100
521120 SWEENEY NOREEN 70700
521146 LINN LORY 19200
521153 CADDENHEAD EDDIE/ROBIN 26200
521167 WENIGER ROBERT 32000
521168 WATTS ELIZABETH 16500
521174 SEWALL LUKE,HOLLY 36700
521177 GILLET HAROLD/JAN 29060
521181 BLACK CARL/SUSAN 21600
521199 LIVINGSTON RUDOLF/DORA 35700
521203 MARTIN PATRICK,LORRAIN 68700
521205 MARTINEZ NATHAN 50000
521207 BURDIAK ROBERT 20850
521222 SIBILLA ROBERT,LINDA 31500
521235 ROBINSON/KARMAN NANCY/KIRK 21900
521259 KAMMO LOUIS,SAHIRA 50000
521263 GERLA A.G. WILLIAM 36700
521275 THOMPSON/GRIESI CAROL/ROBERT 35000
521278 DEWAR/VITTENGL DAVID/SUSAN 72750
521287 HARRISON ANDREW 20250
521368 OKAMURA BRENDA 22050
521400 CRADLER JOHN,RUTHMARY 250000
521402 BAUER,MORROW H. MARTIN,JANET 25000
521406 HIGHIET/WILSON DENISE/ANN 10000
521414 STYLES STEPHEN,KIM 54000
521416 DIAZ ROBERTA,LOVELLA 55000
521443 ADAM DAVID 42300
521447 PAINTER JAMES 10000
521450 BARRY LEE 100000
521454 MARCUS RONALD 22000
521458 HARNEY JAMES,SHIRLEY 25000
521459 CHASE/CHASE ROBIN/MARION 100000
521461 WILLIAMS JOHN,JULIA 27500
521463 HIRAMOTO LLOYD,JANIS 70000
521469 KAMENA MARK,PAULA 300000
521471 MC GEE/SWAIN ROBERT/PAMELA 73100
521472 COFFINO,PITULEA PHILLIP,BRINDUS 59000
521475 COSBY ROBERT 168000
521497 GILBERT STEVEN,PAMELA 36700
521510 GIBSON DOLORES 19200
521524 LOYOLA SAUL,SILVIA 31700
521538 MURPHY VINCENT,DOROTHY 60000
521541 GRILLI SHEILA 36000
521566 STOWERS MARK,MELINDA 72000
521583 DALPORTO ROBERT,PAMELA 47000
521587 SPAGNOLA RICHARD,JULIANA 27500
521592 CORNISH JUDSON,WENDY 50000
521601 DOMINGO/DOMINGO LORIE/ROSALINA 24000
521602 MORRIS ROBERTA 100000
521613 NELSON/CROTTY PAUL,GLORIA 28000
521629 CARMINE GARY 70000
521631 GONZALEZ RIGOBERTO,IRMA 25000
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<PAGE>
521632 TOPPER ETHAN,ANDREA 250000
521633 IRELAND JAMES,ROBIN 53000
521635 MONTERO ROBERT,JEAN 25000
521639 MOSKOWITZ RICHARD,DEBORAH 87500
521647 LIVINGSTON THOMAS 25500
521656 GRAY RANDALL,LAURA 90000
521661 YEE NANCY 100000
521665 DIEDERICH/SHULT MICHELLE/SUSAN 25800
521672 TAKACS JO ANNA 38900
521674 LIN SHIH,LI 44600
521676 HAMAMJIAN SEB V 105000
521680 ODDIE SUSAN,JAMES 33500
521681 HOLLAND PHILO,MARILYN 190000
521683 JOHNSON/MCKEEGA COLIN/MARY 34500
521698 ELLYATT GARY,MARCELINA 32500
521713 KRISHNAMURTHY VINU,MANISHA 32400
521724 CHOY DENNIS,DAISY 200000
521730 RYDMAN JOHN H 50000
521731 DOSEN MICHAEL,EVELYN 90200
521733 TRENCHER REED 49000
521737 PARKER STUART,LORNA 31800
521744 DRAPER DAVID T 19500
521777 SPARKS WILLIAM 75000
521780 RIVAS HERMAN,ROSA 60000
521781 WESTLEY MARTIN,CONNIE 70000
521792 GHANBARI ALI 65700
521802 LEVIN KAREN 89800
521805 DEMPSEY STEVEN,GEORGIA 40500
521808 SINGH PARKER,BEVERLY 44400
521809 ROBERTSON RODNEY,HONORA 150000
521811 LOZANO NOE,ELVIRA 22000
521826 BENSON THOMAS 60700
521830 PHAM/PHAM PHILIP/SANG 59000
521839 WOOD-JONES DEZIE 30000
521844 VORONIN DAVID,TATYANA 50000
521846 SESNON HELEN E 33900
521848 STEPOVICH MICHAEL 50000
521850 SINGLETON WILLIAM 145000
521851 WHALLEY BARRY,SUZANNE 100000
521852 MOORE CYNTHIA 60000
521854 RUMMELL JEFFREY,ELISA 200000
521859 ANDERSON GREGORY,PATRICI 50000
521868 AMIRI SHAHRIAR 36500
521880 JOHANSSON KOREY 21900
521888 BAKER ROBERT 40000
521889 DASILVA DANNY,MARTINHA 64500
521891 WARAICH BHUPINDER,JMP 85000
521892 HALLBERG JAMES 150000
521893 TOBIAS/SCHEIDEG ANTHONY/ANNA 46800
521894 PACKER ALAN,MARGARET 44900
521901 LEWIS JOSEPH,MONICA 42700
521905 PATENAUDE JAMES,LINDA 15400
521909 JACOBSON JEFFREY,CYNTHIA 47000
521915 D'ANNA DOUGLAS,SALLEE 200000
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<PAGE>
521916 AHUJA ARVIND,AMEETA 38700
521934 CIPRI TENO,HELEN 20000
521935 SEIB ERIC,BETHANNE 48400
521936 LAU BONNIE 37500
521940 NICOTRE THOMAS 100000
521941 HUSKINS MICHAEL,VIRGINI 100000
521942 JENSEN LORI 43000
521947 BUHLER F.LEROY,MAXINE 24700
521956 HAAKE K.WALTER,LINDA 100000
521975 SCOTT CAROL 88000
521977 PYLES WILLIAM,JEANINE 64600
521978 KOJNOK IVAN,GABRIELA 42000
521986 TRESHNELL DAVID,LISA 28500
522015 WILKINSON EMMET 50000
522017 DELEON JESUS,BEATRIZ 25000
522021 LEMOS/BROTHERS MICHAEL/JUDITH 32300
522024 DRENNAN WILLIAM,SHELLE 40000
522030 TUTTLE CAROL SASS 22600
522031 MILLER JAMES,CONNIE 30000
522041 PELLEGRINI/CUSC PATRICK/LISA 27200
522064 BURT,BEMUS PATRICK,SARAH 176000
522066 GUPTA/ROBERTS ANIL/GERALDINE 82500
522069 BLAUSHILD BOBBY,CAROL 22000
522070 ALVA JUAN 16400
522071 LEFEVER TIMOTHY,AMY 31500
522073 KEATING NEIL,CHRISTINE 46000
522078 LEWIS CELIA M 15000
522084 KARDOS MICHAEL,ALEXAND 76000
522091 CARLSON,RISLEY ANTON,EMMA 49500
522098 AMOROSO FRANK 34300
522111 TINERVIN RICHARD,GAIL 100000
522112 CONNOLLY PATRICK,CHERYL 62500
522113 BESSIN ROBERT,JANE 200000
522114 SUNDERMEIER,BUR CHRISTOPHER,VIC 47500
522120 RAMADURAI/VASAN SRINIVASAN,REVA 32500
522121 NICKENS/RUFO/SM NORMAN,ROBERT,D 39300
522124 KNOX,MARBLE THOMAS,INGRID 60000
522125 MUNOZ DANIEL 15000
522128 STUTZ/VILLANI LINDA/MARIA 41000
522132 SINGH HARPREET,ANURAD 70000
522134 WORKMAN JEFFREY,STEPHAN 58000
522154 VU LEE,YIN YIN 104700
522160 PIOMBO MARTIN 41900
522163 BROWNING JONATHAN 35000
522165 GROVES,CARLSON JOSEPH,JULIE 42500
522166 PREIS KRZYSZTOF,TERES 31500
522168 SADJADI/KASHEF SHAHROKH/FOROUG 89400
522172 VILBIG RICHARD,VALERI 33000
522178 GRIFFITHS CRAIG,ANNA 89000
522181 JACOBUS LAURA 49900
522185 CECCHINI GARRETT 60000
522199 KAROUMI BASIM,MAY 29200
522200 KISLING RONALD 42400
522291 HUM HONE,ELAINE 37500
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522296 SANFORD/ANDERSO MARK/JENNIFER 15000
522355 HILDRETH MICHEAL,ALICIA 116200
522363 COLLISON CLIFF 21000
522382 EHN,LANDAU MELISSA,DAVID 24000
522389 BURGESS LEWIS 33700
523419 LUKITO/ADINOTO MATTHEW/WIDIA 77900
523432 STRASSER HOWARD M 50000
523438 COHEN CHISTINA 36300
523443 GIBBS DIANE 25000
523452 MARCARINAS MARK,MARILYN 36750
523509 TOOMBS ROBERT,NOLA 16000
523543 HAIDER ALEX,MARY 125000
523591 PIETROMONACO FRANK,JACKI 50000
523609 PENCE LORANCE D 18700
523611 GALE JAN 22200
523645 BARNOUW/RICE PETER/MARGARET 39000
523664 PERKINS DENNIS,ROBIN 50000
523670 FIFER DONALD,SHIRLEY 47000
523676 STEVENS CHAD 26200
523700 TONG RICKY,JOSEPHINE 33000
523701 HO SAMUEL,LORETTA 50000
523732 EDWARD DONNA,BRUCE 46000
523754 MEYER MARLYS 23000
523766 BURKE JAMES W 15750
523804 WAIT JANE 14900
523902 RIVKIN BERNARD,MYRNA 100000
523909 HERR STANLEY,BILJANA 52700
523928 D'AMICO JOSEPH,JAMI 20000
523934 JOHNSON MARK,LENA 13900
523936 MONCAUSKAS RICHARD,DEBRA 14300
523940 HARTE TERRY,GAIL 26800
523943 ANDREWS DIANE 22000
523947 FABEAN WILLIAM,PATRICA 45000
523984 BARBER BRIAN,VICKI 22300
523991 MARKILES DEBRA,JONATHAN 100000
523995 MATTKE CURTIS 15900
524007 SPARKS CHARLES,FRANCES 50000
524020 MORALES HECTOR 47500
524059 MEIER DAVID,KATHY 42200
524060 CONSTABLE KENNETH,BONNIE 50000
524062 GRATZ WILLIAM,REDA 41200
524064 MARQUEZ RICHARD,MICHELL 37200
524066 TAYLOR RICHARD,JEAN 37500
524072 SPERO ROBERT,DONNA 50000
524077 NANSEL NORMAN,JUDITH 48000
524087 SWITZER ALAN,VICKI 65200
524091 EIFLER RANDY,SUSAN 25000
524093 GALLAUDET TIMOTHY 37000
524102 SHADOAN DAVID 57000
524114 MCPHERSON MILES,DEBORAH 60700
524115 SHAPIRO RICHARD,SANDRA 100000
524116 TAYLOR RALPH,LUAN 95000
524124 HALL EDWARD,STEPHANI 75000
524126 WOOD JOHN 34300
Page 57 of 97
<PAGE>
524128 HARDESTY DARREN 39000
524138 GREGORY DEBRA 20000
524141 ANDREWS SANDRA 50000
524142 O'GARA MICHAEL,NANETTE 38800
524153 JONES RAYMOND 27000
524156 GOETHEL PETER 30000
524158 HALL NORMA 36500
524160 DUNN ROBERT,ANNETTE 17200
524176 GOULD GREGORY,DEBORAH 29800
524183 ARENSMEYER KURT,JOAN 20000
524188 CHANDLER/OLMSCH LORI,JOHN 25000
524207 VAUGHN/GILL SHIRLEY/GLEN 100000
524213 PARKER RANDALL,CATHERI 24600
524222 SALEM DONALD,LEIGH 57500
524223 SUBIA THOMAS,LILY 50000
524224 LAM THOMAS,DIANA 56300
524237 LEWELLEN RICHARD,AYESHA 23100
524241 ALLEN DANIEL,JUDY 45300
524243 HANSEN CHARLES,SUSAN 40000
524275 DEL REY RUBEN,EVELYN 100000
524283 DORGAN DANIEL 40800
524285 WOODALL TIMOTHY,JULIE 99900
524293 WACHENDORF WENDY 41000
524301 MOYAL DANIEL 48400
524304 WRIGHT TIMOTHY 16000
524307 STRONG DOUGLAS,KARLAN 50000
524313 VIRAMONTES JESSE,LINDA 50000
524315 LENNON JAMES 25900
524322 DELLACATO CHRISTINE 25000
524341 BREVIG/ADDINGTON KENNITH/RHONDA 45400
524354 NASSIROGHLI ELLA 16500
524360 RADLER ROBERT,CHRISTIN 42000
524367 EVANS EIKO 22000
524368 SHIRER BRUCE,LINDA 47000
524376 KRAVITS KATHY 20800
524383 HERNANDEZ ANTHONY,LESLIE 24600
524385 JOHNSON GEORGE 35500
524414 MCCOLLEY RICHARD,NORMA 32200
524420 ROSSETTO FRANCISCO 20600
524423 LUKENS BEKKI 27100
524436 CHURCH/JENKINS ROBIN/THOMAS 28500
524437 KAISER KENNETH,CHERYL 21700
524447 FORTSON JUDITH 34500
524453 SULLIVAN TIMOTHY 45000
524455 SHAFFER JOSEPH 37300
524460 KAHN MOHAMMED,MAHRUN 33700
524465 GROSCHWITZ JUDY 22200
524467 BARD THOMAS 25000
524483 GLASGOW GARY 73900
524511 JONES MICHAEL,CAROLE 50000
524512 GEORGE ALEXANDER,KRYST 50000
524521 SCHEIDLE SUSAN 15000
524530 BUELL DANIEL,LUPE 18000
524541 DEMARIA SALVATORE,NIDHA 38800
Page 58 of 97
<PAGE>
524555 HUYNH THIENE 30000
524556 HUFFMAN PHILIP,LAURA 39700
524562 CHENG AMY 28200
524566 HEADRICK BRUCE,KRISTINE 37000
524571 PASKOWITZ SALVADOR,KRISTI 48000
524611 PARISI FRANCESCO 31000
524615 BERRIER DAVID,MARY 50000
524616 SEIGLE ROBIN 40000
524622 CLADY CATHY 11300
524640 DERKSEN DARRELL,PATRICI 33000
524647 LOPEZ DAVID,MARIA 14200
524674 VELLING THOMAS,PAULA 47400
524675 JANSEN BRAD,LISA 21800
524676 NEPTUNE STEPHEN,C.L. 100000
524677 UPSON DONALD,SUSAN 50000
524682 PABLO JOSEPH 40000
524686 ANDERSON DAVID,JANICE 41400
524688 HELLER DEBRA 22200
524690 JONES REX,CARROLL 52000
524701 WHIPPLE JOHN,ROSA 20000
524705 YOUNG PHILIP,JANET 75000
524711 MUNN MICHAEL,PATRICA 35000
524731 GRAY KENNETH,DEBBIE 25000
524734 MCNEILL MARY LOU 27500
524743 MIHAILOVICH/AME ERIC/SHERI 22500
524749 BOWMAN BRIAN 33500
524755 HURST DONALD,CATERINE 30000
524771 MORALES ROBERTO,VINA 30000
524775 BUCHMAN BRAD 35000
524779 FRANK MATTHEW 21100
524787 BRANSETTER SCOTT,LORI 37100
524822 GEIER KEVIN,HEIDEMARI 113100
524854 THOMPSON MELVIN,BARBARA 85400
524861 WILLIAMS MICHAEL,DEBBIE 33700
524873 PELTIER JANE 40500
524884 BORK CHARLES 50000
524908 EVANS HUGH,LAYNETTE 50000
524912 JOHN SONJA MARY 40000
524915 STEPHENS HENRY,KAREN 59900
524916 ISMCSON GERALD,LAUREN 63000
524918 BARHYDT RALPH,MARY 40000
524923 HEFFELE DON,ELIZABETH 40000
524930 PRICE SCOTT,LAURA 40000
524943 KLING DAVID,JUDY 30000
524957 BOBROW/GRAHAM ERIC,KATHLEEN 31800
524960 CHRISTENSEN SUZANN 38000
524963 WALLACE CHRISTINE 35000
524964 WU CHIEN 100000
524966 RHEA BRIAN,MALINDA 35000
524969 VILLALOBOS TONY,ANNA 28500
524977 BERLINSKI MICHAEL 25000
524981 KEPFORD GREG,BARBARA 100000
524994 KEEFE JOHN,CAROLE 53200
524997 BOPP MARIANNE 45700
Page 59 of 97
<PAGE>
525008 LIVERGOOD JENNIFER 22600
525011 KEUCHKERIAN JEAN,SONIA 35200
525013 WASSOM DAVID,RENE 77800
525021 STONE ARTHUR C 34500
525022 ROSE STEVEN,COLLEEN 100000
525023 SUN/CHU WERNJIEH,TSENG 85500
525024 HOLDEN ROBERT,JAMIE 50000
525025 BOE PATRICIA 61500
525026 BASRAVI NAVAZ,THERESA 29800
525027 FERGUSON ANDREA,MARK 80000
525028 FIORETTI LINDA,MARK 33700
525046 NORTON ROBERT,PATRICIA 44900
525059 TOYAMA KENNETH K. 40100
525062 SHORT RONALD 36700
525064 BROWNSTEIN ROBERT S 10000
525069 KLEFFMAN TIMOTHY,DEBORAH 170200
525071 SHULTZ DANA,CHANY 100000
525081 GARDNER JAMES,ROSEMARY 50000
525087 TURNER JAMES,NANCY 200000
525132 FIELDING LAWRENCE,LINDA 50000
525137 IRWIN DENNIS,HEIDI 100000
525138 NELSON JOHN,WILMA 26500
525142 FARKAS RICHARD 35000
525144 BROWN HAROLD 15000
525149 BLOMFIELD HOLLY 50000
525190 WANG/HE SUZANNE/JIAN 100000
525191 METZCUS MICHAEL,JOAN 50000
525192 HUGHES MICHAEL,LISA 30000
525193 HARDACRE JEFFREY 25500
525194 JEFFREY WILLIAM,GERALDI 45000
525195 STEINBRECHER THOMAS,KATHLEEN 83000
525204 CALDWELL MICHAEL 84000
525213 HARTNETT KEVIN,WENDY 75000
525214 KUIT SHEEN,PERI 46500
525223 SPEIGHT CHARLIE 28500
525230 KUMAR SALISH 14600
525234 RALH RAMESH,JINDO 10000
525240 BARKER DONALD,NANCY 75000
525247 KVOCHAK TERRY,KRISTINE 49900
525250 LALANNE/RAY ROSE/JULIE 32000
525251 GOUGH FRANCIS,SUSAN 70000
525253 DOLSON PATRICIA 86400
525261 WINTROUB BRUCE,MARYA 100000
525277 DRASNER KENNETH 33500
525282 WARD GARY,SONJA 220000
525284 BRICKWEDEL KENNETH,MONICA 43500
525292 MC CARROLL PATRICK 200000
525293 BRAGG RICHARD,VICKI 45000
525299 SUBAK/MCALLISTE LESLEE/LINDA 49000
525306 BRYAN MICHAEL 123750
525308 HOTELWALA TAMER,RUMANA 100000
525313 MONTALBANO MICHAEL 34000
525316 BRENCHLEY GEORGE,LEONA 50000
525317 TALBOT KENNETH,CAROLIN
Page 60 of 97
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525322 ROBINSON JEROME 18700
525323 PASQUALI RICHARD,KATHLEE 110000
525324 CHOY,SAY GAVIN,EILEEN 26000
525327 VOISINET JOHN,KAREN 200000
525329 KERNS DAVID 67000
525334 KOBBE KENT,GERTRUDE 50000
525337 GORDON LIZABETH 50000
525373 KAWAGUCHI AKIHIKO,TOMOKO 34000
525380 DOWNING/ECKMANN CONSTANCE/JOHN 100000
525381 FOEHR RICHARD,JODI 41500
525389 WASHINGTON OLIVIA 50000
525390 PORTER/MARTINEZ BEATRIZ/NOEL 55000
525406 JONES STEPHEN 59000
525408 JONES JERRY,JULIE 54300
525421 RICKER/TANGUAY GEORGE,LOUISE 26600
525423 MILLER LEROY,SANDRA 20000
525425 ORR JEFFREY,MARIANN 65000
525431 SMYTHE JAMES 69000
525435 MOHAN MUKUND,VINITA 51400
525459 KING MARLA 25400
525466 CINFIO LISA 26200
525475 BRUSMAN MAYNARD,TRACY 39700
525480 VILTMAN PETER,JANE 100000
525481 BYERS MONTE 69000
525484 GOFFEE THOMAS,LETTY 41000
525487 RAY STEVEN 87500
525499 SLOMOFF,MERCER DANIEL,LUCINDA 200000
525500 CLARK MILTON,JAYNE 50000
525503 ROSSMAN DONALD,CONNIE 65000
525529 KLINE RICHARD 50000
525544 HICKMAN THOMAS 28000
525548 MCNALLY MARSHA 100000
525551 RUNYON KATHERINE 34000
525552 RODRIGUEZ ALBERT,LIGIA 123000
525553 KAVORKIAN RALPH,EVELYN 89100
525561 COLEMAN ANTHONY 50000
525562 DOMINGUEZ FELIX,GAIL 50000
525574 PATRICK SUSAN 49000
525578 MONTOYA ERNESTINA 33700
525581 KISH TERRY,MELANIE 30100
525590 CRAVEN FRANK,ELIZABET 39000
525591 KHAYKIN/KHAYKIN YURY,SVETLANA/M 126000
525593 MARTINEZ ARMANDO,LISA 30000
525600 AESCHLIMAN GREGORY,ROBIN 100000
525603 OBEROI/AHLUWALI NIMERTA/SWAPNA 60000
525613 WILSON RONALD 26200
525615 CAPPS RAE ANN 43300
525644 BEALY JOANNE 36000
525650 ROGERS JAMES,SANDY 200000
525651 BATTAGLIA ROBERT,SHERYL 100000
525654 STEARMAN JOHN,EILEEN 50000
525824 MANDEL ELIZABETH 67500
525857 SHANNON DEBORAH E. 50000
526100 HARRELL STEVEN 18600
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526112 OLDS PRESTON M 45000
526160 OLSZEWSKI RANDALL J 138000
526165 PENA LINO E. 24500
526185 KASCH TIM E. 19000
526190 KUSTURA A. STEVEN 50000
526204 MCINTIRE SCOTT D. 29500
526215 SAWLE WAYNE 11000
526230 ARONSON DAYNA B. 31900
526249 BARE DANIEL J.,MONIQ 27600
526308 JACKSON JEFFERY 21800
526314 HOPKINS CLARENCE 39000
526369 EGGERS RICHARD R.,BONN 29800
526378 PECK BRIAN 26250
526418 JOHNSON ERNEST,BARBARA 50000
526453 BAKER ROBERT A.,ELAIN 50000
526908 BLANCHETTE RONALD,KELLY 39100
526912 RIGGINS MICHAEL,SHIRLEY 25000
526917 BROWN YOLANDA 49600
526919 DEUTSCH DAVID 25000
526925 KAPLANSKY PETER,ZINAIDA 26500
526927 LEE JAEWOO,SOYEON 20000
526967 BOSWELL MARY 34500
526970 MCDOWELL BRUCE,ANNE 33500
526971 JOHNSON THOMAS,KRISTEN 32900
526974 RECTOR RONALD,TERRI 30000
526983 HARRELL GEORGE,NANCY 50000
526988 TORRES ALEXIS 34000
526997 ANDERSON JAY,CAROL 15900
527002 DROGEMULLER PEGGY 50000
527005 SALAMONE PAOLO,PAULETTE 75000
527009 ESKRIDGE JAY,STEPHANIE 20000
527014 HARRITY WILLIAM 34800
527015 GILBERTSON RICHARD,DIANA 50000
527023 SHOCKLEY WALTER 28500
527029 PROHASKA DENNIS 35250
527036 GEARY ROBERT 200000
527046 MAC ADAM JOHN 19400
527050 MARTINEZ EMELIO,SONIA 13200
527077 GERAMI MICHAEL,TAMARA 37900
527078 MARK ALLAN,MARA 65000
527093 ESTAVILLO PAUL,ANN 26500
527099 SHERMAN HAROLD,JANICE 62000
527110 STAFFORD MILDRED 100000
527126 THORMODSGMRD TAD 50000
527154 GRAVES GEOFFREY,TRISHA 20300
527174 ANDREW GARY,KIMBERLY 58000
527180 CHAN JACK,LUKY 50000
527183 KENDALL PATRICK,JODY 44500
527184 NITZKOWSKI GREGORY,BARBARA 68000
527198 DICKENSHEETS DAVID,ELIZABETH 10000
527205 HSIAO HSUN 35000
527217 GRAY JERRY,DIANA 41200
527220 LAMB KATHY 47850
527224 BROWNING DONALD,DEBRA 100000
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527226 SASSO LUIGI,JULIANNE 78500
527236 RUSSELL MELINDA 31500
527250 MAYMAN SAM,RACHEL 50000
527251 MEYERS AVRAM,GALE 200000
527252 ALTON/CLEMENT WILLIAM,LISA 150000
527266 LILLEY JOYCE 24700
527271 PERSHING TIMOTHY,FRANCES 50000
527275 VANDERTOL/PODWA JOSEPH/ROBIN 19200
527277 SPEHAR ROBERT,JENNIFER 28500
527291 HUGHES DAVID,JANIS 29200
527299 BELL PHYLLIS 20000
527300 EPSTEIN/KAPLAN MATT/JANE 250000
527305 DUNN/STOCK WILLIAM/BARBARA 41800
527307 TURNER COLLEEN 48000
527310 SCHWARZ JOHN,LYNDA 60000
527315 GAMPER REINHOLD 75000
527320 JONES DOUGLAS,JOANNA 38200
527340 BANKS RUTH 35700
527350 DEL MONICO PATRICIA 50000
527353 COLLIER WILLIAM,JANET 60000
527359 HOUGE MARTIN 31000
527392 RUDIN MICHAEL 50000
527395 ZAMMN/WINGATE ALEXANDER/DENIS 50000
527410 FOWLER PETER,LAUREN 36000
527432 SPOTTS LARRY,SHANIE 14000
527440 SIMMONS MICHAEL 64000
527458 MCDONALD MICHAEL,COLLEEN 65000
527462 LAPP STEPHAN 69500
527463 PHARES ROSS,JUDY 50000
527471 JONES PHILIP,PAMELA 23000
527475 LEONARD DENNIS,DEBRA 30000
527482 HALE JOHN 116000
527485 BAIRD CAROL 63000
527492 DI RISIO LEONARD 36700
527497 STRETTELL JOSEPHINE 54100
527500 SANCHO ANTHONY 30700
527512 VOTAVA GERALD,LINDA 54700
527523 TRUISI ANTHONY,LISA 73000
527535 AKIBA JOEY,CAROL 41200
527536 SILLS GREGORY,LAUREEN 140000
527550 GALVAN EPIGMENIO 50000
527553 TEDESCO/ANTHONY ARTHUR/CEPTEMBR 20500
527657 KRAMER JACK,RALPHON 25500
527665 KIRSCHNER NATALIE,DARIN 56400
527671 GRANTZ ARTHUR/LEILA 49000
527698 MCCLAUGHERTY RALPH,JOY 29700
527713 SCHEFCICK RICHARD,CHRISTI 33000
527714 FOSTER JOHN,MARIANNE 66000
527774 GOLD JOSH 36800
527994 ZACK SHANK R 50000
528036 VOLNEY GREGORY,REBECA 25000
528079 MILLER KENDALL,PEGGY 50000
528086 JAMES DENNIS,JOANN 59000
528089 JUREK BERNIE,ELLEN 50000
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528099 BARR TANYETTA,WILLIA 16600
528183 CLEASBY ELWOOD,MARGE 47000
528186 INGLE DEBBIE D. 21400
528189 GONZALEZ CARLOS,JANICE 35200
528285 HEIL WAYNE,DEBRA 11000
528304 HARRIS THOMAS,KENDALL 38000
528910 BAILEY STEVEN,JANIS 50000
528912 ALARCON MICHAEL,MARY 53700
528917 MOORE JOHN 92200
528938 HUNN KEViN,MICHELL 15600
528952 FAYETTE KEITH 30300
528974 BASCH JEFFREY,JILL 39300
528992 SMITH CHRISTOPHER,MAR 25500
528997 DODGE KEVIN,PATRICIA 50000
529038 BOBINSKI ROBERT 48700
529040 SNIDER BRUCE,DEBORAH 29000
529052 POTTER KEVIN,STEPHANIE 10000
529075 MORINO DANIEL,DEBORAH 22000
529078 HOSFORD GERALD,CAROL 22000
529152 RAGSDALE LARRY,TERESA 17200
529188 GRADY PATRICK,KIMBERL 19500
529219 LOCKMAN HEIDI 38200
529919 SIGALA CONSUELO 25000
529935 HENDERSON IAN,NANCY 25700
529961 PETERSEN KRISTIAN,MARIEL 30800
530906 SHEPPHARD MICHAELA 35200
530911 VAN HORN WILLIAM 19800
530915 WOODS DARCY,SUZANNE 38400
530916 LEVENSON DAVID,CHERI 120000
530919 GUNDERSEN ROBERT 25900
530920 TOSCANO PAUL,MARGARET 41000
530922 BOSSHARDT KYLE,KIMBERLY 21000
530925 ARSHAD CLAUDIA,MOE 50000
530935 CHANCE/TUSHINSK RAY/JAMES 50000
530951 RAHMAT/CHARLA OMID,CHARLA 33200
530960 VANDONKELAAR CHARLES,SANDRA 150000
530961 MOSHREF MOHAMMAD 124500
530964 REYNOLDS FRED 50000
530975 TALLMAN GARY,JACQUE 22900
530986 LUYON ALVIN,REGINA 40500
530988 GOETZ ROYAL,TERELEN 50000
530990 BANNES PAUL,CAROLE 33600
531002 CLARK LAURA,DANIEL 88000
531003 MILAZZO/WYLDER DAVID,MARILYN 140000
531006 KLINE ANDREW,REBECCA 89000
531007 HARO KATHLEEN 50000
531011 WOODBRIDGE WILLIAM,BEVERL 31900
531045 BUSCH MICHAEL,SUZANNE 31000
531047 CLARK KEVIN,ROSEMARY 35500
531055 KING DENNIS,DIANA 40000
531056 CLARK DONALD,JANIS 44800
531060 ELI DONALD,TERRI 50000
531062 ALIANO LOUISE 21000
531063 DILL ANTONIA 74000
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<PAGE>
531066 DURHAM SUSAN,BENJAMIN 91000
531085 VANDERCREEK MICHAEL,ALLISON 51200
531095 JONES MICHAEL/ANNE 34500
531102 SINCLAIR/FISHER ANDREW,KATHLEEN 100000
531111 BUTLER/FRAZITA PHILIP/CHRISTIN 24500
531113 BRUSH ALISON 18500
531116 SCHNOLL MICHAEL,VELMA 64000
531128 HAFTORSON/BATTA CHAD/KRISTI/SCH 50000
531141 CHINO BRUCE,TERI 50000
531142 AUSTIN EDWlN,RAYAN 50000
531144 JURADO ANTHONY,PAULA 75000
531146 SEBASTIAN XIMENA,MARCELO 50000
531148 WEBER ALAN,HINDA 70000
531161 CHOW DAVID,CHOR 50000
531163 CHIU ANTHONY 79000
531194 MURPHY JOHN 12900
531195 NORGARD/OPPOLD DAVID/JOSEPH 33000
531197 GOLDMAN DANIEL,CANDICE 100000
531207 SHEPAS MARY LOU 21600
531233 SURUNIS CHRIST,ANDREA 50000
531236 COHN STEVEN 150000
531249 LEE RAOUL 18000
531261 PRIEST-HECK ROBERT,SARAH 80000
531264 FEENEY JOHN H. 40000
531269 FINNERTY MARTIN,MARYLYN 50000
531271 GALLUCCI SAMUEL,ANTONIA 85000
531286 ZHANG/WANG YIMIN/JIAN 38400
531294 ORNEDO ARNEL,RIZALIE 33000
531295 TROXEL PATRICIA 33000
531296 DUDLEY CONSTANCE 100000
531297 NAVID BEHZAD,FARZANEH 50000
531299 WARREN LINDA 25000
531301 MCLEOD DANA,CRAIG 47600
531305 LEE MICHAEL 49500
531319 SAHA BIKRAM,CHANDRAM 27400
531321 WOLINSKY MARK,LINDA 46000
531334 TAUB KENNETH 57000
531340 SHENG/LI YUNTAI,JINLIAN 58000
531343 HENRY SMELLY 41200
531345 BROWNLEE GRAHAM 55800
531346 INGRAM ARTHUR.KAREN 150000
531347 HARNISH/DUMAS DAVID/LESLIE 34100
531353 WONG/DERE VICTOR,EDNA 27000
531364 HSU/CHANG SHERMAN/CAROL 100000
531412 CARLSON SHIRLEY 50000
531413 FRIEDMAN ALAN 200000
531422 POLKINGHORNE/ES ADAM/GRETCHEN 32700
531423 ASPELUND CURTIS,HELENE 32000
531447 LEUNG MUN 33500
531454 SHOEMATE ROGER,DEBBIE 58500
531464 HARRIS JOHN,WENDY 30000
531469 PEARCE JASON 45000
531470 ESCAMILLA CARLOS,JULIE 15700
531473 LIANG MAURICE 95000
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<PAGE>
531476 YOUNGLING GLENN,CATHERINE 70000
531489 CHAND PRAKASH,UMA 49000
531491 KAZEMI ENAYAT 25600
531504 WONG/LOO WALTER/CHEN 38700
531522 DEVOE RICHARD 19200
531526 WICKRAMASEKARA LEE,RANMAL 58000
531527 DO/NGUYEN/PHAM HIEP/TUYEN/DONG 27300
531528 SERAME/SERAME PEARL/PABLO 50000
531532 MORGAN ROBERT,CATHLEEN 30000
531544 KIM YEJI 43500
531568 MURILLO CHARLES,ARLENE 112500
531571 GOSWAMI SANJAY,RAJNI 41300
531576 PETERSON ROBERT,JUDITH 50000
531595 ROGERS JESSE,MELINDA 145000
531604 ROCHA/GONZALEZ CARLOS,MA DEL 70000
531609 JOLLEY JOHN,LYNNE 100000
531614 CORNELIUS/ATTIX RICHARD/CHARLES 41800
531632 GARCIA/COOK KELLI/MICHAEL 57900
531640 STREMEL JOHN,VICKI 40000
531641 CASABONNE YVES,ANNETTE 50000
531657 LIANG/LI YUNGFU/SU-CHIN 59200
531686 MOORE/LEE DON,ROBYNN 50000
531687 GOLDMAN HELEN 98000
531691 GREENE CELESTE 56100
531828 SMITH ROSEMARIE 50000
531840 OSTERGAR GEORGE 30000
531859 KEYES/HILTON WILLIAM/CYNTHIA 33700
531904 MCKEITHAN THOMAS,DONNA 35000
531907 SMITH ROBERT,PAMELA 200000
531914 FREEMAN JOHN,BONNIE 20000
531949 SANTOS-PASADIS BETHAN 75000
531951 HAYDEN KENT,JACQUELINE 10000
531953 VALDEZ FRANK,URSULA 20400
531954 GLYNN JAMES,JOAN 100000
531958 HUBBERT DONALD,JENNIFER 40000
531960 HALBACH MARIE 80000
531961 CABRAL VICTOR,JOYCE 50000
531997 HENDERSON ALAN,DENA 50000
532012 HARPER BETH 30000
532382 WILLIAMS RAY 25000
532400 AIELLO JOHN 47200
532404 WELLS HAL,RONNA 19000
532419 STOVER JAMES 35600
532434 ISLE KENNETH,CATHERI 100000
532450 KELLY HELENE 25400
532452 DEGEN JAMES 14200
532456 KUBACKI-PIELKA ELIZABETH 14000
532483 STREADBECK JEFF/ANNETTE 38000
532501 RAEL CELESTINO 42400
532509 LASWELL ROBERT,CAROLE 50000
532526 WILCOX LANI 23400
532592 PICKETT ROGER,ANA 50000
533172 SANESI GRAZIANO,MICHIK 20200
533173 CONLEY STEPHEN 17900
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533191 PLATNIK-LYONS LAURIE 43500
533196 MCBRIDE WILLIAM,MARY 35500
533206 JIANG,CHANFENG TAO,ZHAO 36900
533209 COLLIER SUSAN 41500
533251 VISCITO ANTONIO 18700
533261 BASZAK DAVID,KAREN 40200
533263 JONES BARBARA 107000
533304 RODEMEYER NANCY 15900
533311 PARENT STEPHEN/PAULA 37000
533333 DUDDY MICHAEL 60000
533343 KISH CHARLES/SANDRA 30000
533346 FRATARCANGELI JOSEPH 25500
533396 FIELD BURGESS/JEANETT 14900
533417 GIFOROS/EFTING DIMITRIOS/DEANA 31500
533418 DUCKETT JOHN,MARJORIE 100000
533504 ZWIESLER DAVID 22200
533549 CUFFARI/MILLER CHRISTOPHER,DAN 17700
533565 DE LA VEGA DANIEL,ELAINE 100000
533577 BALASCIO ALBERT,JUDY 81000
533654 SALANT ANTHONY,ELIZABE 100000
533901 WALLACE ALVINN 89000
533906 BOCK FRED,LOIS 99000
533932 MENDOZA JOSE,MARTHA 75000
533960 O'CONNELL-SIMQU ERIN 68200
533984 ANGUIANO ALFRED,THERESA 50000
533993 BECKERLE JAMES,CHERI 52600
533996 BLANKSTEIN LEON,MARIA 71700
533999 LUND KENNETH 96700
534037 MALNIC ERIC,MARTHA 50000
534058 HOWELL DANIEL 19800
534082 PORTNOY DEBORAH 20500
534103 QUINN JAMES,DELLA 17800
534132 ATHEY TERESA 29600
534152 WILLAMNN EMIL,MARCIA 69000
534160 ROSS/WEISBERG-R MARK/RONI 45000
534178 TOGNO MICHAEL,KAREN 33500
534194 WADE JAMES 50000
534213 BOLDEN GARY E 20000
534279 KAHAN MIRIAM 29200
534904 DAWSON BRUCE,RUBY 12900
535045 ALLEN JAMES,JANET 31000
535918 ARTHUR WILLIAM,KAREN 50000
535920 BRUNO FRANK,ROBIN 62100
535995 HARDER/MC KAY KEIKILANI/JASON 35400
536011 LEIS RONALD,JOAN 32000
536055 HERSETH RANDY,GLORENE 35200
536059 MCCARROLL DAVID,CATHY 33000
536099 EVANS/HUNTER ALLAN,APRIL 104000
536136 TURAGA SURYA,LAKSHMI 31700
536149 SAKAGUCHI MISA 40000
536185 SOJA GLORIA 19000
536224 BORSE MICHAEL,DENICE 37000
520981 SIRVAIN/SIRVAIN SUSAN/ROBERT 40000
507589 RUSS PAULA 40000
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489067 PETTIPHER JOHN,CAROL 100000
489134 CHAVEZ LEANDRO,ELISABE 25500
489457 ELLIS/SCHERR ALAN,LIANNE 50000
489601 CASTALDO DONALD 50000
489619 LEHANE BARRY/KRISTINE 50000
489620 KARL/NIELSEN ROBERT/JAMES 24750
489621 BESBECK STEVEN 50000
489625 ZIMMERMAN BRIAN/RUTH 60000
489627 MCCOY MICHAEL/JILLIAN 29500
489629 MCCLURE ROBERT/PATTI 44950
489639 SEARS ROBERT 38200
489645 FRENCH/SCHEELE LAURA/JEFFREY 50000
489646 PELLO ERIC,MARY 18500
489655 DENNIS/RIVERA LAURA/JOSE 36000
489688 CONTE WILLIAM,CHERYL 50000
489712 SMITH CHARLES,MAUREEN 75000
489729 SCATES REX,MARY 31350
489736 LARSON BRENT,PAULA 47500
489764 EISNER ALAN,JERI 36500
489779 PICARD W.PATRICK,HEATH 19500
489798 COZINE THOMAS,ELISABET 42500
489832 LYONS/WOLF ALAN/GARY 34400
489836 LIU/LIU/LIU MICHAEL/SANDY/J 35000
489837 BRUNFELD ANDREI,ANGELA 32800
489838 WILLIAMS MARK,CYNTHIA 41000
489875 KWAN/KWAN SELENA/GIT 50000
489897 WYRSCH DEBRA 13900
507418 CHAVARRIA MANUEL 28000
507419 ROSENBERG RONALD,CARYN 79500
507420 OVERSTREET PAUL,TONI 56950
507422 BOUCHARD GEORGE,JANET 42000
507425 ROBERTS/SANCHEZ DARRELL,MARYANN 49900
507437 CARVOTTA RICHARD 35700
507448 CASEY DESMOND 39750
507449 WHEELWRIGHT DAVID 30000
507458 BRAMMER/LOOP-BR KEVIN/SHAWN 45500
507459 COVIELLO KIRK/APRIL 50000
507471 MOORE ALAN,DEBRA 46600
507474 STEFFEN GREGORY,KIMBERL 20850
507476 SIRRINE/FLEMING JON,DOROTHY 15400
507477 PROSTOR JEFFREY,SUSAN 200000
507481 WOLFE FREDERICK 36150
507482 ELASHMAWI ESAM 31000
507485 HORST RICK ALLEN 26000
507489 WILSON JOHN,REBECCA 39750
507490 CHERI LIONEL,MARIANNE 39300
507492 FRITZ KENT,MICHELE 52000
507493 WARD/RHINER RICK/SUSANNA 35100
507498 COUGHLIN THOMAS 30800
507499 KORTH/CROOKS SANDRA/CURTIS 29250
507500 LAM/LEE ALANNVENDY 29800
507501 KROGEN DIANE 34500
507502 ADAMSKI ANTHONY,DONNA 32400
507517 RIEDBERGER RONALD,MARY 65000
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507540 SAND JON,NOREEN 32200
507542 WONG EDWARD,WONDY 35250
507552 KOZAK THOMAS 26500
507568 BURRELL ROBERTA 50000
507575 BUHL/SMITH EDWARD,DANA 51675
507583 WHITE/MORENO MICHEAL/MARCELL 44000
507590 ARNDT NICK,MELINDA 41250
507600 LAZO DELORES/HENRY 50000
507601 SYMMANIK/VOS DANIEL/BEVERLY 14600
507602 NELSON STEPHEN/SUZANNE 62300
507605 JAKOV AVI,SIMONE 50000
507615 WETTSTEIN ERIC,LISA 38200
507628 ARECHIGA DAVID,TINA 45000
513418 BARBIERI RAYMOND,LYNDA 50000
513464 LIVESAY PAUL 41200
513490 SHARMA/SHARMA VIVEK/PRASHANT 33400
513501 GRANT ADRIAN,ELVIRA 50000
513509 SOLORIO PAULA 26500
513521 HUTCHISON KEVIN,MARIA 50000
513588 LOPEZ DEBRA,ABEL 27000
513589 HONG DAVID,AMBER 32000
513603 ZALIZNYAK ARCH,MAYA 30000
513605 BLAKE MARTIN,DARCY 46000
513606 FAIRCHILD PETER 39000
513607 MOSER MARK,LISA 50000
513620 JOLLY THOMAS,CATHERIN 49500
513630 MULLER DAVID,JEAN 35600
513636 SHELEM AVNER,LIORA 127800
513649 KIESSELBACH KEVIN,SYLVIA 46000
513659 KENNEDY CRAIG,SHARON 85000
513683 MACHADO ARLENE 39000
513695 BUCKO/ALEXANDER DANIEL,JEANINE 20500
513706 CAMPBELL/SIME WALTER,JANE 51000
513721 LORENZINI WILLIAM,LINDA 36300
513724 MOORE DOUGLAS,KATHRYN 56700
513743 TRAN/NGUYEN HUNG,HONG 100000
513782 EDMISON JOANNE 30000
513798 MURTHY RAGHURAM,UMA 56200
513799 ORLANDO SALVATORE,EVA 32200
513800 HSU GEORGE,CHUNG-A 100000
513801 BLANCHARD JANIS,SCOTT 40800
513802 LIFTON RON,LEONORA 43000
513803 OELSNER BENJAMIN,JODI 31500
513804 CARROW JOHN,CATHERINE 85000
513806 EBEL ROGER,PENNE 36700
513807 EVANS LAWSON 33000
513876 ZANONI BERNARD,DEBRA 15000
513878 OBATA,SHIRAKI WILBUR,JILL 30500
513894 REESER COURTNEY,DONATA 87500
513903 SANDS/MILLER RICHARD/ROBERT 46000
513923 BROCK STEPHEN,KARIN 67000
513928 BLACKBURN MARC,LISA 25000
513929 JUSLIN BJORN,MERJA 28500
513930 BUCK H.DONALD,CAROLE 58000
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513931 SPORZYNSKI STEVEN 35000
513936 MORTON/DAVIS ANNE/MARK 44200
513947 GOMEZ/GOMEZ LLOYD/MAXIMO 50000
513948 SULLIVAN LINDA 33000
513960 WILSON/DOSLAND KRISTIN/BRAD 23900
513961 GRIFFITH DON,CAROL 17200
513963 SERKISSIAN ALAN A. 140000
513968 GRIESHABER PAUL,GAIL 88000
513985 SCHMIDT RICH,YOSHIKO 19400
513992 BURAK/KANEKO STEFAN/NICOLE 30000
513993 BAKER ANTHONY,ANTONE 14700
513994 BEACH DARRYL 21500
514019 WARD PHILIP,DIANE 100000
514020 MCPHERSON JAMES,BONNIE 40500
514031 MYERS/ANTON PATRICK/LEAH 40000
514032 HEWSON/ALLEN GERALD/ANNAMARI 12000
514054 KALK ANTHONY 100000
514055 COONEY THOMAS/DOROTHY 36500
514056 BARROWS BRUCE,JANET 25000
514069 SKEEN STEVEN,KATHERIN 30000
514072 JAO WUNSTIN,SHU-JEN 100000
514073 VASILEVSKY MARGIE 100000
514074 GIAMPAOLO MICHAEL,CHRISTI 50000
514083 HSIEH EDWARD,SHIRLEY 77750
514100 MULAM,CHODEY KALYANA,KRISHNA 43000
514107 LUNDING/LANE STEFFEN/CLAUDIA 36700
514155 BOLGATZ MICHAEL 25000
514156 LLOYD GARY 38500
514157 OCELLO GREGORY,SOPHIA 39700
514158 STIBBE IVO/TENLEY S. 30500
514191 ARCHAMBEAU KATHLEEN 62000
514203 MURPHY JOSEPH,CATHERIN 55000
514204 MALONE ROBERT,MONICA 29000
514205 RING CATHERINE M. 15300
514216 GHOREISHI ISSA S. 28500
514233 HUANG/WEI LIN/QIN 45700
514234 MC FARLANE MARILOU,CRAIG 130000
514301 CAMPOS ERUBEL,GLORIA 80000
514302 SCATES STEVEN,DEBRA 83700
514304 MANKIN/CALDERON DANIEL/MARIA 10000
514319 HSU JOHN,FENG-JUI 100000
514342 GASPARINI GEORGE 50000
514343 HEIDTKE JAMES,GAIL 36800
521083 ROUSH NELSON,NANCY 17400
465748 POOLE ERIC,DONNA 57500
497396 LUND VICKI,GARY 30000
506118 FERNANDES ADRIAN,ROBLEY 31000
510772 DEAN THOMAS,MARJORIE 27400
500189 WALTON RICHARD 27700
506302 MATHEWSON-VARGA CHRISTINE 40000
506495 WADE RICHARD,PAMELA 100000
507106 SHERIDAN SUSAN 50000
517033 NELSON JOE,IRENE 76900
521464 SCHIMMENTI MARK,JULIE 47700
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489558 O'DONNELL GREGORY,ELIZABE 25700
505883 CHARMATZ/WIATT ANDREW,SARA 30000
512833 COOKS WILMER 23400
515899 MARK/NICKEL RAYMOND/WENDELL 16000
516066 WESTLEY MARTIN,CONNIE 40000
469385 ALBRIGHT JIM M. 27450
499409 HILTON JUSTIN 120000
507087 HINMAN LAWRENCE,BETTY 100000
507202 MARSHAK,KELLY ROBERT,JUDY 100000
521679 EVONIUK KENNETH,LEANN 69000
469964 GREEN JERRY,LILLIAN 48000
470137 NICHOLS FREDERICK,KATHE 25800
484877 PALECEK PAUL,NIKKI 30000
486786 FERNANDEZ MANUEL/DELORES 21500
490143 MUELLER DENNIS,SUSAN 149000
490326 BRADLEY ROBIN,KAY 37000
491377 FERREIRA ANTONIO,RITA 50000
491382 DEVINE SEAN,MAUREEN 50000
493676 KLINGENBERG ROBERT,CHERYL 40000
493989 WARE CRAIG,KIM 23200
494325 MURRAY DAVID MICHAEL 33500
494389 DIETZLER RON,JUDIE 39800
497271 HOFFMAN FRANK,JUDITH 100000
497342 BERZINS MARIS,INTA 20800
497364 CHONG KAP,SUK 25000
497608 O'LEARY DENIS/JUDITH 100000
498386 MARQUART LESLIE,CHRIS 57700
498399 WHALEN JON,PATRICIA 50000
499286 SAUNDERS DAVID,LAURIE 29400
499774 TOM/LOUIE ROGER/MEI 24000
500108 ANDERSON ANITA 50000
500119 REICHENBERG BRAD 50000
500248 LANE JOHN,ANN MARIE 23300
500252 WITYAK JEFFREY,CYNTHIA 23800
500363 CALMA/CALMA/CAS ARMANDO/LEONIL 24500
501156 SCHWARTZ CINDY 28000
502595 HEMMINGWAY IRA,PENNY 34200
502608 DESMOND DAN,GLORIA 50000
502744 O'MALLEY JAMES 30000
502750 GREENWOOD BRADLEY 25500
502760 REYES THOMAS,RAE 19500
502766 CURTISS THOMAS,PENNY 250Q0
502828 GONSALVES MARY 50000
502830 SCHULTHESS CARL,JACQUELINE 35000
502904 GRACE DREENA,JACK 35200
502922 ALEXANIAN KEGHAM,VICTORIA 25000
502923 HELFRICH MARY 54900
503001 ABREU JOSEPH,CARROL 39000
503008 CONGER ROBERT,ANITA 26900
503020 JAMALI PARVIN 46600
503022 OLSON MICHELLE 30100
503040 WILLIS WESLEY,KATHLEEN 42300
503065 WALKER GREGORY 31800
503080 FREEMAN JEFFREY,DIANE 61700
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503101 SHELTON,JR./SH JOHN/JUDY 25000
503125 MENDELL/MENDELL KAREN/RUTH 32600
503142 SIEVERS EUGENE,GLORIA 22300
503169 MARTIN/BLACK SCOTT/RANDAL 20200
503181 LUONG KIMCHI 20000
503966 TWI/CHELL VAN,BRENDA 15000
504210 SAMANIEGO ARMANDO,LISSETT 37500
504317 WAINWRIGHT MARK,MARYJO 31500
504526 PHILLIPS RONALD,MARTI 9100
504983 KARAS-COX PENELOPE 50000
505028 RILEY GERALD,LINDSAY 24700
505244 KURASCH KATHARINE 100000
505316 SIMONIAN KRIKKOR 35500
505338 CONANT CARLOS,LEONOR 25000
505424 LAULLON FERNANDO,KAREN 23400
505516 BRAZENOR WALTER,KIMBERLY 50000
505772 CUNNINGHAM/MEAD RICHARD/MARTIN 91500
505796 GONZALEZ MICHEAL,JENNIE 108000
505845 SPALDING CHARLES 15300
506070 SHIH LIH-BIN 38200
506173 GUTU EUGENIA 33600
506223 CLARK KENYON,KATHY 99900
506228 HRACH WARREN,ELVERA 50000
506247 WALIA JATINDER,KAMAL 120000
506260 STEPHENSON NANCY 23200
506315 DAVIS DIANE 13500
506349 MARQUAND JAMES,KATHERINE 24000
506367 PONCAVAGE WILLIAM,JESUSA 25000
506383 GAGNE GUY,KATHY 50000
506403 FITZPATRICK GREGORY,JUDITH 10000
506408 PLAGATA LEE,GIRLIE 26000
506429 VOEGELI JEFFREY,LILIAN 29600
506452 BLEILER CHARLES,JOYCE 100000
506472 BREWER DOUGLAS 18000
506478 HANSCH W. JOHN 50000
506508 ANDERSEN GARRETT 22500
506527 CARNEY ROBERT 16700
506531 JOHNSON DOROTHY 37500
506601 PERRY HENRY,JANE 90000
506620 SCHLAKE ELLEN,HOWARD 32000
506637 MACKAIG MILTON 100000
506640 SEVERINO MICHAEL,KIMBERL 109300
506681 BEARD EDDIE 10000
506706 ROGERS CYNTHIA 50000
506743 MORRIS THEODORE,LETICI 25000
506778 QUINLAN MICHAEL,DONNA 53000
506793 CORDTS HOLGER 40000
506805 CASSORLA KENNETH,JEANETE 90000
506847 ACKERMAN THOMAS,BARBARA 50000
506859 HOLLAND DENNIS 24000
506869 KIZALE EDWARD,NANCY 43000
506871 MARTIN KEVIN,MELVENIA 72000
506891 ROSE DONALD 22500
506943 DAIGLER GARY,PATRICIA 60000
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506966 AIELLO PAUL,JOYCE 70000
506981 ELHAMI KARL 100000
507040 QUESADA JOSE,CECILIA 40000
507042 CRAFORD MICHAEL,ARDETH 100000
507052 FERNANDEZ JEFFREY,NANCIE 70000
507064 HORNER JOHN,GRETCHEN 106000
507075 MALSAM,BELL FRANCES,A DENNIS 38500
507092 MOORE/MINAHAN/S MARK/DANIEL/MIC 113000
507095 FOSTER,CARLISLE WILLIAM,KIMBERL 130000
507110 MARANA PETER,VALLON 106700
507120 KANTIPUDI NARENDRA,ANURAD 41500
507140 MOODY DARYN,COLEEN 50000
507180 PIERCE JANET 70000
507185 OPUNUI TEDDY,JANEICE 50000
507187 FRANZINI MARY 28000
507194 MADHVANI KANTILAL,MARIA 199800
507201 O'CONNOR SEAN,AUDREY 68000
507206 WOLFE EDWARD A 50000
507236 DHILLON SATVINDER,BALBI 100000
507250 BRADY LYLE,BETTY 100000
508413 HALVORSON JAMES,CAROLINE 25000
508529 JAFFE ALLAN,CYNTHIA 30000
508539 ARENDS LARRY,AUDREY 37300
508581 VARNADORE KIRK 20000
508610 LEE JACK,BARBARA 100000
508638 HAAS JAMES,BETH 50000
508654 DERDULA/PARHIZG DANIEL/AZIN 36300
508716 AUSIELLO GERALD,NANCY 100000
508721 HANSON/STANBERY MARK/LESLIE 100000
509857 TAN FRANK,LYDIA 34200
509944 KADKHODA MOJGAN 50000
510042 KAYE STUART,DEBRA 65000
510077 MCPHILLIPS RANDALL,CAROL 75500
510138 HURLBUT DAVID,DIANE 46500
510171 KAUFFMAN VERN,JEANNE 67000
510201 JOHNSON GERALD 21000
510348 TAVERNIER MARK,SHERI 19700
510393 RICHOUX/POULAKO DAWN/FRANK 75000
510395 SHABAHANG MOHSEN 100000
510475 GEIGER ROBERT,PATRICIA 100000
510481 ST.LEGER-BARTER LAURA,MARTIN 200000
510518 BEDELL PAUL,CASSANDRA 37500
510607 PRALY SEBASTIEN,KRIST 53000
510709 BUTTERFIELD STEVEN,MICHELLE 33700
510749 DI IORIO ANTONIO,DELORES 42500
510782 PETRAS JON 84000
510792 WILLIAMSON JOHN,DONNA 50000
510794 CANFIELD KENNA,JANET 93000
510821 HERNAND WARREN,DEBORAH 48500
510823 GHIAICHAMLOU CLAUDE P 100000
510836 JONES JOHN,KRISTIN 67500
510863 HARRIS/LEVALLEY JOSH,CAROL 84900
510922 HORNING TAD,KIMBERLY 33700
510924 PERSONS RICHARD,JULIA 93000
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510968 NICHOLSON CHRISTOPHER,CYN 26600
511040 ST.LEGER-BARTER GERALD,JEAN 50000
511041 HOSELEY RALPH,SONYA 50000
511042 WONG PHILIP K S 41200
511045 NICHOLS SCOTT,PATTE 43500
511111 PILLOW CHARLES,VICKI 36000
511124 FONOONI MANOOCHEHR 63500
511181 MCAULEY GORDON,MARJA 50000
511185 PAULSEN JON,PAULA 74000
511223 KNOX CLAUDIA,ROBERT 50000
511325 AMSTADTERN/WEIL DEBRA/DAVID 50000
511330 HARVEY JOHN 40000
511541 DI MARTINI PAUL,PATRICIA 20300
511594 MORGAN DOROTHY 25000
511608 BRUBAKER MICHAEL,JANET 54000
511642 GEIGER GEORGE,LINDA 27700
511867 LLOYD ALAN,DIANA 45000
511869 CHIANG PETER,DEANNA 57500
511919 SOLANKI RAY,LALITA 95100
511940 HASBROUCK RICHARD,DELORS 23000
511942 NEMETH MIKLOS,MARIA 28000
511949 BELLAMY BONNIE J 20000
511951 BRYAN AUDREY 100000
511955 ROSS DAVID,BETH 30000
511994 SCHANK CLIFFORD W 11200
512012 THOMPSON GLENN 85000
512094 RICHER LAWRENCE/KATHLE 61300
512191 BIEGELBAUER IMRE,VIRGINIA 37300
512463 TAVENNER CHRIS,ALISON 35000
512464 PEREZ LUIS,NANCY 38500
512552 ADAMS MARY 12000
512584 BURGAL ALBERT 50000
512593 ENQUIST WILLIAM,LISA 25000
512640 JOHNSON FRANK,YVONNE 25500
512643 DOTTING GORDON,LINDA 45600
512677 FOGO DAVID,AMY 19800
512688 SCHUBERT KURT 43500
512719 HURT AL 33400
512724 MORGANTE ANTHONY,ELIZABE 37500
512745 COX JERRY,SUE 62700
512751 MCKECHNIE GLENNA 21700
512796 SARDINA FRANK,RANDI 24000
512813 LANGLEY SONDRA 39000
512817 WIKLEM BRIAN,ANILISA 32000
512837 TANAKA GLEN,DENISE 45000
512840 WONG LAN 31000
512884 BROWN JASON 50000
512899 YOUNG DENNIS,SUSAN 27000
512903 CHANG WARREN,MARJORIE 50000
513019 PETERSON TODD 34500
513053 SHAFFER MARK,ANITA 50000
513076 DOBY BRENDA 31000
513099 FELS SHAWN,KELLI 20100
513131 KELLY JAMES 38200
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<PAGE>
513209 PEMBERTON ROBERT,ANTONIA 17900
513212 REYNOLDS MITHCHELL,EDNA 31000
513214 BIEDENBENDER FREDERICK,AGNES 20000
513219 DAMECKI CHESTER,GLORIA 200000
513271 EZELL ROBERTA 30400
513299 SCHULTE PETE,HOLLIE 43500
513332 MATTHEW DAVID 40500
513349 VEGA CARLOS 10600
513358 BACHELOR JAMES 12100
513377 MORRIS IVAN 19300
513378 HAR DAE,SUN 88200
513395 JENKINS MARK,ROBIN 62000
514483 SIMON DAVID,CAROL 100000
514486 PATTON ERIC,PEGGY 31900
514564 SERRA MICHAEL,MELINDA 71500
514582 O'HEARN JOHN,KAREN 40000
514592 STEPHENS FRED,SONYA 71500
514679 KETRICK MARIAN 49000
514796 SOROURIAN ELYAHOO 100000
514807 CHAN/CHEN RIK/CATHY 62500
514808 CAMBERLAN ALISA 100000
514856 GONZALES JANET 100000
514908 FRANZEN MARK,DEBI 100000
514921 OUZOUNIAN AGAVNI 32000
514933 SIRACUSA MARILYN 35700
514962 BROWN JOHNNIE 73500
514971 FRAIPONT PAUL,CARRIE 77500
514979 LIU PETER,JOYCE 50000
514986 SIMPSON LEON,DORIS 37700
515024 TONEY CHARLES,MARIE 60300
515042 EIDMAN CHARLES,SOPHIA 29000
515044 NELSON RANDY,LISA 71400
515091 DOWEN ANDREW,TERRI 42500
515101 MOLES/BROMSTAD MATTHEW/ANGELA 81700
515105 GRIMES SCOTT,DAWN 43500
515107 ROVIE JANE 29900
515112 CALIENDO MICHAEL 26000
515119 PIZZARELLI LAURA 41700
515125 RESNICK CRAIG,JANET 75000
515409 RAGUENEAU ANDRE D 20000
515488 BARTH FLORIAN,LORI 100000
515506 EDWARDS PETER 75000
515510 DINGLEY CHRIS,MARY 45100
515512 ROLLINSON WILLIAM,JILL 75000
515521 BRANDOW WARREN 25700
515587 SCHRADER DONALD,COLLEEN 50000
515590 FREEMAN SHARI L 23500
515597 MURLEY LAURI H 75000
515602 VON DER LIETH PETER 37400
515605 BOWMAN CLAUDIA 65000
515638 O'CEALLAIGH,HUN DIARMAID,MARGAR 30000
515644 SALTOS/MILLER ELIZABETH,PAULE 19500
515646 JARAMILLO JOHN,AMANDA 82400
515717 BAILEY DANIEL,SUZANNE 62000
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515754 JOHNSTON DENISE 50000
515788 MARTINEZ DANIEL,CYNTHIA 67300
515794 MILLER/SEVERO DOUGLAS,SHAUNA 140000
515818 PECK DOUGLAS,SALLY 75000
515826 GOSSLER VICTOR,DEANNE 98900
515866 KARSTETTER SCOTT,DEBORA 100000
515873 VON KARL THOMAS W 52500
515890 AGINSKY YASHA,CARRIE 100000
515896 KARAM KEITH 47500
515900 LEE DANNY 50000
515904 HOENBRINK KEVIN 43700
515909 SHERRILL CHARLES,KATHLEE 26000
515933 REDDY MODUGU,SHAKUNTH 50000
515935 KELLY GARY,JAN 48900
515971 ARMAS/ARMAS LINDA/KATHY 23500
515974 GREEN JOHN,LINDA 40000
515995 ASATO LLOYD,KAREN 42000
516003 MCKINNEY RICHARD,KATHLEE 45000
516011 SHAPIRO DAVE A 47200
516012 OVCHINNIKOV SERGEI,GALINA 63500
516016 RUDESILL WILLIAM,CAROLLY 44000
516023 FOURBY DONALD,SUSAN 21000
516039 DRETZKA KIP 28400
516042 HIGGINS DANIEL,ELIZABET 40500
516043 SRABIAN GABRIEL,BEATRIC 36700
516045 CARLSTEDT GARRY,LISA 24900
516184 HAYES JAMES/MAY 60000
516474 HAWSER MICHAEL,JEAN 100000
516525 LINDEN/GALATAS MATTHEW/MATTHEW 42900
516570 NEAL GORDON/JOAN 76000
516635 CHIARELLA EUGENE 50000
516649 RUIZ MARK,ROSANNA 63700
516662 VILORIA THOMAS 24400
516668 VERLINDEN RICHARD,PATTI 50000
516714 LANG STEPHEN,JOYCE 100000
516715 GRAY DENNIS,SHERRY 25000
516998 MORTON DAVID 20000
517027 ABELL SCOTT,BELINDA 22200
517035 HANSEN JANICE 60000
517036 GOMEZ ALONSO,SONIA 17100
517038 MCCUBBIN ROSEMARIE,WALTE 10500
517065 BOCKS KENT,MONICA 25000
517083 PETERS DANIEL,LINDA 74400
517539 MAXWELL R. HOWARD 21000
517541 KYLLO JESSE B. 17200
517998 LYNN CAROL 30000
518005 VONHOF JOHN 21000
518019 WILLIAMS RICHARD,BRENDA 95000
518021 FARRINGTON DALE,BERNADETE 19000
518042 CHOW JOHN,NGWAI 100000
518101 ENGEN CAROL 31900
518171 MILLER HELEN D 20000
518260 WATERS DANIEL WILLIAMS 100000
518297 MILLER RANDY,JUDI 15000
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518330 MEYER LEONA M 22000
518339 PUGH FRANCIS 50000
518410 DWIGHT/GROVES MICHAEL/KATHLEE 17000
518418 JOHNSON CAROLYN 50000
518419 CAVANAUGH JOHN,LEILA 50000
518420 HORCASITAS LOUIS,CLAIRE 50000
518422 VANDOORN LOUIE 60000
518476 QUINLAN PATRICIA 35000
518486 MOON ROBERT C 60000
518519 DENAULT ROGER G 72000
518524 FLIESSBACH JOHN 64500
518532 RYAN STEVEN,LINDA 100000
518619 TAILLEFER/TAILL PATRICIA/JEAN/J 23800
518636 NAMUCHE VICTOR,LUCY 53500
518653 MC CORMICK/KNOW TIMOTHY,JILL 22600
518655 LINSLEY MICHAEL,NANCY 200000
518659 BARNARD JAMES,ELAINE 31000
518695 BADGER KELLY,JANNA 43000
518701 CHINTALAPANI MADHU,USHA 32400
518706 MORGAN,FEELEY MARCY,JAMES 60000
518741 VAN DUINEN,CRAN ROGER,JULIE 48000
518744 TUSSY SHARON,ROBERT 30000
518747 BRAGMAN WILLIAM 100000
518793 CIAMARRO,SMITH JAMES,M 34200
518830 LLEWELLYN,KENT JOSEPH,MARY 61700
518905 MORTENSON BRADLEY,JACQELI 30000
518907 LEIGHTON EDWIN,JEANETTE 48300
518911 KASPAR CHUCK 36200
518917 SOENKSEN JERRY,DONNA 75000
518941 MOINPOUR HAMID,MASOOMEH 55100
518947 JAMES ARTHUR,RENU 39500
518949 RENDEROS RUFINO 42500
518958 MCCLELLAN MICHAEL,LORI 23000
518970 LIN TZONG,MARGARET 100000
518972 WATKINS THOMAS J 57900
518984 WONG LAI 54500
519039 CARRILLO BARBARA LEE 15300
519063 DANG TAI VAN 17800
519115 THAYER GAYLE,BRADLEY 44200
519161 IHRER SHERRI 35200
519235 BLANKLEY JOHN/PATRICIA 43000
519926 COWAN/ESTRADA CHARLES/JULIA 21400
519946 CHECKAL JOHN,PAULETTE 15200
520054 COLLINS PHILIP,CHRISTIN 24700
520076 CHEN TSUNG-JEN 36200
520093 YSLAS/TROY STEPHEN/ALICE 70000
520113 PIAZZA BASIL,BETTE 50000
520159 FECKLEY STEVE,CHRISTINE 28400
520183 REYES RUBEN,CAROLYN 44900
520203 ARARADIAN MGO 42000
520213 ASSAD SEDIGHEH 100000
520233 RODRIGUEZ MICHAEL 17900
520436 STATON LAWRENCE/ARLENE 35700
520445 BINA HOMAYOUN,FARAHN 100000
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520447 ENYART THOMAS,SHAWNA 35000
520481 SYLVESTER WILLIAM,SANDRA 46000
520495 NATT STEVEN,JANET 50000
520515 SHEPARD KATHERINE 75500
520606 GOLDMAN DANIEL,ZINA 50000
520608 CALABRESE VERNA 138700
520643 OUTCALT KEVIN,DEBORAH 86500
520663 SABOL THOMAS,BRENDA 62000
520667 DOLLE SHIRLEY 50000
520860 CACAVAS LISA MARY 50000
520895 HEERMANS JAMES,WANNA 43000
520904 FERGUSON STEVE 16000
520912 JENSEN ROY,LYNN 10100
520959 ENOS PAULETTE 34500
521042 HAMMILL BRAD 16500
521407 KWON YOUNG,HYE 50000
521456 ZUBER MICHAEL,DOROTHY 45800
521460 ALLEN ROBERT,ROBIN 60000
521489 CULLIGAN JOHN,JOYCE 100000
521499 COWENS WAYNE,PAMELA 200000
521513 PENN/MLOT MARK/GREGORY 32500
521525 CHITTY JAMES,SHERRY 82000
521537 WHITE/KING DENNIS/ELIZABET 60000
521544 JONES PATRICIA 50000
521570 KWONG PETER,MARY 33700
521605 CECCHINI JAMES,TRACY 58000
521614 TRAMMELL WALLACE,WENDY 78000
521649 HERTEUX ARMIN,BRENNA 143000
521717 TEJADA ROBERT/JUDY 39100
521727 GROSSINGER MALCOLM,LINDA 50000
521728 PATANKAR ANIL,ANJALI 47100
521729 DOMAN THURMAN,MARY 88300
521732 LEAMAN EDWARD,FRANCESC 50000
521759 EMBREE WALTER,DEBORAH 50000
521766 THORMAHLEN RODNEY 17200
521783 EIBAND/HASTINGS JASON/SUSAN 100000
521813 SILVA/BODAS FRANK,LARA/BRYA 45300
521853 SCHACK DANIEL,CYNTHIA 100000
521884 PEABODY JANE 100000
521920 SIDMAN JOHN 19200
521954 HUDDLESON SHARON,JOSEPH 100000
521979 MURRAY DEBORAH S. 38500
521980 AUSTIN DONALD,JOYCE 50000
521984 JOHNSON TERRI 39000
522032 VELASQUEZ MICHELLE 21900
522058 DENISTON LAURENCE 50000
522063 KOHLER LORI 56200
522072 YORK CLIFFORD,MARGA 55000
522127 BARAN ANDRZEJ,SABINA 36000
522157 BANUELOS WILLIAM,NAOMI 29400
522177 THORMAHLEN PHILIP,SHARON 48200
523520 YOON BYONG,CHUN 50000
523534 YATES RONDALD,ROMA 48300
523769 HAMILTON ROBERT,BARBARA 50000
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523789 JENNINGS/MCDONA LANCE K./JAN 20000
523903 LYON JOSEPH,ROBIN 17000
523935 KONTOPULS GUS 100000
523938 CLARK BUFORD,ELIZABET 40000
524038 KRUSE ROBERT 65000
524054 HELGAGER JAMES,DAGMAR 200000
524084 JORDAN HAROLD,DEBORAH 33000
524085 SINGH/KAUR BALVINDER,GUNFR 22000
524107 RIVERA GEORGE 44500
524225 LUNA JAY,BRANDY 40800
524230 FOLSOM JOHN 100000
524346 PESHKOFF JOHN,RUTH 30000
524973 KREPACK ALAN,CELESTE 147100
525090 MARSH PHILIP,PATRICIA 42800
525100 BOYD KARLA 40000
525150 PARSO/YORK ALAN/ANDREW 60000
525197 SEVENAU MICHAEL,REBECC 100000
525205 GARCIA ROBIN 20000
487498 VAID VIPUL,DAKSHA 50000
493913 BOGUCKI DAVID,KAREN 32000
493991 BRICKNER TYRIN,JENENE 22000
498597 KANE NEIL,PAMELA 48400
499485 HERNANDEZ ADOLFO,MARY 26500
499760 DANDAN ERNESTO,YOLANDA 34300
507012 STAUB MARTIN 50000
514912 FELDBERG I MARTIN 100000
515464 HAWKER JOHN,SHELLEY 50000
531268 MIAN GHAZALA,ARSHAD 14000
494363 NOYES PETER W. 50000
507247 NUGENT KAREN 15000
508572 GAFFNEY EUGENE,MARY 16500
512925 CERASARO JAN 20000
513251 HILLEY MARY 15000
513288 ALEXANDER STEPHEN 35000
515653 HALLISEY/WARRIN JEREMIAH,ALISON 180000
516582 MARTIN EDWARD/SANDRA 16100
516823 SMILGIUS/PECK JOSEPH/SUSAN 50000
518363 LAMB MAYNARD,PAMELA 22400
518599 CLARK DENISE 20000
520302 FLYNN STEVEN,CATHERIN 50000
521606 ANDERSON DEAN,TAMMY 17000
521640 HILLARD M.PATRICE 23000
521876 CONDE LOUIS,GRACIELA 12200
524012 CASH DOUGLAS,MARGARE 28000
524649 ELTINGE DAVID 35000
525377 ELSON THOMAS,JOY 36500
525439 PALMER KIRT,GEORGIA 45000
525604 MARTIN CECILY 20000
525665 HANSON JOSEPH,MARY 50000
527231 KIRSCHNER HARRY,RUTH 41000
531143 CHUKU CHINEDU,CATHERI 35000
531474 WINE/MORENO-WIN LAWRENCE/LUPE 17000
485877 MEREDITH JOHN E 48000
494116 CARR VERLA,RICHARD 40000
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499235 STANCER STEVEN,MICHELLE 37200
499538 JOHNSON CRAIG 100000
499555 SCHAAF TERRY,EMILY 42000
503798 ROBINSON/BRADFO LESLIE/JAMES 18700
503931 LEECH JAMES,KATHLEEN 38200
506954 GREGO RANDY,KIM 52800
510873 ZUMBRENNEN JOHN C 70000
511198 CAYCE CHRISTOPHER 43200
515454 NIXON/GARDINER BONNIE/CHARLES 49000
525128 FASSIO EDWARD,DONNA 61000
525369 TAGLE ALBERTO 23700
484838 MENDELSOHN MARC 28500
505676 GUTIERREZ RUDY,MARIA 35000
505837 MCFARLAND/MAYER CLIFTON,BRIGITT 16600
506961 HUMPHRIES,BARAD TODD,AMELIA 19800
507138 JOHNSTON PHILIP M 29900
510535 BECKENBACH JOSEPH,YONGZHEN 37200
510677 WALSH KATHLEEN 29200
510876 MCGRATH MICHAEL,DIANNA 45400
512605 HALLIDAY MATTHEW,JOANNE 35000
512859 GILLINGHAM DAVID,SUSAN 53400
513915 KNAGGS/HOKANS J.RICHARD/CHRIS 50000
514647 MCLEAN COLLEEN 30100
515265 REILING PAMELA 28900
515716 YEOMANS JEANNINE 47500
515744 FERRELLGRICE/K JAMES/ROGER/LOI 50000
515897 YOUNG/ISLEY WILLIAM/LINDA 40500
516327 WICKENDEN LORETTA,JAMES 45500
518945 SENG CAROL 10000
520114 CONNELL JAMES,DONNA 19700
521987 YANG BENSON,FRANCES 43900
522052 TEBBEN,TRUONG JOSIE,THIEN 46300
522379 WIENHOLZ EDWARD 73100
525290 STEELE KIMBERLEY 36900
531572 SOSNOWSKI STEVEN 23500
491209 SODINI HELEN 99000
497751 NALAMWAR ASHOK,PUSHPA 78000
499579 PLUMBRIDGE JAMES,MELINDA 25000
499704 MOLINARI KEVIN 50000
499766 MOLINARI KEVIN 50000
500438 RAINVILLE PHILIP,GENEVA 51800
502062 JONES DANNY 33000
503472 SEEBOLD LOUISE 42700
504058 PAGLINAWAN ALBERT,GAILE 33300
504290 FOGEL BRAD,VINCENZA 58500
505512 TRIMBORN ROBERT,JOANNE 24700
505591 BOROVAY GARY,DEBORAH 35200
505646 LINE HARRY,RENEE 74000
505734 CAMARDA/DOZACK DANIEL,DONNA 37500
506172 YEAGER ERIC,JUDITH 25500
506470 RANKIN JOHN,LYNN 39700
506998 MORESCO RODNEY,PATRICIA 26200
508411 MCNIFF JOSEPH,MAUREEN 25500
510955 NAYLOR RICHARD,MARGARE 53500
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511342 DAVIS/PEROFSKY SCOTT/HOWARD 21000
511902 MIDDLETON PAULA 13600
514480 CHARLESWORTH KEITH,MONIKA 35900
515789 LENHART KATHRYN 22500
521628 PINKHASIK,KUSK NAUM,YEKATERIN 41700
522116 PAYNE DANIEL,GAYLE 70000
525556 OLSON LAURA 31000
527186 RAYMAN MARK,NATALIE 43900
503504 MOORE ROBERT/JENNY 10600
484661 DELLOSA RENE,BIE 30000
490152 MEYER GREGORY 43100
497282 NUNER DARRELL,GLORIA 32000
498433 MATHISON ROGER,REBECCA 10000
498496 SLINGLUFF/ANDER DAVID,CHRISTINE 25000
499304 SIPOVAC SLOBODAN,SHANNO 26000
499628 HUBBLE/LA MONTA ANN,STOREY 48000
499648 ALLPORT ANNE E 19200
499995 LIBBY PARKER,MARGARET 36000
502962 YOST/ROSS GEOFFREY/KATHRY 32600
505815 AUSTIN GREGORY,BARBARA 24500
505843 JONES DONALD,PAULA 22400
510237 VUKOVIC MIO 37500
513102 CLARK JACK 37500
513327 WOZNIAK JOANNA 48000
513667 PAPULIAS KEITH,WENDY 89100
514617 WILSON IAN,LUISA 20500
514666 LIEPSHUTZ JANE 36000
515463 WALTERS LARRY,FRANCES 35000
515733 SALAMON JOSEPH,VICTORIA 44000
515831 RODRIGUES GABRIEL 24300
515881 CHENG/BROWN SUSAN/SCOTT 42100
516498 JOHNSON CAROLE 18000
516546 SEYKOSKI JOHN 50000
518423 LUPPI JAMES,JACQUELIN 46000
518569 GRAY KEVIN,ELLEN 30500
518894 HONG SUNG,WON 50000
518996 CAVANAGH ELIZABETH,JOE 50000
519133 KARP MICHAEL E. 25500
520330 BEBER MICHAEL,TERI 25000
521405 MAPPS ROY,BEVERLY 50000
521515 KAISER ALAN 50000
521650 HARDWICK WILLIAM,DONNA 25000
521774 MIALI THOMAS,NAOMI 29900
524780 RIESENBERGER JAMES,HEATHER 45700
524911 GRIFFITH/MYERS BRIAN/DEANA 24200
525030 HALSTEAD STEWART,SUSAN 23400
525083 MAHAJANI SUJAT,MAITREYE 35100
525375 CIVIELLO CINDY,MICHAEL 21000
525493 REGAN/DAVIS JOHN/BARBARA 47600
530932 LONG/STEVENSON GREGORY,STACY 29000
531202 ROSE RAY 32200
531226 UMANSKY SAMUIL,GALINA 36900
531513 KACIRK KAREN 10000
510189 KOEHLER EUGENE,ESTHER 31500
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517700 URMSON BRUCE 25000
521495 SAMI/WATI NARAYAN/PADMA 25000
527268 STITT RANDALL,SALLY 43000
454936 WAGENMAN CHAD,CASSIE 20000
469351 BURDGE CLETIS,TERESA 22000
480690 ERICKSON GALE 37500
482027 BAUER THOMAS,ANITA 28000
484692 QUINONES SAM,SONIA 50000
484741 YOUNG RICH,KELLY 47000
485205 WELLSANDT GERALD,RHONDA 16200
487424 VAZQUEZ JOSE,LUCILA 18000
487492 SULLIVAN JANET 37900
489315 CORBETT DIANA 33500
489847 BUUS SHARON 38600
491262 EILERTSEN SOREN,ELIZABETH 42700
491331 YU/CHU WING,YIM 38700
491343 MOORE KELLY,SHIRLEY 42000
491388 REEFE THOMAS 21700
491800 SULLIVAN ROBERT,LINDA 28000
491839 KRAMER EDWARD 26000
492202 BROWN/MILDICE DOUGLAS,LORNA 45000
492269 SWAN GLEN 45000
492313 HOLMES RICHARD,KAREN 40000
493465 CRAIG RODNEY,LORI 39400
493516 DOWD RONALD,ROSEMARY 46800
493662 DOWD LARRY,LAURA 33000
493747 ROBLES RICHARD 35500
494115 LAWSON LANCE 30000
494146 STEELMAN BLAIR,VICIE 43800
494160 WEYGANDT THOMAS,KAREN 24700
494222 BOYLE TIM E 20800
494255 LOEN LLOYD,ROBBIN 15600
494814 DICKENS JOSEPH,KRISTIN 35500
496785 SWOPES BRET,LINDA 46300
496975 JOHNSEN TERRY,JANA 22000
497662 HOSSEINI MOHSEN 31700
498537 YOUNG MARY BORCHERT 43000
498548 CAMAGONG VIRGIL,ESTRELLT 21300
498579 ONG FREDDY 16300
498683 BARTH MARY 26900
498711 TRUNNELL ERIC,DEBRA 26700
498868 GENEROSSO PABLO,ANITA 30000
498874 LANG ROBERT,THERESA 50000
499093 MOLLOY LAWRENCE,BETTE 43000
499113 BLAND WILLIAM,SARITA 50000
499136 LORD THOMAS 33000
499201 KOONCE MARK,ELISABETH 26900
499253 CACHERO THEO,BERNADETTE 25000
499271 LEE ESTHER 24000
499276 SPENCER CARL,COLLEEN 37000
499334 PAGE JONATHAN,ELAINE 24500
499483 MACK RONALD,HEIDI 22200
499495 CRUICKSHANK JOHN,EDITH 35000
499561 PASADIS STEPHEN 40000
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499606 ZITTING DENNiS,SCHERYL 18000
499624 POLK WILLIAM 39800
499680 BENN DONALD,JUDITH 22000
499736 SWARTZ BRUCE M 50000
499752 DIBA MOHAMMAD,HAYDEH 40200
499793 MURPHY GARY,LYNNE 33500
499857 MMEJE NWAKEGO,MBAERU 36500
499892 DANGERFIELD TED,BECKY 16100
499972 BUTTERFIELD WILLIAM,MICHELL 25000
499982 HANEGBI YOEL 50000
500002 SINK JAMES,LISA 42300
500055 WILSON WAYNE,JAN 41000
500153 BRIGHAM ROBERT 23000
500355 MATSON JAMES J 25000
500413 PENOLA ANNA,ANTHONY 18500
500687 STEVENS TOBY,JULI 15500
500769 STOUGH GEORGE,LYNDA 21300
500871 FINLAYSON CLINTON,SHARON 30000
501111 LOBB DONALD,CAROL 25000
502453 WALTERS ROBERT 23000
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504942 ALMAGUER-SANCHE FERNANDO,MACRIS 27100
505085 AFOEJU IFEOMA,BERNARD 18000
505106 YEE LARRY,SUSAN 50000
505357 BERZANSKY STEVEN,STACY 47700
505441 GOODSON DIANA 20000
505452 CATRIZ ALBERT 50000
505471 ALFORD THOMAS,JOAN 17500
505547 DUH Yl-SHEN 44200
505757 KAMM/BOLTJES SVEN,TAMRA 30500
505938 HANIS MATTHEW,LEE 26300
506049 BURTON KEVIN,LISA 10500
506091 LEFFLER DERECK,DIANE 55400
506124 FISHER ROBERT,BARBARA 40000
506166 PHAM ADAM,ANGELLA 91000
506282 EBNER GERALD,DELORES 42000
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506363 HANEY LISA 30000
506453 KIPERTS VALDIS,REBECCA 24000
506476 PALASCIANO SIMONE,MARY 48400
506629 ROBERTS THOMAS,LAURIE 17000
506827 SULLIVAN ROCHELLE 11600
506830 TOMIHIRO BOB,DONNA 46300
506952 BOCKSTIEGEL WESLEY,REBECCA 50000
507034 GARCIA GILBERT,VALERIE 30900
507041 PALMER GARY,LISA 26500
507091 CSENDES ILONA,GABOR 8700
507099 SOLICK ROBERT,RANDA 50000
507139 BOWNE SHARON,STEVEN 50000
507146 LEVINE MARCIA 29200
507205 SILAS LA DORTHA 22000
507217 LAVROFF NICHOLAS 50000
507219 HARRIS STEVE,SUZANNE 50000
507231 NORRIS RUSSELL 22000
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508414 TONERY JAMES 48900
508463 STREIT HENRY,CAROLE 25000
508515 BROWN NIGEL,MARIAN 32000
510246 KARO THELMA 39700
510744 EDMISTON THOMAS R 33000
510784 HAMPTON JACQUELINE 30000
510828 APPLEGARTH NANCY,JOHN 42000
510829 FREEMAN EMILY P 17900
510927 PARSONS RICHARD 13500
511088 MENDEZ YSIDRO,RENEE 50000
511090 LESSARD/AINES STEVE,MARTHA 30000
511130 SNYDER BERLY 32200
511410 NAVARRO EDWARD,CHERI 14100
511484 VALDES JOSEPH,ANTOINET 33000
511487 SANDERS DAVID,CARLA 50000
511540 HAMSON GREG,MAUREEN 50000
512061 PACKARD JEFFREY,LAURA 46000
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512171 GALOVIC DANIEL J 17000
512236 BARTON/ALEXANDE ANDREW,DEEANN 17000
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512832 RUBIN BETTE 17000
513343 GROSS HAROLD 49000
513522 BRUCE EDWIN,SUSAN 48000
514408 BREENE SHELLEY 50000
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514602 SCHORNACK/SOKAT GEORGE/JULIA 20000
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515075 OSEAS MARK,BONNIE 61500
515221 GOZINI ARSALAN 175000
515406 GOMEZ JORGE,SUSAN 39200
515465 EVANS DAVID,SHARILYN 35000
515571 HOLDERNESS PATRICK,KRISTIN 20000
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516010 ENOMOTO JIRO,DOROTHY 42500
516407 SHARSMITT RICHARD,LAURA 48000
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520390 DENTON MOLLY 36800
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522151 PHILLIPS DOYLE,JEANNE 24000
531438 RITTER G,JILL 47400
531834 PETERS JAMES,MICHELLE 30000
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498608 KLANDER BOBBY,MARGARET 25000
499433 SKINNER DAVID,BRENDA 100000
499806 SHEPPERD JAMES,ANN M 75000
500957 BAKER MICHAEL,SHARON 55000
501046 HERNRIED JOHN,SUZANNE 82000
502936 PIPKIN JERRY,NINA 43000
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502955 MCCLOSKEY EUGENE 40200
503034 HOKE LOIS 32400
503208 GOMEZ WILLIAM,PATRICI 45000
503214 JUAREZ ROBERT,FRANCES 39000
503326 WHEELER DENNIS,BONNIE 44900
506202 WALKER PATRICK,LEA 46800
506599 MURRAY DARRELL,LINDA 80000
506885 WILLIAMS THOMAS,CAROLYN 27500
506910 EMERY DEREK D 50000
507112 WILD CLAUDIA,TIMOTHY 20000
507562 MOSS RAY,DANA 37700
508566 PANASIK MICHAEL 22000
508599 MEADE STEPHEN,JOAN 26800
508676 MILLER RONALD,MELINDA 25000
508697 HOLMES LOUISE D. 28000
509968 KNOWLES JENNIFER 60300
511080 ARTHUN DAVID 10100
511132 GUITERREZ JUAN 10000
511133 DENSMORE CHRISTOPHER,KAR 18000
511590 CAMPBELL JAMES,JANET 13500
512370 BEESON RICHARD,CHERYL 35000
512842 DIEHL WILLIAM 48600
512973 WIECHERT ROBERT,SHERRI 30000
512985 DIXON DONALD,DEBRA 25000
513009 JAZO GUADALUPE,MARY 14100
513105 FISCHER DON,BRENDA 16400
513180 SHAW JAMES,TONI 29000
513362 BISHOP JASPER,ETNA 35000
513648 WALTER/KRUG RON/KELLIE 50000
513949 HOVEY/BRAUN JOSPEH/BRAUN 43100
513969 GALLAGHER PAUL,HEIDI 30000
514068 OLSON GREG,KARI 38400
514778 FOX DAVID,ISABELLE 45000
514823 MANSEN JOSEPH,JULIE 37000
514963 SHERMAN KIM,CINDY 50000
515034 FARRELL CURTIS,CATHRINE 44000
515043 ELLINGSON BEN,M 50000
515404 HENDERSON TIMOTHY,ALVERTA 30000
515461 CLARK/DILL/KAMM JAMES,WILLIAM 22000
515514 BETHUNE ALBERT,SANDRA 37000
515756 JOHNSON FREDERICK,AVERY 62000
515758 MCGOVERN MARK,KELLY 37000
515824 SINGH CHARAN,ANITA 29000
515872 AHMED/AHMED WASEEM/NADEEM 37100
515968 CHAN IVAN,MARTHA 50000
516322 MOODY JEROLS,JILLS 35000
516620 BETTER ELIZABETH 26000
516650 PENA DIOGENES,LEANNE 10000
516801 GRAY DONALD,MAUREEN 25000
516864 HERSHEY DIANA 25000
516876 BREMSON FRANCIS,CHERYL 39500
517405 BARRAGAN-TONN HILDA M 30400
517516 MOORE TONYA R. 35000
517565 WILLETT ANITA C. 15000
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518176 POGUE ROBERT,JUNE 27800
518221 WILLIAMS MARC,LYNNE 34000
518266 MACMASTER JOHN 29700
518278 WYCOFF RICK 26500
518428 HUTTON,PHILLIPS JAMES,FRANCES 47500
518520 WARREN GEORGE,KIMBERLY 29000
518523 TRACY CAROLYN 23600
518570 MANFREDONIA RICHARD C 39900
518742 CUCKLER/BETTENC RUSSELL/MARLENE 40000
518760 PARK MYUNG,JUNG 33400
518779 TEAHAN/SIRI KEVIN,LYNIE/D 38000
518943 ORDUNA JOSEPH,DIANA 45000
518950 MILLER MICHAEL,BERNIE 40000
519038 HSIAO KENYON,FEI-TSO 50000
519254 JAMASBI BABAK,ANNE 144000
519938 WHITAKER WILLIAM,TERESIT 50000
520019 ROBERTSON/ROBER JAMES/JAMES 21800
520027 CLARK WESLEY 30000
520257 BLYZKA MICHAEL 33700
520642 WHITAKER JOAN 50000
520646 HAMPTON GREGORY 25000
521044 PENROD JOHN/WENDY 22050
521465 HOLTON MYCOL,SUSAN 32400
521491 TYCHOLIZ RONALD 31000
521598 RIVERA ROGER,ELIZABETH 31000
521630 CROWE KEVIN,GIGI 32000
521638 KELSON/MCNEVIN KRISTINE/MICHAE 50000
521752 SHIN CHANG,CINDY 25600
521776 MASSEY BRAD,GINA 40000
521814 PHILLIPS ROY,JAN 50000
521822 CHRISTIANSEN BRIAN,CHRISTINE 29300
521883 FLOYD KELLY,BARBARA 46000
522080 BLACKBURN WILLIAM,BOBBIE 49000
522122 FAMATIGAN ZENIR,LEILANI 31000
522135 RIDGEWAY REGINALD,SUSAN 28600
522173 CREGO DAVID,DIANNA 50000
522174 LALANI ASIF 32700
523403 MILLER LINDY 31100
523944 LISTUG KURT,JENNY 213700
523954 JOHNSON PETER,MARIE 65000
523970 VALDEZ ANTONIO 23300
523973 EDWARDS GREGORY,KATHRYN 16000
523985 MCQUEEN BRUCE,SONJA 30000
524095 MULHERN KEVIN 20000
524106 EDMUNDS ROBERT,PAMELA 39000
524337 BULLOCK THOMAS,ANNEMARI 58500
524374 LUTHER MICHAEL,JULIE 40500
524427 SCOTT DAVID I. 40000
524540 MOORE DONALD,ALICE 25000
524564 VILLARREAL LYNN 27000
524653 READ/DEIBOLD CHRISTOPHER,KAR 46400
524747 SCOZZARI ANTHONY,LYNN 44000
524919 TUCKER,GASKILL NORMAN/MARCIA 35600
524929 GAVIN THADDEUS 20000
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525078 SALM LENDA 15000
525088 MORGAN WORTH 19700
525136 CORNELIUS CYNTHIA 41900
525188 SITHIVONG RATTANA,PHANOM 25000
525376 ROCKWELL SCOTT,HOPE 15000
525642 ROGERS VERN,MELISSA 45000
525648 SMITH GLENN,DONNA 38000
525649 SAMPSON RANDY 24800
525655 KLINGLER WILLIAM 40000
526146 WHITE CHRISTINE C. 28900
526911 BIANCHI EDWARD 21700
527238 JAIME IGNACIO,SUSAN 21700
527313 EVANS MICHAEL,CONNIE 13600
527502 PACIOREK MIKE,STACI 74300
528922 HARDER DAN,ANNETTE 37200
529088 FRASIER MITCHELL,TAMIE 24000
529220 SMOTHERS SHAWN,SHANNON 10000
529263 WELLS JAMES,SUSAN 31000
530908 JOYNER DEAN,BOBI 42000
531004 NELSON STEWART 23300
531008 SBRAGIA GERALDINE 25600
531103 CHAN/WONG ALEXANDER,SHEL 46700
531108 LINNENKOHL LISA A 33600
531337 DIAZ JAVIER,YOLANDA 50000
531391 SCOTT STEPHEN,NANCY 39000
531847 BEADLES ROBERT,ROBIN 34200
531935 PETERSON JEFFREY,KATHERI 35000
533188 TWITCHELL CRAIG,JANET 50000
533279 KALAND GARY,DANA 28000
533917 BECKER KEVIN 20000
535915 FOX STEPHEN,LAURA 75000
537938 MORA ELEAZAR 50000
531523 LONEY CHERYL 33500
484892 SWEETLAND ROGER,DONNA 20000
485241 BUTLER AUDREY A 49000
489674 CORWIN RICHARD/ROBYN 42000
490089 STRIPLIN RUBY 21200
491366 VILDERMAN YULY,ALBINA 100000
491908 CAVANAUGH DEBBIE 46000
492300 CRANFORD KEVIN,BEVERLY 34900
493599 PAHLKE CAROL,PHILIP 94000
494107 WESTING JOHN,ANNA 46200
494280 FLIEDER WILLIAM,DEIRDRE 64000
494299 JONES THOMAS E. 35000
496520 HERMANNS KARL,DEBRA 100000
497227 WHALEY RICHARD,BARBAR 45000
498515 GAHMAN TIMOTHY,SHARON 44000
498965 HEBERT JAMES 60000
499427 MANSURE JUZER,RASHIDA 45000
499463 FRANSIS ADEL,ALICE 81900
499539 RAWLINSON DEBORAH 100000
499570 KIM KITAE,MICHELLE 22800
499583 WEDEMEYER WILLIAM,JEANNE 74000
499739 BAJAMUNDI PATRICIA 100000
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499767 ANG YONG YONG 52000
499894 BATCHELDER CHRISTIAN 71000
499966 CARTER TOM 35000
499977 PERRAULT ALAN,MARTHA 14500
499993 NAVE THOMAS,JANICE 35000
500148 MOLINAR DANIEL 40000
500155 LIU COREY,TEODORA 47400
500183 NEWTON GEORGE,MARILYN 100000
500192 HEARN CAROLE,RICHARD 100000
500263 LUCKY BRYAN,MARY 82000
500298 TONKIN JOHN,ROBIN 20600
500386 SHAW JOHN,BEVERLY 75000
500848 SALZBERG HARVEY,JUDY 71000
502235 LECKINGER ROBERT,KELLY 48300
502443 JONES CRAIG 40600
502510 CABILDO EMMANUEL,DELIA 60000
503814 MIRANDA/ARRIAGA JESUS,ROSA 38200
503863 SELBY BARBARA 50000
505208 QIAN LIN-ER 97000
505231 NIEMAS JUNE 20200
505298 CHHAY CHHENG,MUY 68000
505564 JENSEN DANIEL,SHERYL 100000
505972 DALY BROOK,JEAN 75800
505994 HALBO HERMIZ,BUSHRA 84800
506182 JONES TOMMIE 38900
506434 HOWELL STANLEY 57000
506690 DANTCHEV CYRIL,ELISABETH 63900
506731 WARREN JOSH,ANN 56500
506779 PABON ROBERT,KATHLEEN 52900
506917 SAWYER RUSSELL,LILLY 100000
507089 PULPANECK FREDERICK,PHYLL 54500
507204 GIFFORD ROBERT,ELLEN 100000
507208 BOGGIO KIRSTEN S 30000
510640 MARSHALL ANDREW,LYNN 100000
510786 MITCHELL JOHN S 41500
510788 GORMAN DANIEL,DONNA 100000
510883 GILMORE LOUIS B 42000
511089 PEREA SAMUEL,ANA 61200
511109 GOHIL BHARAT,BHARGAVI 52500
511514 STEGMAIER JAMES,CAROLYN 45000
512046 MITSUNAGA DARRELL 98900
512104 HARTIG DALE,DORIS 33100
512776 PATHAK TEJOMAY 44200
515413 KIM KUN HEE,TAI IM 61300
515554 HINOJOSA JAIME,SOPHIA 30000
515572 LOU RICHARD,CAROL 92600
516452 HANKS LOUIS,CYNTHIA 14000
518466 SAFOREK/CENTANN TERRY,CHRISTINE 39000
518515 TAYLOR DONALD,DELEESE 113000
521408 DAWSON EDWARD,MARCIA 325000
521462 BROWNLEE JAMES,LESLIE 100000
521678 HANCOCK STEVEN,STEPHANI 48000
523476 ZHU/XIA STEVE/LUCY 60000
525131 DENNISON RONALD,DEBORAH 100000
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527640 MARQUIS DONALD,MARGO 75000
531153 PICKMAN GREGORY,MONICA 31500
531436 BURKHART ROBERT 27100
531441 BENHAM COURTNEY,JENNIF 98900
489594 LEVERING GARY,JOANNE 25000
492201 SAVEY MARK,MARILEE 34000
499804 ZEHNDER JOHN 19000
500128 BURNSWORTH DOUGLAS,DEBRA 31400
502093 LUCERO FRED,EVELYN 53700
502951 COJOCNEANU BOGDAN 28400
502960 SINHA/KISHORE SUNIL/VINEETA 26000
503047 BROUSSARD RUSSELL 9800
503109 SMITH MABLE 25000
503238 O'BRIEN/ARENA BRADLEY/NICOLE 51000
503271 FARAH RANDALL,NANCI 28500
505505 BORING BRUCE,PAMELA 87700
506242 DUDA JAMES 31500
506714 TRADONSKY STEVEN,SHARON 106000
507246 SMITH BONNEY 10000
508338 ROGERS KIM,CHRISTINA 36000
508598 STRATFORD VAUGHN,MARILYN 59000
508653 FINKLE/PRYST THOMAS,PRYST 92900
508741 SAND DOROTHY 40000
508797 O'DONNELL EDWARD,DONNA 56400
510330 HICKS/PENNYWELL MICHAEL/ELIZABE 21000
510391 SINATRA CHRISTIAN,LISA 31000
510938 FOWLER STEPHEN,KIMBERL 96000
511195 WEIDNER MARK,SHEILA 51000
512554 TURNER TERRY,JANICE 93500
513032 KRAFT RONALD,JANENE 90000
513055 HAMANN GLENN,CHRISTINE 25400
513058 BEE NORMAN 50000
513178 SUNG JIM 64500
513181 AMUNDSON RAYMOND,KRIS 54000
513183 PEARIGEN PAUL,KIM 68000
513223 DOBBINS/ERICKSE DONALD/TERRI 30100
513365 BAGLEY WORTH 88000
513725 AUGUSTINE MARY ANN 45000
513756 KLEMES JEFFREY,SARINA 120000
513814 WONG/SAXE NOEL/JOANNE 100000
514121 SMITH MATTHEW,SUZANNE 100000
514553 WULFF MARK 37500
514659 HERRINGTON,BROO THOMAS,COLETTE 100000
514742 EGERER MICHELLE 33600
514792 JACOBSEN/PACHEO TIMOTHY/REUBEN 85000
514873 LEE LITER,BETTY 50000
514922 YOUNG ALEXANDER,KAREN 100000
515035 MURPHY PATRICK,CAROLYN 37500
515057 ROUSE THOMAS,CHERI 83000
515145 SPOTNITZ FRANK 161200
515162 ZIMMERMAN/ZIMME DANIEL/DEAN 26500
515555 ROBINSON DONNA 42000
515607 CHOW/LOUIE RICHARD,ALICE 100000
515659 LA PLANTE BRIAN,BAMBI 97000
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515787 SCHMIDT JEFFREY,KATHLEE 66200
515864 MAGEE JOHN,REBECCA 75000
515898 PALSTRA DONALD,LORNA 100000
516018 SHADY WILLIAM,CASSAND 76250
516029 GARROSS ROBERT G 59200
516321 MAZZA THOMAS,GLADYS 76700
516484 BROWN MARTIN/SALLY 45100
516691 SMITH MARTIN,JULIE 34000
516749 ODEN RICHARD,PATRICA 28400
517111 HOLCOMB GREGORY,KELLY 52900
517400 PRYOR LARRY,KATHLEEN 19000
517408 WITT JAMES,JOAN 60700
517467 MAZUR DENNIS J. 51500
517575 JENSEN RICHARD 90500
517867 NELMARK CHARLES 82250
518227 PETRIE DUANE 33300
518526 TIPPETT PHILLIP,JENNIFE 75000
518530 CALDWELL PATRICK,JOHANA 68000
518646 BURNS MARK 45300
518737 NEWMAN JAMES,KIMBERLY 100000
518990 DYE JAMES,SOUSSAN 84000
519920 MARTIN NANCY 32500
519975 BOOTHE GREGORY 75000
520069 DOBROWOLSKY/ISA HARRY/JOHN 100000
520250 FORTE STEPHEN,CAMILLA 64000
520439 ROJALES VIGGO,ELLEN 17900
520538 LEMONS DONALD,PEGGY 54000
520696 ROZEN GORDON,VIRGINIA 45000
521026 JAHNKE ROBERT,JUDITH 84500
521417 PHAN THIEU,ANH 60000
521494 FIELD ROBERT 60000
521502 WONG/JIANG GORDON,LILY 98000
521509 UKENA CAROLYN 51000
521682 POLE SVEN,CHERYL 75000
521847 CASELLA WILLIAM,JUDITH 88400
521897 ACEVEDO MARIO 30000
521932 ELLIOTT BRIAN,RHONDA 70000
521976 NJOKU-OBI JOSEPH,LEONA 80000
521985 ROSSITER JOHN 28000
522118 BICKEL DAN,CAROL 72000
522150 VIDOVCICH ROY,TINA 21000
522161 BUMGARNER KATHRYN 68000
523519 BITANGA EDGARDO,MARIE 95400
523949 LUNA WENCESLAO,FORTU 42500
524034 MCCART ROBERT,KIMBERLY 70500
524292 POTTS JAMES 80800
524518 WHITE LAWRENCE,DONNA 73000
524519 DANNEMILLER THOMAS,TRISTEN 100000
524585 ROSEMUND VULEE,DIANE 60000
524754 ALEXANDER CAROL 60000
525029 WHITE NICHOLAS 100000
525085 SALIBI ELIAS 60000
525494 FIELDS BRADLEY,ROBIN 42900
525555 SCHREIBER RONALD,JOANN 68000
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525597 LOUDERBACK THOMAS,KELLEE 27000
525601 REED MARK,CLAIRE 115000
527129 OSTER VINCENT,MARIA 100000
527612 CHANG/LEE KEH/MEI 90000
527901 PETERSEN PATRICK,PAMELA 30000
528975 LEYBA LARRY,JOANNE 61000
529169 MIGLIOZZI RALPH,SUSAN 98600
529192 HOSMAN STUART,LISA 88000
530997 MORGAN COLIN 48000
531109 HIGGS SAMUEL,KATHY 50000
531122 RADOVAN ARMANDO,ELVIRA 59000
531493 CAPIAUX RAYMOND,ARLENE 32700
537905 LINDSAY/SHEBELL KENNETH,LISA 63000
506638 ROBAK DONALD 16200
470198 CARROLL SANDRA K. 15000
484680 NARDIL JOSEPH 24000
487364 RAGLAN CHARLES,BLANCHE 15000
489058 ILLIA RICHARD,LORI 10000
489371 KEHR WALTER,MENDI 20500
489548 OXMAN THOMAS,PATRICIA 30000
490161 MARSHALL LYN C. 25950
493227 LOZANO JOHN M. 12950
493377 BIRD FRED 21700
493477 MILLER VINCENTE,MARIA 16600
493578 WINTERFELD DELBERT,JUNE 10000
494000 ESTEP BRENT D. 21500
494119 THOMAS LARRY,EMMA 20000
494154 GREENSLADE MICHAEL S 50000
496451 NEAL/DYRESON SANDRA,KENNETH 21700
497294 ARGER ANTHONY,BETTY 10900
497324 ANDERSON GARY,PAULA 21900
497913 ERTL JANICE 12300
498253 FEDOR GEORGE,MARY 12800
498803 VASQUEZ ADALBERTO,BLANC 15800
498982 FRIEDERICH ROBERT,ROSEMARY 13800
499020 CALLENDER BINNIE 15900
499258 IBSEN DAVID,MISTY 22000
500040 PABALINAS NOE,MARIA 26500
500451 STRONG DAVID,CHERYLE 10000
500453 STRONG DAVID,CHERYLE 10000
500950 CUMMINGS,SELF DAVID,JANET 16400
500972 INTORF/DUNCAN PHILIP/CARMEN 52000
501414 KEYSER KENNETH,BRIDGET 43400
502113 BRISTOW VIVIAN 28700
502123 VALLES/GODINEZ RAY/PEDRO 25000
502188 DANSON RICHARD,RANDI 30700
503769 ARCHULETA LARRY,LORRAINE 13300
504064 CONNELLY CARL E 22400
504162 HASELBUSCH BEVERLY/HAROLD 29000
504216 PRICE RUSSELL HAYDEN 22600
505005 WILLHITE CLIFFORD 20000
505281 MAYO DARRYL,KAREN 10000
506346 CATELLO JOSEPH 19000
506458 MANDERY JERI 20000
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506494 VENA PETER,JOCELYN 25000
506749 DOLEMAN THOMAS 24000
507152 BEETON LEZLEE K 41800
507153 BEETON LEZLEE 40900
508981 GUERRERO RAFAEL & MAXINE 22800
509842 SPURGEON LEONA 22000
510245 LEDIN JIM,LYNDA 27000
510555 BIEDERMANN LEO,SANDRA 22500
510633 CRUZ EDGARDO,EVELYN 16000
511959 STEVENS PATRICK,TAMMY 13000
512393 HIGBIE BENJAMIN,MARILY 27000
516553 SCHEPMAN ROBERT,PATTIANN 36000
489544 KRONER/OSTROM KEVIN/LISA 24200
489554 ZIMMERMAN WILLIAM,ANGIE 37900
490740 MARTIN WILLIAM/DEANA 22100
491192 ROBERTS TIMOTHY,SUZETTE 80000
492301 BODOW DONALD,SUE 66100
492379 STEWART CHRISTOPHER/KAR 69000
495173 VERFAILLIE TARCIS,GRACE 64000
495176 SABATH BARRY 49000
498474 HEALEY KENNETH,MARY 44800
498831 BARENO FRANK 15000
499493 LEVINE DIANE 33000
499639 YOUSEFFI/YOUSEF MOHAMMAD/MASOOD 75000
499869 KUMAR/RANI ALTURI,ALTURI 64000
500266 AMIRIAN LILY 100000
500580 ELMORE DALE,KAREN 30800
501688 CADE CHESTER,VALERIE 42200
501801 LEE PAUL 31800
502129 WEAVER HARRY 33400
502189 PAVLOVITS IVAN,GABRIELLA 50000
502440 COLOMA ANTONIO,NENITA 20000
502672 BEARDALL TIM,CHRISTINE 40000
503717 WEISBERG MITCHELL 73500
505138 KAENI,MIRZA HASSAN,FERESHTE 59200
505314 JACOBSON MATTHEW 125000
506056 LENKEY PETER,JANELLE 33400
506149 ADZIMA BARBARA,JEFFREY 34500
506525 HIKEL EUGENE 100000
506959 PERSON GREER,CECILIA 129500
506975 HUQ TAREQ,ORLA 35000
507113 TAYLOR PETER 29000
507176 WEST CAREY,VIVIAN 46000
508441 KITCHENS DENNIS,LINDA 47000
509826 SOSA GUS,CRISTINE 22800
510730 MCGOWAN/COLBURN MARK/SUSAN 33700
510738 POMILIA FRANK,KATHLEEN 28000
510789 HODAPP STEVEN,DARIA 123700
511190 TAM LAI 30000
511194 BURRUSS ROBERT,BARBARA 24000
512462 LAWSON MARC,SUSAN 66000
512488 HOBBY EDWARD,JUDIE 48700
514472 LOWE DON,CAROLYN 300000
518577 LORD GARY,TAMI 125000
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519064 WOLF ANTHONY,PATRICI 31500
520602 PASSMORE DAVID 32000
520810 BENSON JAMES,NERA 50000
521401 WILKERSON STEVE,LISA 34000
521455 COATES THOMAS 500000
521821 LEONARD MICHAEL,MARSHA 100000
521988 BROWN DENNIS,SUZANNE 116800
524291 LEE DONALD,AMELIA 50000
525426 JABBS CINTHEA 12200
494284 RECH/LARIDON TROY/ALLISON 49900
494307 DAVIES FRANCES 15000
503913 SILAS ANTHONY 21600
510160 POPOVICH GREGORY 21000
511559 TIZANI BASSEL 29000
511616 GRANEY GLORIA 14000
512379 HEADRICK FRANK,DIANA 30000
512649 KRUGLOV MARGARET 14000
513106 PACKARD MICHAEL,JERRILY 36700
513256 HEISER JAMES,VANDA 22000
513291 SNIDER NORMAN,KIMBERLY 36000
513641 SAN JUAN FREDESWINDO,ERL 19500
514528 WEEDON/BRYANT DANIEL/ROMMELL 21000
514928 MEADERS TIM,LAURA 32800
515816 BRILL MARTIN,CATHERIN 29000
516028 ANIFF TUAN,GNEI 32200
517025 FERCH/BROWN DAVID,PAMELA 35400
517194 MIKKELSEN JERRY 25200
518478 FLORES RONALD,LAURIE 25000
518567 MCCORMICK LAWRENCE,BETSY 33000
519143 JEDINAK DAVID,KATINA 18700
519383 MCNALLY FRANCIS,BARBARA 15300
520337 DENTON MOLLY 14500
520434 WILLIAMS PATRICK,SHIRLEY 13600
520965 SCHWINOF NANETTE/MICHAEL 21000
520985 BROWN RONNIE 35000
521217 MILLER RICHARD,DEBORAH 19200
521224 DE LA ROSA MERLENA 16200
521233 OSBURN WYATT,KAREN 18600
521478 JOHNSON ROY,ANNIE 43000
521521 ETTINGER MATTHEW 16500
522075 PERNELL JUDY 16400
523957 REYES ARNULFO,YOLANDA 12000
524081 OLLIVERAS RAYMOND 20600
524379 MORGAN DENIS,PIA 19200
524469 ROBINSON MURRAY,PATRICIA 11000
524479 BURNHAM STEVEN 13000
525652 MCMILLEN MICHAEL,LAURA 33300
526275 PAKDEL HESAMEDDIN,STEP 24400
527043 PREEDGE DARRYL 50000
527593 DHALIWAL GURDIP,BALJIT 30000
527628 MAYO DARRYL,KAREN 11600
527951 CHAPMAN HENRY,CARY 14000
530909 STEVENS R,SHARYN 32000
532426 WEDEL SCOTT 37200
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<PAGE>
533201 YOUNG GALE,DONNA 39500
459460 AYERS BRETT 5000
493667 FAESSLER PATRICK 34500
498580 AGUINALDO FELIPE,PERLITA 36700
500154 ROGERS WILLIAM,LAURA 97000
502242 RAPPAPORT DANIEL,ANNA 65000
503307 MALDONADO/DAVIS CAROL/WALLY 59000
504530 PRICE ROYCE,KATHY 95000
505887 PENNER GEORGE 73000
506784 HILBERT ROBERT,KATHLEEN 52400
507053 KRANEFUSS KEN,DEBORAH 95000
507137 MESSINA MICHAEL 17300
508565 POWELL DEREK,BRITT 10000
511022 CHUZHOY/DENKER ALEX,SHERYL 45000
512870 SMILEY DAVID.NANCY 29200
513135 CLEMENTS CHARLES,ROBIN 35700
514632 DAVIDSON RANA 19800
515000 BIRCH CHRISTINE 72200
515022 MCNAB MALCOLM,ILDIKO 150000
515056 O'BRIEN PATRICK,LINDA 183750
515839 MCBANE KATHY 14200
517669 HATFIELD KENNETH 61900
517901 SMITH DAVID,LINDA 74900
518516 SHAW LARS,DEBORA 89800
518559 PENTICO WADSWORTH,BARBA 32000
518786 ROUSE HARRY,LORENE 52500
518946 KUNTZ WILLIAM 90000
518953 HERBERT/DAVIS MARK/JENNIFER 16000
518985 SCHOO PETER,MARLENE 69500
520406 MiCHAELS/RICHTE BETTY/ANDY 50000
520754 MCBRIDE MICHAEL,LINDA 73000
521782 LOJO PAUL,MARIAN 35000
524305 THURSTON WILLIAM,NORAH 46200
524413 GOMEZ JUAN,BLANCA 82300
524425 AVILA EMMA,ANTONIO 11900
524645 SILADY FRED,SHARON 63600
524694 NIXON MARION,BARBARA 50000
524713 AL TAAN HAKIM 40000
525289 EDWARDS L. JEAN 100000
525433 CAMPBELL STEVEN,MARY 24000
525512 LY/HOANG NHUT/THUY 88500
526909 GYULNAZARIAN GRANT,IRINA 24300
531440 QUEZADA ALFRED,ANA 200000
531598 HUCKVALE DONALD,SHANNON 61000
533276 BONEY SHON,HEATHER 56000
533410 CALDWELL J.,MARIA 90600
534003 WHITE/SHARPLESS JONATHAN/LYNN 26500
490039 CLEVENGER THOMAS 12600
491916 SHAMY JERI 10100
494203 MENDOZA TIRSO A. 50000
498745 RANT KAZIMIERZ,MARZE 10100
498772 SHAMY JERI 10500
499398 GIBBS/MAY ROBERT,JANIS 37800
500215 PRODROMIDES HARRY,LINDA 50000
Page 94 of 97
<PAGE>
501082 DESILVA DAVID,SVETLANA 12500
501084 DESILVA DAVID,SVETLANA 12000
503470 CHAN/CHAN CHARLES/DAVID 21700
505861 SANFORD/VEST GEOFFREY/DONNA 41000
505926 GILBERT GREGORY,MARY 25600
506301 NEGRETE CARLOS,SANDRA 13300
506310 BAROUGH JACK,CELIA 29500
510598 CHAN CHARLES 23600
510661 DUBOIS CRAIG,SANDRA 28000
511095 REYNOLDS JERRY,CONSTANCE 11000
511234 DE LUCA JOSEPH,BARBARA 16500
490379 BASSIGNAN GARY 17850
498949 O'BRIEN CHESTER,NORMA 52200
499422 SANADA PAUL,AILEEN 20000
499569 OCCHIPINTI JOHN,CYNTHIA 48000
499817 TOM RONALD,ANNA 100000
499936 KEMP ALAN,DAINA 50000
500200 HARRIS/HARRIS IAN/VIRGINIA 25600
500226 FERNANDES/D'CUN ROQUE/BOJANE 50000
500343 STANTON JOAN E. 45000
502142 PALAZUELOS ANNETTE 15800
502302 PERETZ CARROLL,MIRIAM 32400
502602 SIGLIN LESTER,MARY 30000
504932 KHURSHEED WAJEEH 18000
504989 KAUFMAN PAUL,SHARI 38500
505729 LOWY MARC 22500
505733 CHEBAN/GOROVETS MIKHAIL,ASYA 63000
505875 MOTELL MARK,DEBBIE 75500
505914 PAROISSIEN JEANNE 42000
507164 SCHLEIGER GRANT 41500
507178 ARCHULETA DAVID J 20000
509960 KIMBRO CHRISTY 65600
510132 SHELLEY JACQUELYN 24600
510723 SAINT-PAUL PHILIPPE,CARLA 34500
510781 GILMAN MARTHA,PAUL 10000
512492 WADLEIGH JO ANN,KENNETH 55000
514522 VELONA CHARLES,MARY 59700
515934 FISHER MICHAEL,NANET 39900
518792 LEE/SULLIVAN ANTHONY/STEVEN 46900
524161 BAKER HARLAN,REA 47900
525050 PENN/MLOT MARK/GREGORY 75000
525595 VEREEKE JAMES,SHRILEY 65000
531382 EVANS/EVANS CHERYL/CHARLETO 37000
489934 CASANOVA MICHAEL/ANTHONY 10100
490255 BASSIGNAN GARY,RUTH 27000
509796 FINKLE HUGH 29800
512648 KRUGLOV MARGARET 14000
512808 KIMELMAN MICHAEL 35300
513128 MCDONALD MICHAEL 23400
513248 SERNA IRMA,ERNEST 50000
514880 ALVAREZ SANTOS 26400
515069 BENNETT BRIAN 26200
515127 OSMAN DAVE,COLLEEN 27000
515515 YEOMANS JEANNINE 78000
Page 95 of 97
<PAGE>
516621 SMITH REBECCA 12600
519053 ANDREWS STEPHYN,DEVA 31900
520241 CALDERA JOSE,GLORIA 11000
520949 PATTON ROBERT/PATRICIA 50000
520950 PATTON ROBERT/PATRICIA 50000
521210 LATRONICO GARY,CHRISTINE 32500
524098 COKOR STEVEN,VIRGINIA 12800
495268 RUSH MICHAEL,JULIE 14000
504611 ANDROY ROBERT,JENNIFER 100000
505855 SOKOLOW NANCY 35000
505868 REYNOLDS FRANCINE 155000
506189 ZVETINA JOHN,CATHY 96000
510916 BANKS STEPHEN,KEIKO 63500
512786 HICKEY/KLAMM WILLIAM,LINDA 250000
512955 VANDER VEEN ARVIN,KAREN 100000
513085 MURPHY JAMES,RUTH 58000
514967 DELIO DAMIEN 50000
515167 HORWITZ MARK 92000
515177 WILLIAMS/O'BRIE KENNETH,LESLIE 198700
516671 KENNEDY DAVID,CYNTHIA 14500
517534 DARIO WILLIAM P. 99000
518241 NEWPORT KAREN 15800
518403 HOY WAYNE,GORANKA 43100
518825 SMITH ALLAN,MYLLICENT 27000
518879 CAMILLO HANSEL,MARILTN 94000
518913 DYAS WILLIE,VIOLA 71200
519915 MILES BRETT,MADELON 50000
520051 CLARKE/OATH ROBERT/KATHERIN 80000
520099 BRENNAN ERICK 39800
520154 HONNEN GIA 45000
520594 LEE ROBERT,ANNE 129000
520846 LAWSON CRAIG,THERESE 70600
524046 HERR STEVEN,TAMMY 50000
525080 CUTLER RAYMOND,CAROLYN 94000
525291 MITCHELL CHARLES 80000
525664 NASH GREG 59000
531905 SOUZA LARRY,KAREN 17400
533374 BARRETT SAXTON,MERRILL 93500
506498 ROSEMAN STEVEN 39400
481397 KRUEGER CHANEL 21600
506164 NASON KRISTIN 36700
507969 SCHEMBRI JOE 55400
512045 COOPER CHRISTOPHER,PAT 62000
515457 MONDAY MARK,THERESA 49200
518607 SAHA SUBAL,APARNA 184800
527214 NISHIDA TAMMY 40100
503289 WOOD RICHARD,LAURIE 75000
510991 COLEMAN DENNIS,SALLY 98600
512299 STOCKWELL LAWRENCE,ANNET 100300
519118 IMPERIAL,MAHRON JOANNE,MATTHEW 190000
520648 FLANIGAN JOSEPH 55500
520822 SASSONE/SENATOR FRANCIS/PAMELA 39100
521969 BOGENHOLM VANESSA 19000
524008 KAU RICHARD,BONNIE 90000
Page 96 of 97
<PAGE>
525434 SLEIGHT RICHARD,SHARON 93700
498034 WHEELER DELBERT/ETHEL 18900
508347 MARTINEZ JUAN,CARMEN 12000
521982 MALLADI SRINIVAS,PADMAJ 50000
526978 MANAKA TIMOTHY 34500
259782577
Page 97 of 97
<PAGE>
EXHIBIT B
---------
FORM OF OPINION OF COUNSEL
WITH RESPECT TO SECTION 3.11 OF THE
SALE AND SERVICING AGREEMENT
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in
the opinions of counsel to the Company delivered on the Closing Date.
Unless otherwise indicated, all capitalized terms used herein shall have
the meanings ascribed to them in the Sale and Servicing Agreement dated as of
August 1, 1997 among Headlands Mortgage Company (the "Company" and the
"Servicer"), Headlands Mortgage Securities Inc. (the "Sponsor") and The
First National Bank of Chicago, as Indenture Trustee. Terms used but not
defined herein shall have the meaning given to such terms in the
above-referenced Sale and Servicing Agreement.
1. the Indenture Trustee has a valid perfected first priority
security interest with respect to the Sponsor's right, title and
interest in and to the HELOCs (including all Subsequent HELOCs
and Eligible Substitute HELOCs).
B-1
<PAGE>
EXHIBIT C-1
-----------
OFFICER'S CERTIFICATE
---------------------
REQUEST BY THE SERVICER FOR PERMANENT RELEASE
OF HELOCs AND MORTGAGE FILE
------------------------------
TO: The First National Bank of Chicago,
as Indenture Trustee
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Office
Gentlemen:
In connection with the payment in full of the HELOCs held by
you as Indenture Trustee, under the Sale and Servicing Agreement dated as of
August 1, 1997 among Headlands Mortgage Company, as Servicer, Headlands Mortgage
Securities Inc., as Sponsor, and you, as Indenture Trustee, the undersigned
requests the release of the HELOCs and the Mortgage Files for the HELOCs
identified in the schedule attached to this Request.
The undersigned hereby certifies that any and all payments
received on the HELOCs identified in the schedule attached to this Request which
are required to be deposited in the Collection Account pursuant to Section 3.02
of such Sale and Servicing Agreement have been so deposited.
HEADLANDS MORTGAGE COMPANY,
as Servicer
By:--------------------
Name:---------------
Title:--------------
Date:---------------
ACKNOWLEDGED BY:
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By:-------------------------------
Name:--------------------------
Title:-------------------------
Date:--------------------------
C-1-1
<PAGE>
EXHIBIT C-2
-----------
OFFICER'S CERTIFICATE
---------------------
REQUEST BY THE SERVICER FOR TEMPORARY RELEASE
OF HELOCs AND MORTGAGE FILES
-------------------------------
TO: The First National Bank of Chicago,
as Indenture Trustee
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Office
Gentlemen:
In connection with the administration of the HELOCs held by
you as Indenture Trustee, under the Sale and Servicing Agreement dated as of
August 1, 1997 among Headlands Mortgage Company, as Servicer, Headlands Mortgage
Securities Inc., as Sponsor, and you, as Indenture Trustee, the undersigned
requests the temporary release of the HELOCs and the related Mortgage Files for
the HELOCs identified in the schedule attached to this Request.
HEADLANDS MORTGAGE COMPANY,
as Servicer
By:--------------------
Name:---------------
Title:--------------
Date:---------------
ACKNOWLEDGED BY:
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By:----------------------------------
Name:-----------------------------
Title:----------------------------
Date:-----------------------------
C-2-1
<PAGE>
EXHIBIT D
----------
FORM OF CREDIT LINE AGREEMENT
D-1
<PAGE>
CAPITAL MARKETS ASSURANCE CORPORATION
SURETY BOND
August 21, 1997
Surety Bond No. SB120-15
Re: Headlands Home Equity Loan Trust 1997-1
(the "Trust") Revolving Home Equity Loan
Asset-Backed Notes, Series 1997-1, Class A
(the "Class A Notes") and Class S (the "Class
S Notes").
Insured Obligation: Obligation of the Trust to pay principal on
the Class A Notes, plus Class A Note Interest
and Class S Note Interest.
Beneficiary: The First National Bank of Chicago, as
indenture trustee of the Trust (together with
any successor indenture trustee duly
qualified under the Indenture, the "Indenture
Trustee"), for the benefit of the Class A and
the Class S Noteholders.
CAPITAL MARKETS ASSURANCE CORPORATION ("CapMAC"), in consideration of the
payment of the premium and subject to the terms of this surety bond (the "Surety
Bond"), does hereby unconditionally and irrevocably guarantee to the
Beneficiary, payment of the Insured Obligation. CapMAC agrees to pay to the
Beneficiary, an amount euqal to the sum of:
(a) for any Distribution Date, an amount equal to the amount by which
the sum of (i) Class A Note Interest up to the Class A Interest Payment Cap
payable pursuant to Section 8.3(a)(i) under the Indenture, and (ii) Class S
Note Interest payable pursuant to Section 8.3(a)(ii) under the Indenture
exceeds (ii) the sum of (A) Noteholders' Interest Collections on deposit in
the Collection Account (after giving effect to (x) the deposit thereto of
all investment earnings on deposit in the Funding Account and (y) the
reallocation of Certificateholders' Available Funds pursuant to 8.3(c)), (B)
amounts transferred from the Deferred Interest Account pursuant to Section
8.8 of the Indenture on such Distribution Date and (C) all amounts on
deposit in the Spread Account on such Distribution Date;
<PAGE>
(b) for any Distribution Date on which the Certificateholders'
Subordinated Amount has been reduced to zero, the lesser of (i) the amount,
if any, by which the Class A Note Principal Balance after giving effect to
all other amounts allocable and distributable to principal on the Class A
Notes on such Distribution Date, including withdrawal of amounts from the
Spread Account, exceeds the Invested Amount after giving effect to the
allocation of all amounts in reduction thereof as of the date immediately
following such Distribution Date, and (ii) the Net Insured Principal Amount
(as defined below) on such Distribution Date, and
(c) on the Distribution Date in August 2024 (the "Final Distribution
Date"), the lessor of (i) the amount if any by which the Class A Note
Principal Balance (after giving effect to all other amounts allocable to and
distributable as principal on the Class A Notes on such Distribution Date)
exceeds the sum of the amounts on deposit in the Collection Account
available to be distributed to the Class A Noteholders pursuant to Section
8.3(b) of the Indenture with respect to such Final Distribution Date, and
(ii) the Net Insured Principal Amount.
provided, however, that in no event shall the aggregate amount of payments made
hereunder in respect of the principal of the Class A Notes exceed the Insured
Principal Amount (as defined below).
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Indenture dated as of August 1, 1997 (the
"Indenture") by and between the Trust and the Indenture Trustee.
"Class A Interest Payment Cap" means, with respect to any Distribution
Date, an amount equal to accrued interest on the Class A Note Principal Balance
for the related Interest Period at the Maximum Rate.
"Insolvency Proceeding" means the commencement, after the date hereof, of
any bankruptcy, insolvency, readjustment of debt reorganization, marshalling of
assets and liabilities or similar proceedings by or against any Person or the
commencement, after the date hereof, of any proceedings by or against any Person
for the winding up or liquidation of its affairs, or the consent after the date
hereof to the appointment of a trustee, conservator, receiver or liquidator in
any bankruptcy, insolvency, readjustment of debt, marshalling of assets,
reorganization and liabilities or similar proceedings of or relating to any
Person.
"Insured Principal Amount" means the Original Class A Note Principal
Balance.
"Net Insured Principal Amount" means on any day an amount equal to the
Insured Principal Amount less the sum of: (i) the aggregate of all amounts
theretofore paid by CapMAC in respect of principal of the Class A Notes pursuant
to all Notices for Payment (as defined below) hereunder and (ii) the aggregate
of all amounts heretofore withdrawn from the Spread Account in respect of
payments of the principal of the Class A Notes.
2
<PAGE>
CapMAC will pay or cause to be paid to the Beneficiary, irrevocably and
unconditionally and without the prior assertion of any defenses to payment,
including fraud in inducement or fact, the amount demanded in a Notice for
Payment, not to exceed the sum of (i) the Net Insured Principal Amount on the
Distribution Date relating to the Notice for Payment, and (ii) the amount
calculated pursuant to clause (a) of the first paragraph of this Surety Bond for
the Distribution Date relating to the Notice for Payment, in immediately
available funds on the later of (a) 11:00 a.m. New York City time on the
Business Day immediately preceding a Distribution Date and, (b) 11:00 a.m. New
York City time on the Business Day next succeeding presentation to CapMAC (as
hereinafter provided) of a notice for payment in the form of Exhibit A hereto
("Notice for Payment"), appropriately completed and executed by the Beneficiary.
A Notice for Payment under this Surety Bond must be received by CapMAC
by 2:00 p.m. New York City time on any Business Day by (i) delivery of the
original Notice for Payment to CapMAC as its address set forth below, or (ii)
facsimile transmission of the original Notice for Payment to CapMAC at its
facsimile number set forth below. If presentation is made by facsimile
transmission, the Beneficiary shall (i) simultaneously confirm transmission by
telephone to CapMAC at its telephone number set forth below, and (ii) as soon as
reasonably practicable, deliver the original Notice for Payment to CapMAC at its
address set forth below. Any Notice for Payment received by CapMAC after 2:00
p.m. New York City time, on a Business Day, or on any day that is not a Business
Day, will be deemed to be received by CapMAC at 9:00 a.m., New York time, on the
next succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed
pursuant to paragraphs (a), (b) or (c) above is voided (a "Preference Event")
under any applicable bankruptcy, insolvency, receivership or similar law in an
Insolvency Proceeding, and, as a result of such a Preference Event, the
Beneficiary or a Class A or Class S Noteholder is required to return such voided
payment, or any portion of such voided payment, made in respect of the Class A
or Class S Notes (the "Avoided Payment"), CapMAC will pay on the guarantee
described in clauses (a), (b) and (c) of the first paragraph of this Surety
Bond, an amount equal to such Avoided Payment, irrevocably, absolutely and
unconditional and without the assertion of any defenses to payment, including
fraud in the inducement or fact or any other circumstances that would have the
effect of discharging a surety in law or in equity, upon receipt by CapMAC from
the Beneficiary of (A) a certified copy of a final order of a court exercising
jurisdiction in such Insolvency Proceeding to the effect that the Beneficiary is
required to return any such payment or portion thereof prior to the Surety Bond
Termination Date (as defined below) because such payment was voided under
applicable law, with respect to which order the appeal period had expired
without an appeal having been filed (the "Final Order"), (B) a certificate of
the Indenture Trustee on behalf of the Class A Noteholders and the Class S
Noteholders that the Final Order has been entered and is not subject to any
stay, (C) an assignment, in form reasonably satisfactory to CapMAC, irrevocably
assigning to CapMAC all rights and claims of such Beneficiary or a Class A or
Class S Noteholder relating to or arising under such Avoided Payment and (D) a
Notice for Payment in the form of Exhibit A hereto appropriately completed and
executed by the Beneficiary. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Final
Order and not to the Beneficiary directly.
3
<PAGE>
Notwithstanding the foregoing, in no event shall CapMAC be obligated to
make any payment in respect of any Avoided Payment, which payment represents a
payment of principal amount of the Class A Notes, prior to the time CapMAC would
have been required to make a payment in respect of principal pursuant to clauses
(b) or (c) of the first paragraph of this Surety Bond.
CapMAC hereby waives and agrees not to assert any and all rights to
require the Beneficiary to make demand on or to proceed against any person,
party or security prior to demanding payment under this Surety Bond.
No defenses, set-offs and counterclaims of any kind available to CapMAC
so as to deny payment of any amount due in respect of this Surety Bond will be
valid and CapMAC hereby waives and agrees not to assert any and all such
defenses, set-offs and counterclaims, including, without limitation, any such
rights acquired by subrogation, assignment or otherwise.
Any rights of subrogation acquired by CapMAC as a result of any payment
made under this Surety Bond shall, in all respects, be subordinate and junior in
right of payment to the prior indefeasible payment in full of all amounts due
the Indenture Trustee on account of payments due under the Class A and Class S
Notes.
This Surety Bond is neither transferable nor assignable except, in
whole but not in part, to a successor Indenture Trustee duly appointed and
qualified under the Indenture. Such transfer and assignment shall be effective
upon receipt by CapMAC of a copy of the instrument effecting such transfer and
assignment signed by the transferor and by the transferee, and a certificate,
properly completed and signed by the transferor and the transferee, in the form
of Exhibit C hereto (which shall be conclusive evidence of such transfer and
assignment), and, in such case, the transferee instead of the transferor shall,
without the necessity of further action, be entitled to all the benefits of and
rights under this Surety Bond in the transferor's place, provided that, in such
case, the Notice for Payment presented hereunder shall be a certificate of the
transferee and shall be signed by one who states therein that he is a duly
authorized officer of the transferee.
All notices, presentations, transmissions, deliveries and
communications made by the Beneficiary to CapMAC to this Surety Bond shall
specifically refer to the number of this Surety Bond and shall be made to CapMAC
at:
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, N.Y. 10022
Attention: Managing Director,
Credit Enhancement
Telephone: (212)891-4271
Facsimile: (212)755-5462
4
<PAGE>
or such other address, officer, telephone number or facsimile number as CapMAC
may designate to the Beneficiary in writing from time to time. Each such
notice, presentation, delivery and communication shall be effective only upon
actual receipt by CapMAC.
The obligations of CapMAC under this Surety Bond are irrevocable, primary,
absolute and unconditional (subject to the terms and conditions hereof) and
neither the failure of the Indenture Trustee, the Sponsor, the Servicer, the
Company or any other person, to perform any covenant or obligation in favor of
CapMAC (or otherwise), nor the failure or omission to make a demand permitted
hereunder, nor the commencement of any bankruptcy, debtor or other insolvency
proceeding by or against the Indenture Trustee, the Sponsor, the Servicer, the
Company or any other person shall in any way affect or limit CapMAC's
obligations under this Surety Bond. If an action or proceeding to enforce this
Surety Bond is brought, the Beneficiary shall be entitled to recover from CapMAC
costs and expenses reasonably incurred, including without limitation reasonable
fees and expenses of counsel.
There shall be no acceleration payment due under this Surety Bond unless
such acceleration is at the sole option of CapMAC.
This Surety Bond and the obligations of CapMAC hereunder shall terminate
on the day (the "Surety Bond Termination Date") on which the earlier of the
following occurs: (i) the date on which CapMAC shall have paid in full the
Insured Obligation, and (ii) the date that is one year and one day following the
earliest to occur of (a) the date that CapMAC receives written notice from the
Indenture Trustee, substantially in the form of Exhibit B hereto, stating that
the termination of the Trust has occurred, (b) the Distribution Date occurring
in August 2024, and (c) the Distribution Date upon which the later of the final
distribution on the Class A Notes and the Class S Notes is made, provided
further that, if an Insolvency Proceeding is existing by or against the Sponsor,
the Servicer, the Company or the Trust, during the one year and one day period
set forth at clause (ii) above, then this Surety Bond and CapMAC's obligations
hereunder shall terminate on the later of (a) date of the conclusion or
dismissal of such Insolvency Proceeding without continuing jurisdiction by the
court in such Insolvency Proceeding and (b) the date on which CapMAC has made
all payments required hereunder in respect of Avoided Payments.
This Surety Bond shall be returned to CapMAC on the Surety Bond
Termination Date.
This Surety Bond is not covered by the property/casualty insurance fund
specified in Article Seventy-six of the New York State insurance law.
5
<PAGE>
This Surety Bond sets forth in full the undertaking of CapMAC, and shall
not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment to any other agreement or instrument, or
by the merger, consolidation or dissolution of the Trust or any other Person and
may not be cancelled or revoked prior to the time it is terminated in accordance
with the express terms hereof.
THIS SURETY BOND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, CapMAC has caused this Surety Bond to be executed on
the date first written above.
CAPITAL MARKETS ASSURANCE CORPORATION
By: /s/ Scott Mangan
--------------------------
Name: Scott Mangan
Title: Vice President
By: /s/ A.M. Croyli
--------------------------
Name: A.M. Croyli
Title: Authorized Producer
<PAGE>
EXHIBIT A to Surety Bond No. SB12015
Capital Markets Assurance Corporation
885 Third Avenue
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
NOTICE FOR PAYMENT
UNDER SURETY BOND NO. SB12015
The undersigned individual, a duly authorized officer of ,
as Indenture Trustee (the "Indenture Trustee"), hereby certifies to Capital
Markets Assurance Corporation ("CapMAC"), with reference to the Surety Bond
dated August 21, 1997 (the "Surety Bond"), as follows:
1. The Indenture Trustee is the Indenture Trustee under the Indenture,
dated as of August 1, 1997, by and between the Trust and the Indenture Trustee
(the "Indenture") and the Beneficiary under the Surety Bond.
2. The Indenture Trustee is entitled to make a demand under the Surety
Bond pursuant to the provisions of the Indenture and the Sale and Servicing
Agreement.
3. This notice relates to the [insert date] Distribution Date. The Net
Insured Principal Amount for such Distribution Date is $ .
4. The Beneficiary demands payment of $ , which is the amount
calculated pursuant to clause(s) [(a)] and/or [(b)] and/or [(c)] of the first
paragraph of the Surety Bond for such Distribution Date. Such amount is the
amount the Indenture Trustee is entitled to demand pursuant to the Indenture and
the Sale and Servicing Agreement.
5. $ of the draw referred to in item 4 above relates to the
Guaranteed Principal Distribution Amount.
6. $ of the draw referred to in item 4 above relates to the
Class A Note Interest.
7. $ of the draw referred to in item 4 above relates to the
Class S Note Interest.
8. The amount demanded is to be paid in immediately available funds to
Account No. .
<PAGE>
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Indeture and the Surety Bond, as the case may
be.
IN WITNESS WHEREOF, this notice has been executed this day of ,
.
____________________, as Indenture Trustee
By: _____________________________________
Name:
Title:
<PAGE>
EXHIBIT B to Surety Bond No. SB12015
Capital Markets Assurance Corporation
885 Third Avenue
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
Dear Sirs:
Reference is made to that certain Surety Bond No. SB12015 dated August
21, 1997 which has been issued by Capital Markets Assurance Corporation in favor
of ____________, as Indenture Trustee.
The undersigned hereby certifies and confirms that the Trust has
terminated in accordance with the terms of the Sale and Servicing Agreement and
the date of such termination has occurred on _________________.
The original of the Surety Bond is enclosed herewith.
[Name of Indenture Trustee or
Transferee]
By: _________________________
Name:
Title:
<PAGE>
EXHIBIT C to Surety Bond No. SB12015
Capital Markets Assurance Corporation
885 Third Avenue
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
Dear Sirs:
Reference is made to that certain Surety Bond No. SB12015 dated August
21, 1997 (the "Surety Bond") which has been issued by Capital Markets Assurance
Corporation in favor of ____________, as Indenture Trustee.
The undersigned [Name of Transferor] has transferred and assigned (and
hereby confirms to you said transfer and assignment) all of its rights in and
under said Surety Bond to [Name of Transferee] and confirms that [Name of
Transferor] no longer has any rights under or interest in said Surety Bond.
Transferor and Transferee have indicated on the face of said Surety
Bond that it has been transferred and assigned to Transferee.
Transferee hereby certifies that it is a duly authorized transferee
under the terms of said Surety Bond and is accordingly entitled upon
presentation of the document(s) called for therein, to receive payment
thereunder.
[Name of Transferor]
By: ___________________
[Name and Title of
Authorized Officer of
Transferor]
[Name of Transferee]
By: _______________________
[Name and Title of
Authorized Officer of
Transferee]
<PAGE>
EXECUTION COPY
HELOC PURCHASE AGREEMENT
Between
HEADLANDS MORTGAGE COMPANY,
as Seller
and
HEADLANDS MORTGAGE SECURITIES INC.,
as Purchaser
Dated as of August 1, 1997
<PAGE>
Table of Contents
Page
ARTICLE I Definitions...................................... 1
ARTICLE II Procedures for Purchases of HELOCs;
Conditions Precedent; Settlements................ 8
Section 2.01. Purchase and Sale......................... 8
Section 2.02. Delivery of Documents; Purchase of
Initial HELOCs............................ 8
Section 2.03. Delivery of Documents; Purchases of
Subsequent HELOCs......................... 9
Section 2.04. Purchase Requests......................... 9
Section 2.05. Survival of Representations............... 10
Section 2.06. Proceeds of HELOCs........................ 10
Section 2.07. Defective HELOCs.......................... 10
ARTICLE III ............................................................... 11
Section 3.01. Intent of Parties; Security
Interest.................................. 11
ARTICLE IV Representations and Warranties................... 11
Section 4.01. Representations and Warranties
of Seller................................. 11
Section 4.02. Representations and Warranties
Regarding HELOCs.......................... 13
Section 4.03. Representations and Warranties
of Purchaser.............................. 21
Section 4.04. Remedies for Breach of Representations
and Warranties; Repurchase
Obligation................................ 22
ARTICLE V Covenants and Warranties of Seller............... 24
Section 5.01. Affirmative Covenants..................... 24
Section 5.02. Negative Covenants........................ 26
ARTICLE VI Sale of HELOCs from the Purchaser
to the Trust..................................... 26
Section 6.01. Sale and Servicing Agreement.............. 26
ARTICLE VII Seller's Servicing Obligations................... 28
Section 7.01. ................................................. 28
ARTICLE VIII Fees and other Costs............................. 28
Section 8.01. Fees and Expenses......................... 28
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ARTICLE IX Termination; Additional Remedies................ 29
Section 9.01. Termination of Commitment
to Purchase............................... 29
Section 9.02. Additional Remedies....................... 29
ARTICLE X Payment of Purchase Price........................ 30
Section 10.01. Purchase Price Payments................... 30
Section 10.02. The Purchaser Note........................ 30
ARTICLE XI Confidentiality.................................. 31
ARTICLE XII Term............................................. 32
ARTICLE XIII Exclusive Benefit of Parties;
Assignment....................................... 32
ARTICLE XIV Amendment; Waivers............................... 32
ARTICLE XV Execution in Counterparts........................ 32
ARTICLE XVI Effect of Invalidity of Provisions............... 33
ARTICLE XVII Governing Law.................................... 33
ARTICLE XVIII Notices.......................................... 33
ARTICLE XIX Entire Agreement................................. 33
ARTICLE XX Indemnities...................................... 34
ARTICLE XXI RESPA Obligations................................ 35
ARTICLE XXII Survival......................................... 35
ARTICLE XXIII Right of Set-off................................. 36
ARTICLE XXIV Consent to Service............................... 36
ARTICLE XXV Submission to Jurisdiction; Waiver
of Trial by Jury................................. 36
ARTICLE XXVI Construction..................................... 37
ARTICLE XXVII Further Agreements............................... 37
<PAGE>
HELOC PURCHASE AGREEMENT ("Agreement") dated as of August 1,
1997 between Headlands Mortgage Company, a California S-corporation ("Seller"),
and Headlands Mortgage Securities Inc., a Delaware corporation ("Purchaser").
WHEREAS, Seller desires to sell from time to time to Purchaser
the Initial HELOCs and Subsequent HELOCs (each as hereinafter defined), and
Purchaser desires to purchase such Initial HELOCs and Subsequent HELOCs, each in
accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties, in consideration of good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, hereby agree as follows:
ARTICLE I
Definitions
Capitalized terms not defined herein shall have the meanings
set forth in the Sale and Servicing Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Additional Balance": As to any HELOC and day, the
aggregate amount of all Draws conveyed to the Trust pursuant to Section
2.01 of the Sale and Servicing Agreement.
"Asset Balance": As to any HELOC, other than a Liquidated
HELOC, and day, the related Cut-Off Date Asset Balance, plus, any Additional
Balance in respect of such HELOC minus (ii) all collections credited as
principal against the Asset Balance of any such HELOC in accordance with the
related Loan Agreement. For purposes of this definition, a Liquidated HELOC
shall be deemed to have an Asset Balance equal to the Asset Balance of the
related HELOC immediately prior to the final recovery of related Liquidation
Proceeds and an Asset Balance of zero thereafter.
"Assignment of Mortgage": With respect to any Mortgage, an
assignment, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the sale of the Mortgage to the Trust, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the HELOC secured by Mortgaged
Properties located in the same jurisdiction.
"Business Day": A day on which banks are open for
business in New York, California or Delaware and on which
<PAGE>
dealings in United States dollars are carried on in the London interbank market.
"Class A Note": Any note executed and authenticated
by the Indenture Trustee substantially in the form set forth in Exhibit A
to the Indenture.
"Class A Noteholder": The holder of a Class A Note.
"Class S Note": Any note executed and authenticated
by the Indenture Trustee substantially in the form set forth
in Exhibit B to the Indenture.
"Class S Noteholder": The holder of a Class S Note.
"Closing Date": August 21, 1997.
"Collateral": As defined in Article III hereof.
"Collection Account": The custodial account or accounts
created and maintained for the benefit of the Noteholders and the Credit
Enhancer pursuant to Section 3.02(b) of the Sale and Servicing Agreement.
The Collection Account shall be an Eligible Account.
"Collection Period": With respect to any Distribution Date
and any HELOC, the calendar month preceding such Distribution Date.
"Credit Line Agreement": With respect to any HELOC, all of the
Seller's rights under the related credit line account agreement and promissory
note executed by the related Mortgagor and any amendment or modification thereof
but none of the Seller's obligations thereunder.
"Cut-Off Date": With respect to each Initial HELOC, July 31,
1997 and with respect to each Subsequent HELOC, the date on which such
Subsequent HELOC was transferred to the Trust.
"Cut-Off Date Asset Balance": With respect to any HELOC,
the unpaid principal balance thereof as of the Cut-Off Date.
"Distribution Date": The fifteenth day of each month, or if
such day is not a Business Day, then the next Business Day, beginning in the
month immediately following the month of the initial issuance of the Class A and
Class S Notes.
"Due Date": The twenty-fifth day of the month.
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"Draw": An additional borrowing by the Mortgagor
subsequent to the Cut-Off Date in accordance with the related Mortgage Note.
"Event of Termination": As defined in Article IX
hereof.
"FHA": The Federal Housing Administration or its
successors in interest.
"FHLMC": The Federal Home Loan Mortgage Corporation
or its successors in interest.
"FNMA": The Federal National Mortgage Association
or its successors in interest.
"GAAP": means generally accepted accounting
principles, consistently applied.
"HELOC": The adjustable rate home equity revolving credit line
loans sold by the Seller to the Purchaser pursuant to this Agreement, as set
forth on the initial HELOC Schedule and all subsequent HELOC Schedules,
including any Subsequent HELOCs.
"HELOC File": With respect to each HELOC:
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in
recordable form;
(iii) the original recorded Mortgage or, if, in connection
with any HELOC, the original recorded Mortgage with evidence of
recording thereon cannot be delivered on or prior to the Closing Date
(or the relevant Subsequent Transfer Date with respect to Subsequent
HELOCs) because of a delay caused by the public recording office where
such original Mortgage has been delivered for recordation or because
such original Mortgage has been lost, the Seller shall deliver or cause
to be delivered to the Purchaser, a true and correct copy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of the Seller stating that
such original Mortgage has been dispatched to the appropriate public
recording official or (ii) in the case of an original Mortgage that has
been lost, a certificate by the appropriate county recording office
where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if
any ("Intervening Assignments"), with evidence of recording thereon,
showing a complete chain
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<PAGE>
of title to the Mortgage from the originator to the Indenture Trustee
or, if any such original Intervening Assignment has not been returned
from the applicable recording office or has been lost, a true and
correct copy thereof, together with (i) in the case of a delay caused
by the public recording office, an Officer's Certificate of the Seller
stating that such original Intervening Assignment has been dispatched
to the appropriate public recording official for recordation or (ii) in
the case of an original Intervening Assignment that has been lost, a
certificate by the appropriate county recording office where such
Mortgage is recorded;
(v) either a title policy, a title search or guaranty of
title with respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection
with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation or substitution agreement; if any, relating to the
HELOC; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage;
provided, however, that if, as to any HELOC, (x) an optical image or other
representation of the related documents specified in clauses (i) through (viii)
above are enforceable in the relevant jurisdictions to the same extent as the
original of such document and (y) such optical image or other representation
does not impair the ability of an owner of such HELOC to transfer its interest
in such HELOC, and does not result in a reduction in the then current rating of
the Class A and Class S Notes, such optical image or other representation may be
transferred to the Purchaser in lieu of the physical documents specified above.
"HELOC Schedules": The schedule of Initial HELOCs attached
hereto as Schedule 1, and any additional HELOC Schedules in connection with the
transfer of any Subsequent HELOCs.
"HUD": The United States Department of Housing and Urban
Development.
"Indenture": The Indenture dated as of August 1, 1997
between the Issuer and the Indenture Trustee.
"Indenture Trustee": The First National Bank of Chicago or
any successor Indenture Trustee appointed in
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<PAGE>
accordance with the Indenture that has accepted such appointment in accordance
with the Indenture.
"Initial HELOC": Each HELOC transferred and assigned to the
Indenture Trustee on the Closing Date, together with any Eligible Substitute
HELOCs delivered for Defective HELOCs.
"Issuer": Headlands Home Equity Loan Trust 1997-1.
"Liquidated HELOC": As to any Distribution Date, any HELOC in
respect of which the Servicer has determined, in accordance with the servicing
procedures specified herein, as of the end of the related Collection Period,
that all Liquidation Proceeds which it expects to recover with respect to the
disposition of such HELOC or the related REO have been recovered.
"Loan Rate": As defined in the Sale and Servicing
Agreement.
"Losses": Any and all out-of-pocket losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
directly incurred by any person specified in this Agreement, resulting from
transactions entered into under this Agreement (other than liability for taxes).
Losses must be accounted for and presented for reimbursement documented in
reasonable detail and within a reasonable time.
"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 HELOC.
"Mortgage Note": The Credit Line Agreement and related
promissory note to which the related mortgagor agrees to pay the indebtedness
evidenced thereby and secured by the related Mortgage.
"Mortgaged Property": The underlying property, including
any real property and improvements thereon, securing a HELOC.
"Mortgagor": The obligor or obligors under a Loan Agreement.
"Officer's Certificate": A certificate signed by the
President, an Executive Vice President, a Senior Vice President, a Vice
President, an Assistant Vice President, the Treasurer, Assistant Treasurer,
Controller or Assistant Controller of the Seller or the Purchaser, as the case
may be.
"Original Pool Balance": $192,924,110.37.
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<PAGE>
"Policy": The financial guaranty insurance policy number
SB12015, dated as of the Closing Date, issued by Capital Markets Assurance
Corporation to the Indenture Trustee for the benefit of the Class A and Class S
Noteholders.
"PUD": A planned unit development.
"Purchase": Any purchase of Subsequent HELOCs by Purchaser
from Seller pursuant to the terms hereof and of the applicable Purchase Request.
"Purchase Date": With respect to the Subsequent HELOCs,
the Subsequent Transfer Date.
"Purchase Price": With respect to the Asset Balance of the
Initial HELOCs as of the Cut-Off Date (and any Eligible Substitute HELOC as of
the date delivered) 102.0%; with respect to the Asset Balances of all Additional
Balances and all Subsequent HELOCs 100%.
"Purchase Request": A request for the purchase of
Subsequent HELOCs in the form of Exhibit A hereto.
"Purchaser Note": As defined in Section 10.02.
"Reference Bank": Three major banks that are engaged in
the London interbank market, as selected by the Purchaser.
"Reference Bank Rate": The arithmetic mean (rounded upwards,
if necessary, to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered by the
Reference Banks as of 11:00 a.m., London time, on the second Business Day prior
to the date of determination to prime banks in the London interbank market for a
period of one month.
"Related Documents": As defined in Section 2.01 of the Sale
and Servicing Agreement.
"REO": A Mortgaged Property that is acquired by the Trust
in foreclosure or by deed in lieu of foreclosure.
"Repurchase Price": The sum of (a) product of (i) the
outstanding principal balance of the related HELOC as of such date of
repurchase and (ii) the related Purchase Price, plus (b) any accrued interest
as of such date.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of August 1, 1997 among the Seller, the Purchaser, the
Issuer and the Indenture Trustee.
"SEC": The Securities and Exchange Commission and any
successor thereto.
6
<PAGE>
"Servicer": Headlands Mortgage Company, a closely-
held California corporation, any successor thereto and, after
its termination as Servicer, any successor hereunder.
"Shareholder's Equity": The aggregate "assets" of Seller less
the aggregate "liabilities" of Seller, with the term "asset" having the meaning
ascribed to such term by GAAP and the term "liabilities" being those obligations
or liabilities of the Seller which, in accordance with GAAP, would be included
on the liability side of the Seller's balance sheet.
"Sponsor": Headlands Mortgage Securities Inc.
"Subsequent HELOCs": HELOCs sold by the Seller to the
Purchaser on any Subsequent Transfer Date.
"Subsequent Transfer Date": Any date on which the Seller
transfers to the Purchaser Subsequent HELOCs in accordance with the Sale and
Servicing Agreement.
"Termination Date": The date of termination of the Trust
in accordance with the Trust Agreement.
"Trust": The trust created by the Trust Agreement, the corpus
of which consists of the HELOCs, such other assets as shall from time to time be
identified as deposited in a Collection Account in accordance with the Sale and
Servicing Agreement (and with respect to the interest payments on the Initial
HELOCs, an amount equal to 25 days' interest on the Original Pool Balance,
calculated at the Weighted Average Loan Rate), property that secured a HELOC and
that has become REO, the rights of the Sponsor in certain hazard insurance
policies maintained by the Mortgagors or the Servicer in respect of the HELOCs,
the Policy, an assignment of certain rights of the Sponsor under this Agreement,
such assets as may be deposited from time to time in a funding account, rights
to certain amounts in a spread account and a deferred interest account and all
proceeds of each of the foregoing (exclusive of payments of accrued interest on
the HELOCs which are due on or prior to the Cut-Off Date).
"Trust Agreement": The Trust Agreement dated as of August 1,
1997 between the Sponsor and Wilmington Trust Company, as Owner Trustee.
7
<PAGE>
ARTICLE II
Procedures for Purchases of HELOCs;
Conditions Precedent; Settlements.
Section 2.01. Purchase and Sale. (a) On the Closing
Date in consideration for the Purchase Price the Seller hereby sells,
transfers, assigns, sets over and otherwise conveys to the Purchaser, without
recourse, all of its right, title and interest in and to (i) each Initial HELOC,
including its Asset Balance and all collections in respect thereof received on
or after the Cut-Off Date (excluding payments in respect of accrued interest due
prior to the Cut-Off Date and with respect to interest payments on the Initial
HELOCs, an amount equal to 25 days' interest on the Original Pool Balance,
calculated at the weighted average Loan Rate); (ii) property that secured an
Initial HELOC that is acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Seller's rights under the hazard insurance policies and (iv) all
proceeds with respect to the foregoing. From time to time, with respect to any
Subsequent HELOC, pursuant to the terms of this Agreement, Seller shall, on the
related Subsequent Transfer Date transfer, assign, set over and otherwise convey
to the Purchaser without recourse all of its right, title and interest in and to
the Asset Balances of the Subsequent HELOC and all collections in respect
thereof received after the Cut-Off Date for the Subsequent HELOC or, with
respect to any Additional Balances with respect thereto, on or after the date of
transfer to the Trust.
(b) Each such purchase with respect to the Subsequent HELOCs,
shall be initiated by Seller pursuant to the delivery to Purchaser of a Purchase
Request in the manner set forth in Section 2.04.
Section 2.02. Delivery of Documents; Purchase of Initial
HELOCs. Prior to the purchase of Initial HELOCs:
(a) Seller shall have delivered to the Purchaser or any agent
appointed by the Purchaser the HELOC File for each of the HELOCs.
(b) Purchaser shall have received a HELOC Schedule
pertaining to the related HELOCs.
(c) Purchaser shall have received copies of the resolutions of
the Board of Directors of Seller, certified by its respective
Secretary, approving this Agreement.
(d) Purchaser shall have received the Articles of
Incorporation of Seller certified by the Secretary of State of the
State of California.
8
<PAGE>
(e) Purchaser shall have received a certificate of the
Secretary or Assistant Secretary of Seller certifying (i) the names and
signatures of the officers authorized on its behalf to execute this
Agreement, and any other documents to be delivered by it hereunder and
(ii) a copy of Seller's By-laws.
(f) Purchaser shall have received an opinion of counsel to
Seller as to the due authorization, execution and delivery by the
Seller of this Agreement and as to the validity and enforceability of
the transfers contemplated hereunder and addressing such other matters
as the Purchaser may reasonably request.
(g) Seller shall have instructed the applicable debtor,
trustee, paying agent, authenticating agent, transfer agent, registrar,
predecessor in interest, owner (if the HELOCs are in the form of a
security agreement), or servicer, if any, in respect of the related
HELOCs to reflect on their books and records the transfer of such
HELOCs to Purchaser, as owner or secured party (if the HELOCs are in
the form of a security agreement).
(h) Purchaser shall have received the most recent available
standard servicing or lien reports in summary form, if any, with
respect to all of the mortgages in Seller's portfolio similar to the
HELOCs.
(i) The Purchaser shall be permitted to perform its standard
loan review of each HELOC to be purchased.
(j) UCC-1 financing statements duly executed by Seller as
debtor shall have been filed in California naming the Purchaser as
secured party and the Indenture Trustee on behalf of the Trust as
assignee.
Section 2.03. Delivery of Documents; Purchases of Subsequent
HELOCs. Prior to any purchase of Subsequent HELOCs after the purchase of Initial
HELOCs, the actions, conditions and deliveries specified in Section 2.02 shall
have been taken or made, as the case may be with respect to the Subsequent
HELOCs.
Section 2.04. Purchase Requests. Seller shall deliver to
Purchaser a Purchase Request at least three Business Days prior to the proposed
Purchase Date for any Purchase (unless otherwise agreed by the parties).
Purchaser shall indicate its acceptance or declination of each Purchase Request
by completing the appropriate section of the Purchase Request and returning
the copy thereof to Seller; provided, however, that Purchaser hereby agrees to
accept each Purchase Request if all of the conditions to such Purchase
provided for in this Agreement (including, without limitation, Section 2.02
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<PAGE>
hereof and the conditions with respect to the purchase of Subsequent HELOCs)
have been satisfied.
With respect to all Purchase Requests, if Purchaser does not
send a copy of a completed Purchase Request to Seller within at least three
Business Days prior to the proposed Purchase Date (five Business Days, if the
related Purchase Request was received by Purchaser at least two calendar weeks
prior to the proposed Purchase Date), Purchaser shall be deemed to have accepted
such Purchase Request. Each Purchase Request accepted by Purchaser shall be
irrevocable and binding on Purchaser and Seller. Seller shall indemnify
Purchaser and hold it harmless against any Losses incurred by Purchaser as a
result of any failure by Seller to timely deliver the Subsequent HELOCs subject
to such Purchase. On the applicable Purchase Date, the Purchaser shall pay
Seller the Purchase Price for the related Subsequent HELOCs against receipt of
the documents required to be delivered by Seller pursuant to Section 2.03.
Section 2.05. Survival of Representations. The terms and
conditions of the purchase of each HELOC shall be as set forth in this
Agreement. Seller will be deemed on the Closing Date and on each Purchase
Date to have made to Purchaser the representations and warranties set forth in
Article IV hereof and such representations and warranties of Seller shall be
true and correct on and as of the Closing Date and on and as of such Purchase
Date. Each Purchase Request made by Seller shall be deemed to be a restatement
of each of the covenants of Seller made pursuant to Article V of this
Agreement. In addition, Seller shall reaffirm the representations and
warranties contained in Article IV on the date of disposition of the HELOCs
by the Purchaser pursuant to the Sale and Servicing Agreement.
Section 2.06. Proceeds of HELOCs. The transfer and sale hereby
of all of the Seller's right, title and interest in and to each HELOC shall
include all proceeds, products and profits derived therefrom, including, without
limitation, all scheduled payments of principal of and interest on such HELOCs
and other amounts due or payable or to become due or payable in respect thereof
and proceeds thereof, including, without limitation, all moneys, goods and other
tangible or intangible property received upon the liquidation or sale thereof,
except any payments in respect of accrued interest due prior to the Cut-Off Date
and with respect to interest payments on the Initial HELOCs, an amount equal to
25 days' interest on the Original Pool Balance, calculated at the weighted
average Loan Rate.
Section 2.07. Defective HELOCs. If any HELOC is
re-transferred to the Purchaser pursuant to Section 2.03 of the Sale and
Servicing Agreement, the Seller shall, at the Purchaser's option, either (a)
repurchase such HELOC at the
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Repurchase Price, or (b) provide an Eligible Substitute HELOC if the Seller has
any such loans available for sale at the time, subject to the terms and
conditions of the Sale and Servicing Agreement.
ARTICLE III
Section 3.01. Intent of Parties; Security Interest. Purchaser
and Seller confirm that the transactions contemplated herein are intended as
purchases and sales rather than as loan transactions. In the event, for any
reason, and solely in such event, any transaction hereunder is construed by any
court or regulatory authority as a loan or other purchase and sale of the
related HELOCs, Seller shall be deemed to have hereby pledged to Purchaser as
security for the performance by Seller of all of its obligations from time to
time arising hereunder and under any and all Purchases effected pursuant
thereto, and shall be deemed to have granted to Purchaser a security interest
in, the related HELOCs and all distributions in respect thereof, and the
proceeds of any and all of the foregoing (collectively, the "Collateral"). In
furtherance of the foregoing, (i) this Agreement shall constitute a security
agreement, (ii) Purchaser shall have all of the rights of a secured party with
respect to the Collateral pursuant to applicable law and (iii) Seller shall
execute all documents, including, but not limited to, financing statements under
the Uniform Commercial Code as in effect in any applicable jurisdictions, as the
Purchaser may reasonably require to effectively perfect and evidence Purchaser's
first priority security interest in the Collateral. Seller also covenants not to
pledge, assign or grant any security interest to any other party in any HELOC
sold to Purchaser.
ARTICLE IV
Representations and Warranties.
Section 4.01. Representations and Warranties of Seller. The
Seller represents, warrants and covenants to the Purchaser as of the Closing
Date and with respect to the Subsequent HELOCs as of each related Subsequent
Transfer Date that:
(i) the Seller is duly organized, validly existing
and in good standing under the laws of the State of California
and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the
Seller in any state in which a Mortgaged Property is located
to the extent necessary to ensure the enforceability of each
HELOC and the
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servicing of the HELOC in accordance with the terms
of this Agreement;
(ii) the Seller has the full corporate power and
authority to service each HELOC, and to execute, deliver and
perform, and to enter into and consummate the transactions
contemplated by this Agreement and the execution, delivery and
performance of this Agreement by the Seller has been duly
authorized by all necessary corporate action on the part of
the Seller; and this Agreement, assuming the due
authorization, execution and delivery thereof by the
Purchaser, constitutes a legal, valid and binding obligation
of the Seller, enforceable against the Seller in accordance
with its respective terms, except to the extent that (a) the
enforceability thereof may be limited by federal or state
bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b)
the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) the execution and delivery of this Agreement by
the Seller, the servicing of the HELOCs by the Seller
hereunder, the consummation by the Seller of the transactions
herein contemplated, and the fulfillment by the Seller of or
compliance by the Seller with the terms hereof will not (A)
result in a breach of any term or provision of the charter or
by-laws of the Seller or (B) conflict with, result in a
breach, violation or acceleration of, or result in a default
under, the terms of any other material agreement or instrument
to which the Seller is a party or by which it may be bound, or
any statute, order or regulation applicable to the Seller of
any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller, which
breach, violation, default or non-compliance would have a
material adverse effect on (a) the business, operations,
financial condition, properties or assets of the Seller taken
as a whole or (b) the ability of the Seller to perform its
obligations under this Agreement; and the Seller is not a
party to, bound by, or in breach or violation of any material
indenture or other material agreement or instrument, or
subject to or in violation of any statute, order or regulation
of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it,
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which materially and adversely affects or, to the Seller's
knowledge, would in the future reasonably be expected to
materially and adversely affect, (x) the ability of the Seller
to perform its obligations under this Agreement or (y) the
business, operations, financial condition, properties or
assets of the Seller taken as a whole;
(iv) the Seller is, and currently intends to remain,
in good standing and qualified to do business in each
jurisdiction where failure to be so qualified or licensed
would have a material adverse effect on (a) the business,
operations, financial condition, properties or assets of the
Seller taken as a whole or (b) the enforceability of any HELOC
or the servicing of the HELOCs in accordance with the terms of
this Agreement;
(v) there is no litigation pending or, to the
Seller's actual knowledge, overtly threatened against the
Seller that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or the
ability of the Seller to service the HELOCs or for the Seller
to perform any of its other obligations hereunder in
accordance with the terms hereof;
(vi) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by the Seller of, or
compliance by the Seller with, this Agreement or the
consummation of the transactions contemplated hereby (except
for such consents, approvals, authorizations, or orders to be
obtained in connection with each Purchase Date with respect to
future transactions to be consummated hereunder), or if any
such consent, approval, authorization or order not relating to
a future transaction is required, the Seller has obtained the
same; and
(vii) the Seller has caused to be performed any and
all acts required to preserve the rights and remedies of the
Purchaser in any insurance policies of the Seller or a
mortgagee applicable to the HELOCs sold by the Seller.
Section 4.02. Representations and Warranties Regarding HELOCs.
(a) With respect to the HELOCs, Seller represents and warrants to Purchaser as
of the Closing Date with respect to each Initial HELOC and as of the related
Subsequent Transfer Date with respect to each Subsequent HELOC as follows:
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(i) The information set forth on the initial HELOC
Schedule with respect to the Initial HELOCs is true and
correct as of the Closing Date and on each additional HELOC
Schedule with respect to the Subsequent HELOCs, as of the
related Subsequent Transfer Date in all material respects;
(ii) No payments due prior to the Closing Date or
the related Purchase Date are more than 60 days delinquent
(measured on a contractual basis); and none of the Initial
HELOCs were delinquent;
(iii) Each related Mortgage is a valid and
enforceable first or second lien on the Mortgaged Property
subject only to (a) the lien of nondelinquent current real
property taxes and assessments, (b) any first mortgage loan
secured by such Mortgaged Property and specified on the HELOC
schedule, (c) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the
date of recording of such Mortgage, such exceptions appearing
of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in
connection with the origination of such HELOC, and (d) other
matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security
intended to be provided by such Mortgage;
(iv) As of the Closing Date or the Purchase Date, as
the case may be, the Seller had good title to, and was the
sole owner of, each HELOC including the related Mortgage,
Mortgage Note and Cut-Off Date Asset Balance free and clear of
any pledge, lien, encumbrance or security interest and had
full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell
and assign the same;
(v) To the best of the Seller's knowledge, there
is no delinquent tax or assessment lien against any related
Mortgaged Property;
(vi) To the best of Seller's knowledge, there is no
valid offset, defense or counterclaim to any related Mortgage
Note or Mortgage, including the obligation of the Mortgagor to
pay the unpaid principal of or interest on such Mortgage Note;
(vii) To the best of the Seller's knowledge, there
are no mechanics' liens or claims for work, labor or material
affecting any related Mortgaged
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Property which are or may be a lien prior to, or equal with,
the lien of such Mortgage, except those which are insured
against by the title insurance policy referred to in (xi)
below;
(viii) To the best of the Seller's knowledge, each
related Mortgaged Property is free of material damage and is
in good repair;
(ix) The origination of each HELOC complied in all
material respects with applicable state and federal laws,
including, without limitation, usury, equal credit
opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, relating to the
origination of mortgage loans and consummation by the Seller
of the transactions contemplated hereby will not involve the
violation of any such laws;
(x) Neither the Seller nor any prior holder of any
related Mortgage has modified such Mortgage in any material
respect; satisfied, cancelled or subordinated such Mortgage in
whole or in part; released the related Mortgaged Property in
whole or in part from the lien of such Mortgage; or executed
any instrument of release, cancellation, modification or
satisfaction with respect thereto except as has been disclosed
to Purchaser prior to Purchase Date, as the case may be, in
which case a copy of such modification agreement will have
been delivered to the Purchaser;
(xi) A lender's policy of title insurance together
with a condominium endorsement, if applicable, and extended
coverage endorsement and, if applicable, an adjustable rate
mortgage endorsement in an amount at least equal to the
principal balance as of the Closing Date or the related
Purchase Date, as the case may be, of each such HELOC or a
commitment (binder) to issue the same was effective on the
date of the origination of such HELOC, each such policy is
valid and remains in full force and effect, and each such
policy was issued by a title insurer qualified to do business
in the jurisdiction where the related Mortgaged Property is
located and acceptable to FNMA or FHLMC and in a form
acceptable to FNMA or FHLMC, which policy insures the Seller
and successor owners of indebtedness secured by the insured
related Mortgage, as to the first or second priority lien of
such Mortgage; to the best of the Seller's knowledge, no
claims have been made under such mortgage title insurance
policy and no prior holder of such Mortgage, including the
Seller, has
15
done, by act or omission, anything which would impair the
coverage of such mortgage title insurance policy;
(xii) Each HELOC was originated by the Seller or, if
not originated by the Seller, was purchased by the Seller
subject to materially the same standards and procedures used
by the Seller in originating mortgage loans directly;
(xiii) To the best of the Seller's knowledge, all of
the material improvements of the related Mortgaged Property
lie wholly within the boundaries and building restriction
lines of such property, and no material improvements on
adjoining properties encroach upon such Mortgaged Property
unless the applicable title insurance policy for such
Mortgaged Property affirmatively insures against loss or
damage by reason of any encroachment that is disclosed or
would have been disclosed by an accurate survey;
(xiv) To the best of Seller's knowledge, no
improvement located on or being part of the related Mortgaged
Property is in violation of any applicable zoning law or
regulation. To the best of the Seller's knowledge, all
inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of such Mortgaged
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 to the best of the
Seller's knowledge, such Mortgaged Property was lawfully
occupied under applicable law at origination and is lawfully
occupied under applicable law as of the Closing Date or the
Purchase Date, as the case may be;
(xv) All parties which have had any interest in any
related Mortgage, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the related Mortgaged Property is located, and
(2)(A) organized under the laws of such state, (B) qualified
to do business in such state, (C) federal savings and loan
associations or national banks having principal offices in
such state, or (D) not doing business in such state;
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(xvi) The related Mortgage Note and the related
Mortgage are genuine, and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance
with its terms and with applicable laws except to the extent
that the enforceability thereof may be limited by (a) federal
or state bankruptcy, insolvency, moratorium and other similar
laws relating to creditors' rights generally and (b) the
availability of the remedy of specific performance and
injunctive and other forms of equitable relief and by the
discretion of the court before which any proceeding therefor
may be brought; provided, however, that none of the foregoing
will affect the ultimate realization of the benefits of the
lien of the related Mortgage on the related Mortgaged
Property. All parties to the related Mortgage Note and the
related Mortgage had legal capacity to execute such Mortgage
Note and such Mortgage and such Mortgage Note and Mortgage
have been duly and properly executed by such parties;
(xvii) The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of
the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security,
including, (i) if such Mortgage is designated as a deed of
trust, by trustee's sale and (ii) otherwise by judicial
foreclosure. No homestead or other exemption available to the
related Mortgagor will materially interfere with the right to
sell such Mortgaged Property at a trustee's sale or the right
to foreclose such Mortgage;
(xviii) With respect to any related 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 Purchaser
to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the related Mortgagor;
(xix) The related Mortgaged Property is suitable
for year-round occupancy for its geographic location;
(xx) There exist no deficiencies with respect to
escrow deposits and payments, if such are required by the
related Mortgage or Mortgage Note, for which customary
arrangements for repayment
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thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been
capitalized under the related Mortgage or the related Mortgage
Note;
(xxi) The origination, underwriting and collection
practices used by the Seller with respect to such HELOC have
been in all respects legal, proper, prudent and customary in
the mortgage lending and servicing business with respect to
mortgage loans similar to such HELOC;
(xxii) The related Mortgage Note is not secured by any
collateral, pledged account or other security except for the
lien of the related Mortgage or a third party guaranty;
(xxiii) Such HELOC does not have a shared
appreciation feature, or other contingent interest feature;
(xxiv) Such HELOC contains a "due-on-sale" clause
unless prohibited by applicable law;
(xxv) The improvements upon the related Mortgaged
Property are covered by a valid and existing hazard insurance
policy with a generally acceptable carrier that provides for
fire extended coverage and such other hazards as are customary
in the area where the Mortgaged Property is located
representing coverage not less than the least of (i) the
minimum amount required to compensate for damage or loss on a
replacement cost basis, (ii) the outstanding principal balance
of the related HELOC or (iii) the maximum allowed. All
individual insurance policies and flood policies referred to
in clause (xxvii) below contain a standard mortgagee clause
naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has
received no notice that any premiums due and payable thereon
have not been paid; the related Mortgage obligates the related
Mortgagor thereunder to maintain all such insurance, including
flood insurance, at the Mortgagor's cost and expense, and upon
Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(xxvi) If the related Mortgaged Property is in a
Federal Flood Hazard Zone, a flood insurance policy in a form
meeting the requirements of the current guidelines of the
Flood Insurance Administration is
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in effect with respect to such Mortgaged Property with a
generally acceptable carrier in an amount representing
coverage not less than the least of (A) the original
outstanding principal balance of the HELOC, (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;
(xxvii) To the best of the Seller's knowledge, there is
no proceeding pending or threatened for the total or partial
condemnation of the related Mortgaged Property, nor is such a
proceeding currently occurring, and such property is undamaged
by waste, fire, earthquake or earth movement;
(xxviii) To the best of Seller's knowledge, there is no
default, breach, violation or event of acceleration existing
under the related Mortgage or the related Mortgage Note; and
the Seller has not waived any default, breach, violation or
event of acceleration;
(xxix) The related Mortgaged Property is improved by a
one- to four-family residential dwelling, including
condominium units and dwelling units in PUDs, which, to the
best of the Seller's knowledge, does not include cooperatives
and does not constitute other than real property under state
law;
(xxx) Unless otherwise specified in the related
Purchase Request with respect to Subsequent HELOCs, each HELOC
is being serviced by the Seller;
(xxxi) There is no obligation on the part of the
Seller or any other party under the terms of the related
Mortgage or related Mortgage Note to make payments in addition
to those made by the related Mortgagor;
(xxxii) Any future advances made prior to the Closing
Date or the related Purchase Date, as the case may be, 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 HELOC Schedule;
(xxxiii) To the best of the Seller's knowledge, there
are no defaults in complying with the terms of the Mortgage,
and all taxes, governmental
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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. The Seller has not advanced funds,
or induced, solicited or knowingly received any advance of
funds by a party other than the related Mortgagor, directly or
indirectly, for the payment of any amount required by the
related Mortgage except for (A) payments in the nature of
escrow payments, including, without limitation, taxes and
insurance payments, and (B) interest accruing from the date of
the related Mortgage Note or date of disbursement of the
related Mortgage proceeds, whichever is later, to the day
which precedes by one month the Due Date of the first
installment of principal and interest;
(xxxiv) All amounts received with respect to such
HELOCs to which Seller is not entitled have been transferred
to the Purchaser;
(xxxv) Such HELOC was underwritten in accordance
with the Seller's underwriting guidelines;
(xxxvi) Unless otherwise specified in the related
Purchase Request with respect to Subsequent HELOCs, such HELOC
is not subject to a temporary buydown or similar arrangement.
If the HELOC has an adjustable rate, it is not convertible at
the option of the related Mortgagor to a fixed rate mortgage
loan;
(xxxvii) With respect to such HELOC, no loan junior in
lien priority to such HELOC and secured by the related
Mortgaged Property was originated by the Seller at the time of
origination of such HELOC unless specifically set forth on the
Purchase Request with respect to Subsequent HELOCs and
expressly approved by the Purchaser;
(xxxviii) At origination either (i) the related Mortgaged
Property was not located within a 1 mile radius of any site
with environmental or hazardous waste of which the Seller had
actual knowledge, or (ii) as to any related Mortgaged Property
located within a 1 mile radius of any site as to which the
Seller has actual knowledge of environmental or hazardous
waste, the related HELOC was reviewed in accordance with the
Seller's established environmental review procedures; and
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(xxxix) To the best of the Seller's knowledge, no
error, omission, misrepresentation, negligence, fraud or
similar action occurred on the part of any person in
connection with the origination of any HELOC.
(xl) No Obligor with respect to each HELOC is the
subject of any insolvency or bankruptcy proceeding.
(xli) The related HELOC File contains each of the
documents and instruments specified to be included therein.
(b) Seller represents and warrants to Purchaser that each
HELOC shall have been originated in conformity with and meets, as of the
Purchase Date, the underwriting standards for the Seller's home equity loans
described in the Prospectus Supplement dated August 18, 1997 with respect to the
Class A and Class S Notes.
(c) Each HELOC conforms to the representations and warranties
set forth in Section 2.05 of the Sale and Servicing Agreement.
Section 4.03. Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and warranties, each of
which representations and warranties (i) is material and being relied upon by
Seller and (ii) is true in all respects as of the date of this Agreement:
(i) Purchaser has been duly organized and is validly existing
as a corporation under the laws of the State of Delaware.
(ii) Purchaser has the requisite power and authority and legal
right to execute and deliver, engage in the transactions contemplated
by, and perform and observe the terms and conditions of, this Agreement
to be performed by it.
(iii) This Agreement has been duly authorized and executed by
Purchaser, is valid, binding and enforceable against Purchaser in
accordance with its terms, and the execution, delivery and performance
by Purchaser of this Agreement does not conflict with any material term
or provision of any other agreement to which Purchaser is a party or
any term or provision of the Certificate of Incorporation or the
By-laws of the Purchaser, or any law, rule, equation, order, judgment,
writ, injunction or decree applicable to Purchaser of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Purchaser.
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(iv) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or
court is required under applicable law in connection with the execution
and delivery by Purchaser of this Agreement.
(v) To the best knowledge of Purchaser, there is no action,
proceeding or investigation pending or threatened against Purchaser
before any court, administrative agency or other tribunal (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement,
or (iii) which is likely to materially and adversely affect the
performance by Purchaser of its obligations under, or the validity or
enforceability of, this Agreement.
(vi) Each purchase of Initial HELOCs and Subsequent HELOCs
hereunder shall constitute a representation by Purchaser to Seller that
Purchaser understands, and that Purchaser has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of, its investment in the relevant
HELOCs.
Section 4.04. Remedies for Breach of Representations and
Warranties; Repurchase Obligation. It is understood and agreed that the
representations and warranties set forth in Section 4.01 and 4.02 shall survive
each sale of HELOCs to the Purchaser and shall inure to the benefit of the
Purchaser and subsequent transferees notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any HELOC File. With respect to the
representations and warranties contained in Sections 4.01 and 4.02 which are
made to the best of the Seller's knowledge or to the actual knowledge of the
Seller, if it is discovered by either the Seller or the Purchaser that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related HELOC or the
Purchaser's interest therein, then notwithstanding the Seller's lack of
knowledge with respect to the inaccuracy at the time the representation or
warranty was made, the Seller shall repurchase the related HELOC in accordance
with this Section 4.04 as if the applicable representation or warranty was
breached, subject to the terms and conditions of the Sale and Servicing
Agreement. Upon discovery by either the Seller or the Purchaser of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the value of the HELOCs or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related HELOC in the case of a representation and warranty
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relating to a particular HELOC), the party discovering such breach shall give
prompt written notice to the others.
Within 60 days of the earlier of either discovery by or notice
to the Seller of any breach of a representation or warranty which materially and
adversely affects the value of any HELOC or the Purchaser's interest therein,
the Seller shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured or is not cured or is not
being diligently pursued as evidenced by a notice acceptable to the Purchaser,
as evidenced by the Purchaser's agreement thereto, at the end of such 60-day
period, the Seller shall, at the Purchaser's option, either (a) repurchase such
HELOC at the Repurchase Price, or (b) provide an Eligible Substitute HELOC, if
the Seller has any such loans available for sale at the time subject to the
terms and conditions of the Sale and Servicing Agreement.
At the time of repurchase or substitution, the Purchaser and
the Seller shall arrange for the assignment of such HELOC to the Seller and the
delivery by the Purchaser to the Seller of the related HELOC Files.
In addition to such cure and repurchase obligation, the Seller
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the representations and warranties contained in this Article IV (notwithstanding
any limitation in such representation and warranty as to the Seller's
knowledge). It is understood and agreed that the obligations of the Seller set
forth in this Section 4.04 to cure or repurchase a defective HELOC and to
indemnify the Purchaser as provided in this Section 4.04 constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against the Seller relating to or arising
out of the breach of any representations and warranties made in Sections 4.01 or
4.02 shall accrue as to any HELOC upon (i) discovery of such breach by the
Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by the
Seller to cure such breach or repurchase such HELOC as specified above, and
(iii) demand upon the Seller by the Purchaser for compliance with the relevant
provisions of this Agreement.
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ARTICLE V
Covenants and Warranties of Seller.
So long as this Agreement remains in effect or Seller shall
have any obligations hereunder, Seller hereby covenants and agrees with
Purchaser as follows:
Section 5.01. Affirmative Covenants. (a) Until the later
to occur of (i) the discharge and payment of all of Seller's obligations under
this Agreement and (ii) the Termination Date of this Agreement, Seller shall,
promptly upon preparation, but in no event later than 60 days following the end
of each such party's first three fiscal quarters, deliver to Purchaser its
unaudited company-prepared financial statements as of the end of each such
fiscal quarter, prepared in accordance with GAAP. Seller shall, promptly upon
preparation, but in no event later than 90 days following the end of such
party's fourth fiscal quarter, deliver to Purchaser its audited and certified
financial statements, prepared in accordance with GAAP, as of the end of the
most recently ended fiscal year, which audits and certifications shall each be
prepared by a nationally recognized independent accounting firm or by a
regionally recognized independent accounting firm with the prior written
consent of Purchaser, which consent shall not be unreasonably withheld. In all
cases, financial statements shall include, without limitation, a balance sheet,
a profit and loss statement and a statement of cash flows. Notwithstanding
anything in this Agreement to the contrary, if (x) the audited and certified
financial statements described in the immediately preceding sentence are not
delivered within the above-specified 90 days, (y) Seller is diligently using its
best efforts to deliver such financial statements, and (z) Seller provides
Purchaser with a notice specifying the reason for the delay and a date, within a
reasonable time period (as determined by Purchaser), on which such financial
statements will be delivered, and they are so delivered; then failure to deliver
such financial statements within the above-specified 90 days, as the case may
be, shall not be deemed to be an Event of Termination of this Agreement.
(b) Upon request of Purchaser, Seller shall, to the extent
lawful, promptly upon filing, deliver to Purchaser copies of all material public
filings made by Seller with any governmental or quasi-governmental body.
(c) Seller shall (i) with respect to any HELOCs serviced by
Seller or any of its affiliates or otherwise use its best efforts to cause to be
delivered to Purchaser monthly, the report, if any, prepared by the relevant
trustee or servicer setting forth payment activity, defaults and delinquencies
with respect to each HELOC acquired by Purchaser and (ii) prepare and deliver
reports each month, detailing,
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with respect to all Purchases, such information as the Purchaser may from time
to time reasonably request.
(d) Seller shall do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
except where failure to maintain such authority would not have a material
adverse effect on the ability of Seller to conduct its business or to perform
its obligations under this Agreement.
(e) At all times during this Agreement, Seller shall possess
sufficient net capital and liquid assets (or ability to access the same) to
satisfy its obligations as they become due in the normal course of business.
(f) Seller will notify Purchaser in writing of any of the
following promptly upon learning of the occurrence thereof, describing the same
and, if applicable, any remedial steps being taken with respect thereto;
(i) The occurrence or likelihood of occurrence
of an Event of Termination hereunder;
(ii) The institution of any litigation, arbitration
proceeding or governmental proceeding which, in the opinion of counsel
to Seller, will have a material adverse effect on Seller or the HELOCs;
(iii) The entry of any judgment or decree against
Seller if the aggregate amount of all judgments and decrees then
outstanding against Seller exceeds $10,000,000 after deducting (A) the
amount with respect to which Seller is insured and with respect to
which the insurer has assumed responsibility in writing, and (B) the
amount for which Seller is otherwise indemnified if the terms of such
indemnification are reasonably satisfactory to Purchaser; or
(iv) The occurrence or likelihood of any event which
would allow the obligee under any material loan agreement to which
Seller is bound to declare an event of default or accelerate the
obligations of Seller thereunder.
(g) Seller shall permit the Purchaser or its accountants,
attorneys or other agents access to all of the books and records relating to
HELOCs purchased and retained by Purchaser for inspection and copying during
normal business hours at all places where Seller conducts business.
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Section 5.02. Negative Covenants.
(a) Seller shall not assign or attempt to assign this
Agreement or any rights hereunder, without first obtaining the specific written
consent of Purchaser.
(b) Seller shall not amend its Articles of Incorporation or
By-laws, which amendment shall have or is likely to have an adverse effect upon
Purchaser or its interests under this Agreement, without the prior written
consent of Purchaser.
(c) During the term of this Agreement, Seller shall not engage
in any business other than as a consumer and mortgage finance lender and
servicer, except with the prior written consent of Purchaser.
(d) Seller shall not (i) dissolve or terminate its existence
or (ii) transfer any assets to any affiliate except as otherwise expressly
permitted or contemplated hereby.
(e) Except with the written consent of the Purchaser, the
Seller shall not guarantee, endorse or otherwise in any way become or be
responsible for any obligations of any other person, entity or affiliate,
including, without limitation, whether directly or indirectly by agreement to
purchase the indebtedness of any other person or through the purchase of goods,
supplies or services, or maintenance of working capital or other balance sheet
covenants or conditions, or by way of stock purchase, capital contribution,
advance or loan for the purposes of paying or discharging any indebtedness or
obligation of such other person or otherwise; provided, however, that nothing
contained herein shall prevent Seller from indemnifying its officers, directors
and agents pursuant to its By-laws and its Articles of Incorporation.
(f) Seller will not commit any act in violation of applicable
laws, or regulations promulgated pursuant thereto that relate to the HELOCs or
that materially and adversely affect the operations or financial conditions of
Seller.
ARTICLE VI
Sale of HELOCs from the Purchaser to the Trust
Section 6.01. Sale and Servicing Agreement. It is the intent
of the Seller and the Purchaser that with respect to the HELOCs, the Purchaser
shall concurrently sell all of its right, title and interest to the HELOCs and
all other property conveyed to it hereunder to the Trust pursuant to the Sale
and Servicing Agreement.
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With respect to such sale, the Seller agrees:
(i) to cooperate fully with the Purchaser and the Trust
with respect to all reasonable requests and due diligence procedures
including participating in meetings with rating agencies, credit
enhancers and such other parties as the Purchaser shall designate and
participating in meetings with the Trust and providing information
reasonably requested by the Trust;
(ii) to execute the Sale and Servicing Agreement and
all other necessary documents to effect the transactions contemplated
therein;
(iii) the Seller shall make the representations and
warranties set forth herein regarding the Seller and the HELOCs as of
the date of the transfer to the Trust;
(iv) to deliver to the Purchaser for inclusion in any
prospectus or other offering material such publicly available
information regarding the Seller, its financial condition and the
mortgage loan delinquency, foreclosure and loss experience of its
portfolio as is customarily set forth in a prospectus supplement with
respect to a comparable mortgage pool, the underwriting of mortgage
loans, the servicer, the servicing and collection of mortgage loans,
lending activities and loan sales of the servicer, regulatory matters
and delinquency and loss experience and any additional information
reasonably requested by the Purchaser, and to deliver to the Purchaser
unaudited consolidated financial statements of the Seller, in which
case the Purchaser shall bear the cost of having such statements
audited by certified public accountants if the Purchaser desires such
an audit, or as is otherwise reasonably requested by the Purchaser and
which the Seller is capable of providing without unreasonable effort or
expense, and to indemnify the Purchaser and its affiliates for material
misstatements or omissions contained in such information;
(v) to deliver to the Purchaser and to any person
designated by the Purchaser, at the Purchaser's expense, such
statements and audit letters issued by reputable, certified public
accountants pertaining to information provided by the Seller pursuant
to clause (iv) above as shall be reasonably requested by the Purchaser
(it being acknowledged by Purchaser that the delivery of such
statements and letters is subject to the consent of such accountants);
(vi) to deliver to the Purchaser, and to any Person
designated by the Purchaser, such legal documents and in-house opinions
of counsel as are customarily delivered by originators or servicers, as
the case may
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be, and reasonably determined by the Purchaser to be necessary in
connection with the transactions contemplated by the Sale and Servicing
Agreement, it being understood that the cost of any opinions of outside
special counsel that may be required shall be the responsibility of the
Seller;
(vii) to cooperate fully with the Purchaser and any
prospective Purchaser with respect to the preparation of HELOC
documents and other documents and with respect to servicing
requirements reasonably requested by the rating agencies and credit
enhancers; and
(viii) to negotiate and execute one or more custodial and
servicing agreements among the Purchaser, the Seller and a third party
custodian/trustee which is generally considered to be a prudent
custodian/trustee in the secondary mortgage market designated by the
Purchaser in its sole discretion after consultation with the Seller, in
either case for the purpose of securitizing the HELOCs.
ARTICLE VII
Seller's Servicing Obligations.
Section 7.01. The Seller, as independent contract servicer,
shall service and administer the HELOCs in accordance with the terms and
provisions set forth in Articles III, IV, V, VII and VIII of the Sale and
Servicing Agreement which sections are hereby incorporated in this Agreement in
their entirety (with, however, the changes and adjustments as provided in this
Agreement) as if the same were contained in this Article VII.
To the extent any provision of any definition set forth in the
Sale and Servicing Agreement shall conflict with any provision set forth in this
Agreement, the provision or definition in this Agreement shall govern.
ARTICLE VIII
Fees and other Costs.
Section 8.01. Fees and Expenses. The Purchaser shall pay
any salaries and other compensation due its employees and the legal fees and
expenses of its attorneys and accountants. All other costs and expenses
incurred in connection with the transfer and delivery of the HELOCs pursuant
to this Agreement or the Sale and Servicing Agreement, including, without
limitation, recording fees, fees for title policy endorsements and
continuations, and fees for
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recording intervening assignments of Mortgage, shall be paid by the Seller. To
the extent not paid out of the Trust pursuant to Section 8.3(a)(x) of the
Indenture, the Seller shall pay the on-going fees of any custodian or trustee
under the Sale and Servicing Agreement, the Trust Agreement or the Indenture.
The Seller shall pay (i) the acceptance and file review fees of any custodian or
trustee under this Agreement, the Indenture, the Trust Agreement or the Sale and
Servicing Agreement and (ii) the costs of legal counsel and legal opinions,
accounting comfort letters and fees, printing of disclosure documents, rating
agency fees, credit enhancement provider up-front fees, SEC filing fees and the
costs of any and all related document preparations associated with the Sale and
Servicing Agreement, the Trust Agreement, the Indenture or this Agreement unless
stated otherwise in the Purchase Request with respect to any Subsequent HELOCs.
The Seller also agrees to pay the fees and other amounts for which the Seller or
Servicer is obligated under the Insurance Agreement.
ARTICLE IX
Termination; Additional Remedies.
Section 9.01. Termination of Commitment to Purchase. The
agreement of the Purchaser to purchase HELOCs from the Seller hereunder, and the
agreement of the Seller to sell HELOCs hereunder, shall terminate automatically
on the first day of the Rapid Amortization Period. All other provisions hereof
shall continue in force and effect until the Termination Date.
Section 9.02. Additional Remedies. Upon the occurrence of a
Rapid Amortization Event under the Indenture due to an act or omission of the
Seller (an "Event of Termination"), the Purchaser and its assignees shall have,
in addition to all other rights and remedies under this Agreement or otherwise,
all other rights and remedies provided under the UCC of each applicable
jurisdiction and other applicable laws, which rights shall be cumulative.
Without limiting the foregoing, the occurrence of an Event of Termination shall
not deny to the Purchaser or its assignees any remedy in addition to
termination of its obligations to make purchases hereunder to which the
Purchaser or its assignee may be otherwise appropriately entitled, whether by
statute or applicable law, at law or in equity.
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ARTICLE X
Payment of Purchase Price.
Section 10.01. Purchase Price Payments. On the Closing Date,
and on the Business Day following each other day on which any HELOCs are
purchased from the Seller by the Purchaser pursuant to Article II hereof or
Additional Balances relating to HELOCs are funded by the Seller, on the terms
and subject to the conditions of this Agreement, the Purchaser shall pay to the
Seller the applicable Purchase Price by (i) making or causing to be made a cash
payment to the Seller or its designee in such amount determined by the
Purchaser, and (ii) automatically increasing the principal amount outstanding
under the Purchaser Note by the amount of the excess of the Purchase Price to
be paid to the Seller for such purchased assets over the amount of any cash
payment made on such day to the Seller, subject to a cap on such note at any
time equal to $10 million. Such $10 million cap may be increased upon the
occurrence of and in the amount of any cash capital contributions made by the
Seller to the Purchaser.
Section 10.02. The Purchaser Note.
(a) On the Closing Date, the Purchaser shall deliver to the
Seller a promissory note, substantially in the form of Exhibit B, payable to the
order of the Seller (such promissory note, as the same has been or hereafter may
be amended, supplemented, endorsed or otherwise modified from time to time,
together with any promissory note issued from time to time in substitution
therefor or renewal thereof in accordance with this Agreement, being herein
called the "Purchaser Note"), which Purchaser Note shall, in accordance with its
terms, be subordinated to all interests of the Trust, all claims to the cash
flows from Trust assets and all obligations of the Purchaser, of any nature, now
or hereafter arising under or in connection with the Sale and Servicing
Agreement. The Purchaser Note shall evidence all amounts outstanding thereunder
as of the Closing Date in addition to amounts subsequently incurred thereunder
as provided in this Agreement. Subject to the foregoing, the Purchaser Note
shall be payable in full on the date which is one year and one day after the
Termination Date. The Purchaser Note shall bear interest at the "prime rate" as
determined by the Indenture Trustee from time to time in effect. The Purchaser
may prepay all or part of the outstanding balance of the Purchaser Note and
interest accrued thereon from time to time without any premium or penalty,
unless a Rapid Amortization Event has occurred and is continuing or would result
from such prepayment or payment.
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(b) The Servicer shall hold the Purchaser Note for the benefit
of the Seller, and shall make all appropriate recordkeeping entries with respect
to the Purchaser Note or otherwise to reflect the payments on and adjustments of
the Purchaser Note. The Servicer's books and records shall constitute rebuttable
presumptive evidence of the principal amount of and accrued interest on the
Purchaser Note at any time. The Seller hereby irrevocably authorizes the
Servicer to mark the Purchaser Note "CANCELLED" and to return the Purchaser Note
to the Purchaser upon the full and final payment thereof after the Termination
Date.
(c) The Seller hereby agrees not to transfer, assign, exchange
or otherwise convey or pledge, hypothecate or otherwise grant a security
interest in the Purchaser Note or any interest represented thereby, and any
attempt to transfer, assign, exchange, convey, pledge, hypothecate or grant a
security interest in the Purchaser Note or any interest represented thereby
shall be void and of no effect. Notwithstanding anything to the contrary herein,
the Seller may pledge the Purchaser Note to secure its obligations under the
Master Repurchase Facility between Greenwich Capital Financial Products Inc. and
Headlands Mortgage Company.
ARTICLE XI
Confidentiality.
Purchaser and Seller each acknowledges that the information
heretofore provided to them pursuant to the operation of this Agreement, is
highly confidential, proprietary information of Seller or Purchaser, as the case
may be. Purchaser and Seller each agrees that it will hold such information in
strict confidence and will not disclose any part of such information to any
person or entity, other than to its accountants and lawyers to the extent
necessary for the performance of their duties and as required by law and other
than to such other persons to the extent necessary, as determined by the
Purchaser in its sole discretion, to complete the transactions contemplated
hereunder and in the Sale and Servicing Agreement including the offering and
issuance of the Class A and Class S Notes; provided, however, that copies of
this Agreement may be included as part of any filing made pursuant to the
Securities Act of 1933 and the Securities Exchange Act of 1934 and any
regulations promulgated thereunder. In furtherance of the foregoing, Purchaser
and Seller each covenants that it will adhere to its established procedures for
the maintenance of confidentiality with respect to such information. Purchaser
and Seller each further agrees that it will not distribute such information
within its own organization except to persons with a need to
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know such information in connection with the transactions contemplated by this
Agreement.
ARTICLE XII
Term.
This Agreement shall terminate on the Termination Date.
ARTICLE XIII
Exclusive Benefit of Parties; Assignment.
This Agreement is for the exclusive benefit of the parties
hereto and their respective successors and assigns and shall not be deemed to
give any legal or equitable right to any other person except the Sponsor, the
Trust, the holders of the Class A and Class S Notes and the Credit Enhancer.
This Agreement may not be assigned by any party hereto without the prior written
consent of the other party hereto except to the Trust.
ARTICLE XIV
Amendment; Waivers.
This Agreement may be amended from time to time only by
written agreement of Seller and Purchaser with the prior written consent of the
Credit Enhancer, which consent shall not be unreasonably withheld. Any
forbearance, failure, or delay by a party in exercising any right, power, or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by a party of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of a party
shall continue in full force and effect until specifically waived by it in
writing. No right, power or remedy shall be exclusive, and each such right,
power or remedy shall be cumulative and in addition to any other right, power or
remedy, whether conferred hereby or hereafter available at law or in equity or
by statute or otherwise.
ARTICLE XV
Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same instrument.
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ARTICLE XVI
Effect of Invalidity of Provisions.
In case any one or more of the provisions contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall in no way be affected, prejudiced or disturbed thereby.
ARTICLE XVII
Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its rules
regarding conflict of laws.
ARTICLE XVIII
Notices.
Any notices, consents, directions, demands and other
communications given under this Agreement (unless otherwise specified herein)
shall be in writing and shall be deemed to have been duly given when personally
delivered at or telecopied to the respective addresses or facsimile numbers, as
the case may be, set forth on the signature page hereof for Seller and
Purchaser, or to such other address or facsimile number as either party shall
give notice to the other party pursuant to this Section. Notices, consents,
etc., may also be effected by first class mail, postage prepaid sent to the
foregoing addresses and will be effective upon receipt by the intended
recipient.
ARTICLE XIX
Entire Agreement.
This Agreement, including the Exhibits and Schedules hereto,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements between
them, whether oral or written, of any nature whatsoever with respect to the
subject matter hereof.
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ARTICLE XX
Indemnities.
Without limiting any other rights which Purchaser or Seller
may have hereunder or under applicable law, and in addition to any other
indemnity provided hereunder, Seller hereby agrees to indemnify Purchaser and
its respective officers, directors, agents and employees (each, an "Indemnified
Party") from and against any and all Losses incurred by any of them relating to
or resulting from:
(1) any representation or warranty made by Seller (or any
officers, employees or agents of Seller) under or in connection with
this Agreement, any periodic report required to be furnished thereunder
or any other information or document delivered by Seller pursuant
hereto, which shall have been false or incorrect in any material
respect when made or deemed made;
(2) the failure by Seller to (a) comply with any applicable
law, rule or regulation with respect to any Purchase or (b) perform or
observe any material obligation or covenant hereunder; or
(3) the failure by Seller (if so requested by Purchaser) to
execute and properly file, or any delay in executing and properly
filing, financing statements or other similar instruments or documents
under the Uniform Commercial Code of any applicable jurisdiction or
other applicable laws with respect to the HELOCs.
Promptly after receipt by an Indemnified Party under this
Article XX of notice of the commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Article XX, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability that it may have to any Indemnified Party
otherwise than under this Article XX. In case any such action is brought against
any Indemnified Party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and to
the extent that it may elect by written notice delivered to the Indemnified
Party promptly after receiving the aforesaid notice from such Indemnified Party,
to assume the defense thereof, with counsel satisfactory to such Indemnified
Party; provided, however, that if the defendants in any such action include both
the Indemnified Party and the indemnifying party and the Indemnified Party or
parties shall have reasonably concluded that there may be legal defenses
available to it or them and/or other Indemnified Parties that are different from
or additional to those available to the indemnifying party, the
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Indemnified Party or parties shall have the right to elect separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such Indemnified Party or parties. Upon receipt of notice
from the indemnifying party to such Indemnified Party of its election so to
assume the defense of such action and approval by the Indemnified Party of
counsel, the indemnifying party will not be liable for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by you in the case of Article XX, representing the
Indemnified Parties under this Article XX, who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the Indemnified Party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall only be in respect of the counsel referred to in such
clause (i) or (iii).
ARTICLE XXI
RESPA Obligations.
Seller agrees to discharge on Purchaser's behalf all
obligations, including, without limitation, all disclosure obligations, which
Purchaser may have under the Real Estate Settlement Procedures Act of 1974, as
amended, in connection with Purchaser's purchases of HELOCs hereunder. Purchaser
agrees to provide Seller with such information as is reasonably necessary for
Seller to discharge such obligations and hereby appoints Seller as its agent in
its name for the purposes of, and only for the purposes of, performing such
obligations. Seller hereby agrees to indemnify Purchaser and its respective
officers, directors, agents and employees from any losses suffered by any such
party in connection with Seller's obligations under this Article XXI.
ARTICLE XXII
Survival.
All indemnities and undertakings of Seller and Purchaser
hereunder shall survive the termination of this Agreement.
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ARTICLE XXIII
Right of Set-off.
Upon the occurrence of any event or circumstance which
requires Seller to make a payment hereunder, Purchaser is hereby authorized then
or at any time or times thereafter, without notice to Seller (any such notice
being expressly waived by Seller), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final), at any time held and
other indebtedness at any time owing by Purchaser to or for the credit or the
account of Seller against any and all of the obligations of Seller now or
hereafter existing hereunder, irrespective of whether or not Purchaser shall
have made any demand hereunder. Purchaser agrees promptly to notify Seller after
any such set-off and application made by Purchaser; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of Purchaser under this Article XXIII are in addition to other rights
and remedies which Purchaser may have.
ARTICLE XXIV
Consent to Service.
Each party irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given
pursuant to Article XVIII hereof.
ARTICLE XXV
Submission to Jurisdiction; Waiver of Trial by Jury.
With respect to any claim arising out of this Agreement each
party irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough of
Manhattan, City of New York, and each party irrevocably waives any objection
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating hereto brought in any such court,
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such party; provided that service of process is made as set
forth in Article XXIV hereof, or by any other lawful means. To the extent
permitted by applicable law, Purchaser and Seller each irrevocably waive all
right of trial by jury in any action,
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proceeding or counterclaim arising out of or in connection with this Agreement
or any matter arising hereunder.
ARTICLE XXVI
Construction.
The headings in this Agreement are for convenience only and
are not intended to influence its construction. References to Articles,
Sections, Schedules and Exhibits in this Agreement are to the Articles, Sections
of and Schedules and Exhibits to this Agreement. The Schedules and Exhibits are
hereby incorporated into and form a part of this Agreement. In this Agreement,
the singular includes the plural, the plural the singular, the words "and" and
"or" are used in the conjunctive or disjunctive as the sense and circumstances
may require and the word "including" means "including, but not limited to."
Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word "from"means "from
and including" and the words "to" and "until" each means "to but excluding."
ARTICLE XXVII
Further Agreements.
The Seller and the Purchaser each agree to execute and deliver
to the other such reasonable and appropriate additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
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IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the date first written above.
HEADLANDS MORTGAGE SECURITIES INC.
as Purchaser
700 Larkspur Landing
Circle, Suite 240
Larkspur, California 94939
/s/ Becky Poisson
By: --------------------------
Name: Becky Poisson
Title: Vice President
HEADLANDS MORTGAGE COMPANY,
as Seller
700 Larkspur Landing
Circle, Suite 250
Larkspur, California 94939
/s/ Kristen Decker
By: --------------------------
Name: Kristen Decker
Title: Senior Vice President
Phone: (415) 925-5442
Facsimile: (415) 461-5320
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HELOC Purchase Agreement
EXHIBIT A
[Form of Purchase Request]
Headlands Mortgage Securities Inc.
700 Larkspur Landing Circle
Suite 240
Larkspur, California 94939
Pursuant to Section 2.04 of the HELOC Purchase Agreement dated
as of August 1, 1997 between Headlands Mortgage Company and you, we hereby offer
to sell, transfer and assign to you all of Headlands Mortgage Company's right,
title and interest in and to the Subsequent HELOCs identified in the attached
schedule on the following date (the "Purchase Date"): , including any
Additional Balances thereto.
Please acknowledge your acceptance of such offer by executing
this Purchase Request in the space provided below and returning it to Headlands
Mortgage Company at by facsimile with an original acceptance to follow
by first class mail.
The failure of Headlands Mortgage Securities Inc. to return
this Purchase Request after execution by Headlands Mortgage Securities Inc., to
Headlands Mortgage Company in the manner provided above within three Business
Days prior to the Purchase Date (five business days, if this Purchase Request
was received by you at least two calendar weeks prior to the above-referenced
Purchase Date) shall constitute an acceptance of the offer communicated hereby.
Very truly yours,
Headlands Mortgage Company
By:___________________________
Name:
Title:
Agreed to and acknowledged
this ____ day of __________, ____.
Headlands Mortgage Securities Inc.
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT B
FORM OF NON-NEGOTIABLE HEADLANDS MORTGAGE
SECURITIES INC. PROMISSORY NOTE
August __, 1997
EXCEPT TO THE EXTENT PROVIDED IN THE PURCHASE AGREEMENT REFERRED TO
BELOW, THIS PROMISSORY NOTE AND ANY INTEREST REPRESENTED HEREBY SHALL
NOT BE TRANSFERRED, ASSIGNED, EXCHANGED, CONVEYED, PLEDGED,
HYPOTHECATED OR OTHERWISE THE SUBJECT OF THE GRANT OF A SECURITY
INTEREST AND ANY ATTEMPT TO TRANSFER, ASSIGN, EXCHANGE, CONVEY, PLEDGE,
HYPOTHECATE OR GRANT A SECURITY INTEREST IN THIS PROMISSORY NOTE OR ANY
INTEREST REPRESENTED HEREBY SHALL BE VOID AND OF NO EFFECT.
For VALUE RECEIVED, the undersigned, HEADLANDS MORTGAGE
SECURITIES INC., a Delaware corporation (the "Purchaser"), promises to pay to
HEADLANDS MORTGAGE COMPANY, a California corporation (the "Seller"), on the
terms and subject to the conditions set forth herein and in the Purchase
Agreement referred to below, the aggregate unpaid Purchase Price of all assets
purchased and to be purchased by the Purchaser pursuant to the Purchase
Agreement. Such amount as shown in the records of the Seller will be rebuttable
presumptive evidence of the principal amount owing under this Note.
1. Purchase and Sale Agreement. This Note is the Purchaser Note
described in, and is subject to the terms and conditions set forth in, that
certain HELOC Purchase Agreement dated as of August 1, 1997 (as the same may be
amended, supplemented, restated or otherwise modified in accordance with its
terms, the "Purchase Agreement"), between the Seller and the Purchaser.
Reference is hereby made to the Purchase Agreement for a statement of certain
other rights and obligations of the Purchaser and the Seller.
2. Definitions. Capitalized terms used (but not defined) herein have
the meanings ascribed thereto in the Purchase Agreement. In addition, as used
herein, the following terms have the following meanings:
"Bankruptcy Proceedings" has the meaning set forth
in clause (a) of paragraph 7 hereof.
"Final Maturity Date" means the date that falls one year and
one day after the Termination Date.
"Junior Liabilities" means all obligations of the
Purchaser to the Seller under this Note.
<PAGE>
"Senior Liabilities" means all obligations of the Purchaser to
the Trust and any other obligations of the Purchaser arising under or in
connection with the Sale and Servicing Agreement, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or thereafter
existing, or due or to become due on or before the Final Maturity Date.
"Subordination Provisions" means, collectively, clauses (a)
through (i) of paragraph 7 hereof.
3. Interest. Subject to the Subordination Provisions and paragraph 10
hereof, the Purchaser promises to pay interest on the aggregate unpaid
principal amount of this Note outstanding on each day, at a variable rate
equal to the rate publicly announced by the Indenture Trustee from time to time
as its "prime lending rate."
4. Interest Payment Dates. Subject to the Subordination Provisions,
paragraph 10 hereof and Section 10.02 of the Purchase Agreement, the Purchaser
shall pay accrued interest on this Note on each Distribution Date and on the
Final Maturity Date. The Purchaser also shall pay accrued interest on the
principal amount of each prepayment hereof on the date of each such prepayment.
5. Basis of Computation. Interest accrued hereunder shall be computed
for the actual number of days elapsed on the basis of a 360-day year.
6. Principal Payment Dates. Subject to the Subordination Provisions,
any unpaid principal of this Note shall be paid on the Final Maturity Date (or,
if such date is not a Business Day, the next succeeding Business Day). Subject
to the Subordination Provisions, paragraph 10 hereof and Section 10.02 of the
Purchase Agreement, the principal amount of and accrued interest on this Note
may be prepaid on any Business Day without premium or penalty.
7. Subordination Provisions. The Purchaser covenants and agrees, and
the Seller, by its acceptance of this Note, likewise covenants and agrees, that
the payment of all Junior Liabilities is hereby expressly subordinated in right
of payment to the payment and performance of the Senior Liabilities to the
extent and in the manner set forth in the following clauses of this paragraph 7:
(a) (i) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to the Purchaser,
whether voluntary or
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involuntary, partial or complete, and whether in bankruptcy, insolvency,
receivership or other similar proceedings, or upon an assignment for the benefit
of creditors, or any other marshalling of the assets and liabilities of the
Purchaser or any sale of all or substantially all of the assets of the Purchaser
except pursuant to the Sale and Servicing Agreement (such proceedings being
herein collectively called "Bankruptcy Proceedings"), and (ii) on and after the
occurrence of a Rapid Amortization Event, the Senior Liabilities shall first be
paid and performed in full and in cash before the Seller shall be entitled to
receive and to retain any payment or distribution in respect of the Junior
Liabilities. In order to implement the foregoing: (x) all payments and
distributions of any kind or character in respect of the Junior Liabilities to
which the Seller would be entitled except for this clause (a) shall be made
directly to the Indenture Trustee (for the benefit of the Noteholders); and (y)
the Seller hereby irrevocably agrees that the Indenture Trustee (on behalf of
the Noteholders), in the name of the Seller or otherwise, may demand, sue for,
collect, receive and receipt for any and all such payments or distributions, and
file, prove and vote or consent in any such Bankruptcy Proceedings with respect
to any and all claims of the Seller relating to the Junior Liabilities, in each
case until the Senior Liabilities shall have been paid and performed in full and
in cash.
(b) Following the occurrence of any of the events described in clause
(a)(i) or (ii), in the event that the Seller receives any payment or other
distribution of any kind or character from the Purchaser or from any other
source whatsoever, in respect of the Junior Liabilities, such payment or other
distribution shall be received in trust for the Indenture Trustee and shall be
turned over by the Seller to the Indenture Trustee (for the benefit of the
Noteholders) forthwith. All payments and distributions received by the Indenture
Trustee in respect of this Note, to the extent received in or converted into
cash, may be applied by the Indenture Trustee (for the benefit of the
Noteholders) first to the payment of any and all reasonable expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the Indenture
Trustee or the Noteholders in enforcing these Subordination Provisions, or in
endeavoring to collect or realize upon the Junior Liabilities, and any balance
thereof shall, solely as between the Seller and the Noteholders, be applied by
the Indenture Trustee toward the payment of the Senior Liabilities in a manner
determined by the Indenture Trustee to be in accordance with the Indenture; but
as between the Purchaser and its creditors, no such payments or distributions of
any kind or character shall be
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deemed to be payments or distributions in respect of the Senior Liabilities.
(c) Upon the final payment in full and in cash of all Senior
Liabilities, the Seller shall be subrogated to the rights of the Indenture
Trustee to receive payments or distributions from the Purchaser that are
applicable to the Senior Liabilities until the Junior Liabilities are paid in
full.
(d) These Subordination Provisions are intended solely for the purpose
of defining the relative rights of the Seller, on the one hand, and the
Indenture Trustee (on behalf of Noteholders), on the other hand. Nothing
contained in these Subordination Provisions or elsewhere in this Note (subject
to paragraph 10 hereof) is intended to or shall impair, as between the
Purchaser, its creditors (other than the Noteholders) and the Seller, the
Purchaser's obligation, which is unconditional and absolute, to pay the Junior
Liabilities as and when the same shall become due and payable in accordance with
the terms hereof (subject to paragraph 10 hereof) and of the Purchase Agreement
or to affect the relative rights of the Seller and creditors of the Purchaser
(other than the Noteholders).
(e) The Seller shall not, until the Senior Liabilities have been
finally paid and performed in full and in cash, (i) cancel, waive, forgive,
transfer or assign, or commence legal proceedings to enforce or collect, or
subordinate to any obligation of the Purchaser, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, or now or
thereafter existing, or due or to become due (other than the Senior
Liabilities), the Junior Liabilities or any rights in respect hereof or (ii)
convert the Junior Liabilities into an equity interest in the Purchaser, unless,
in the case of each of clauses (i) and (ii) above, the Seller shall have
received the prior written consent of the Indenture Trustee and the Credit
Enhancer in each case.
(f) The Seller shall not, except without the advance written consent of
the Indenture Trustee and the Credit Enhancer, commence, or join with any other
Person in commencing, any Bankruptcy Proceedings with respect to the Purchaser
until at least one year and one day have passed since the Termination Date.
(g) If, at any time, any of the payment (in whole or in part) made with
respect to any Senior Liabilities is rescinded or must be restored or returned
by the Indenture Trustee or Noteholders (whether in connection with any
Bankruptcy
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Proceedings or otherwise), these Subordination Provisions shall continue to be
effective or shall be reinstated, as the case may be, as though such payment had
not been made.
(h) The Indenture Trustee (on behalf of Noteholders) may, from time to
time, with the consent of the Credit Enhancer without notice to the Seller, and
without waiving any of its rights under these Subordination Provisions, take any
or all of the following actions: (i) retain or obtain an interest in any
property to secure any of the Senior Liabilities; (ii) retain or obtain the
primary or secondary obligations of any other obligor or obligors with respect
to any of the Senior Liabilities; (iii) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Senior Liabilities, or release or compromise any obligation of any nature with
respect to any of the Senior Liabilities; (iv) amend, supplement, amend and
restate, or otherwise modify the Sale and Servicing Agreement or any related
document; and (v) release its security interest in or surrender, release or
permit any substitution or exchange for all or any part of any rights or
property securing any of the Senior Liabilities, or extend or renew for one or
more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such rights or property.
(i) The Seller hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Noteholders, (ii) notice of the
existence, creation, non-payment or non-performance of all or any of the Senior
Liabilities; and (iii) all diligence in enforcement, collection or protection
of, or realization upon, the Senior Liabilities, or any thereof, or any security
therefor.
(j) These Subordination Provisions constitute a continuing offer from
the Purchaser to all Persons who become the holders of, or who continue to hold,
Senior Liabilities; and these Subordination Provisions are made for the benefit
of the Noteholders, and the Indenture Trustee may proceed to enforce such
provisions on behalf of each of such Persons.
8. General. No failure or delay on the part of the Seller in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Note shall in any event be effective unless (a) the same shall be in
writing and
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signed and delivered by the Purchaser and the Seller, and (b) all consents
required for such actions under the Purchase Agreement and the Sale and
Servicing Agreement shall have been received by the appropriate Persons. The
rights and remedies granted hereunder to the Indenture Trustee and the
Noteholders are subject to exercise as provided in the Purchase Agreement and
the Sale and Servicing Agreement.
9. Limitation on Interest. Notwithstanding anything in this Note to the
contrary, the Purchaser shall never be required to pay unearned interest on any
amount outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder at a rate in excess of the maximum
interest rate that may be contracted for, charged or received without violation
of applicable federal or state law.
10. Acknowledgment. The Seller acknowledges and agrees that it has no
rights to payment under this Note, and will not make any claim for payment
hereunder, unless funds are available for payment by the Purchaser in excess of
amounts due and payable by it at the time under the Sale and Servicing
Agreement.
11. No Negotiation. This Note is not negotiable.
12. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
13. Captions. Paragraph captions used in this Note are provided
solely for convenience of reference only and shall not affect the meaning or
interpretation of any provision of this Note.
HEADLANDS MORTGAGE SECURITIES INC.
By:______________________________
Name:____________________________
Title:___________________________
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EXECUTION COPY
INSURANCE AND REIMBURSEMENT AGREEMENT
THIS INSURANCE AND REIMBURSEMENT AGREEMENT (the "Insurance Agreement") is
made as of August 1, 1997 by and among CAPITAL MARKETS ASSURANCE CORPORATION, a
New York stock insurance company ("CapMAC"), HEADLANDS MORTGAGE COMPANY, in its
individual capacity ("Headlands") and as Seller (the "Seller") and Servicer (the
"Servicer"), HEADLANDS MORTGAGE SECURITIES INC., as Sponsor (the "Sponsor"), and
THE FIRST NATIONAL BANK OF CHICAGO, in its capacity as indenture trustee under
the Indenture (as defined below) (The First National Bank of Chicago, as
indenture trustee, and any successor indenture trustee appointed pursuant to the
Indenture being hereinafter referred to as the "Indenture Trustee").
PRELIMINARY STATEMENTS
The Seller is the originator of assets consisting of adjustable rate home
equity revolving credit line loans secured by mortgages and deeds of trust on
certain residential properties (the "HELOCs") and has agreed to sell the HELOCs
and related assets to the Sponsor pursuant to the HELOC Purchase Agreement (as
defined below). The Sponsor will sell such HELOCs to a trust (the "Trust")
pursuant to the Sale and Servicing Agreement dated as of August 1, 1997 (the
"Sale and Servicing Agreement") among the Servicer, the Sponsor, the Trust and
the Indenture Trustee; and
CapMAC is authorized to transact a financial guaranty insurance business in
the State of New York and has agreed to issue to the Indenture Trustee a surety
bond substantially in the form of Exhibit A hereto (the "Surety Bond"); and
The parties hereto, among other things, desire to specify the conditions
precedent to issuance by CapMAC of the Surety Bond, the payment of the premium
and other amounts in respect thereof, the reimbursement obligations of the
Sponsor and the Servicer to CapMAC thereunder, and to provide for certain other
matters related thereto.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, CapMAC, Headlands, the Seller, the Servicer, the Sponsor and
the Indenture Trustee agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions. The terms defined in this Article I
shall have the meanings provided herein for all purposes of this Insurance
Agreement, unless the context clearly requires otherwise, in both singular and
plural form, as appropriate. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Sale and Servicing
Agreement.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended.
"Base Rate" means the fluctuating rate of interest as 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", the Base Rate to change when and as
such published prime rate changes.
"Change of Control" means with respect to Headlands, the merger or
consolidation of Headlands or entrance by Headlands into any other corporate
transaction whereby Headlands is not the successor entity, or whereby control of
Headlands has changed with respect to management, or any corporate transaction
whereby the families of Peter T. Paul and Dennis M. Hart shall collectively fail
to own at least fifty-one percent (51%) of the voting stock of Headlands, unless
CapMAC shall have otherwise consented thereto in writing.
"Charged-Off Balance" means for any date of determination the aggregate
Asset Balances on such date of all HELOCs that constitute Charged-Off Loans on
such date.
"Charged-Off Loan" means a defaulted HELOC that is not a Liquidated HELOC
and as to which (i) collection procedures are ongoing and (ii) the Servicer has
charged off all or a portion of the related Asset Balance.
"Charged-Off Percentage" means for each Distribution Date commencing on the
third Distribution Date, the percentage equivalent of a fraction the numerator
of which is equal to the average of the Charged-Off Balances as of the last day
of each of the three immediately preceding Collection Periods, and the
denominator of which is equal to the average of the Pool Balances as of the last
day of each of the three immediately preceding Collection Periods.
"Delinquent Asset Balance" means for any date of determination the
aggregate Asset Balances on such date of all HELOCs with respect to which
principal or interest are at least 60 days delinquent on such date.
"Delinquency Percentage" means for each Distribution Date commencing on the
third Distribution Date, the percentage equivalent of a fraction the numerator
of which is equal to the average of the Delinquent Asset Balances as of the last
day of each of the three immediately preceding Collection Periods, and the
denominator of which is equal to the average of the Pool Balances as of the last
day of each of the three immediately preceding Collection Periods.
<PAGE>
"Headlands Credit Agreements" means (i) the First Amended and Restated
Warehousing Credit and Security Agreement (Single-Family Mortgage Loans) dated
as of September 1, 1996 between Headlands and Residential Funding Corporation as
Lender; (ii) the Mortgage Loan Warehousing Agreement dated as of October 24,
1994, as amended, by and among Headlands, the Lenders named therein, The First
National Bank of Chicago as Administrative Agent and the Collateral Agent; and
all other credit, loan, financing or other similar agreements entered into by
Headlands or by which Headlands is bound during the term of the Trust.
"HELOC Purchase Agreement" means the HELOC Purchase Agreement dated as of
August 1, 1997 between the Seller and the Sponsor.
"Indemnification Agreement" means the Indemnification Agreement, dated
August 18, 1997 among CapMAC, Headlands, the Sponsor and the Underwriter (as
defined therein).
"Indenture" means the Indenture dated as of August 1, 1997 between the
Trust and the Indenture Trustee.
"Investment Agent" means The First National Bank of Chicago, or any other
Investment Agent appointed by CapMAC pursuant to Section 2.05 hereof to act as
the Investment Agent for the Spread Account.
"Net Excess Spread" means for each Distribution Date commencing on the
third Distribution Date, the percentage equivalent of a fraction the numerator
of which is equal to the product of (A) four (4) multiplied by (B) the sum, with
respect to the three immediately preceding Collection Periods, of (i)
Noteholders' Interest Collections as reported on the Servicing Certificate
pursuant to Section 4.01 of the Sale and Servicing Agreement, for each of the
three immediately preceding Collection Periods, in each case minus (ii) the sum
of (A) the aggregate Loss Amounts during such three Collection Periods, (B) the
Class A Note Interest paid to the Class A Noteholders with respect to such three
Collection Periods, (C) the Class S Note Interest paid to the Class S
Noteholders with respect to such three Collection Periods, (D) the Servicing
Fees paid to the Servicer with respect to such three Collection Periods, (E) the
Premiums at the Premium Fee Rate paid to CapMAC with respect to such three
Collection Periods and (F) the trustee fees paid to the Indenture Trustee and
the Owner Trustee with respect to such three Collection Periods, and the
denominator of which is equal to the average of the Invested Amounts as of the
last day of each of the four immediately preceding Collection Periods (and with
respect to the third Distribution Date, the average of the Invested Amounts as
of the last day of each of the three immediately preceding Collection Periods
and the Original Invested Amount).
"Premium Fee Rate" has the meaning given to such term in the Premium Side
Letter.
"Premium Side Letter" means the letter dated the Closing Date from CapMAC
to Headlands setting forth the payment arrangements for the Premium on the
Surety Bond and certain related expenses.
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"Prospectus" means the prospectus dated July 17, 1997 and prospectus
supplement dated August 18, 1997 relating to the offering of the Class A Notes
and the Class S Notes filed with the Securities and Exchange Commission pursuant
to Rule 424(b)(1) of the Securities Act of 1933, as amended.
"Registration Statement" means the Registration Statement on Form S-3 of
the Sponsor on behalf of the Trust as issuer (Registration No. 33-28031), as
amended, relating to the Class A Notes and the Class S Notes at the time it
became effective under the Securities Act of 1933.
"Repayment Amount" has the meaning given to such term in Section 2.04(a)
hereof.
"Servicing Standards" means, at any time, the quality of the Servicer's
performance with respect to (i) compliance with the terms and conditions of the
Sale and Servicing Agreement, and (ii) adequacy of the Servicer's servicing of
the HELOCs, measured in accordance with industry standards and current and
historical standards of the Servicer in respect of the servicing of all mortgage
loans serviced by the Servicer, regardless of whether any such mortgage loan is
owned by the Servicer.
"Spread Account" means the account established by the Indenture Trustee
pursuant to Section 4.03 of the Sale and Servicing Agreement entitled, "The
First National Bank of Chicago, as Indenture Trustee, in trust for the
registered holders of Revolving Home Equity Loan Asset Backed Notes, Series
1997-1, Class A and Class S Notes and Capital Markets Assurance Corporation."
"Spread Account Maximum" means an amount equal to the sum of (a) 4.00% of
the Original Pool Balance plus (b) the aggregate of the Asset Balances of all
HELOCs with respect to which any payment is, as of the end of the most recent
Collection Period, six (6) or more months past due; provided, however, if, on
any Distribution Date commencing on the third Distribution Date, the Net Excess
Spread is less than 1.5%, then in such event, the Spread Account Maximum shall
equal the sum of (a) 6.0% of the Original Pool Balance plus (b) the aggregate of
the Asset Balances of all HELOCs with respect to which any payment is, as of the
end of the most recent Collection Period, six (6) or more months past due;
provided further, however, that upon the occurrence of a Rapid Amortization
Event, then in such event, the Spread Account Maximum shall equal the Class A
Note Principal Balance, as of the date of such determination. The Spread Account
Maximum may consist of a combination of cash, the Certificateholders'
Subordinated Amount and any Overcollateralization Amount; provided however that,
following the Closing Date the cash portion of the Spread Account Maximum on
deposit in the Spread Account shall not be less than an amount equal to 0.5% of
the Original Pool Balance. The Spread Account Maximum may be amended or modified
at the request of Headlands with the prior written consent of CapMAC and each
Rating Agency.
"Surety Bond" means, the Surety Bond No. SB12015 dated August 21, 1997
issued by CapMAC to the Indenture Trustee for the benefit of the Class A and
Class S Noteholders.
"Trigger Event" has the meaning given to such term in Section 6.01
hereof.
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"Underwriting Agreement" means the Underwriting Agreement dated August 18,
1997 among Headlands, the Sponsor and the Underwriter (as defined therein).
Section 1.02. Generic Terms. All words used herein shall be construed to be
of such gender or number as the circumstances require. The words "herein,"
"hereby," "hereof," "hereto," "hereinbefore" and "hereinafter," and words of
similar import, refer to this Insurance Agreement in its entirety and not to any
particular paragraph, clause or other subdivision, unless otherwise specified.
ARTICLE II
THE SURETY BOND AND REIMBURSEMENT
Section 2.01. Surety Bond. CapMAC agrees, subject to the conditions
hereinafter set forth, on the Closing Date to issue the Surety Bond.
Section 2.02. Conditions Precedent. The obligation of CapMAC to issue the
Surety Bond under this Insurance Agreement is subject to the satisfaction of the
following conditions on the Closing Date:
(a) The following documents shall have been duly authorized, executed and
delivered to the extent such entity is a party thereto by the Seller, the
Servicer, Headlands, the Sponsor and the Indenture Trustee and all other parties
thereto and shall be in full force and effect and in form and substance
satisfactory to CapMAC and an executed counterpart of each thereof shall have
been delivered to CapMAC:
(i) this Insurance Agreement;
(ii) the Sale and Servicing Agreement;
(iii) the HELOC Purchase Agreement;
(iv) the Indenture;
(v) the Trust Agreement;
(vi) the Underwriting Agreement;
(vii) the Indemnification Agreement; and
(viii) all documents relating to the Headlands Mortgage Yield
Maintenance Certificates, Series 1997-1.
(items (i) through (viii) collectively referred to herein as the "Transaction
Documents").
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(b) CapMAC shall have received:
(i) copies, certified by the Secretary or an Assistant Secretary of
Headlands and the Sponsor dated the Closing Date, of such corporation's
charter and by-laws and the resolutions of the Board of Directors of each
such corporation or a duly authorized committee thereof authorizing its
execution and delivery of each of the Transaction Documents to which it is
a party, and of all documents evidencing other corporate action and
governmental approvals, if any, that are necessary for the consummation of
the transactions contemplated in such documents;
(ii) a certificate, dated the Closing Date, of the Secretary or an
Assistant Secretary of Headlands and the Sponsor, certifying the names and
true signatures of its officers authorized to sign such documents;
(iii) a certificate, dated the Closing Date, of the Treasurer or an
Assistant Treasurer of Headlands and the Sponsor, certifying to the effect
of the representation and warranty set forth in Section 3.02(h) hereof;
(iv) a favorable opinion or opinions, dated the Closing Date,
satisfactory in form and substance to CapMAC, from counsel to Headlands and
the Sponsor, acceptable to CapMAC, to the effect that (A) each of the
Transaction Documents to which it is a party has been duly executed and
delivered by such entity and each constitutes the legal, valid and binding
agreement of such entity, and each of the Sale and Servicing Agreement,
this Insurance Agreement, the HELOC Purchase Agreement and the Trust
Agreement, are enforceable in accordance with their respective terms,
subject to bankruptcy, reorganization, insolvency, moratorium fraudulent
conveyance or other laws of general applicability relating to or affecting
creditors' rights generally from time to time in effect and general
principles of equity, (B) the purchase and sale of the Initial HELOCs on
the Closing Date and the rights to receive payments thereunder as
contemplated by the HELOC Purchase Agreement constitutes a "true sale" by
the Seller to the Sponsor, and that, in the event that the Seller were to
become a debtor in a case under the Bankruptcy Code, the Initial HELOCs and
the rights to receive payments thereunder would not constitute property of
the estate of the Seller (under Section 541 of the Bankruptcy Code), and
that therefore, the automatic stay (under Section 362(a) of the
Bankruptcy Code) would not apply with respect to the Initial HELOCs and the
rights to receive payment thereunder, and that in any such proceeding, the
Sponsor would not be substantively consolidated with the estate of the
Seller, (C) the transfer from the Sponsor to the Trust shall have created a
duly perfected first priority security interest in the Initial HELOCs and
all other assets transferred to the Trust pursuant to the Sale and
Servicing Agreement, (D) [reserved], and (E) no registration with or
consent or approval of any State or Federal governmental authority or
regulatory body having jurisdiction over such entity is required in
connection with the execution, delivery or performance of any such
agreement which has not been obtained and with respect to such other
matters, including taxation, as CapMAC may reasonably require;
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(v) evidence reasonably satisfactory to CapMAC that a Uniform
Commercial Code financing statement or statements covering the ownership
interest of the Sponsor created by or pursuant to the HELOC Purchase
Agreement in the Initial HELOCs and other assets transferred to the Sponsor
pursuant to the HELOC Purchase Agreement and the proceeds thereof has been
executed by the Seller in favor of the Sponsor, as purchaser, has been duly
filed, or with the consent of CapMAC properly prepared for filing in such
place or places which, in the opinion of counsel for the Sponsor and
CapMAC, are necessary or desirable to protect said interests;
(vi) evidence reasonably satisfactory to CapMAC that a Uniform
Commercial Code financing statement or statements covering the security
interest of the Trust created by or pursuant to the Sale and Servicing
Agreement in the Initial HELOCs and other assets transferred to the Trust
pursuant to the Sale and Servicing Agreement and the proceeds thereof has
been executed by the Sponsor in favor of the Trust, as secured party, has
been duly filed, or with the consent of CapMAC properly prepared for filing
in such place or places which, in the opinion of counsel for the Sponsor
and CapMAC, are necessary or desirable to protect said interests; and
(vii) evidence, satisfactory to CapMAC and its counsel, of the
release of all prior liens upon the HELOCs pursuant to the Headlands
warehousing facility and all other Headlands Credit Agreements.
(c) No statute, rule, regulation or order shall have been enacted, entered
or deemed applicable by any government or governmental or administrative agency
or court which would make the transactions contemplated by the Transaction
Documents illegal or otherwise prevent the consummation thereof.
(d) On the Closing Date CapMAC shall have received copies of specimens of
the Class A and Class S Notes.
(e) CapMAC shall have received an executed copy of all legal opinions,
certificates, accountant's reports and other documents required to be furnished
by the Seller, the Servicer and the Sponsor pursuant to the Transaction
Documents or pursuant to the requirements of any Rating Agency rating the Class
A and Class S Notes. Such documents shall be in form and substance satisfactory
to CapMAC and each such legal opinion or certificate shall be addressed to
CapMAC or accompanied by appropriate reliance letters to CapMAC except as
otherwise agreed by CapMAC.
(f) Simultaneously with the issuance of the Surety Bond, the Class A Notes
and the Class S Notes shall have been duly executed and authenticated and
delivered to the Underwriter pursuant to the Underwriting Agreement or
otherwise.
(g) On or prior to the Closing Date Headlands shall have paid all fees and
disbursments payable as of the Closing Date pursuant to Section 5.06 hereof.
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Section 2.03. Premium. On each Distribution Date, in consideration of the
issuance by CapMAC of the Surety Bond, the Trust shall pay to CapMAC pursuant to
Section 8.3(a)(v) of the Indenture, and if and to the extent not so paid by
the Trust. Headlands shall pay to CapMAC, and if and to the extent not so paid
the Indenture Trustee shall pay, from the Spread Account pursuant to Section
2.05(d) of this Insurance Agreement, a premium (the "Premium") for each
Interest Period, payable in arrears, in an amount equal to the product of (x)
the Premium Fee Rate divided by twelve and (y) the outstanding Class A Note
Principal Balance, determined as of the day immediately preceding the
Distribution Date in respect of which the installment of the Premium is to be
paid, or in the case of the first Distribution Date, as of the Closing Date.
The premium for each Interest Period shall be calculated on the basis of a
360-day year for the actual number of days elapsed during the Interest Period in
respect of which the premium is being calculated, and, with respect to the first
Distribution Date, for the actual number of days elapsed from and including the
Closing Date to and including the day preceding the first Distribution Date.
Section 2.04. Reimbursment Obligations. (a) CapMAC shall be entitled to
reimbursement for any payment made under the Surety Bond, which reimbursement
shall be paid to CapMAC on the date that any amount is to be paid pursuant to a
Notice for Payment (as defined in the Surety Bond), in an amount equal to the
amount to be so paid and all amounts previously paid that remain unpaid,
together with interest on any and all amounts remaining unpaid (to the extent
permitted by law, if in respect of any unpaid amounts representing interest)
from the date such amounts became due until paid in full (after as well as
before judgment), at a rate of interest equal to the Base Rate from time to time
in effect plus 1.0% (the "Repayment Amount"). The Repayment Amount, shall be
payable to CapMAC pursuant to Section 8.3(a)(vii) of the Indenture and the
provisions of this Insurance Agreement. Except as expressly set forth in this
Insurance Agreement, the Sale and Servicing Agreement and the Indenture, the
obligation to pay to CapMAC the Repayment Amount shall not be recourse to the
Seller, the Sponsor or the Servicer (or any person or organization acting on any
of their behalf), the Indenture Trustee or any Securityholder or any affiliate,
officer or director of any of them. CapMAC shall have full recourse against the
Sponsor and the Servicer, as the case may be, with respect to drawings under the
Surety Bond that arise from any event described in Section 2.04(b) hereof.
(b) Anything in Section 2.04(a) to the contrary notwithstanding, CapMAC
shall be entitled to reimbursement from (i) the Sponsor, for payments made under
the Surety Bond arising as a result of such Sponsor's failure to repurchase
(after giving effect to any substitution of an Eligible Substitute HELOC) any
HELOC required to be repurchased pursuant to Sections 2.03 or 2.05 of the Sale
and Servicing Agreement, together with interest on any and all amounts remaining
unpaid (to the extent permitted by law, if in respect of any unpaid amounts
representing interest) from the date such amounts became due until paid in full
(after as well as before judgment), at a rate of interest equal to the Base Rate
from time to time in effect plus 1%, and (ii) the Servicer, for payments made
under the Surety Bond, arising as a result of the Servicer's failure to deposit
into the Collection Account any amount required to be so deposited pursuant to
the Sale and Servicing Agreement or failure to deposit into the Collection
Account
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all amounts in connection with the repurchase of certain HELOCs in accordance
with Section 3.06 of the Sale and Servicing Agreement, together with interest on
any and all amounts remaining unpaid (to the extent permitted by law, if in
respect of any unpaid amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a rate of
interest equal to the Base Rate from time to time in effect plus 1.0%.
(c) CapMAC shall have no right to set-off payments to be made under the
Surety Bond against payments to be made to it by the Sponsor, the Servicer (or
any person or organization acting on any of their behalf), the Trust, the
Indenture Trustee or any Securityholder or any affiliate, officer or director of
any of them.
(d) Interest payable to CapMAC under this Insurance Agreement shall be
calculated on the basis of a 360-day year for the actual number of days elapsed
and shall be payable on demand.
Section 2.05. The Spread Account. On or prior to the Closing Date,
Headlands shall deposit into the Spread Account an amount equal to 0.50% of the
Original Pool Balance. On each Distribution Date the Indenture Trustee shall
deposit Noteholders' Interest Collections to the Spread Account until the amount
on deposit therein equals 0.50% of the Original Pool Balance in accordance with
Section 8.3(a)(vii) of the Indenture.
(a) All funds on deposit in the Spread Account shall be invested in
Eligible Investments, which are short term instruments, having a rating in the
highest applicable category of each Rating Agency, in each case as shall be
specified by the Investment Agent in writing to the Indenture Trustee which
shall mature not later than the Business Day preceding the next Distribution
Date and shall be held to maturity. Each such instruction shall designate
specific investments and shall certify that the investments specified have the
required short term rating, mature at the time required hereby and are otherwise
permitted hereby. Income earned on funds deposited to the Spread Account, if
any, shall be considered a part of the Spread Account. The Sponsor will report
for Federal, state and local income tax purposes the income, if any, represented
by the Spread Account and may not assign, transfer or otherwise convey its
rights under this Insurance Agreement, the Sale and Servicing Agreement and the
Indenture to receive any amounts from the Spread Account. CapMAC and the
Indenture Trustee on behalf of the Class A and Class S Noteholders, hereby
appoint The First National Bank of Chicago as Investment Agent, which
appointment The First National Bank of Chicago accepts to act as agent on behalf
of CapMAC and the Indenture Trustee on behalf of the Class A and Class S
Noteholders for investing all cash at any time on deposit in the Spread Account.
CapMAC and the Indenture Trustee hereby direct the Investment Agent to invest
all cash at any time on deposit in the Spread Account in accordance with this
Section 2.05(a). In making investments of funds on deposit in the Spread
Account, the Indenture Trustee may conclusively assume that The First National
Bank of Chicago is entitled to direct the investment of such funds pursuant to
this Section 2.05 until such time as the Indenture Trustee is otherwise notified
in writing by CapMAC. The Indenture Trustee shall not be liable for any loss
incurred in connection with any
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investment in the Spread Account, except for losses with respect to investments
in any investment issued or guaranteed by the Indenture Trustee.
(b) CapMAC hereby irrevocably instructs the Indenture Trustee to cause
amounts on deposit in the Spread Account to be paid as provided for in Section
2.05(d) hereof.
(c) [reserved]
(d) Funds deposited to the Spread Account shall be applied, by the
Indenture Trustee, on each Distribution Date, in the following order of
priority: first, to pay to the Class A Noteholders, the amount by which
Noteholders' Interest Collections and amounts transferred from the Deferred
Interest Account on such Distribution Date pursuant to Section 8.8 of the
Indenture are insufficient (after application of funds pursuant to Section
8.3(a)(i) of the Indenture) to pay Class A Note Interest payable pursuant to
Section 8.3(a)(i) of the Indenture; second, to pay to the Class S Noteholders
the amount by which Noteholders' Interest Collections and amounts transferred
from the Deferred Interest Account on such Distribution Date pursuant to
Section 8.8 of the Indenture are insufficient (after application of funds
pursuant to Section 8.3(a)(i) and 8.3(a)(ii) of the Indenture) to pay Class
S Note Interest payable pursuant to Section 8.3(a)(ii) of the Indenture;
third, to pay to the Class A Noteholders, after the distribution of Principal
Collections to Class A Noteholders in accordance with Sections 8.3(b) and
8.7(c)(iii) and all other amounts allocable to principal including amounts
pursuant to Sections 8.3(a)(iii), (iv) and (viii) of the Indenture and after
giving effect to the application of Certificateholders' Available Funds pursuant
to Section 8.3(c) of the Indenture and after the Certificateholders'
Subordinated Amount has been reduced to zero, the amount by which the Class A
Note Principal Balance exceeds the Invested Amount, fourth, to the extent not
paid pursuant to Section 8.3(a)(v) of the Indenture and to the extent not paid
by Headlands pursuant to Section 2.03 hereof, to pay the Premium for the Surety
Bond; fifth, to satisfy the obligations of the Sponsor and of the Servicer to
pay interest to CapMAC under this Insurance Agreement; sixth, to CapMAC to
satisfy the obligations of the Sponsor and the Servicer under this Insurance
Agreement; including, but not limited to, payment of reimbursement to CapMAC for
drawings under the Surety Bond described in Section 2.04(b) of this Insurance
Agreement; and seventh, all remaining amounts in excess of the Spread Account
Maximum, after payment of all amounts pursuant to Section 8.3(a)(xiv) of the
Indenture, if any, to the Certificateholders.
(e) Upon (i) the termination of the Surety Bond and (ii) the payment in
full of the Class A and Class S Notes, then, upon written direction of CapMAC,
the Indenture Trustee shall release all funds deposited in the Spread Account to
the Sponsor; provided however that, if upon such termination and payment in full
of the Class A and Class S Notes, the long term unsecured debt rating of
Headlands is not BBB or better by Standard & Poor's and Baa3 or better by
Moody's, funds deposited in the Spread Account shall be retained until the end
of 124 days following the last to occur of (i) and (ii) above, provided further
however, that if an insolvency event of the type described in Section 6.01 of
the Sale and Servicing Agreement with respect to any of the Trust, the Sponsor,
the Seller or Servicer or the holder of the Certificates, shall have occurred
during such 124 day period, then funds deposited in the Spread Account shall be
retained until the date all applicable statute of limitation periods with
respect to all applicable
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preference actions and periods have expired and during which time no preference
action or similar proceeding at law or in equity is commenced. at which time
CapMAC shall direct the Indenture Trustee in writing to release all amounts in
the Spread Account to the Sponsor. In the event that any preference action
referred to above is commenced during any applicable statute of limitations
period, funds deposited in the Spread Account shall be retained until the date
on which there is a final determination by a court of competent jurisdiction as
to whether any payment or payments made pursuant to the Indenture, the Sale and
Servicing Agreement, the HELOC Purchase Agreement, the Indemnification
Agreement, or this Insurance Agreement is recoverable from either CapMAC, the
Class A Noteholders or the Class S Noteholders. If it is so determined that a
payment is so recoverable, funds deposited in the Spread Account shall be
applied by the Indenture Trustee at the written direction of CapMAC first to pay
any and all such claims with respect to such preference actions as the Class A
Noteholders, the Class S Noteholders and CapMAC may be required to pay and
then to the Sponsor. If it is determined that any such payment is not
recoverable, CapMAC shall direct the Indenture Trustee in writing to release all
amounts on deposit in the Spread Account to the Sponsor upon receipt by CapMAC
of both a final order determining that such payments are not recoverable and an
opinion of nationally recognized bankruptcy counsel to the effect that such
order is final and not subject to appeal. For purposes of compliance with this
paragraph (e), the Indenture Trustee shall be entitled to rely on written
instructions from CapMAC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of Headlands, the Seller and
the Servicer. Each of Headlands, the Seller and the Servicer represents and
warrants to CapMAC, as of the Closing Date that:
(a) It is duly organized, validly existing as a corporation in good
standing under the laws of the State in which it was incorporated, with the full
right, power and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Prospectus and to enter
into and perform its obligations under the Transaction Documents to which it is
a party, and to cause the Notes and the Certificates to be issued; and it is
duly qualified as a foreign corporation in each jurisdiction which requires such
qualification, except where failure to be so qualified would not have a material
adverse effect on its business or financial condition. Each of Headlands, the
Seller and the Servicer is duly authorized under the statutes which regulate the
business of making loans or of financing the sale of goods, and real estate
(whether commonly called "small loan laws", "consumer finance laws", "sales
finance laws" or "mortgage finance laws"), or is permitted under the general
interest statutes and related laws and court decisions, to conduct in the
various jurisdictions in which it does business, its business as currently
conducted.
(b) It has the corporate power, authority and right to make, execute,
deliver and perform the Transaction Documents to which it is a party, and all of
the transactions contemplated hereby and thereby and, as Seller, to convey the
HELOCs, the rights to payment thereunder and the
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Subsequent HELOCs to the Sponsor, and has taken all necessary corporate action
to authorize the execution, delivery and performance of the above stated
Agreements. When executed and delivered, this Insurance Agreement, the Sale and
Servicing Agreement, the Indemnification Agreement, and the HELOC Purchase
Agreement, will constitute its legal, valid and binding agreement, and each of
this Insurance Agreement, the Sale and Servicing Agreement and the HELOC
Purchase Agreement, will be enforceable in accordance with its respective terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws of general applicability relating to or affecting creditors' rights
generally from time to time in effect. The enforceability of its obligations
under such agreements is subject to general principles of equity regardless of
whether such enforceability is considered in a proceeding in equity or at law.
Section 3.02. Representations and Warranties of Headlands, the Seller, the
Servicer and the Sponsor. Each of the Seller, the Servicer and the Sponsor
represents and warrants to CapMAC, as of the Closing Date that:
(a) It is not required to obtain the consent of any other party or any
consent, license, approval or authorization, or registration with, any Federal,
State or local governmental authority, or regulatory body, bureau or agency in
connection with the execution, delivery or performance of the Transaction
Documents to which it is a party, that has not been duly obtained and which is
not and will not be in full force and effect on the Closing Date.
(b) The execution, delivery and performance of the Transaction Documents to
which it is a party, do not violate any provision of any existing law or
regulation applicable to it or any order or decree of any court to which it is
subject; nor do they violate any of its organizational or corporate documents,
including, without limitation, its articles or certificate of incorporation or
its by-laws; nor does it violate any mortgage, indenture, contract or other
agreement to which it is a party or by which it or any significant portion of
its properties is bound.
(c) There is no litigation or administrative proceeding before any court,
tribunal or governmental body presently pending, or, to its knowledge,
threatened, with respect to the Transaction Documents or the transactions
contemplated hereby or thereby, or the issuance of the Notes or the Certificates
and there is no such litigation or proceeding against it or any significant
portion of its properties pending, or to its knowledge, threatened, in each case
which could, in its opinion, be reasonably expected to have a material adverse
effect on the transactions contemplated by the Transaction Documents.
(d) Each of the representations and warranties made by it in the
Transaction Documents are true and correct in all material respects.
(e) Headlands has heretofore furnished CapMAC copies of the audited
financial statements for Headlands for the year ended December 31, 1996 and
unaudited financial statements for Headlands for the two fiscal quarters ending
on June 30, 1997. Such financial statements (including the notes thereto) have
been prepared in conformity with generally accepted accounting principles for
the periods involved and present fairly the financial condition of Headlands as
at the date thereof and the results of the operations and the changes in the
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financial position of Headlands for the periods indicated. Since December 31,
1996, and since June 30, 1997, there has been no material adverse change in the
business, operations or financial condition of Headlands, except as previously
disclosed in writing to CapMAC.
(f) [reserved]
(g) [reserved]
(h) The execution and delivery of the Transaction Documents by the Sponsor
and Headlands, and the consummation of the transactions contemplated by such
agreements (including the transfer of the HELOCs by the Seller to the Sponsor
pursuant to the HELOC Purchase Agreement and by the Sponsor to the Trust
pursuant to the Sale and Servicing Agreement) were not made (i) in contemplation
of the insolvency of the Sponsor or Headlands, (ii) with the intent to hinder,
delay or defraud any creditor of the Sponsor or Headlands, any federal banking
agency or any other person or entity, (iii) after the commission of any act of
insolvency by the Sponsor or Headlands, or (iv) without fair consideration. Each
of Headlands, and the Sponsor is not possessed of assets or capital
unreasonably small in value in relation to its business, and its remaining
assets or capital will not be unreasonably small in value in relation to and
after giving effect to the Seller's transfer to the Sponsor and the Sponsor's
transfer to the Trust of the Initial HELOCs, the rights to payment thereunder
and the Subsequent HELOCs and the consummation of the other transactions
contemplated by the aforementioned agreements. Each of Headlands and the Sponsor
was solvent at the time of, and will not be rendered insolvent by virtue of,
such transfers and transactions. By consummating the transactions contemplated
by the aforementioned agreements, each of Headlands and the Sponsor does not
intend to, or believe that it will, incur debts beyond its ability to pay such
debts as they become due.
Section 3.03 Representations and Warranties of the Sponsor. The Sponsor
hereby represents and warrants to CapMAC as of the Closing Date:
(a) It is duly organized, validly existing as a corporation in good
standing under the laws of the State in which it was incorporated with the full
right, power and authority to own, lease and operate its properties and conduct
its business as described in the Prospectus and to enter into and perform its
obligations under the Transaction Documents to which it is a party, and to
cause the Notes and the Certificates to be issued; and it is duly qualified as a
foreign entity in each jurisdiction which requires such qualification, except
where failure to be so qualified would not have a material adverse effect on its
business or financial condition. The Sponsor is duly authorized under the
statutes which regulate the business of making loans or of financing the sale of
goods, and real estate (whether commonly called "small loan laws", "consumer
finance laws", "sales finance laws" or "mortgage finance laws"), or is permitted
under the general interest statutes and related laws and court decisions, to
conduct in the various jurisdictions in which it does business, its business as
currently conducted.
(b) It has the power, authority and right to make, execute, deliver and
perform the Transaction Documents to which it is a party, and all of the
transactions contemplated hereby and thereby and, as Sponsor, to convey the
HELOCs, the rights to payment thereunder and the
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Subsequent HELOCs to the Trust, and has taken all necessary corporate action to
authorize the execution, delivery and performance of the above stated
Agreements. When executed and delivered, each of the Transaction Documents to
which it is a party will constitute its legal, valid and binding agreement, and
each of this Insurance Agreement, the Sale and Servicing Agreement, the Trust
Agreement and the HELOC Purchase Agreement, will be enforceable in accordance
with its respective terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws of general applicability relating to or
affecting creditors' rights generally from time to time in effect. The
enforceability of is obligations under such agreements is subject to general
principles of equity regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(c) The Sponsor is a special purpose subsidiary of Headlands and Headlands
is the 100% owner of the issued and outstanding ownership interests in the
Sponsor.
(d) The Sponsor was organized for the limited purpose of engaging solely in
the type of transactions described in the Prospectus, other similar transactions
and any activities incidental to and necessary and convenient for the
accomplishment of such purposes.
(e) The Sponsor is the holder of the Certificates.
ARTICLE IV
COVENANTS
Section 4.01 Covenants of the Servicer. The Servicer hereby covenants and
agrees that during the term of this Insurance Agreement:
(a) It shall comply in all material respects with the terms and conditions
of this Insurance Agreement and the Sale and Servicing Agreement and shall
provide CapMAC with written notice immediately upon becoming aware of any
material breach by it of the provisions of either agreement.
(b) It shall comply in all material respects with all applicable laws,
rules, regulations and orders with respect to it, its business and properties,
such compliance to include, without limitation, usury, truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection and privacy laws and payment before delinquency of all taxes,
assessments and governmental charges imposed upon it or upon its property
(except to the extent contested in good faith if properly reserved in accordance
with generally accepted accounting principles, or regulatory accounting
principles, as the case may be, consistently applied), if the effect of such
noncompliance would have a material adverse effect on the Servicer's performance
of its obligations under this Insurance Agreement and the Sale and Servicing
Agreement.
(c) It will furnish to CapMAC a copy of each material certificate, report,
statement, notice or other written communication furnished by or on behalf of
it, to Securityholders or to Indenture Trustee concurrently therewith and
furnish to CapMAC promptly after receipt thereof,
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a copy of each notice, demand or other communication received by it from the
Indenture Trustee, Noteholders representing 25% or more of the aggregate
percentage interest of the outstanding principal balances of the Notes or any
Rating Agency then rating the Notes with respect to any of the Notes, this
Insurance Agreement, the Sale and Servicing Agreement and the Indenture.
(d) It will, on or before each Determination Date, furnish to CapMAC a copy
of the Servicing Certificate, as defined in the Sale and Servicing Agreement,
with respect to the Collection Period relating to such Determination Date.
(e) It will, at all times during the term hereof, upon the reasonable
request of CapMAC and upon reasonable notice, permit CapMAC or its authorized
agent, at reasonable times, at no charge, to inspect and audit the Mortgage
Files and any other documents and records relating to the servicing of the
HELOCs, including computer records relating to the HELOCs and will cause its
personnel to assist in any examination of such records. Such inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably interfere with the business of the Servicer, its normal operations
or its employee or customer relations. Any information obtained by CapMAC
pursuant to the activities contemplated in this Section 4.01(e) shall be held
in confidence by CapMAC unless (i) such information has become available to the
public other than as a result of a disclosure by or through CapMAC or (ii) such
information was available to CapMAC on a nonconfidential basis prior to its
disclosure to CapMAC hereunder, or (iii) CapMAC should be required in connection
with any legal or regulatory proceeding to disclose such information; provided,
that, in any such instance, CapMAC will use its best efforts to notify the
Servicer of its intention to make any such disclosure immediately upon
determination to make any such disclosure. The Mortgage Files and records
relating thereto will be maintained at the addresses and locations as the
Servicer shall have notified CapMAC in writing prior to the Closing Date and as
the Servicer shall otherwise advise CapMAC in writing.
(f) It will furnish to CapMAC the following:
(i) immediately upon the occurrence thereof, notice of any event
constituting an Event of Servicing Termination under the Sale and Servicing
Agreement or a Trigger Event, and as soon as possible, and in any event
within five days after the occurrence of each Event of Servicing
Termination or Trigger Event or each condition, event or act which with the
notice or lapse of time or both would constitute such an Event of Servicing
Termination or Trigger Event, continuing on the date of such statement, a
statement of a Vice President or other authorized officer setting forth
details of such Event of Servicing Termination or Trigger Event or
condition, event or act and the action which the Servicer proposes to take
with respect thereto;
(ii) as soon as available in any year in which an annual report to
shareholders is prepared, a copy of such report for such year, if any such
annual report is prepared;
(iii) [reserved]
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(iv) promptly, notice of (x) each action, suit or proceeding before
any court, tribunal or other governmental authority or other regulatory
body or any arbitrator which may materially adversely affect its condition
or operations, financial or otherwise; and (y) any dispute or the
commencement of any proceeding with respect to any of its obligations under
the Sale and Servicing Agreement, the Indemnification Agreement, or the
HELOC Purchase Agreement; and (z) such other information respecting its
business, properties, condition or operations, financial or otherwise as
CapMAC may from time to time reasonably request in writing;
(v) no later than each Determination Date the Servicing Certificate
together with an Officer's Certificate to the effect that such Servicing
Certificate is true and correct in all material respects, in accordance
with Section 4.01 of the Sale and Servicing Agreement; and
(vi) such other information as CapMAC may reasonably require.
(g) Unless otherwise consented to in writing by CapMAC, Headlands will
remain the majority interest holder in the Sponsor, and 100% of the issued and
outstanding ownership interests in the Sponsor will continue to be owned by
Headlands.
Section 4.02 Covenants of the Sponsor. The Sponsor, hereby covenants and
agrees that during the term of this Insurance Agreement:
(a) It shall comply in all material respects with the terms and conditions
of the Transaction Documents and enforce its rights thereunder for the benefit
of CapMAC and shall provide CapMAC with written notice immediately upon becoming
aware of any material breach by it of the provisions of any such agreement.
(b) It shall comply in all material respects with all applicable laws,
rules, regulations and orders with respect to it, its business and properties
(except to the extent contested in good faith if properly reserved in accordance
with generally accepted accounting principles or regulatory accounting
principles, as the case may be, consistently applied), if the effect of
noncompliance thereof would have a material adverse effect on its performance of
its obligations under the Transaction Documents.
(c) The Sponsor hereby covenants each of the covenants of the Sponsor set
forth at Section 2.06 of the Sale and Servicing Agreement to CapMAC.
(d) It will furnish to CapMAC the following:
(i) as soon as available and in any event within 90 days after the
close of each fiscal quarter, (A) quarterly financial statements for the
Sponsor and for Headlands and its subsidiaries, prepared in accordance with
generally accepted accounting principles for the period involved and
presenting fairly the financial condition of the Sponsor and Headlands and
its subsidiaries, as the case may be, as at the date thereof and the
results of
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the operations and the changes in the financial position of the Sponsor and
of Headlands and its subsidiaries for the period indicated, (provided that
for any period for which the Sponsor is consolidated for accounting
purposes with Headlands, no separate quarterly financial statements for the
Sponsor need be delivered hereunder) or if filed, a report on Form 10-Q
relating to any such entity filed with the Securities and Exchange
Commission containing all such information;
(ii) as soon as available and in any event within 120 days after the
end of each fiscal year, annual audited financial statements prepared in
accordance with generally accepted accounting principles for the period
involved and presenting fairly the financial condition of the Sponsor and
of Headlands and its subsidiaries as at the date thereof and the results of
the operations and the changes in the financial position of the Sponsor and
of Headlands and its subsidiaries for the period indicated (provided that
for any period for which the Sponsor is consolidated for accounting
purposes with Headlands, the Sponsor need not deliver separate annual
audited financial statements hereunder) or if filed. a report on Form 10-K
relating to any such entity filed with the Securities and Exchange
Commission containing all such information;
(iii) as soon as available, and in any event within 30 days after
filing, each report on Form 8-K filed with the Securities and Exchange
Commission that contains any matter that may have a material adverse effect
upon the transactions contemplated hereunder, under the Transaction
Documents or on the HELOCs; provided, however, CapMAC may at any time
request the delivery of any such Form 8-K, which Form 8-K will be delivered
to CapMAC forthwith; and
(iv) such other information as CapMAC may reasonably require.
(e) Unless CapMAC otherwise consents in writing, it will remain a wholly
owned subsidiary of Headlands and 100% of the issued and outstanding ownership
interests in the Sponsor will continue to be owned by Headlands.
(f) It will not engage at any time in any business or business activity
other than such activities expressly set forth or authorized in its corporate
documents, including its Certificate of Incorporation and its By-Laws, delivered
to CapMAC on or prior to the Closing Date;
(g) It will not amend its Certificate of Incorporation without the prior
written consent of CapMAC;
(h) It will not sell, transfer, hypothecate or otherwise dispose of or
encumber the Certificates without the prior written consent of CapMAC (except in
connection with the issuance of Yield Maintenance Certificates contemporaneously
herewith).
(i) [reserved]
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(j) It will not consolidate with or merge into any other entity or convey,
transfer or lease its properties and assets substantially as an entirety to any
entity, or permit any entity to merge into the Sponsor or convey, transfer or
lease its properties and assets substantially as an entirety to the Sponsor
without the prior written consent of CapMAC;
(k) It will not:
(i) Fail to do all things necessary to maintain its corporate
existence separate and apart from Headlands and any other Person,
including, without limitation, holding regular meetings of its board of
directors and its shareholders and maintaining appropriate corporate books
and records (including a current minute book);
(ii) Except as otherwise expressly provided in its Certificate of
Incorporation and its By-laws, suffer any limitation on the authority of
its own officers to conduct its business and affairs in accordance with
their independent business judgment or authorize or suffer any person other
than its own officers to act on its behalf with respect to matters (other
than matters customarily delegated to others under powers of attorney) for
which a corporation's own officers would customarily be responsible;
(iii) Fail to (A) maintain or cause to be maintained by an agent of
the Sponsor under the Sponsor's control physical possession of all its
corporate books and records, (B) maintain capitalization adequate for the
conduct of its business, (C) account for and manage all its liabilities
separately from those of any other Person, including payment by it of all
payroll, administrative expenses and taxes, if any, from its own assets,
(D) segregate and identify separately all of its assets from those of any
other Person, (E) to the extent any such payments are made, pay its
employees, officers and agents for services performed for the Sponsor or
(F) maintain separate offices with a separate telephone number from those
of Headlands; or
(iv) except as may be provided in the Sale and Servicing Agreement,
commingle its funds with those of Headlands or any affiliate thereof or use
its funds for other than the Sponsor's uses.
(1) It shall include in any offering document for the Notes only
information concerning CapMAC that is supplied or consented to in writing by
CapMAC expressly for inclusion therein.
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ARTICLE V
FURTHER AGREEMENTS
Section 5.01 Obligations Absolute. The obligations of the Sponsor and
Headlands, individually and as Seller and Servicer pursuant to this Insurance
Agreement are absolute and unconditional and will be paid or performed strictly
in accordance with the respective terms hereof, irrespective of:
(a) any lack of validity or enforceability of, or any amendment or other
modifications of, or waiver with respect to, the Transaction Documents;
(b) any amendment or waiver of, or consent to departure from, the Surety
Bond or the Transaction Documents;
(c) the existence of any claim, set off, defense or other rights either may
have at any time against the other, the Indenture Trustee, any beneficiary or
any transferee of the Surety Bond (or any persons or entities for whom the
Indenture Trustee, any such beneficiary or any such transferee may be acting),
CapMAC or any other person or entity whether in connection with the Surety Bond,
the Transaction Documents or any unrelated transactions;
(d) any statement or any other document presented under the Surety Bond
(including any Notice for Payment) proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect whatsoever;
(e) the inaccuracy or alleged inaccuracy of any Servicing Certificate or
Notice for Payment upon which any drawing under the Surety Bond is based;
(f) payment by CapMAC under the Surety Bond against presentation of a draft
or certificate which does not comply with the terms of the Surety Bond, provided
that such payment shall not have constituted gross negligence or wilful
misconduct of CapMAC;
(g) the bankruptcy or insolvency of CapMAC, the Trust or any other party;
(h) any default or alleged default of CapMAC under the Surety Bond;
(i) any defense based upon the failure of the Trust to receive all or part
of the proceeds of the sale of the Class A Notes and the Class S Notes or of the
Servicer to receive any or all of the Servicing Fee payable pursuant to the Sale
and Servicing Agreement or other compensation required under the Sale and
Servicing Agreement or otherwise, or any nonapplication or misapplication of the
proceeds of any drawing upon any Surety Bond; or
(j) any other circumstance or happening whatsoever, provided, that, the
same shall not have constituted gross negligence or willful misconduct of
CapMAC.
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Section 5.02 Reinsurance and Assignments. CapMAC shall have the right to
give paricipation's in its rights under this Insurance Agreement and to enter
into contracts of reinsurance with respect to any Surety Bond, provided that
CapMAC agrees that any such disposition will not alter or affect in any way
whatsoever CapMAC's direct obligations hereunder and under the Surety Bond and
provided further that any reinsurer or participant will not have any rights
against the Trust, the Sponsor, the Seller, the Servicer, Headlands, the
Securityholders or the Indenture Trustee and that none of such aforementioned
parties shall have any obligation to have any communication or relationship
whatsoever with any reinsurer or participant in order to enforce the obligations
of CapMAC hereunder and under the Surety Bond.
None of the Sponsor, the Servicer, the Seller or Headlands may assign its
obligations under this Insurance Agreement without the prior written consent of
CapMAC, such consent not to be unreasonably withheld.
Section 5.03 Liability of CapMAC. Each of the Sponsor and Headlands agrees
that neither CapMAC, nor any of its officers, directors or employees shall be
liable or responsible for (except to the extent of its or their own gross
negligence, willfull misconduct or bad faith): (a) the use which may be made of
the Surety Bond by or for any acts or omissions of another Person in connection
therewith or (b) the validity, sufficiency, accuracy or genuineness of any
documents delivered to CapMAC, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged. In furtherance and not in limitation of the
foregoing, CapMAC may accept documents that appear on their face to be in order,
without responsibility for further investigation.
Section 5.04 Successor Servicer. Any successor Servicer, by accepting its
appointment pursuant to the Sale and Servicing Agreement (a) shall agree to be
bound by the terms, covenants and conditions contained herein applicable to the
Servicer and subject to the duties and obligations of the Servicer hereunder,
(b) as of the date of its acceptance, shall be deemed to have made with respect
to itself the representations and warranties made by the Servicer in Sections
3.01 and 3.02 hereof, to the extent applicable. and (c) shall agree to indemnify
and hold harmless CapMAC from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which CapMAC may incur (or which may
be claimed against CapMAC) by reason of the gross negligence or willful
misconduct of the successor Servicer in exercising its powers and carrying out
its obligations as Servicer under the Sale and Servicing Agreement. No such
appointment shall make the successor Servicer responsible with respect to any
liabilities of the outgoing Servicer incurred prior to such appointment or for
any acts, omissions or misrepresentations of such outgoing Servicer.
Section 5.05 Appointment of Paying Agent. CapMAC hereby consents to the
appointment of the Indenture Trustee as the Note Paying Agent.
Section 5.06 Fees and Expenses. (a) Headlands or the Sponsor shall pay, in
accordance with the Premium Side Letter, CapMAC's attorneys' fees plus expenses,
and other reasonable costs and expenses (including without limitation
accountants' fees not to exceed $5,000) incurred by CapMAC in connection with
the negotiation, preparation, execution and delivery of the
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Prospectus, this Insurance Agreement, the Sale and Servicing Agreement, the
Indenture, the Trust Agreement, the Indemnification Agreement and all other
documents delivered with respect thereto, and all Rating Agency fees incurred at
any time by CapMAC in connection with this Insurance Agreement and the
transactions described in the Sale and Servicing Agreement. All such fees, costs
and expenses shall be payable on the Closing Date upon the presentation of an
invoice for any such fees, costs and expenses, provided that if an invoice
therefor is presented to Headlands or the Sponsor subsequent to the Closing Date
the amount of such invoice shall be payable on the date it is presented.
(b) Each of Headlands and the Sponsor agrees to pay all reasonable costs
and expenses (including those of legal counsel) incurred by CapMAC in connection
with any modification, waiver, amendment, revision or similar action with
respect to the Transaction Documents and/or any other document or agreement
executed in connection with the transactions contemplated by this Insurance
Agreement; and/or the enforcement against the Sponsor, the Seller, the Servicer
or Headlands of CapMAC's rights under the Transaction Documents or any other
document or agreement executed in connection with the transactions contemplated
by this Insurance Agreement.
ARTICLE VI
TRIGGER EVENTS; REMEDIES
Section 6.01 Trigger Events. (a) The occurrence of any of the following
events shall constitute a Trigger Event hereunder:
(i) the Seller or the Sponsor, as the case may be, shall fail to pay
when due or deposit when required any amount payable by it under the HELOC
Purchase Agreement, the Sale and Servicing Agreement or this Insurance
Agreement, and such failure shall continue for two (2) Business Days after
notification that such payment or deposit is required to be made, and such
failure results in a draw on the Surety Bond;
(ii) the Servicer shall fail to pay when due or deposit when required
any amount payable by it under the Sale and Servicing Agreement or this
Insurance Agreement, and such failure shall continue for two (2) Business
Days after notification that such payment or deposit is required to be
made, and such failure results in a draw on the Surety Bond;
(iii) a "Rapid Amortization Event" shall occur under the Indenture;
(iv) an "Event of Servicing Termination" occurs under the Sale and
Servicing Agreement;
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(v) CapMAC determines that the performance of the Servicer under the
Sale and Servicing Agreement is not, in the reasonable opinion of CapMAC,
in conformity with Servicing Standards;
(vi) An insolvency event as described in Section 6.01(iii) or (iv) of
the Sale and Servicing Agreement shall occur with respect to Headlands, any
of its affiliates, the Sponsor, or the Trust;
(vii) The Transaction Documents including without limitation the Sale
and Servicing Agreement, the Indenture and this Insurance Agreement shall
cease to be in full force and effect, or the interest of the Indenture
Trustee on behalf of the Noteholders in the HELOCs and all other property
transferred to it pursuant to the Sale and Servicing Agreement shall cease
to be a perfected first priority security interest;
(viii) A Change of Control shall occur with respect to Headlands;
(ix) Headlands shall be in material breach or violation of any
financial covenants, or an event of default has occurred with respect to
any of the Headlands Credit Agreements;
(x) failure of the Servicer, if the Servicer is Headlands, to maintain
a minimum volume in its mortgage servicing portfolio of $2 billion,
calculated by the aggregate outstanding principal balances of all mortgage
loans serviced by the Servicer, calculated in accordance with the
Servicer's credit and collection policy;
(xi) failure by Headlands and its subsidiaries on a consolidated basis
to maintain the following financial covenants, all calculations thereof to
be made in accordance with GAAP. Commencing on September 30, 1997 and as of
the end of each fiscal quarter thereafter:
(i) shareholder's equity equal to not less than $15,000,000; and
(ii) a ratio of total liabilities to shareholder's equity of not
greater than 20 to 1;
(xii) failure by the Servicer, if the Servicer is Headlands, to
implement a third party servicing system mutually acceptable to the
Servicer and CapMAC within 90 days after availability of the system;
(xiii) the Delinquency Percentage (for any Distribution Date
commencing with the third Distribution Date) shall exceed 4 percent;
(xiv) the Charged-Off Percentage (for any Distribution Date commencing
with the third Distribution Date) shall exceed 2 percent.
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(b) Upon the occurrence of any Trigger Event CapMAC may, unless otherwise
waived by CapMAC in writing (so long as no Credit Enhancer Default shall
have occurred and be continuing):
(i) inform the Indenture Trustee of the occurrence of any Trigger
Event and inform the Indenture Trustee of any other information CapMAC may
have with respect to the performance of the Servicer; or
(ii) with respect to a Trigger Event other than as set forth at
Section 6.01 (ii), (iv) and (v), require, so long as there has been no
Credit Enhancer Default, that the Indenture Trustee deliver a notice to the
Servicer declaring that a Rapid Amortization Event has occurred as of the
date of such notice; or
(iii) with respect to any Trigger Event set forth in this Section
6.01, so long as there has been no Credit Enhancer Default, terminate all
of the rights and obligations of the Servicer as servicer under the Sale
and Servicing Agreement in accordance with Section 6.01 of the Sale and
Servicing Agreement; and/or
(iv) take action or cause the Indenture Trustee or a designated
Successor Servicer to take action to intercept payments made by or on
behalf of Obligors, direct that payment of all amounts payable under any
HELOC be made directly to the Indenture Trustee, and require that Headlands
give notice of the Indenture Trustee's interest in the HELOCs to each
Obligor and direct that payments be made directly to the Indenture Trustee.
The remedies set forth in this Section 6.01 shall be in addition to any
other remedies that CapMAC may have in equity or at law.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc. No amendment or waiver of any provision of
this Insurance Agreement, nor consent to any departure therefrom, shall in any
event be effective unless in writing and signed by all of the parties hereto,
with written notice thereof to each Rating Agency; provided that any waiver so
granted shall extend only to the specific event or occurrence so waived and not
to any other similar event or occurrence which occurs subsequent to the date of
such waiver.
Section 7.02 Notices. Except to the extent otherwise expressly provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in
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writing (and if sent by mail, certified or registered, return receipt requested)
or facsimile transmission and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or three
Business Days after being deposited in the mail, postage prepaid, or, in the
case of facsimile transmission, when sent, addressed as follows:
If to the Seller or the Servicer:
---------------------------------
Headlands Mortgage Company
700 Larkspur Landing Circle, Suite 250
Larkspur, CA 94939
Attention: Peter T. Paul, President
Telephone: (415) 461-6790
Facsimile: (415) 461-2128
If to the Sponsor:
------------------
Headlands Mortgage Securities Inc.
700 Larkspur Landing Circle, Suite 240
Larkspur, CA 94939
Attention: Gilbert MacQuarrie, Vice President
Telephone: (415) 461-6790
Facsimile: (415) 461-5320
If to CapMAC:
-------------
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
Telephone: (212) 891-4271
Facsimile: (212) 755-5462
If to the Indenture Trustee:
----------------------------
The First National Bank of Chicago
One North State Street - 9th Floor
Chicago, Illinois 60602-0126
Attention: Corporate Trust
Administration Department
Telephone: (312) 732-4000
Facsimile: (312) 407-1708
Section 7.03 No Waiver, Remedies and Severability.. No failure on the part
of CapMAC to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor
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shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law. The
parties further agree that the holding by any court of competent jurisdiction
that any remedy pursued by CapMAC hereunder is unavailable or unenforceable
shall not affect in any way the ability of CapMAC to pursue any other remedy
available to it. In the event any provision of this Insurance Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, the
parties hereto agree that such holding shall not invalidate or render
unenforceable any other provision hereof.
Section 7.04 Payments. (a) All payments to CapMAC hereunder shall be made
in lawful currency of the United States and in immediately available funds and
shall be made prior to 2:00 p.m. (New York City time) on the date such payment
is due by wire transfer to BK OF NYC/CTR/BBK = IOC 565 INST'L CUSTODY ABA
#021000018 Account: CapMAC #052040 Re: Headlands Series 97-1 or to such other
office or account as CapMAC may direct. Payments received by CapMAC after 2:00
p.m. (New York City time) shall be deemed to have been received on the next
succeeding Business Day, and such extension of time shall be included in
computing interest, commissions or fees, if any, in connection with such
payment.
(b) Whenever any payment under this Insurance Agreement shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such cases be
included in computing interest, commissions or fees, if any, in connection with
such payment.
SECTION 7.05 GOVERNING LAW. THIS INSURANCE AGREEMENT SHALL BE CONSTRUED,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING (WHETHER OR NOT ARISING OUT OF OR RELATING TO THIS INSURANCE
AGREEMENT, THE SURETY BOND OR OTHERWISE) IN WHICH THEY SHALL BE ADVERSE PARTIES.
Section 7.06 Counterparts. This Insurance Agreement may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 7.07 Paragraph Headings, Etc. The headings of paragraphs contained
in this Insurance Agreement are provided for convenience only. They form no
part of this Insurance Agreement and shall not affect its construction or
interpretation.
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Section 7.08 Termination. This Insurance Agreement shall terminate on the
later occur of (i) the date on which the Surety Bond terminates in accordance
with the provisions thereof, and (ii) the release of all funds on deposit in the
Spread Account in accordance with the provisions of Section 2.05(e) hereof.
The reimbursement provisions set forth in Section 2.04 hereof, and the
provisions of Section 5.04, Section 5.06 and similar indemnification and
reimbursement provisions contained in this Insurance Agreement, shall survive
the termination of this Insurance Agreement and the termination of the Surety
Bond. The obligation of CapMAC under Section 4.01(e) to hold information
received by it in confidence shall survive termination of this Insurance
Agreement and the termination of the Surety Bond.
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IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
CAPITAL MARKETS ASSURANCE CORPORATION
By: /s/ Scott Mangan
------------------------------
Name: Scott Mangan
Title: Vice President
HEADLANDS MORTGAGE COMPANY,
in its individual capacity and as
Seller and Servicer
By: /s/ Kristen Decker
------------------------------
Name: Kristen Decker
Title: Sr. Vice President
HEADLANDS MORTGAGE SECURITIES, INC.,
as Sponsor
By: /s/ Becky Poisson
------------------------------
Name: Becky Poisson
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By: /s/ Richard Tarnas
------------------------------
Name: Richard Tarnas
Title: Vice President
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EXHIBIT A
FORM OF SURETY BOND
28
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SURETY BOND
PLEASE SEE TAB 9
<PAGE>
Consent of Independent Certified Public Accountants
The Board of Directors
Capital Markets Assurance Corporation:
We consent to the use of our report included in the Form 8-K of Headlands
Mortgage Securities Inc., and to the reference to our firm under the heading
"Experts" in the Prospectus Supplement for Headlands Home Equity Loan Trust
1997-1.
/s/ KPMG Peat Marwick LLP
New York, New York
August 15, 1997
