SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) December 30, 1997
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1997-5
(Exact name of registrant as specified in its charter)
NEW YORK 333-39505 APPLICATION PENDING
(State or other jurisdiction (Commission (IRS Employer
File Number) ID Number)
277 PARK AVENUE, NEW YORK, NEW YORK 10172
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (212) 207-2800
N/A
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Description of the Certificates and the Mortgage Loans
ContiSecurities Asset Funding Corp. registered issuance of up to
$6,000,000,000 principal amount of Asset Backed Certificates on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1993, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 333-39505) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, ContiMortgage Home Equity Loan Trust 1997-5 (the
"Registrant" or the "Trust") issued $1,660,000,000 in aggregate principal amount
of its Home Equity Pass-Through Certificates, Series 1997-5 (the
"Certificates"), on December 23, 1997. This Current Report on Form 8-K is being
filed to satisfy an undertaking to file copies of certain agreements executed in
connection with the issuance of the Certificates, the forms of which were filed
as Exhibits to the Registration Statement.
Certain certificates were issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") attached hereto as Exhibit
4.2, dated as of December 1, 1997, among ContiSecurities Asset Funding Corp.
(the "Depositor"), ContiMortgage Corporation (the "Company"), as seller and
servicer (the "Servicer") and Manufacturers and Traders Trust Company, in its
capacity as trustee (the "Trustee"). The certificates issued pursuant to the
Pooling and Servicing Agreement consist of the following classes: the Class A-1,
Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class A-9, Class A-10 and Class A-11 IO Certificates (the "Class A Trust
Certificates"), the Class B Certificates (the "Class B Certificates"), the Class
R Certificates (the "Class R Certificates") and the Class R-I Certificates (the
"Class R-I Certificates" and together with the Class A Trust Certificates, the
Class B Certificates and the Class R Certificates, the "Trust Certificates").
The Trust Certificates evidence, in the aggregate, 100% of the undivided
beneficial ownership interests in the Trust. Certain certificates were issued
pursuant to a Grantor Trust Agreement (the "Grantor Trust Agreement") attached
hereto as Exhibit 4.3, dated as of December 1, 1997, among ContiSecurities Asset
Funding Corp. (the "Depositor"), ContiMortgage Corporation (the "Company"), as
servicer (the "Servicer") and Manufacturers and Traders Trust Company, in its
capacity as trustee (the "Grantor Trustee"). The certificates issued pursuant to
the Grantor Trust Agreement consist of the Class A-2 Floating Certificates. Only
the Class A Trust Certificates (except the Class A-2 Fixed Certificates), the
Class A-2 Floating Certificates and Class B Certificates were offered pursuant
to the Registration Statement.
The assets of the Trust initially include a pool of closed-end home equity
loans (the "Home Equity Loans") secured by mortgages or deeds of trust primarily
on one-to-four family residential properties. Interest distributions on the
Class A Trust Certificates are based on the Certificate Principal Balance (or,
in the case of the Class A-11 IO Certificates, the Notional Principal Amount)
thereof and the applicable Pass-Through Rate thereof. The Pass-Through rates for
the Class A Certificates are as follows: Class A-1, 5.90625%; Class A-2 Fixed,
6.37%; Class A-3, 6.40%; Class A-4, 6.58%; Class A-5, 6.63%, Class A-6, 6.87%;
Class A-7 Class A-8, Class A-9, Class A-10 and Class A-11 IO, as defined in the
Pooling and Servicing Agreement and Class A-2 Floating as defined in the Grantor
Trust Agreement. The Pass-Through Rate for the Class B Certificate is 7.62%. The
Class A Trust Certificates have initial aggregate principal amount as follows:
Class A-1, $103,340,000; Class A-2 Fixed, 675,000,000; Class A-3, $63,000,000;
Class A-4, $140,000,000; Class A-5, $40,000,000; Class A-6, $115,540,000; Class
A-7, $130,000,000; Class A-8, $109,520,000; Class A-9, $35,605,000; Class A-10,
$194,875,000; Class B, $53,120,000. The Class A-11 IO Certificate is interest
only and has no Certificate Principal Balance. The Class A-2 Floating
Certificate has an initial aggregate principal balance of $675,000,000.
As of the Cut-Off Date, the Home Equity Loans possessed the
characteristics described in the Prospectus dated December 16, 1997 and the
Prospectus Supplement dated December 16, 1997 filed pursuant to Rule 424(b)(5)
of the Act on December 22, 1997.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1 Underwriting Agreement dated December 5, 1997 among ContiSecurities
Asset Funding Corp., Greenwich Capital Markets Inc., ContiMortgage
Corporation and ContiWest Corporation.
4.2 Pooling and Servicing Agreement dated as of December 1, 1997,
among ContiSecurities Asset Funding Corp., as the depositor,
ContiMortgage Corporation, as a seller and servicer, ContiWest
Corporation, as a seller and Manufacturers and Traders Trust
Company, as the Trustee.
4.3 Grantor Trust Agreement dated as of December 1, 1997, among
ContiSecurities Asset Funding Corp., as the depositor, ContiMortgage
Corporation, as the servicer and Manufacturers and Traders Trust
Company, as the Grantor Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONTISECURITIES ASSET FUNDING CORP.
BY:/s/ James E. Moore
Name: James E. Moore
Title: Authorized Signatory
Dated: December 30, 1997
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
4.1 Underwriting Agreement dated December 5, 1997 among ContiSecurities
Asset Funding Corp., Greenwich Capital Markets Inc., ContiMortgage
Corporation and ContiWest Corporation.
4.2 Pooling and Servicing Agreement dated as of December 1, 1997, among
ContiSecurities Asset Funding Corp., as the depositor, ContiMortgage
Corporation, as a seller and servicer, ContiWest Corporation, as a
seller and Manufacturers and Traders Trust Company, as a Trustee.
4.3 Grantor Trust Agreement dated as of December 1, 1997, among
ContiSecurities Asset Funding Corp., as the depositor, ContiMortgage
Corporation, as the servicer and Manufacturers and Traders Trust
Company, as the Grantor Trustee.
Exhibit 4.1
$1,660,000,000
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1997-5
Home Equity Loan Pass-Through Certificates
Series 1997-5
UNDERWRITING AGREEMENT
December 5, 1997
Greenwich Capital Markets, Inc.
As Representative of the Several Underwriters
600 Steamboat Road
Greenwich, Connecticut 06830
Ladies and Gentlemen:
ContiSecurities Asset Funding Corp. (the "Depositor"), a Delaware
corporation, has authorized the issuance and sale of Home Equity Loan
Pass-Through Certificates, Series 1997-5, Class A-1, Class A-2 Fixed, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and
Class A-11 IO, (the "Class A Trust Certificates"), Class B (the "Subordinate
Certificates") and the Grantor Trust Pass- Through Certificates, Series 1997-A,
Class A-2 Floating (the "Grantor Trust Certificates"). The Class A Trust
Certificates (other than the Class A-2 Fixed Certificates), the Grantor Trust
Certificates and the Subordinate Certificates are collectively the "Offered
Certificates". Also issued are the Class R and R-I Certificates (the "Retained
Certificates"). The Class A-2 Floating Certificates evidence interests in the
ContiMortgage Grantor Trust 1997-A (the "Grantor Trust"). The Class A Trust
Certificates, the Grantor Trust Certificates, the Subordinate Certificates and
the Retained Certificates shall be referred to as the "Certificates".
Only the Offered Certificates are being purchased by the Underwriters named
in Schedule A hereto, and the Underwriters are purchasing, severally, only the
Offered Certificates set forth opposite their names in Schedule A, except that
the amounts purchased by the Underwriters may change in accordance with Section
X of this Agreement. Greenwich Capital Markets, Inc. ("Greenwich") is acting as
representative of the several Underwriters and in such capacity is hereinafter
referred to as the "Representative."
The Class A Trust Certificates, Subordinate Certificates and Retained
Certificates (collectively the "Trust Certificates") will be issued under a
pooling and servicing agreement (the "Pooling and Servicing Agreement"), to be
dated as of December 1, 1997 among the Depositor, ContiMortgage Corporation
("ContiMortgage"), as the servicer and a seller (in such capacity, the
"Servicer" or a "Seller," as the case may be), ContiWest Corporation
("ContiWest"), as a seller (a "Seller," and collectively with ContiMortgage, the
"Sellers") and Manufacturers and Traders Trust Company, as the Trustee (in such
capacity, the "Trustee"). Each of the Depositor, ContiMortgage and ContiWest is
a subsidiary of ContiFinancial Corporation ("ContiFinancial").
The Trust Certificates will evidence fractional undivided interests in the
Trust (the "Trust") formed pursuant to the Pooling and Servicing Agreement. The
assets of the Trust will initially include, among other things, a pool of home
equity loans, one comprised of fixed rate home equity loans and the other
comprised of adjustable rate home equity loans having a Cut-Off Date as of the
close of business on December 15, 1997 (the "Home Equity Loans"), and such
amounts as may be held by the Trustee in any accounts held by the Trustee for
the Trust. The Home Equity Loans are secured primarily by first and second deeds
of trust or mortgages on one- to four-family residential properties. A form of
the Pooling and Servicing Agreement has been filed as an exhibit to the
Registration Statement.
The Grantor Trust Certificates will be issued pursuant to a Grantor Trust
Agreement (the "Grantor Trust Agreement") dated as of December 1, 1997, among
the Depositor, the Servicer and Manufacturers and Traders Trust Company, as the
Grantor Trustee (in such capacity, the "Grantor Trustee").
The Grantor Trust Certificates evidence interests in the ContiMortgage
Grantor Trust 1997-A, which is comprised of: (i) the Class A-2 Fixed
Certificates issued by the Trust, (ii) a swap agreement between the Grantor
Trust and National Westminster Bank, Plc. (the "Swap Agreement") and (iii) the
rights of the Grantor Trustee under the related Certificate Insurance Policy.
The Certificates are more fully described in a Registration Statement which
the Depositor has furnished to the Underwriters. Capitalized terms used but not
defined herein shall have the meanings given to them in the Pooling and
Servicing Agreement and the Grantor Trust Agreement.
The Class A Trust Certificates and the Grantor Trust Certificates will each
be entitled to the benefits of a certificate guaranty insurance policy
(together, the "Policies") issued by MBIA Insurance Corporation ("MBIA"). The
Depositor, ContiMortgage and ContiWest will also enter into an Indemnification
Agreement (the "Indemnification Agreement") dated as of December 1, 1997 among
the Underwriters, the Depositor, ContiMortgage, ContiWest and MBIA, governing
the liability of the several parties with respect to the losses resulting from
material misstatements or omissions contained in the Prospectus Supplement.
Pursuant to Section 3.05 of the Pooling and Servicing Agreement and
concurrently with the execution thereof, ContiMortgage and ContiWest will
transfer to the Depositor all of their right, title and interest in and to the
unpaid principal balances of the Home Equity Loans as of the Cut-Off Date and
interest due after the Cut-Off Date and the collateral securing each Home Equity
Loan.
SECTION I. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The Depositor
represents and warrants to, and agrees with the Underwriters that as of the date
hereof and as of the Closing Date:
A. A Registration Statement on Form S-3 (No. 333-39505), has (i) been
prepared by the Depositor in conformity with the requirements of the Securities
Act of 1933, as amended (the "Securities Act") and the rules and regulations
(the "Rules and Regulations") of the United States Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective and is still effective as of
the date hereof under the Securities Act; Copies of such Registration Statement
have been delivered by the Depositor to the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of which such
Registration Statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Registration Statement" means such registration
statement, at the Effective Time, including any documents incorporated by
reference therein at such time; "Basic Prospectus" means such final prospectus
dated December 16, 1997; and "Prospectus Supplement" means the final prospectus
supplement relating to the Offered Certificates, to be filed with the Commission
pursuant to paragraphs (2), (3) or (5) of Rule 424(b) of the Rules and
Regulations. "Prospectus" means the Basic Prospectus together with the
Prospectus Supplement. Reference made herein to the Prospectus shall be deemed
to refer to and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of the
Prospectus and any reference to any amendment or supplement to the Prospectus
shall be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of the Prospectus, and
incorporated by reference in the Prospectus and any reference to any amendment
to the Registration Statement shall be deemed to include any report of the
Depositor filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order preventing or
suspending the use of the Prospectus or the effectiveness of the Registration
Statement and no proceedings for such purpose are pending or, to the Depositor's
knowledge, threatened by the Commission. There are no contracts or documents of
the Depositor which are required to be filed as exhibits to the Registration
Statement pursuant to the Securities Act or the Rules and Regulations which have
not been so filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statement other than such documents or
materials, if any, as any Underwriter delivers to the Depositor pursuant to
Section VIII (D) hereof for filing on Form 8-K. The conditions for use of Form
S-3, as set forth in the General Instructions thereto, have been satisfied.
To the extent that any Underwriter has provided to the Depositor
Computational Materials that such Underwriter has provided to a prospective
investor, the Depositor will file or cause to be filed with the Commission a
report on Form 8-K containing such Computational Materials, as soon as
reasonably practicable after the date of this Agreement, but in any event, not
later than 11:00 a.m. New York time the date on which the Prospectus is made
available to the Underwriter and is filed with the Commission pursuant to Rule
424 of the Rules and Regulations.
B. The Registration Statement and the Prospectus conform, and any further
amendments or supplements to the Registration Statement or the Prospectus will
conform, when they become effective or are filed with the Commission, as the
case may be, in all respects to the requirements of the Securities Act and the
Rules and Regulations. The Registration Statement, as of the Effective Date
thereof and of any amendment thereto, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus as of
its date, and as amended or supplemented as of the Closing Date does not and
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in writing by any
Underwriters through the Representative expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
is made as to documents deemed to be incorporated by reference in the Prospectus
as the result of filing a Form 8-K at the request of the Underwriters except to
the extent such documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the general
affairs, management, financial condition, or results of operations of the
Depositor, otherwise than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and is in good standing as a foreign corporation in each jurisdiction in which
its ownership or lease of property or the conduct of its business so requires
such standing. The Depositor has all power and authority necessary to own or
hold its properties, to conduct the business in which it is engaged and to enter
into and perform its obligations under this Agreement, the Grantor Trust
Agreement and the Pooling and Servicing Agreement and to cause the Certificates
to be issued.
F. There are no actions, proceedings or investigations pending with respect
to which the Depositor has received service of process before or threatened by
any court, administrative agency or other tribunal to which the Depositor is a
party or of which any of its properties is the subject (a) which if determined
adversely to the Depositor would have a material adverse effect on the business
or financial condition of the Depositor, (b) asserting the invalidity of this
Agreement, the Pooling and Servicing Agreement or the Certificates (c) seeking
to prevent the issuance of the Certificates or the consummation by the Depositor
of any of the transactions contemplated by the Pooling and Servicing Agreement,
the Grantor Trust Agreement or this Agreement, as the case may be, or (d) which
might materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the Pooling and
Servicing Agreement, the Grantor Trust Agreement, this Agreement or the
Certificates.
G. This Agreement has been, and the Grantor Trust Agreement and the Pooling
and Servicing Agreement when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered by the
Depositor, and this Agreement constitutes, and the Pooling and Servicing
Agreement and the Grantor Trust Agreement when executed and delivered as
contemplated herein will constitute, legal, valid and binding instruments
enforceable against the Depositor in accordance with their respective terms,
subject as to enforceability to (x) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, (y) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law), and (z) with respect to rights
of indemnity under this Agreement and limitations of public policy under
applicable securities laws.
H. The execution, delivery and performance of this Agreement, the Grantor
Trust Agreement and the Pooling and Servicing Agreement by the Depositor and the
consummation of the transactions contemplated hereby and thereby, and the
issuance and delivery of the Certificates do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a party, by
which the Depositor is bound or to which any of the properties or assets of the
Depositor or any of its subsidiaries is subject, which breach or violation would
have a material adverse effect on the business, operations or financial
condition of the Depositor or its ability to perform its obligations under this
Agreement, the Grantor Trust Agreement and the Pooling and Servicing Agreement,
nor will such actions result in any violation of the provisions of the articles
of incorporation or by-laws of the Depositor or any statute or any order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Depositor or any of its properties or assets, which breach or violation
would have a material adverse effect on the business, operations or financial
condition of the Depositor or its ability to perform its obligations under this
Agreement, the Grantor Trust Agreement and the Pooling and Servicing Agreement.
I. The Depositor has no reason to know that Arthur Andersen & Co. are not
independent public accountants with respect to the Depositor as required by the
Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee and the Grantor Trustee to
authenticate, issue and deliver the Certificates has been duly authorized by the
Depositor, and, assuming the Trustee and the Grantor Trustee have been duly
authorized to undertake such actions, when executed; authenticated, issued and
delivered by the Trustee and the Grantor Trustee, as applicable, in accordance
with the Pooling and Servicing Agreement and the Grantor Trust Agreement, the
Certificates will be validly issued and outstanding and the holders of the
Certificates will be entitled to the rights and benefits of the Certificates as
provided by the Pooling and Servicing Agreement and the Grantor Trust Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement, the Grantor Trust
Agreement and the Pooling and Servicing Agreement except such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor possesses all material licenses, certificates, authorities
or permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now conducted by it and as
described in the Prospectus, and the Depositor has not received notice of any
proceedings relating to the revocation or modification of any such license,
certificate, authority or permit which if decided adversely to the Depositor
would, singly or in the aggregate, materially and adversely affect the conduct
of its business, operations or financial condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Home Equity Loans
conveyed by the Sellers, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any person any of its right or title in the Home
Equity Loans contemplated in the Pooling and Servicing Agreement or in the
Certificates being issued pursuant thereto; and (iii) have the power and
authority to sell its interest in the Home Equity Loans to the Trustee and to
sell the Offered Certificates to the Underwriters. Upon execution and delivery
of the Pooling and Servicing Agreement by the Trustee, the Trustee will have
acquired beneficial ownership of all of the right, title and interest in and to
the Home Equity Loans, free of any Liens. Upon delivery to the Underwriters of
the Offered Certificates, the Underwriters will have good title to the Offered
Certificates, free of any Liens.
N. Reserved.
O. As of the Statistical Calculation Date, each of the Home Equity Loans
will meet the eligibility criteria described in the Prospectus and will conform
to the descriptions thereof contained in the Prospectus.
P. Reserved.
Q. Neither the Depositor nor the Trust created by the Pooling and Servicing
Agreement nor the Grantor Trust created pursuant to the Grantor Trust Agreement
is an "investment company" within the meaning of such term under the Investment
Company Act of 1940 (the "1940 Act") and the rules and regulations of the
Commission thereunder.
R. At the Closing Date, the Offered Certificates, the Grantor Trust
Agreement and the Pooling and Servicing Agreement will conform in all material
respects to the descriptions thereof contained in the Prospectus.
S. At the Closing Date, the Offered Certificates (other than the
Subordinate Certificates) shall have been rated in the highest rating category
by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. ("Standard & Poor's")
and Fitch IBCA, Inc. ("Fitch") and the Subordinate Certificates shall have been
rated "Baa3" by Moody's, "BBB-" by Standard & Poor's and "BBB" by Fitch.
T. Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Grantor Trust Agreement,
the Pooling and Servicing Agreement and the Certificates have been paid or will
be paid at or prior to the Closing Date.
U. At the Closing Date, each of the representations and warranties of the
Depositor, ContiMortgage and ContiWest set forth herein, in the Grantor Trust
Agreement and in the Pooling and Servicing Agreement will be true and correct in
all material respects.
V. Any certificate signed by an officer of the Depositor and delivered to
the Representative or counsel for the Representative in connection with an
offering of the Offered Certificates shall be deemed, and shall state that it
is, a representation and warranty as to the matters covered thereby to each
person to whom the representations and warranties in this Section I are made.
W. No registration, other than the filing of the Registration Statement is
required with respect to the transfer of the Class A-2 Fixed Certificates from
the Depositor to the Grantor Trust.
SECTION II. PURCHASE AND SALE. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered Certificates and
agrees to sell to the Underwriters, and the Underwriters agree (except as
provided in Sections X and XI hereof) severally and not jointly to purchase from
the Depositor, the aggregate initial principal amounts or percentage interests
of the Offered Certificates of each Class, as set forth opposite their names on
Schedule A, at the purchase price or prices set forth on Schedule A.
SECTION III. DELIVERY AND PAYMENT. Delivery of and payment for the Offered
Certificates shall be made at the offices of Stroock & Stroock & Lavan LLP, 180
Maiden Lane, New York, New York 10038, or at such other place as shall be agreed
upon by the Representative and the Depositor at 10:00 A.M. New York City time on
December 23, 1997 or at such other time or date as shall be agreed upon in
writing by the Representative and the Depositor (such date being referred to as
the "Closing Date"). Payment shall be made to the Depositor by wire transfer of
same day funds payable to the account of the Depositor. Delivery of the Offered
Certificates shall be made to the Representative for the accounts of the
Underwriters against payment of the purchase price thereof. The Certificates
shall be in such authorized denominations and registered in such names as the
Representative may request in writing at least two business days prior to the
Closing Date. The Offered Certificates will be made available for examination by
the Representative no later than 2:00 p.m. New York City time on the first
business day prior to the Closing Date.
SECTION IV. OFFERING BY THE UNDERWRITERS. It is understood that, subject to
the terms and conditions hereof, the Underwriters propose to offer the Offered
Certificates for sale to the public as set forth in the Prospectus.
SECTION V. COVENANTS OF THE DEPOSITOR. The Depositor and, to the extent the
provisions of subsections H and I below relate to ContiMortgage and ContiWest,
respectively, ContiMortgage and ContiWest agree as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day following the
availability of the Prospectus to the Underwriters; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus prior to
the Closing Date except as permitted herein; to advise the Underwriters,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the Closing
Date or any supplement to the Prospectus or any amended Prospectus has been
filed prior to the Closing Date and to furnish the Underwriters with copies
thereof without charge; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Depositor with the Commission
pursuant to Section 13(a), 13(c), 14 or l5(d) of the Exchange Act subsequent to
the date of the Prospectus and, for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Offered Certificates; to
promptly advise the Underwriters of its receipt of notice of the issuance by the
Commission of any stop order or the institution of or, to the knowledge of the
Depositor, the threatening of any proceeding for such purpose, or of: (i) any
order preventing or suspending the use of the Prospectus; (ii) the suspension of
the qualification of the Offered Certificates for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; or (iv) any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional information.
In the event of the issuance of any stop order or of any order preventing or
suspending the use of the Prospectus or suspending any such qualification, the
Depositor promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters without charge such number of
the following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including exhibits); (ii)
the Prospectus and any amended or supplemented Prospectus; and (iii) any
document incorporated by reference in the Prospectus (including exhibits
thereto). If the delivery of a prospectus is required at any time prior to the
expiration of nine months after the Closing Date in connection with the offering
or sale of the Offered Certificates, and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, the Depositor shall notify the
Underwriters and, upon any Underwriters' request, shall file such document and
prepare and furnish without charge to the Underwriters and to any dealer in
securities as many copies as the Underwriters may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which
corrects such statement or omission or effects such compliance, and in case the
Underwriters are required to deliver a Prospectus in connection with sales of
any of the Offered Certificates at any time nine months or more after the
Effective Time, upon the request of the Underwriters but at their expense, the
Depositor shall prepare and deliver to the Underwriters as many copies as the
Underwriters may reasonably request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Securities Act.
D. To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Depositor or the Underwriters, be required by the Securities Act
or requested by the Commission. Neither the Underwriters' consent to nor their
distribution of any amendment or supplement shall constitute a waiver of any of
the conditions set forth in Section VI.
E. To furnish the Underwriters and counsel for the Underwriters, prior to
filing with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Certificates: (i) any
Post-Effective Amendment to the Registration Statement or supplement to the
Prospectus, or document incorporated by reference in the Prospectus, or (ii)
Prospectus pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered Certificates as
soon as practicable, but in any event not later than 90 days after the close of
the period covered thereby, a statement of earnings of the Trust (which need not
be audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Depositor, Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for the
distribution of the Offered Certificates. The Depositor will file or cause the
filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Offered Certificates have been so qualified.
H. Unless the Underwriters shall otherwise have given their written
consent, no collateralized mortgage obligations or other similar securities
representing interests in or secured by other mortgage-related assets originated
or owned by ContiMortgage shall be publicly offered or sold, nor shall
ContiMortgage enter into any contractual arrangements that contemplate the
public offering or sale of such securities, until the earlier to occur of the
termination of the syndicate or the Closing Date.
I. Unless the Underwriters shall otherwise have given their written
consent, no collateralized mortgage obligations or other similar securities
representing interests in or secured by other mortgage-related assets originated
or owned by ContiWest shall be publicly offered or sold, nor shall ContiWest
enter into any contractual arrangements that contemplate the public offering or
sale of such securities, until the earlier to occur of the termination of the
syndicate or the Closing Date.
J. Unless the Underwriters shall otherwise have given their written consent
(such consent not to be unreasonably withheld), no collateralized mortgage
obligations or other similar securities representing interests in or secured by
other mortgage-related assets that are similar to the Home Equity Loans
originated or owned by the Depositor shall be publicly offered or sold until the
earlier to occur of the termination of the syndicate or the Closing Date.
K. So long as the Offered Certificates shall be outstanding the Depositor
shall cause the Trustee, pursuant to the Pooling and Servicing Agreement, to
deliver to the Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance delivered to the Trustee
pursuant to Section 8.16 of the Pooling and Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants furnished to the Trustee
pursuant to Section 8.17 of the Pooling and Servicing Agreement; (iii) the
monthly servicing report furnished to the Trustee pursuant to Section 7.08 of
the Pooling and Servicing Agreement; and (iv) the monthly reports furnished to
the Certificateholders pursuant to Section 7.09 of the Pooling and Servicing
Agreement.
L. To apply the net proceeds from the sale of the Offered Certificates in
the manner set forth in the Prospectus.
SECTION VI. CONDITIONS TO THE UNDERWRITERS' OBLIGATION. The obligations of
the Underwriters hereunder to purchase the Offered Certificates pursuant to the
Agreement are subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Depositor herein contained;
(ii) the performance by the Depositor of all of its obligations hereunder; and
(iii) the following conditions as of the Closing Date:
A. The Underwriters shall have received confirmation of the effectiveness
of the Registration Statement. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission. Any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus shall have been
complied with.
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Dewey Ballantine
LLP, counsel for the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Grantor Trust Agreement,
the Pooling and Servicing Agreement, the Certificates, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be satisfactory in all
respects to counsel for the Underwriters, and the Depositor shall have furnished
to such counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.
D. Stroock & Stroock & Lavan LLP shall have furnished to the Underwriters
their written opinion, as counsel to the Depositor, addressed to the
Underwriters and dated the Closing Date, in form and substance satisfactory to
the Underwriters, to the effect that:
(i) The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act, as set
forth in the General Instructions to Form S-3, have been satisfied
with respect to the Registration Statement and the Prospectus.
(ii) The Registration Statement and any amendments thereto
have become effective under the Securities Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn and no
proceedings for that purpose have been instituted or threatened and
not terminated; and the Registration Statement, the Prospectus and
each amendment or supplement thereto, as of their respective effective
or issue dates (other than the financial and statistical information
contained therein, as to which such counsel need express no opinion),
complied as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
thereunder.
(iii) To the best of such counsel's knowledge, there are no
material contracts, indentures or other documents of a character
required to be described or referred to in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed
or incorporated by reference as exhibits thereto.
(iv) The statements set forth in the Basic Prospectus under
the captions "Summary of Prospectus," "Description of The
Certificates," "The Trusts" and "The Pooling and Servicing Agreement"
and in the Prospectus Supplement under the captions "Description of
The Offered Certificates" and "The Pooling and Servicing Agreement,"
to the extent such statements purport to summarize certain provisions
of the Certificates or of the Pooling and Servicing Agreement, are
fair and accurate in all material respects.
(v) The statements set forth in the Basic Prospectus and the
Prospectus Supplement under the captions "ERISA Considerations,"
"Certain Legal Aspects of the Mortgage Assets" and "Certain Federal
Income Tax Considerations" to the extent that they constitute matters
of federal law, provide a fair and accurate summary of such law or
conclusions.
(vi) The Pooling and Servicing Agreement conforms in all
material respects to the description thereof contained in the
Prospectus and is not required to be qualified under the Trust
Indenture Act of 1939, as amended, and the Trust is not required to be
registered under the Investment Company Act of 1940, as amended.
(vii) Neither the Depositor nor the Trust nor the Grantor
Trust is an "investment company" or under the "control" of an
"investment company" as such terms are defined in the 1940 Act.
(viii) Assuming that (a) the Trustee causes certain assets
of the Trust Estate, as the Trustee has covenanted to do in the
Pooling and Servicing Agreement, to be treated as a "real estate
mortgage investment conduit" ("REMIC"), as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"), and (b) the
parties to the Pooling and Servicing Agreement comply with the terms
thereof, REMIC I and REMIC II will each be treated as a REMIC, each
Class of the Class A Trust Certificates and the Subordinate
Certificates will be treated as "regular interests" in REMIC II, the
Class R Certificates will be treated as the sole "residual interest"
in REMIC II and the Class R-I Certificates will be treated as the sole
"residual interest" in REMIC I. The Trust is not subject to tax upon
its income or assets by any taxing authority of the State of New York.
(ix) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would adversely
affect the status of REMIC I or REMIC II as a REMIC.
(x) As a consequence of the qualifications of REMIC I and
REMIC II as REMICs, the Class A Trust Certificates and the Subordinate
Certificates will be treated as "regular . . . interest(s) in a REMIC"
under Section 7701(a)(19)(C) of the Code and "real estate assets"
under Section 856(c) of the Code in the same proportion that the
assets in the Trust consist of qualifying assets under such Sections.
In addition, as a consequence of the qualification of REMIC I and the
REMIC II as REMICs, interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real
property" under Section 856(c) of the Code to the extent that such
Offered Certificates are treated as "real estate assets" under Section
856(c) of the Code.
(xi) No election will be made to qualify the Grantor Trust
as a REMIC for federal income tax purposes. For federal income tax
purposes, the Grantor Trust will be classified as a grantor trust
under Subpart E, part I of Subchapter J of the Code, and not as an
association taxable as a corporation. The Grantor Trust Certificates
represent an undivided ownership interest in the Grantor Trust.
(xii) The Class A-10 Certificates and the Grantor Trust
Certificates do not involve any "separate security" not registered
under the Registration Statement.
(xiii) No registration, other than the filing of the
Registration Statement is required with respect to the transfer of the
Class A-2 Fixed Certificates from the Depositor to the Grantor Trust.
(xiv) The Certificates have been duly executed and delivered
by the Depositor to the Trustee for authentication.
Such counsel shall also have furnished to the Underwriters a written statement,
addressed to the Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters to the effect that nothing has come to the
attention of such counsel which lead them to believe that: (a) the Registration
Statement, at the time such Registration Statement became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained in the
Registration Statement); (b) the Prospectus, as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date (other than any document filed at the request of an Underwriter to
the extent such document relates to Computational Materials) contained, as of
the time it became effective or was filed with the Commission, as the case may
be, an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
E. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Stroock & Stroock & Lavan LLP, special counsel to the
Depositor, addressed to the Depositor and satisfactory to Moody's, Standard &
Poor's, Fitch and the Underwriters, with respect to certain matters relating to
the transfer of the Home Equity Loans to the Depositor and from the Depositor to
the Trust, and such counsel shall have consented to reliance on such opinion by
Moody's, Standard & Poor's, Fitch and the Underwriters as though such opinion
had been addressed to each such party.
F. Stroock & Stroock & Lavan LLP, counsel for ContiMortgage in its capacity
as both a Seller and the Servicer and ContiWest in its capacity as a Seller,
shall have furnished to the Underwriters their written opinion, as counsel to
ContiMortgage and ContiWest, addressed to the Underwriters and the Depositor and
dated the Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) ContiMortgage is duly organized, validly existing in
good standing as a corporation under the laws of the State of
Delaware.
(ii) ContiMortgage has full corporate power and authority to
serve in the capacity of a seller and the servicer of the Home Equity
Loans as contemplated in the Pooling and Servicing Agreement and to
transfer the Home Equity Loans to the Depositor as contemplated in the
Pooling and Servicing Agreement.
(iii) The Pooling and Servicing Agreement, Grantor Trust
Agreement and this Agreement have been duly authorized, executed and
delivered by ContiMortgage, and, assuming the due authorization,
execution and delivery of such agreements by the other parties
thereto, constitute the legal, valid and binding agreements of
ContiMortgage, enforceable against ContiMortgage in accordance with
their respective terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion, with respect to
such remedies, of the court before which any proceedings with respect
thereto may be brought.
(iv) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body having jurisdiction over ContiMortgage is required for
the consummation by ContiMortgage of the transactions contemplated by
the Pooling and Servicing Agreement except such consents, approvals,
authorizations, registrations and qualifications as have been
obtained.
(v) Neither the sale and transfer of the Home Equity Loans
by ContiMortgage to the Depositor, nor the execution, delivery or
performance by ContiMortgage of the Grantor Trust Agreement and the
Pooling and Servicing Agreement and the transactions contemplated
thereby (A) conflict with or result in a breach of, or constitute a
default under, (i) any term or provision of the certificate of
incorporation or by-laws of ContiMortgage; (ii) any term or provision
of any material agreement, deed of trust, mortgage loan agreement,
contract, instrument or indenture, or other agreement to which
ContiMortgage is a party or is bound or to which any of the property
or assets of ContiMortgage or any of its subsidiaries is subject;
(iii) to the best of such firm's knowledge without independent
investigation any order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over
ContiMortgage; or (iv) any law, rule or regulation, applicable to
ContiMortgage; or (B) to the best of such firm's knowledge without
independent investigation, results in the creation or imposition of
any lien, charge or encumbrance upon the Trust Estate or upon the
Certificates.
(vi) The execution of the Pooling and Servicing Agreement is
sufficient to convey all of ContiMortgage's, ContiWest's and the
Depositor's right, title and interest in the Home Equity Loans to the
Trust (except as otherwise specifically set forth in the Pooling and
Servicing Agreement) and following the consummation of the transaction
contemplated by Section 3.05 of the Pooling and Servicing Agreement,
the transfers of the Home Equity Loans by ContiMortgage and ContiWest
to the Depositor and by the Depositor to the Trust are sufficient to
vest in the Trust all of ContiMortgage's, ContiWest's and the
Depositor's right, title and interest in the Home Equity Loans (except
as otherwise specifically set forth in the Pooling and Servicing
Agreement).
(vii) There are, to the best of such counsel's knowledge
without independent investigation, no actions, proceedings or
investigations pending with respect to which ContiMortgage has
received service of process or threatened against ContiMortgage before
any court, administrative agency or other tribunal (a) asserting the
invalidity of the Grantor Trust Agreement, the Pooling and Servicing
Agreement, the Underwriting Agreement or the Certificates, (b) seeking
to prevent the consummation of any of the transactions contemplated by
the Pooling and Servicing Agreement or (c) which would materially and
adversely affect the performance by ContiMortgage of its obligations
under, or the validity or enforceability of, the Grantor Trust
Agreement, the Pooling and Servicing Agreement or the Underwriting
Agreement.
G. Michael R. Mayberry, Esq., Counsel for ContiWest, in its capacity as a
Seller, shall have furnished to the Underwriters his written opinion, addressed
to the Underwriters and dated as of the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) ContiWest is duly organized, validly existing in good
standing as a corporation under the laws of the State of Nevada.
(ii) ContiWest has full corporate power and authority to
serve in the capacity of a seller of the Home Equity Loans as
contemplated in the Pooling and Servicing Agreement and to transfer
the Home Equity Loans to the Depositor as contemplated in the Pooling
and Servicing Agreement.
(iii) The Pooling and Servicing Agreement and this Agreement
have been duly authorized, executed and delivered by ContiWest, and,
assuming the due authorization, execution and delivery of such
agreement by the other parties thereto, constitute the legal, valid
and binding agreements of ContiWest, enforceable against ContiWest in
accordance with its terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion, with respect to
such remedies, of the court before which any proceedings with respect
thereto may be brought.
(iv) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body having jurisdiction over ContiWest is required for the
consummation by ContiWest of the transactions contemplated by the
Pooling and Servicing Agreement except such consents, approvals,
authorizations, registrations and qualifications as have been
obtained.
(v) Neither the sale and transfer of the Home Equity Loans
by ContiWest to the Depositor, nor the execution, delivery or
performance by ContiWest of the Pooling and Servicing Agreement and
the transactions contemplated thereby (A) conflict with or result in a
breach of, or constitute a default under, (i) any term or provision of
the Articles of incorporation or by-laws of ContiWest; (ii) any term
or provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement to
which ContiWest is a party or is bound or to which any of the property
or assets of ContiWest or any of its subsidiaries is subject; (iii) to
the best of such counsel's knowledge without independent investigation
any order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over ContiWest; or (iv) any
law, rule or regulation, applicable to ContiWest; or (B) to the best
of such counsel's knowledge without independent investigation, results
in the creation or imposition of any lien, charge or encumbrance upon
the Trust Estate or upon the Certificates.
(vi) There are, to the best of such counsel's knowledge
without independent investigation, no actions, proceedings or
investigations pending with respect to which ContiWest has received
service of process or threatened against ContiWest before any court,
administrative agency or other tribunal (a) asserting the invalidity
of the Pooling and Servicing Agreement, the Underwriting Agreement or
the Certificates, (b) seeking to prevent the consummation of any of
the transactions contemplated by the Pooling and Servicing Agreement
or (c) which would materially and adversely affect the performance by
ContiWest of its obligations under, or the validity or enforceability
of, the Pooling and Servicing Agreement or the Underwriting Agreement.
H. Alan L. Langus, Esq., Counsel for the Depositor, shall have furnished to
the Underwriters his written opinion, addressed to the Underwriters and dated
the Closing Date, in form and substance satisfactory to the Underwriters, to the
effect that:
(i) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
conduct of its business so requires such standing except where the
failure to be in good standing would not result in a material adverse
change in the condition of the Depositor, whether or not arising in
the ordinary course of business. The Depositor has all power and
authority necessary to own or hold its properties and to conduct the
business in which it is engaged and to enter into and perform its
obligations under this Agreement and the Pooling and Servicing
Agreement and to cause the Certificates to be issued.
(ii) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor is a
party or by which it or its properties may be bound, which default
might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Depositor or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor.
(iii) This Agreement, the Grantor Trust Agreement and the
Pooling and Servicing Agreement have been duly authorized, executed
and delivered by the Depositor and, assuming the due authorization,
execution and delivery of such agreements by the other parties
thereto, such agreements constitute valid and binding obligations,
enforceable against the Depositor in accordance with their respective
terms, subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, (y) general principles
of equity (regardless of whether enforcement is sought in a proceeding
in equity or at law) and (z) with respect to rights of indemnity under
this Agreement, limitations of public policy under applicable
securities laws.
(iv) The execution, delivery and performance of this
Agreement, the Grantor Trust Agreement and the Pooling and Servicing
Agreement by the Depositor, the consummation of the transactions
contemplated hereby and thereby, and the issuance and delivery of the
Certificates do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Depositor is a party or
by which the Depositor is bound or to which any of the property or
assets of the Depositor or any of its subsidiaries is subject, which
breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor or its
ability to perform its obligations under this Agreement, the Grantor
Trust Agreement and the Pooling and Servicing Agreement nor will such
actions result in a violation of the provisions of the articles of
incorporation or by-laws of the Depositor or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Depositor or any of its properties or
assets, which breach or violation would have a material adverse effect
on the business, operations or financial condition of the Depositor or
its ability to perform its obligations under this Agreement and the
Pooling and Servicing Agreement.
(v) The execution of the Certificates by the Depositor and
the direction by the Depositor to the Trustee and the Grantor Trustee
to issue, authenticate and deliver the Certificates has been duly
authorized by the Depositor and, assuming that the Trustee and the
Grantor Trustee have been duly authorized to do so, when executed by
the Depositor and authenticated and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement and the Grantor
Trust Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits of the Pooling and
Servicing Agreement and the Grantor Trust Agreement.
(vi) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the issuance of the Certificates, and
the sale of the Offered Certificates to the Underwriters, or the
consummation by the Depositor of the other transactions contemplated
by this Agreement and the Pooling and Servicing Agreement, except such
consents, approvals, authorizations, registrations or qualifications
as may be required under the Securities Act or state securities or
Blue Sky laws in connection with the purchase and distribution of the
Offered Certificates by the Underwriters or as have been previously
obtained.
(vii) There are not, to the best of his knowledge without
independent investigation, any actions, proceedings or investigations
pending with respect to which the Depositor has received service of
process before or threatened by any court, administrative agency or
other tribunal to which the Depositor is a party or of which any of
its properties is the subject: (a) which if determined adversely to
the Depositor would have a material adverse effect on the business,
results of operations or financial condition of the Depositor; (b)
asserting the invalidity of the Grantor Trust Agreement, the Pooling
and Servicing Agreement or the Certificates; (c) seeking to prevent
the issuance of the Certificates or the consummation by the Depositor
of any of the transactions contemplated by the Grantor Trust
Agreement, the Pooling and Servicing Agreement or this Agreement, as
the case may be; or (d) which might materially and adversely affect
the performance by the Depositor of its obligations under, or the
validity or enforceability of, the Grantor Trust Agreement, the
Pooling and Servicing Agreement, this Agreement or the Certificates.
(viii) The Certificates have been duly and validly
authorized and issued and, immediately prior to the sale of the
Offered Certificates to the Underwriters, such Certificates are owned
by the Depositor, free and clear of all Liens.
I. The Underwriters shall have received the favorable opinion of counsel to
the Trustee and the Grantor Trustee (together, for purposes of this section
only, "MTT"), dated the Closing Date, addressed to the Underwriters and in form
and scope satisfactory to counsel to the Underwriters, to the effect that:
(i) MTT is a banking corporation duly incorporated and
validly existing under the law of the State of New York.
(ii) MTT has the full corporate trust power to execute,
deliver and perform its obligations under the Pooling and Servicing
Agreement and the Grantor Trust Agreement.
(iii) The execution and delivery by MTT of the Pooling and
Servicing Agreement and the Grantor Trust Agreement, and the
performance by MTT of its obligations under the Pooling and Servicing
Agreement and the Grantor Trust Agreement, have been duly authorized
by all necessary corporate action of MTT.
(iv) The Pooling and Servicing Agreement and the Grantor
Trust Agreement are valid and legally binding obligations of MTT
enforceable against MTT.
(v) The execution and delivery by MTT of the Pooling and
Servicing Agreement and the Grantor Trust Agreement do not (a) violate
the Organization Certificate of MTT or the by-laws of the MTT, (b) to
such counsel's knowledge, violate any judgment, decree or order of any
New York or United States federal court or other New York or United
States federal governmental authority by which MTT is bound or (c)
assuming the non-existence of any judgment, decree or order of any
court or other governmental authority that would be violated by such
execution and delivery, violate any New York or United States federal
statute, rule or regulation or require any consent, approval or
authorization of any New York or United States federal court or other
New York or United States federal governmental authority.
(vi) The Trust Certificates have been duly authenticated and
delivered by the Trustee. The Grantor Trust Certificates have been
duly authenticated and delivered by the Grantor Trustee.
(vii) If the Trustee were acting as Servicer under the
Pooling and Servicing Agreement as of the date of such opinion, the
Trustee would have the full corporate trust power to perform the
obligations of the Servicer under the Pooling and Servicing Agreement;
and
(viii) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
or affecting MTT before or by any court, arbitrator, administrative
agency or other governmental authority which, if decided adversely to
MTT, would materially and adversely affect the ability of MTT to carry
out the transactions contemplated in the Pooling and Servicing
Agreement or the Grantor Trust Agreement.
J. The Underwriters shall have received the favorable opinion or opinions,
dated the Closing Date, of counsel for the Underwriters, with respect to the
issue and sale of the Offered Certificates, the Registration Statement, this
Agreement, the Prospectus and such other related matters as the Underwriters may
reasonably require.
K. The Underwriters shall have received executed copies of the Broker-
Dealer Agreement and the Auction Agent's Agreement with respect to the Class
A-10 Certificates and the Swap Agreement with respect to the Grantor Trust
Certificates.
L. The Depositor, ContiMortgage, ContiWest and ContiFinancial shall each
have furnished to the Underwriters a certificate, dated the Closing Date and
signed by the Chairman of the Board, the President or a Vice President of the
Depositor, ContiMortgage, ContiWest and ContiFinancial, respectively, stating as
it relates to each, as of the Closing Date:
(i) The representations and warranties of the Depositor,
ContiMortgage and ContiWest in this Agreement are true and correct as
of the Closing Date; and the Depositor, ContiMortgage and ContiWest
have complied with each of their respective agreements contained
herein which are to have been complied with on or prior to the Closing
Date;
(ii) The information contained in the Prospectus relating to
the Depositor, ContiMortgage, ContiWest and the Home Equity Loans is
true and accurate in all material respects and nothing has come to his
or her attention that would lead such officer to believe that the
Registration Statement or the Prospectus includes any untrue statement
of a material fact or omits to state a material fact necessary to make
the statements therein not misleading;
(iii) There has been no amendment or other document filed
affecting the certificate of incorporation or by-laws of the Depositor
since May 18, 1995 or the certificate of incorporation or by-laws of
ContiMortgage since October 19, 1990 or the Articles of incorporation
or by-laws of ContiWest since January 1, 1997 and no such amendment
has been authorized. No event has occurred since June 30, 1997 which
has affected the good standing of the Depositor, ContiMortgage or
ContiWest under the laws of the States of Delaware and Nevada, as
applicable; and
(iv) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Depositor, ContiMortgage, ContiWest or
ContiFinancial from September 30, 1997. No publicly-held debt of
ContiFinancial shall have been downgraded or put on credit watch for
possible downgrade since September 30, 1997; there has been no
suspension of trading in ContiFinancial's publicly-held common stock
since September 30, 1997.
M. The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the Trusts created thereby and the due execution, authentication and
delivery of the Certificates by the Trustee thereunder and such other matters as
the Representative shall reasonably request.
N. [Reserved]
O. The Offered Certificates (other than the Subordinate Certificates) shall
have been rated in the highest rating category by Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies, Inc. ("Standard & Poor's") and Fitch IBCA, Inc. ("Fitch")
and the Subordinate Certificates shall have been rated "Baa3" by Moody's, "BBB-"
by Standard & Poor's and "BBB" by Fitch; no Class of Offered Certificates shall
have been put on credit watch for possible downgrade.
P. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested not less than three full business days prior to the Closing Date.
Q. Prior to the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
R. 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 each of the instances set forth in clauses (i), (ii),
(iii) and (iv) herein, in the reasonable judgment of the Underwriters,
impractical or inadvisable to proceed with the public offering or delivery of
the Certificates on the terms and in the manner contemplated in the Prospectus.
S. The Representative shall have received letters, including bring-down
letters, from Arthur Andersen LLP, dated on or before the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters, to the effect that they have performed certain specified
procedures requested by the Representative with respect to the information set
forth in the Prospectus and certain matters relating to ContiMortgage and
ContiWest.
T. The Underwriters shall have received any other opinions delivered to the
Ratings Agencies.
U. The Policies 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. The Insurance Agreement and the Indemnification
Agreement shall each have been duly executed and delivered by MBIA and the other
parties thereto at or prior to the Closing Date.
V. The Underwriters shall have received a favorable opinion of Kutak Rock,
counsel to MBIA, dated the Closing Date and in form and substance satisfactory
to counsel for the Underwriters, to the effect that:
(i) MBIA is a stock insurance corporation, duly incorporated
and validly existing under the laws of the State of New York. MBIA is
validly licensed to do business in New York and is authorized to issue
the Policies and perform its obligations under the Policies in
accordance with the terms thereof.
(ii) The execution and delivery by MBIA of the Policies and
the Indemnification Agreement are within the corporate power of MBIA
and have been authorized by all necessary corporate action on the part
of MBIA; the Policies have 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 Policies 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) MBIA is authorized to deliver the Indemnification
Agreement, and such agreement has been duly executed and delivered and
constitute the legal, valid and binding obligations of MBIA
enforceable in accordance with its terms except that the enforcement
of the Indemnification 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 MBIA, the lack of which would adversely affect the
validity or enforceability of the Policies; to the extent required by
applicable legal requirements that would adversely affect validity or
enforceability of the Policies, the form of the Policies has been
filed with, and approved by, all governmental authorities having
jurisdiction over the Insurer in connection with the Policies.
(v) The Policies are not required to be registered under the
Securities Act.
(vi) The information set forth in the Prospectus Supplement
under the caption "Credit Enhancement - The Certificate Insurance
Policies," insofar as such statements constitute a description of the
Policies, accurately summarize the Policies.
In rendering this opinion, such counsel may rely, as to matters of fact, on
certificates of responsible officers of MBIA 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 MBIA.
W. The Underwriters shall have received from MBIA a certificate, signed by
the president, a senior vice president or a vice president of MBIA, dated the
Closing Date, to the effect that the signer of such certificate has carefully
examined the Policies, the Indemnification 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 MBIA which, if adversely determined,
individually or in the aggregate, would adversely affect the Insurer's
performance under the Policies or the Indemnification Agreement;
(ii) Each person who as an officer or representative of
MBIA, signed or signs the Policies, the Indemnification 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 information contained in the Prospectus Supplement
under the captions "Credit Enhancement - The Certificate Insurance
Policies" and "The Certificate Insurer" is true and correct in all
material respects and does not omit to state a material fact with
respect to the description of the Policies or the ability of MBIA to
meet its payment obligations under the Policies;
(iv) The tables regarding MBIA's capitalization set forth
under the caption "The Certificate Insurer" presents fairly the
capitalization of the Insurer as of September 30, 1997;
(v) 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 accorded
the claims paying ability of MBIA by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the Securities Act;
(vi) The audited balance sheet of MBIA as of December 31,
1996 and the related statement of income and retained earnings for the
fiscal year then ended, and the accompanying footnotes, together with
the related opinion of an independent certified public accountant,
copies of which are incorporated by reference in the Prospectus
Supplement, fairly present in all material respects the financial
condition of MBIA 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 MBIA as of
September 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 MBIA 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.
(vii) to the best knowledge of such officer, since September
30, 1997, no material adverse change has occurred in the financial
position of MBIA other than as set forth in the Prospectus Supplement.
The officer of MBIA certifying to items (v) - (vii) shall be an officer in
charge of a principal financial function.
MBIA shall attach to such certificate a true and correct copy of its
certificate or articles of incorporation, as appropriate, and its by-laws, all
of which are in full force and effect on the date of such certificate.
If any condition specified in this Section VII shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION VII. PAYMENT OF EXPENSES. The Depositor agrees to pay:
A. the costs incident to the authorization, issuance, sale and delivery of
the Certificates and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Prospectus and any amendment or supplement to the Prospectus or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the costs of reproducing and distributing this Agreement; (e) the
fees and expenses of Dewey Ballantine LLP in qualifying the Certificates under
the securities laws of the several jurisdictions as provided in Section V (G)
hereof and of preparing, printing and distributing a Blue Sky Memorandum and a
Legal Investment Survey (including related fees and expenses of counsel to the
Representative); (f) any fees charged by securities rating services for rating
the Offered Certificates; (g) the cost of the accountants comfort letter
relating to the Prospectus; and (h) all other costs and expenses incidental to
the performance of the obligations of the Depositor (including costs and
expenses of counsel to the Depositor); PROVIDED THAT, except as provided in this
Section VII, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Offered
Certificates which they may sell and the expenses of advertising any offering of
the Offered Certificates made by the Underwriters, and the Underwriters shall
pay the cost of any accountant's comfort letters relating to any Computational
Materials (as defined herein).
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section VI or Section XI, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses,
including fees and disbursements of Dewey Ballantine LLP, counsel for the
Underwriters.
SECTION VIII. INDEMNIFICATION AND CONTRIBUTION.
A. The Depositor agrees to indemnify and hold harmless each Underwriter,
each Underwriter's respective officers and directors and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of the
Offered Certificates), to which such Underwriter or any such controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and shall reimburse
such Underwriter and each such controlling person promptly upon demand for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; PROVIDED, HOWEVER, that the Depositor shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus, or any
amendment thereof or supplement thereto, or the Registration Statement, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter through the Representative, specifically for inclusion therein. The
foregoing indemnity agreement is in addition to any liability which the
Depositor may otherwise have to any Underwriter or any such officer or director
or any controlling person of any such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Depositor or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor or any director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Depositor or any such director,
officer or controlling person.
C. Promptly after receipt by any indemnified party under this Section VIII
of notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section VIII, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section VIII except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section VIII.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section VIII for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section VIII consist of one
or more Underwriters or any of its or their controlling persons, or the
Depositor, if the indemnified parties under this Section VIII consist of the
Depositor or any of the Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section VIII (A) and (B), shall use its reasonable 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. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject of such action.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
D. Each Underwriter agrees to provide the Depositor no later than two
Business Days prior to the day on which the Prospectus Supplement is required to
be filed pursuant to Section I (A) hereof with a copy of any Computational
Materials (defined below) produced by such Underwriter for filing with the
Commission on Form 8-K.
E. Each Underwriter severally agrees, to indemnify and hold harmless the
Depositor, each of the Depositor's officers and directors and each person who
controls the Depositor within the meaning of Section 15 of the Securities Act
against any and all losses, claims, damages or liabilities, to which they may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement of a material fact contained in the
Computational Materials provided by such Underwriter, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading when read in conjunction with the
Prospectus, and agrees to reimburse each such indemnified party for any legal or
other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that in no
event shall an Underwriter be liable to the Depositor under this paragraph E in
an amount in excess of the fees received by such Underwriter in connection with
the offering of the Offered Certificates. The obligations of an Underwriter
under this Section VIII (E) shall be in addition to any liability which such
Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be equally applicable to
this Section VIII (E).
F. The Depositor agrees to indemnify and hold harmless each Underwriter,
each Underwriter's respective officers and directors and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all losses, claims, damages or liabilities, 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
Offered Certificates), to which they may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Seller Provided Information (as defined
below) provided by the Company, 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. The foregoing indemnity agreement is in addition to any
liability which the Depositor may otherwise have to any Underwriter or any such
officer or director or any controlling person of any such Underwriter.
The procedures set forth in Section VIII (C) shall be equally applicable to
this Section VIII (F).
G. If the indemnification provided for in this Section VIII shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section VIII (A), (B), (E) or (F) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the Underwriters on the other from
the offering of the relevant class of Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section VIII (C),
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor shall be deemed
to be in such proportion as the sum of the original principal amount of the
offering, plus the total proceeds to the Depositor from the sale of the Class
A-11 IO Certificates (before deducting expenses) bears to the total underwriting
discounts and commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Depositor or by such Underwriter, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section VIII (G) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
VIII (G) shall be deemed to include, for purposes of this Section VIII (G), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
For purposes of this Section VIII, in no case shall any Underwriter (except
with respect to any document (other than the Computational Materials)
incorporated by reference into the Registration Statement or Prospectus at the
request of such Underwriter through the Representative and except as may be
provided in any agreement among the Underwriters relating to the offering of the
Offered Certificates) be responsible for any amount in excess of the amount by
which (x) the amount received by such Underwriter in connection with its sale of
the Offered Certificates exceeds (y) the amount paid by such Underwriter to the
Depositor for the Offered Certificates hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of
fraudulent misrepresentation.
H. For purposes of this Section VIII, as to each Underwriter the term
"Computational Materials" means collectively, "Computational Materials,"
"Collateral Term Sheets" and "Structural Term Sheets" as such terms are defined
in the No-Action Letter of May 20, 1994 issued by the Securities and Exchange
Commission (the "Commission") to Kidder, Peabody Acceptance Corporation I,
Kidder, Peabody & Co. Incorporated and Kidder Structured Asset Corporation, as
made applicable to other issuers and underwriters by the Commission in response
to the request of the Public Securities Association dated May 24, 1994, and the
No-Action Letter of February 17, 1995 issued by the Commission to the Public
Securities Association, PROVIDED, that the term Computational Materials shall
not include any Seller Provided Information. "Seller Provided Information" means
any computer tape (or other information) furnished to any Underwriter by any
Seller concerning the assets comprising the Trust.
I. The Underwriters confirm that the information set forth in the last
paragraph on the cover page of and under the caption "Underwriting" in the
Prospectus Supplement and the Computational Materials are correct and constitute
the only information furnished in writing to the Depositor by or on behalf of
any Underwriter specifically for inclusion in the Registration Statement and the
Prospectus.
SECTION IX. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Depositor submitted pursuant hereto
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or controlling persons
thereof, or by or on behalf of the Depositor, and shall survive delivery of any
Offered Certificates to the Underwriters.
SECTION X. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, the Underwriters have not
completed such arrangements within such 24-hour period, then
(i) if the aggregate principal amount of Defaulted
Certificates does not exceed 10% of the aggregate principal amount of
the Offered Certificates to be purchased pursuant to this Agreement,
the non-defaulting Underwriters named in this Agreement shall be
obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all such non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted
Certificates exceeds 10% of the aggregate principal amount of the
Offered Certificates to be purchased pursuant to this Agreement, this
Agreement shall terminate, without any liability on the part of any
non-defaulting Underwriters.
No action taken pursuant to this Section X shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this Section
X, each of the Underwriters and the Depositors shall have the right to postpone
the Closing Date for a period not exceeding five Business Days in order that any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION XI. TERMINATION OF AGREEMENT. The Underwriters may terminate this
Agreement immediately upon notice to the Depositor, at any time at or prior to
the Closing Date if any of the events or conditions described in Section VI (R)
of this Agreement shall occur and be continuing, or if any other closing
condition set forth in Section VI shall not have been fulfilled when required to
be fulfilled. In the event of any such termination, the covenant set forth in
Section V (H), the provisions of Section VII, the indemnity and contribution
agreements set forth in Section VIII, and the provisions of Sections IX, XIV and
XVI shall remain in effect.
SECTION XII. NOTICES. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Greenwich Capital Markets, Inc., 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: Asset Finance Group (Fax:
203-622-2090); and
B. if to the Depositor, shall be delivered or sent by mail, telex or
facsimile transmission to care of ContiSecurities Asset Funding Corporation, 277
Park Avenue, New York, New York 10172, Attention: Chief Counsel (Fax:
212-207-2937).
SECTION XIII. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of each Underwriter's respective
officers and directors and for the benefit of directors of the Depositor,
officers of the Depositor who have signed the Registration Statement and any
person controlling the Depositor within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section XIII, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
SECTION XIV. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them.
SECTION XV. DEFINITION OF THE TERM "BUSINESS Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION XVI. GOVERNING LAW: SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles of
conflicts of law thereof.
The parties hereto hereby submit to the jurisdiction of the United States
District Court for the Southern District of New York and any court in the State
of New York located in the City and County of New York, and appellate court from
any thereof, in any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
The parties hereto hereby irrevocably waive, to the fullest extent
permitted by law, any and all rights to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.
SECTION XVII. COUNTERPARTS. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument. SECTION XVIII. HEADINGS. The headings
herein are inserted for convenience of reference only and are not intended to be
part of, or to affect the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the Depositor
and the Underwriters, please indicate your acceptance in the space provided for
the purpose below.
Very truly yours,
CONTISECURITIES ASSET FUNDING CORP.
By: /s/ John A. Banu
Name:John A. Banu
Title: Authorized Signatory
By: /s/ Mary E. Bogdan
Name: Mary E. Bogdan
Title: Authorized Signatory
CONFIRMED AND ACCEPTED, as of the date first above written:
GREENWICH CAPITAL MARKETS, INC.
Acting on its own behalf and
as Representative of the
Several Underwriters referred
to in the foregoing Agreement
By: /s Brian Bernard
Name: Brian Bernard
Title: Vice President
CONTIMORTGAGE CORPORATION CONTIWEST CORPORATION
Accepts and hereby agrees Accepts and hereby agrees
solely to the provisions of solely to the provisions of
Section V (H) Section V (I)
By: /s/ Robert J. Babjack By: /s/ Peter Abeles
Name: Robert J. Babjack Name: Peter Abeles
Title: Executive Vice President & COO Title: President
By: /s/ Daniel J. Egan By: /s/ Robert E. Riedl
Name: Daniel J. Egan Name: Robert E. Riedl
Title: Sr. Vice President & CFO Title: Vice President
SCHEDULE A
Class A-1 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $17,223,333 0.080%
Markets, Inc.
Bear, Stearns & Co. Inc. $17,223,333 0.080%
Credit Suisse First $17,223,333 0.080%
Boston Corporation
Merrill Lynch, $17,223,333 0.080%
Pierce, Fenner & Smith
Incorporated
Morgan Stanley Dean Witter $17,223,333 0.080%
Nomura Securities $17,223,333 0.080%
International, Inc.
Class A-2 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $112,500,000 0.175%
Markets, Inc.
Bear, Stearns & Co. Inc. $112,500,000 0.175%
Credit Suisse First $112,500,000 0.175%
Boston Corporation
Merrill Lynch, $112,500,000 0.175%
Pierce, Fenner &
Smith Incorporated
Morgan Stanley Dean Witter $112,500,000 0.175%
Nomura Securities $112,500,000 0.175%
International, Inc.
Class A-3 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $10,500,000 0.250%
Markets, Inc.
Bear, Stearns & Co. Inc. $10,500,000 0.250%
Credit Suisse First $10,500,000 0.250%
Boston Corporation
Merrill Lynch, $10,500,000 0.250%
Pierce, Fenner &
Smith Incorporated
Morgan Stanley Dean Witter $10,500,000 0.250%
Nomura Securities $10,500,000 0.250%
International, Inc.
Class A-4 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $23,333,333 0.325%
Markets, Inc.
Bear, Stearns & Co. Inc. $23,333,333 0.325%
Credit Suisse First $23,333,333 0.325%
Boston Corporation
Merrill Lynch, $23,333,333 0.325%
Pierce, Fenner &
Smith Incorporated
Morgan Stanley Dean Witter $23,333,333 0.325%
Nomura Securities $23,333,333 0.325%
International, Inc.
Class A-5 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $6,666,667 0.350%
Markets, Inc.
Bear, Stearns & Co. Inc. $6,666,667 0.350%
Credit Suisse First $6,666,667 0.350%
Boston Corporation
Merrill Lynch, $6,666,667 0.350%
Pierce, Fenner &
Smith Incorporated
Morgan Stanley Dean Witter $6,666,667 0.350%
Nomura Securities $6,666,667 0.350%
International, Inc.
Class A-6 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $19,256,667 0.400%
Markets, Inc.
Bear, Stearns & Co. Inc. $19,256,667 0.400%
Credit Suisse First $19,256,667 0.400%
Boston Corporation
Merrill Lynch, $19,256,667 0.400%
Pierce, Fenner &
Smith Incorporated
Morgan Stanley Dean Witter $19,256,667 0.400%
Nomura Securities $19,256,667 0.400%
International, Inc.
Class A-7 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $21,666,667 0.175%
Markets, Inc.
Bear, Stearns & Co. Inc. $21,666,667 0.175%
Credit Suisse First Boston
Corporation $21,666,667 0.175%
Merrill Lynch, Pierce,
Fenner & Smith Incorporate $21,666,667 0.175%
Morgan Stanley Dean Witter $21,666,667 0.175%
Nomura Securities
International, Inc. $21,666,667 0.175%
Class A-8 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $18,253,333 0.250%
Markets, Inc.
Bear, Stearns & Co. Inc. $18,253,333 0.250%
Credit Suisse First Boston
Corporation $18,253,333 0.250%
Merrill Lynch, Pierce, Fenner
& Smith Incorporate $18,253,333 0.250%
Morgan Stanley Dean Witter $18,253,333 0.250%
Nomura Securities
International, Inc. $18,253,333 0.250%
Class A-9 Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $5,934,167 0.200%
Markets, Inc.
Bear, Stearns & Co. Inc. $5,934,167 0.200%
Credit Suisse First Boston
Corporation $5,934,167 0.200%
Merrill Lynch, Pierce, Fenner
& Smith Incorporated $5,934,167 0.200%
Morgan Stanley Dean Witter $5,934,167 0.200%
Nomura Securities
International, Inc. $5,934,167 0.200%
Class A-10 Certificates
Underwriters Principal Underwriting
Amount Discount
Merrill Lynch, Pierce, Fenner
& Smith Incorporated $194,875 0.230%
Class A-11 IO Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital N/A 0.500%
Markets, Inc.
Class B Certificates
Underwriters Principal Underwriting
Amount Discount
Greenwich Capital $8,853,333 0.600%
Markets, Inc.
Bear, Stearns & Co. Inc. $8,853,333 0.600%
ContiFinancial $ 0 0.000%
Services Corporation
Credit Suisse First Boston
Corporation $8,853,333 0.600%
Merrill Lynch, Pierce, Fenner
& Smith Incorporated $8,853,333 0.600%
Morgan Stanley & Co.
Incorporated $8,853,333 0.600%
Nomura Securities
International, Inc. $8,853,333 0.600%
<PAGE>
EXHIBIT A
[LETTERHEAD OF CONTIFINANCIAL CORPORATION]
December 5, 1997
Greenwich Capital Markets, Inc.
As Representative of the Several Underwriters
600 Steamboat Road
Greenwich, Connecticut 06830
Ladies and Gentlemen:
This Guaranty is made by ContiFinancial Corporation, a Delaware corporation
with its principal office at 277 Park Avenue, New York, New York 10172 ("CFC"),
in favor of Greenwich Capital Markets, Inc., as Representative of the Several
Underwriters, with its principal office at 600 Steamboat Road, Greenwich,
Connecticut 06830.
As an inducement to you and in consideration of your entering into the
Underwriting Agreement referred to below, CFC hereby absolutely, unconditionally
and irrevocably guarantees the prompt performance of the obligations, including
any payment obligations, of ContiSecurities Asset Funding Corp., ("Depositor"),
a Delaware corporation with its principal office at 277 Park Avenue, New York,
New York 10172, under Section VIII of the Underwriting Agreement, dated as of
December 5, 1997, between Depositor and Greenwich Capital Markets, Inc., as
Representative of the Several Underwriters. This Guaranty is a guaranty of
performance and payment and not of collection. The obligations of CFC hereunder
shall not be impaired by failure of Depositor to provide notice to CFC of any
modification or amendment of said contract agreed to by the parties thereto.
This Guaranty may be amended only by an instrument in writing executed by the
undersigned.
This Guaranty shall be governed by the laws of the State of New York
applicable to agreements made and to be performed in the State of New York
without giving effect to the conflict of law rules thereof.
IN WITNESS WHEREOF, CFC has caused this Guaranty to be executed by duly
authorized corporate officers the day and year first above written.
CONTIFINANCIAL CORPORATION
By: /s/ John A. Banu
Name: John A. Banu
Title: Authorized Signatory
By: /s/ Mary E. Bogdan
Name: Mary E. Bogdan
Title: Authorized Signatory
ACCEPTED
as of December 22, 1997
GREENWICH CAPITAL MARKETS, INC.
as representative of the Several Underwriters
By: /s/ Brian Bernard
Name: Brian Bernard
Title: Vice President
Exhibit 4.2
================================================================================
--------------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1997
--------------------
among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Seller and Servicer,
CONTIWEST CORPORATION,
as Seller
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
Home Equity Loan Pass-Through Certificates
Series 1997-5
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.................................2
Section 1.01 Definitions.................................................2
Section 1.02 Use of Words and Phrases...................................28
Section 1.03 Captions; Table of Contents................................29
Section 1.04 Opinions ..................................................29
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST......................30
Section 2.01 Establishment of the Trust.................................30
Section 2.02 Office.....................................................30
Section 2.03 Purposes and Powers........................................30
Section 2.04 Appointment of the Trustee; Declaration of Trust...........30
Section 2.05 Expenses of the Trust......................................30
Section 2.06 Ownership of the Trust.....................................30
Section 2.07 Situs of the Trust.........................................31
Section 2.08 Miscellaneous REMIC Provisions.............................31
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS.................34
Section 3.01 Representations and Warranties of the Depositor............34
Section 3.02 Representations and Warranties of the Servicer............35
Section 3.03 Representations and Warranties of the Sellers..............37
Section 3.04 Covenants of the Sellers to Take Certain Actions
with Respect to the Home Equity Loans In Certain
Situations...............................................42
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages....................................48
Section 3.06 Acceptance by Trustee; Certain Substitutions of
Home Equity Loans; Certification by Trustee..............51
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES................................53
Section 4.01 Issuance of Certificates...................................53
Section 4.02 Sale of Certificates.......................................53
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS............................54
Section 5.01 Terms......................................................54
Section 5.02 Forms......................................................54
Section 5.03 Execution, Authentication and Delivery.....................54
Section 5.04 Registration and Transfer of Certificates..................55
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates..........56
Section 5.06 Persons Deemed Owners......................................57
Section 5.07 Cancellation...............................................57
Section 5.08 Limitation on Transfer of Ownership Rights.................57
Section 5.09 Assignment of Rights.......................................58
ARTICLE VI COVENANTS........................................................59
Section 6.01 Distributions..............................................59
Section 6.02 Money for Distributions to be Held in Trust;
Withholding..............................................59
Section 6.03 Protection of Trust Estate.................................60
Section 6.04 Performance of Obligations.................................60
Section 6.05 Negative Covenants.........................................61
Section 6.06 No Other Powers............................................61
Section 6.07 Limitation of Suits........................................61
Section 6.08 Unconditional Rights of Owners to Receive Distributions....62
Section 6.09 Rights and Remedies Cumulative.............................62
Section 6.10 Delay or Omission Not Waiver...............................62
Section 6.11 Control by Owners..........................................62
Section 6.12 Indemnification............................................63
Section 6.13 Access to Names and Addresses of Owners of
Certificates.............................................63
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES............................64
Section 7.01 Collection of Money........................................64
Section 7.02 Establishment of Accounts..................................64
Section 7.03 Flow of Funds..............................................64
Section 7.04 Auction Rate Certificates..................................68
Section 7.05 Investment of Accounts.....................................68
Section 7.06 Payment of Trust Expenses..................................69
Section 7.07 Eligible Investments.......................................69
Section 7.08 Accounting and Directions by Trustee.......................70
Section 7.09 Reports by Trustee to Owners and the Certificate
Insurer..................................................71
Section 7.10 Reports by Trustee.........................................74
Section 7.11 Preference Payments........................................74
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS..............75
Section 8.01 Servicer and Sub-Servicers.................................75
Section 8.02 Collection of Certain Home Equity Loan Payments............76
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers............................................76
Section 8.04 Successor Sub-Servicers....................................76
Section 8.05 Liability of Servicer; Indemnification.....................76
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners....................................77
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee...............................................77
Section 8.08 Principal and Interest Account.............................77
Section 8.09 Delinquency Advances and Servicing Advances................79
Section 8.10 Compensating Interest; Repurchase of Home
Equity Loans.............................................80
Section 8.11 Maintenance of Insurance...................................80
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements...............................................81
Section 8.13 Realization Upon Defaulted Home Equity Loans;
Modification.............................................81
Section 8.14 Trustee to Cooperate; Release of Files.....................82
Section 8.15 Servicing Compensation.....................................83
Section 8.16 Annual Statement as to Compliance..........................84
Section 8.17 Annual Independent Certified Public Accountants'
Reports..................................................84
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans..........................84
Section 8.19 Assignment of Agreement....................................84
Section 8.20 Removal of Servicer; Resignation of Servicer...............84
Section 8.21 Inspections by Certificate Insurer; Errors and
Omissions Insurance........................................88
ARTICLE IX TERMINATION OF TRUST.............................................89
Section 9.01 Termination of Trust.......................................89
Section 9.02 Termination Upon Option of Owners of Class R-I
Certificates.............................................89
Section 9.03 Termination Upon Loss of REMIC Status......................90
Section 9.04 Disposition of Proceeds....................................91
ARTICLE X THE TRUSTEE.......................................................92
Section 10.01 Certain Duties and Responsibilities.......................92
Section 10.02 Removal of Trustee for Cause..............................93
Section 10.03 Certain Rights of the Trustee.............................94
Section 10.04 Not Responsible for Recitals or Issuance
of Certificates.........................................95
Section 10.05 May Hold Certificates.....................................95
Section 10.06 Money Held in Trust.......................................96
Section 10.07 Compensation and Reimbursement; No Lien for Fees.........96
Section 10.08 Corporate Trustee Required; Eligibility...................96
Section 10.09 Resignation and Removal; Appointment of
Successor...............................................96
Section 10.10 Acceptance of Appointment by Successor
Trustee.................................................97
Section 10.11 Merger, Conversion, Consolidation or Succession
to Business of the Trustee.............................98
Section 10.12 Reporting; Withholding....................................98
Section 10.13 Liability of the Trustee..................................98
Section 10.14 Appointment of Co-Trustee or Separate Trustee.............99
ARTICLE XI MISCELLANEOUS...................................................101
Section 11.01 Compliance Certificates and Opinions.....................101
Section 11.02 Form of Documents Delivered to the Trustee...............101
Section 11.03 Acts of Owners...........................................102
Section 11.04 Notices, etc. to Trustee.................................102
Section 11.05 Notices and Reports to Owners; Waiver of Notices.........102
Section 11.06 Rules by Trustee.........................................103
Section 11.07 Successors and Assigns...................................103
Section 11.08 Severability.............................................103
Section 11.09 Benefits of Agreement....................................103
Section 11.10 Legal Holidays...........................................103
Section 11.11 Governing Law; Submission to Jurisdiction................103
Section 11.12 Counterparts.............................................104
Section 11.13 Usury....................................................104
Section 11.14 Amendment................................................104
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.......105
Section 11.16 REMIC Status.............................................106
Section 11.17 Additional Limitation on Action and Imposition
of Tax................................................107
Section 11.18 Appointment of Tax Matters Person........................107
Section 11.19 The Certificate Insurer..................................107
Section 11.20 Reserved.................................................107
Section 11.21 Third Party Rights.......................................108
Section 11.22 Notices .................................................108
SCHEDULE I..................................................................I-1
SCHEDULE II................................................................II-1
SCHEDULE III..............................................................III-1
SCHEDULE IV................................................................IV-1
SCHEDULE V..................................................................V-1
EXHIBIT A-1...............................................................A-1-1
EXHIBIT A-2...............................................................A-2-1
EXHIBIT A-3...............................................................A-3-1
EXHIBIT A-4...............................................................A-4-1
EXHIBIT A-5...............................................................A-5-1
EXHIBIT A-6...............................................................A-6-1
EXHIBIT A-7...............................................................A-7-1
EXHIBIT A-8...............................................................A-8-1
EXHIBIT A-9...............................................................A-9-1
EXHIBIT A-10.............................................................A-10-1
EXHIBIT A-11 IO.......................................................A-11-IO-1
EXHIBIT B...................................................................B-1
EXHIBIT C-1...............................................................C-1-1
EXHIBIT C-2...............................................................C-2-1
EXHIBIT D...................................................................D-1
EXHIBIT E...................................................................E-1
EXHIBIT F...................................................................F-1
EXHIBIT G...................................................................G-1
EXHIBIT H...................................................................H-1
EXHIBIT I...................................................................I-1
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY
LOAN TRUST 1997-5, dated as of December 1, 1997 by and among CONTISECURITIES
ASSET FUNDING CORP., a Delaware corporation, in its capacity as Depositor (the
"Depositor"), CONTIMORTGAGE CORPORATION, a Delaware corporation in its
capacities as a Seller (in such capacity, a "Seller") and as Servicer (in such
capacity, the "Servicer"), CONTIWEST CORPORATION, a Nevada corporation, in its
capacity as a Seller (a "Seller" and together with ContiMortgage Corporation,
the "Sellers") and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking
corporation, in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish the Trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee, valid instruments, and to make this Agreement
a valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve
in the capacity of Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sellers, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal of
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, each Seller hereby bargains, sells,
conveys, assigns and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trust, without recourse
and for the exclusive benefit of the Owners of the Certificates and the
Certificate Insurer, all of its respective right, title and interest in and to
any and all benefits accruing to it from (a) the Home Equity Loans (other than
any principal and interest payments received thereon on or prior to the Cut-Off
Date) listed in Schedule I-A and I-B to this Agreement which the Sellers are
causing to be delivered to the Depositor and the Depositor is causing to be
delivered to the Trustee herewith (and all substitutions therefor as provided by
Sections 3.03, 3.04 and 3.06), together with the related Home Equity Loan
documents and each Seller's interest in any Property which secured a Home Equity
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account together with investment earnings on such amounts and
such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer);
(c) the Insurance Agreement; (d) the Certificate Insurance Policy; and (e)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified herein ((a)-(e) above
shall be collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
<PAGE>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"ACCOUNT": Any account established in accordance with Section 7.02 or
8.08 hereof.
"ACCRUAL PERIOD": With respect to the Fixed Rate Certificates (other
than the Class A-1 Certificates) and any Payment Date, the calendar month
immediately preceding the month in which the Payment Date occurs (or the period
from the Cut-Off Date to the end of the calendar month in which the Cut-Off Date
occurs in the case of the first Payment Date). A "calendar month" shall be
deemed to be 30 days. With respect to the Adjustable Rate Certificates and the
Class A-1 Certificates and any Payment Date, the period commencing on the
immediately preceding Payment Date (or the Closing Date in the case of the first
Payment Date) to and including the day prior to the current Payment Date. All
calculations of interest on the Fixed Rate Certificates will be made on the
basis of a 360-day year assumed to consist of twelve 30-day months and
calculations of interest on the Adjustable Rate Certificates will be made on the
basis of the actual number of days elapsed in the related Accrual Period and in
a year of 360 days.
"ADJUSTABLE RATE CERTIFICATES": The Class A-7, Class A-8, Class A-9
and Class A-10 Certificates.
"ADJUSTABLE RATE HOME EQUITY LOANS": The Home Equity Loans identified
in the related Schedule of Home Equity Loans as having adjustable Coupon Rates
in Schedule I-B hereto, including any Qualified Replacement Mortgages delivered
in replacement thereof.
"AGGREGATE TRUST CERTIFICATE PRINCIPAL BALANCE": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class A Trust Certificates and the Class B Certificates.
"AGREEMENT": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"AMOUNT HELD FOR FUTURE DISTRIBUTION": As of any date of
determination, amounts on deposit in the Auction Remainder Account for future
distribution on the Auction Rate Certificates pursuant to Section 7.04.
"APPLIED REALIZED LOSS AMOUNT": As of any Payment Date, the excess of
(x) the aggregate Certificate Principal Balance of the Class A Trust and Class B
Certificates on such Payment Date, after taking into account the distribution of
the Principal Distribution Amount on such Payment Date but prior to the
application of the Applied Realized Loss Amount, if any, on such Payment Date
over (y) the aggregate outstanding Loan Balance of the Home Equity Loans as of
the last day of the related Remittance Period.
"APPRAISED VALUE": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Home Equity Loan, or, in the case of a Home Equity Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"AUCTION AGENT": The meaning set forth in the Auction Procedures.
"AUCTION AGENT AGREEMENT": The meaning set forth in the Auction
Procedures.
"AUCTION AGENT FEE": The meaning set forth in the Auction Agent
Agreement. The Auction Agent Fee includes the Broker-Dealer Fee payable to the
Broker-Dealer (each as defined in the Auction Procedures).
"AUCTION PROCEDURES": The procedures set forth in Schedule II hereof
by which the Auction Rate is determined.
"AUCTION RATE": The rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.3 thereof.
"AUCTION RATE CERTIFICATES": The Class A-10 Certificates.
"AUCTION REMAINDER ACCOUNT": The account established to hold deposits
of the Amount Held for Future Distribution.
"AUCTION REPORTING DATE": That day of each month which is the fifth
Business Day prior to the Payment Date occurring in such month.
"AUTHORIZED OFFICER:" With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
"AVAILABLE FUNDS CAP:" With respect to any Payment Date, the product
of (I) the weighted average Coupon Rate of the Home Equity Loans as of the
opening of business on the first day of the related Remittance Period, less the
sum of (i) an amount, expressed as an annual percentage rate of the outstanding
aggregate Loan Balance of the Home Equity Loans as of the opening of business on
the first day of the related Remittance Period, equal to the sum of the
Servicing Fee, the Trustee Fee, the Premium Amount, the Auction Agent Fee, in
each case due with respect to such Payment Date, (ii) after the 6th Payment
Date, 0.50% per annum and (iii) for the 1st through the 6th Payment Dates, the
sum of (A) the product of (a) the weighted average Pass-Through Rate of the
Fixed Rate Certificates (other than the Class A-11 IO Certificates) and (b) the
outstanding aggregate Certificate Principal Balance of the Fixed Rate
Certificates (other than the Class A-11 IO Certificates) divided by the
outstanding aggregate Loan Balances of the Home Equity Loans as of the opening
of business on the first day of the related Remittance Period and (B) the
product of (a) 25% per annum and (b) the Notional Amount of the Class A-11 IO
Certificates divided by the outstanding aggregate Loan Balances of the Home
Equity Loans as of the opening of business on the first day of the related
Remittance Period; (iv) and for the 7th through the 18th Payment Dates, the
product of (a) 6.5% per annum and (b) the Notional Amount of the Class A- 11 IO
Certificates divided by the outstanding aggregate Loan Balances as of the
opening of business on the first day of the related Remittance Period and (II)
(i) for the 1st through the 6th Payment Dates, a fraction, the numerator of
which is equal to the outstanding aggregate Loan Balance of the Home Equity
Loans as of the opening of business on the first day of the related Remittance
Period and the denominator of which is the outstanding aggregate Certificate
Principal Balance of the Adjustable Rate Certificates and (ii) for each Payment
Date thereafter, 1.0.
"BUSINESS DAY": Any day that is not a Saturday, Sunday or other day on
which the Certificate Insurer or commercial banking institutions in The City of
New York, or in the city in which the principal corporate trust office of the
Trustee is located, are authorized or obligated by law or executive order to be
closed.
"CERTIFICATE": Any one of the Class A Trust Certificates, Class B
Certificates, Class R-I or Class R Certificates, each representing the interests
and the rights described in this Agreement.
"CERTIFICATE ACCOUNT": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"CERTIFICATE INSURANCE POLICY": The certificate guaranty insurance
policy (number 25456) dated December 23, 1997 issued by the Certificate Insurer
for the benefit of the Owners of the Class A Trust Certificates pursuant to
which the Certificate Insurer guarantees Insured Payments.
"CERTIFICATE INSURANCE POLICY-GRANTOR TRUST": The Certificate
Insurance Policy (number 25457) dated December 23, 1997 issued by the
Certificate Insurer for the benefit of the owners of Class A-2 Floating
Certificate issued by the ContiMortgage Grantor Trust 1997-A pursuant to which
the Certificate Insurer guarantees the Insured Payments (as defined therein).
"CERTIFICATE INSURER": MBIA Insurance Corporation, a New York stock
insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
"CERTIFICATE INSURER DEFAULT": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under the
Certificate Insurance Policy in accordance with its terms; or
(b) (i) the entry by a court having jurisdiction in the premises of
(A) a final and nonappealable decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (B) a final and nonappealable decree or
order adjudging the Certificate Insurer as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganizing, rehabilitation, arrangement,
adjustment or composition of or in respect of the Certificate Insurer under any
applicable United States federal or state law, or appointing a custodian,
receiver, liquidator, rehabilitator, assignee, trustee, sequestrator or other
similar official of the Certificate Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case
or proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate Insurer to
pay debts generally as they become due, or the admission by the Certificate
Insurer in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Certificate Insurer in furtherance
of any such action.
"CERTIFICATE PRINCIPAL BALANCE": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $103,340,000
Class A-2 Fixed Certificates - $675,000,000
Class A-3 Certificates - $ 63,000,000
Class A-4 Certificates - $140,000,000
Class A-5 Certificates - $ 40,000,000
Class A-6 Certificates - $115,540,000
Class A-7 Certificates - $130,000,000
Class A-8 Certificates - $109,520,000
Class A-9 Certificates - $ 35,605,000
Class A-10 Certificates - $194,875,000
Class B Certificates - $ 53,120,000
The Class A-11 IO Certificates, the Class R-I and the Class R
Certificates do not have a Certificate Principal Balance.
"CLASS": Any Class of the Class A Trust Certificates, the Class B
Certificates, the Class R-I or the Class R Certificates.
"CLASS A TRUST CERTIFICATE": Any one of the Class A-1 Certificates,
Class A-2 Fixed Certificates, Class A-3 Certificates, Class A-4 Certificates,
Class A-5 Certificates, Class A-6 Certificates, Class A-7 Certificates, Class
A-8 Certificates, Class A-9 Certificates, Class A-10 Certificates, or Class A-11
IO Certificates.
"CLASS A TRUST CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Trust Certificates less any amounts actually distributed on such Class A
Trust Certificates with respect to the Class A Principal Distribution Amount
pursuant to Section 7.03(d) hereof with respect to principal thereon on all
prior Payment Dates (except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments made in respect of
principal).
"CLASS A DISTRIBUTION AMOUNT": The sum of the Class A-1 Distribution
Amount, the Class A-2 Fixed Distribution Amount, the Class A-3 Distribution
Amount, the Class A-4 Distribution Amount, the Class A-5 Distribution Amount,
the Class A-6 Distribution Amount, the Class A-7 Distribution Amount, the Class
A-8 Distribution Amount, the Class A-9 Distribution Amount, the Class A-10
Distribution Amount and the Class A-11 IO Distribution Amount.
"CLASS A INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of the Class A-1 Interest Carry Forward Amount, the Class A-2
Fixed Interest Carry Forward Amount, the Class A-3 Interest Carry Forward
Amount, the Class A-4 Interest Carry Forward Amount, the Class A-5 Interest
Carry Forward Amount, the Class A-6 Interest Carry Forward Amount, the Class A-7
Interest Carry Forward Amount, the Class A-8 Interest Carry Forward Amount, the
Class A-9 Interest Carry Forward Amount, the Class A-10 Interest Carry Forward
Amount, and the Class A-11 IO Interest Carry Forward Amount.
"CLASS A PRINCIPAL DISTRIBUTION AMOUNT": As of any Payment Date (a)
prior to the Stepdown Date, the lesser of (i) 100% of the Principal Distribution
Amount plus the principal component of any Insured Payment and (ii) the
aggregate Certificate Principal Balance of the Class A Trust Certificates and
(b) on or after the Stepdown Date, the lesser of (i) 100% of the Principal
Distribution Amount plus the principal component of any Insured Payment and (ii)
the excess, if any, of (x) the aggregate Certificate Principal Balance of the
Class A Trust Certificates immediately prior to such Payment Date over (y) the
Senior Optimal Balance applicable to such Payment Date.
"CLASS A TERMINATION DATE": The Payment Date on which the Certificate
Principal Balance of each Class A Trust Certificate has been reduced to zero.
"CLASS A-1 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-1 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-1 CERTIFICATE TERMINATION DATE": December 15, 1998.
"CLASS A-1 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-1 Certificates as it relates to interest previously paid on the Class
A-1 Certificates.
"CLASS A-1 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (w) the Class A-1 Current Interest, (x) the Class A-1 Interest Carry
Forward Amount, (y) the Class A Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.03(d) hereof and (z)
the Class A-1 Guaranteed Payment.
"CLASS A-1 GUARANTEED PAYMENT": The excess, if any, on the December
15, 1998 Payment Date of (i) the outstanding aggregate Certificate Principal
Balances of the Class A-1 Certificates over (ii) the Principal Remittance Amount
for such Payment Date.
"CLASS A-1 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"CLASS A-1 PASS-THROUGH RATE": 5.90625% per annum.
"CLASS A-2 FIXED CERTIFICATE": Any one of the Certificates designated
on the face thereof as a Class A-2 Fixed Certificate, substantially in the form
annexed hereto as Exhibit A-2, executed, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"CLASS A-2 FIXED CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Fixed Certificates less any amounts actually distributed with respect
to the Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof
with respect to principal thereon on all prior Payment Dates (except for
purposes of effecting the Certificate Insurer's subrogation rights, that portion
of Insured Payments made in respect of principal).
"CLASS A-2 FIXED CERTIFICATE TERMINATION DATE": The Payment Date on
which the Class A-2 Fixed Certificate Principal Balance is reduced to zero.
"CLASS A-2 FIXED CURRENT INTEREST": With respect to any Payment Date,
the amount of interest accrued on the Class A-2 Fixed Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-2 Fixed Pass-Through Rate plus the Preference Amount owed to the
Owners of the Class A-2 Fixed Certificates as it relates to interest previously
paid on the Class A-2 Fixed Certificates.
"CLASS A-2 FIXED DISTRIBUTION AMOUNT": With respect to any Payment
Date, the sum of (x) the Class A-2 Fixed Current Interest, (y) the Class A-2
Fixed Interest Carry Forward Amount and (z) the Class A Principal Distribution
Amount payable to the Owners of Class A-2 Fixed Certificates pursuant to Section
7.03(d) hereof.
"CLASS A-2 FIXED INTEREST CARRY FORWARD AMOUNT": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-2 Fixed Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class A-2 Fixed Interest Carry Forward Amount from all
previous Payment Dates exceeds (ii) the amount of the actual distribution with
respect to interest made to the Owners of the Class A-2 Fixed Certificates on
such immediately preceding Payment Date and (y) 30 days' interest on such amount
at the Class A-2 Fixed Pass-Through Rate.
"CLASS A-2 FIXED PASS-THROUGH RATE": 6.37% per annum.
"CLASS A-3 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-3 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-3 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-3 Certificate Principal Balance is reduced to zero.
"CLASS A-3 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-3 Certificates as it relates to interest previously paid on the Class
A-3 Certificates.
"CLASS A-3 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-3 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-3 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"CLASS A-3 PASS-THROUGH RATE": For the 1st through the 6th Payment
Dates, 6.40% per annum and thereafter the lesser of (i) 6.40% per annum and (ii)
the Available Funds Cap.
"CLASS A-4 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-4 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-4 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-4 Certificate Principal Balance is reduced to zero.
"CLASS A-4 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-4 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-4 Certificates as it relates to interest previously paid on the Class
A-4 Certificates.
"CLASS A-4 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-4 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-4 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"CLASS A-4 PASS-THROUGH RATE": For the 1st through the 6th Payment
Dates, 6.58% per annum and thereafter the lesser of (i) 6.58% per annum and (ii)
the Available Funds Cap.
"CLASS A-5 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-5 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-5 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-5 Certificate Principal Balance is reduced to zero.
"CLASS A-5 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-5 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-5 Certificates as it relates to interest previously paid on the Class
A-5 Certificates.
"CLASS A-5 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-5 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-5 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"CLASS A-5 PASS-THROUGH RATE": For the 1st through the 6th Payment
Dates, 6.63% per annum and thereafter the lesser of (i) 6.63% per annum and (ii)
the Available Funds Cap.
"CLASS A-6 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-6 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-6 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-6 Certificate Principal Balance is reduced to zero.
"CLASS A-6 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-6 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-6 Certificates as it relates to interest previously paid on the Class
A-6 Certificates.
"CLASS A-6 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-6 Current Interest, (y) the Class A-6 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-6 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-6 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"CLASS A-6 PASS-THROUGH RATE": For the 1st through the 6th Payment
Dates, 6.87% per annum and thereafter the lesser of (i) 6.87% per annum and (ii)
the Available Funds Cap.
"CLASS A-7 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-7 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-7 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-7 Certificate Principal Balance is reduced to zero.
"CLASS A-7 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-7 Certificates as it relates to interest previously paid on the Class
A-7 Certificates.
"CLASS A-7 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-7 Certificates pursuant to Section 7.03(c) hereof.
"CLASS A-7 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"CLASS A-7 PASS-THROUGH RATE": For any Payment Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.20% per annum and (ii) the Available Funds Cap for such Payment
Date and for any month following the month in which the Clean-Up Call Date
occurs, the lesser of (i) LIBOR plus 0.40% per annum and (ii) the Available
Funds Cap.
"CLASS A-8 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A-8, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-8 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed with respect to the
Class A Principal Distribution Amount pursuant to Section 7.03(d) hereof with
respect to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-8 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-8 Certificate Principal Balance is reduced to zero.
"CLASS A-8 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-8 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-8 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-8 Certificates as it relates to interest previously paid on the Class
A-8 Certificates.
"CLASS A-8 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-8 Current Interest, (y) the Class A-8 Interest Carry
Forward Amount and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-8 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-8 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-8 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-8 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-8 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
"CLASS A-8 PASS-THROUGH RATE": For any Payment Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.30% per annum and (ii) the Available Funds Cap for such Payment
Date and for any month following the month in which the Clean-Up Call Date
occurs, the lesser of (i) LIBOR plus 0.60% per annum and (ii) the Available
Funds Cap.
"CLASS A-9 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-9 Certificate, substantially in the form annexed
hereto as Exhibit A-9, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-9 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-9 Certificates less any amounts actually distributed with respect to the
Class A Distribution Amount pursuant to Section 7.03(d) hereof with respect to
principal thereon on all prior Payment Dates (except for purposes of effecting
the Certificate Insurer's subrogation rights, that portion of Insured Payments
made in respect of principal).
"CLASS A-9 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-9 Certificate Principal Balance is reduced to zero.
"CLASS A-9 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-9 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-9 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-9 Certificates as it relates to interest previously paid on the Class
A-9 Certificates.
"CLASS A-9 DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (x) the Class A-9 Current Interest, (y) the Class A-9 Interest Carry
Forward Amount, and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-9 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-9 INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-9 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-9 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-9 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-9
Pass-Through Rate.
"CLASS A-9 PASS-THROUGH RATE": For any Payment Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.25% per annum and (ii) the Available Funds Cap for such Payment
Date and for any month following the month in which the Clean-Up Call Date
occurs, the lesser of (i) LIBOR plus 0.50% per annum and (ii) the Available
Funds Cap.
"CLASS A-10 CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-10 Certificate, substantially in the form annexed
hereto as Exhibit A-10, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"CLASS A-10 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-10 Certificates less any amounts actually distributed with respect to
the Class A Distribution Amount pursuant to Section 7.03(d) hereof with respect
to principal thereon on all prior Payment Dates (except for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"CLASS A-10 CERTIFICATE TERMINATION DATE": The Payment Date on which
the Class A-10 Certificate Principal Balance is reduced to zero.
"CLASS A-10 CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class A-10 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-10 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-10 Certificates as it relates to interest previously paid on the
Class A-10 Certificates.
"CLASS A-10 DISTRIBUTION AMOUNT": With respect to any Payment Date,
the sum of (x) the Class A-10 Current Interest, (y) the Class A-10 Interest
Carry Forward Amount, and (z) the Class A Principal Distribution Amount payable
to the Owners of the Class A-10 Certificates pursuant to Section 7.03(d) hereof.
"CLASS A-10 INTEREST CARRY FORWARD AMOUNT": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-10 Current Interest as of the immediately preceding Payment Date and (B)
any unpaid Class A-10 Interest Carry Forward Amount from all previous Payment
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-10 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
A-10 Pass-Through Rate. "CLASS A-10 PASS-THROUGH RATE": For the first Payment
Date, LIBOR plus 0.10% per annum. For any other Payment Date, the lesser of (x)
the rate of interest determined in accordance with the Auction Procedures and
(y) the Available Funds Cap.
"CLASS A-11 IO CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-11 IO Certificate, substantially in the form
annexed hereto as Exhibit A-11 IO, executed, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"CLASS A-11 IO CERTIFICATE TERMINATION DATE": The Payment Date on
which the Class A-11 IO Notional Principal Amount is reduced to zero.
"CLASS A-11 IO CURRENT INTEREST": With respect to any Payment Date
during the Interest Only Period, the amount of interest accrued on the Class
A-11 IO Notional Principal Amount immediately prior to such Payment Date during
the related Accrual Period at the Class A-11 IO Pass-Through Rate plus the
Preference Amount owed to the Owners of the Class A-11 IO Certificates as it
relates to interest previously paid on the Class A-11 IO Certificates plus the
Class A-11 IO Interest Carry Forward Amount.
"CLASS A-11 IO INTEREST CARRY FORWARD AMOUNT": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-11 IO Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-11 IO Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution made to Owners
of the Class A-11 IO Certificates on such immediately preceding Payment Date and
(y) 30 days' interest on such amount at the Class A-11 IO Pass-Through Rate.
"CLASS A-11 IO NOTIONAL PRINCIPAL AMOUNT": For each Payment Date
during the Interest Only Period, the aggregate Class A-5 and Class A-6
Certificate Principal Balances immediately prior to such Payment Date and
thereafter, zero.
"CLASS A-11 IO PASS-THROUGH RATE": For the 1st through the 6th Payment
Date, 25.0% per annum; for the 7th through the 18th Payment Date, 6.5% per
annum; thereafter, zero.
"CLASS B APPLIED REALIZED LOSS AMOUNT": As to any Payment Date, the
lesser of (x) the Class B-1 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class B Applied Realized Loss Amount,
if any, on such Payment Date) and (y) the Applied Realized Loss Amount as of
such Payment Date.
"CLASS B CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class B Certificate, substantially in the form annexed hereto
as Exhibit B, executed authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"CLASS B CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B Certificates less the sum of (x) any amounts of the Class B Principal
Distribution Amount actually distributed to the Owners of the Class B
Certificates pursuant to Section 7.03(d) hereof on all prior Payment Dates and
(y) the aggregate, cumulative amount of the Class B Applied Realized Loss
Amounts on all prior Payment Dates plus any amount previously distributed with
respect to principal that is recovered as a voidable preference by a trustee in
bankruptcy pursuant to a final, nonappealable order.
"CLASS B CERTIFICATE TERMINATION DATE": The Payment Date on which the
Class B Certificate Principal Balance is reduced to zero.
"CLASS B CURRENT INTEREST": With respect to any Payment Date, the
amount of interest accrued on the Class B Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class B Certificates as it relates to interest previously paid on the Class B
Certificates.
"CLASS B DISTRIBUTION AMOUNT": With respect to any Payment Date, the
sum of (w) the Class B Current Interest, (x) the Class B Principal Distribution
Amount, if any, (y) the Class B Interest Carry Forward Amount, if any, and (z)
the Class B Realized Loss Amortization Amount, if any.
"CLASS B INTEREST CARRY FORWARD AMOUNT": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class B
Current Interest as of the immediately preceding Payment Date and (B) any unpaid
Class B Interest Carry Forward Amount from all previous Payment Dates exceeds
(ii) the amount of the actual distribution with respect to interest made to the
Owners of the Class B Certificates on such immediately preceding Payment Date
and (y) 30 days' interest on such amount at the Class B Pass-Through Rate.
"CLASS B OPTIMAL CERTIFICATE BALANCE": As of any Payment Date on and
after the Stepdown Date:
(a) if neither a Delinquency Trigger Event nor a
Cumulative Realized Loss Trigger Event is then in
effect, the lesser of:
(i) the product of (x) 97.42% and (y) the
outstanding aggregate Loan Balance of the Home
Equity Loans as of the last day of the related
Remittance Period, and
(ii) the outstanding aggregate Loan Balance of
the Home Equity Loans as of the last day of the
related Remittance Period minus $8,300,000; or
(b) if a Delinquency Trigger Event is then in effect, but
as to which a Cumulative Loss Trigger Event is not in
effect, the lesser of:
(i) the product of (x) 100% minus 45% of the
Three-Month Rolling Average 60+ Delinquency
Rate and (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last
day of the related Remittance Period and
(ii) the outstanding aggregate Loan Balance of
the Home Equity Loans as of the last day of the
related Remittance Period, minus $8,300,000; or
(c) if a Cumulative Realized Loss Trigger Event is in
effect but as to which a Delinquency Trigger Event is
not in effect, the lesser of:
(i) the product of (x) 100% minus the percentage
equivalent of a fraction, the numerator of
which is $35,524,000 and the denominator of
which is the outstanding aggregate Loan Balance
of the Home Equity Loans as of the last day of
the related Remittance Period and (y) the
outstanding aggregate Loan Balance of the Home
Equity Loans as of the last day of the related
Remittance Period and
(ii) the outstanding aggregate Loan Balance of
the Home Equity Loans of the last day of the
related Remittance Period, minus $8,300,000; or
(d) if both a Delinquency Trigger Event and a Cumulative
Realized Loss Trigger Event are then
in effect, the least of:
(i) the product (x) 100% minus 45% of the
Three-Month Rolling Average 60+ Delinquency
Rate and (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last
day of the related Remittance Period,
(ii) the product of (x) 100% minus the percentage
equivalent of a fraction, the numerator of
which is $35,524,000 and the denominator of
which is the outstanding aggregate Loan Balance
of the Home Equity Loans as of the last day of
the related Remittance Period, and (y) the
outstanding aggregate Loan Balance of the Home
Equity Loans as of the last day of the related
Remittance Period, and
(iii) the outstanding aggregate Loan Balance of
the Home Equity Loans as of the last day of the
related Remittance Period, minus $8,300,000.
"CLASS B PASS-THROUGH RATE": For the 1st through the 6th Payment
Dates, 7.62% and thereafter the lesser of (i) 7.62% per annum and (ii) the
Available Funds Cap.
"CLASS B PRINCIPAL DISTRIBUTION AMOUNT": As of any Payment Date on or
after the Stepdown Date, the excess, if any, of (x) the aggregate Certificate
Principal Balance of the Class A Trust Certificates and Class B Certificates
(after taking into account the payment of the Class A Principal Distribution
Amount), over (y) the Class B Optimal Certificate Balance, provided that if the
Class A Trust Certificate Principal Balance has been reduced to zero, 100% of
the Principal Distribution Amount.
"CLASS B REALIZED LOSS AMORTIZATION AMOUNT": As of any Payment Date,
the lesser of (x) the Class B Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Class A Interest Carry Forward Amount, the Reimbursement Amount, the
Extra Principal Distribution Amount and the Class B Interest Carry Forward
Amount, in each case for such Payment Date.
"CLASS R CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C-2, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an interest
designated as a "residual interest" in REMIC II for the purposes of the REMIC
Provisions.
"CLASS R-I CERTIFICATE": Any one of the Certificates designated herein
as a Class R-I Certificate, substantially in the form annexed hereto as Exhibit
C-1, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC I for the purposes of the REMIC Provisions.
"CLEAN-UP CALL DATE": The first Monthly Remittance Date immediately
following the date on which the aggregate Loan Balances of the Home Equity Loans
has declined to $166,000,000 or less.
"CLOSING": As defined in Section 4.02 hereof.
"CODE": The Internal Revenue Code of 1986, as amended.
"COMPENSATING INTEREST": As defined in Section 8.10(a) hereof.
"CONTIMORTGAGE": ContiMortgage Corporation, a Delaware corporation
that is the originator of each Home Equity Loan, one of the Sellers and the
Servicer.
"CONTIWEST": ContiWest Corporation, a Nevada corporation that is one
of the Sellers.
"CORPORATE TRUST OFFICE": The principal office of the Trustee at One
M&T Plaza, Buffalo, New York 14240.
"CORRESPONDING CLASS OF CERTIFICATES": With respect to each class of
the Class I-A-1, I-A-2, I-A-3, I- A-4, I-A-5, I-A-6, I-A-7, I-A-8, I-A-9,
I-A-10, and I-B Certificates in REMIC I described in Section 2.08 hereof, the
Class A-1, Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10 and Class B Certificates, respectively.
"COUPON RATE": The rate of interest borne by each Note.
"CUMULATIVE REALIZED LOSS TERMINATION TRIGGER": A Cumulative Realized
Loss Termination Event occurs on any date of determination if the amount of
Cumulative Realized Losses expressed as a percentage of the Original Aggregate
Loan Balance on any date of determination equals or exceeds the percentage for
such date set out below:
DATE PERCENTAGE
---- ----------
January 1998-December 1999 1.575%
January 2000-December 2000 2.700%
January 2001-December 2001 3.600%
January 2002-December 2002 4.275%
January 2003 and thereafter 4.500%
"CUMULATIVE REALIZED LOSS TRIGGER EVENT": A Cumulative Realized Loss
Trigger Event occurs on any date of determination if the amount of Cumulative
Realized Losses expressed as a percentage of the Original Aggregate Loan Balance
on any date of determination equals or exceeds the percentage for such date set
out below:
DATE PERCENTAGE
---- ----------
January 1998- December 1999 1.05%
January 2000- December 2000 1.80%
January 2001- December 2001 2.40%
January 2002- December 2002 2.85%
January 2003 and thereafter 3.00%
"CUMULATIVE REALIZED LOSSES": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Equity Loans since
the Startup Day.
"CURRENT INTEREST": With respect to any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Fixed Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class A-8 Current Interest, the Class A-9 Current Interest, the Class A-10
Current Interest, the Class A-11 IO Current Interest and the Class B Current
Interest plus the Preference Amount as it relates to interest previously paid on
such Classes prior to such Payment Date.
"CUT-OFF DATE": As of the close of business on December 15, 1997.
"DAILY COLLECTIONS": As defined in Section 8.08(c) hereof.
"DATE-OF-PAYMENT LOANS": Any Home Equity Loan as to which, pursuant to
the Note relating thereto, interest is computed and charged to the Mortgagor at
the Coupon Rate on the outstanding principal balance of such Note based on the
number of days elapsed between receipt of the Mortgagor's last payment through
receipt of the Mortgagor's most current payment.
"DELINQUENCY ADVANCE": As defined in Section 8.09(a) hereof.
"DELINQUENCY TRIGGER EVENT": A Delinquency Trigger Event has occurred
with respect to a Payment Date on or after the Stepdown Date if 55% of the
Three-Month Rolling Average of 60+ Day Delinquency Rate equals or exceeds the
Senior Specified Enhancement Percentage.
"DELINQUENT": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"DELIVERY ORDER": Each delivery order in the form set forth as Exhibit
G hereto and delivered by each Seller to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"DEPOSITOR": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"DEPOSITORY": The Depository Trust Company, 7 Hanover Square, New
York, New York 10004, and any successor Depository hereafter named.
"DESIGNATED DEPOSITORY INSTITUTION": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer acting in its fiduciary capacity, having combined capital and surplus of
at least $50,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A2" by Moody's, and, if rated by Fitch, at
least "A" by Fitch (ii) a short-term debt rating of at least "A-1" by Standard &
Poor's and (iii) if such Principal and Interest Account is moved to a new
institution, the Servicer shall provide the Trustee, the Certificate Insurer and
the Owners with a statement identifying the location of the Principal and
Interest Account.
"DETERMINATION DATE": As to each Payment Date, the third Business Day
next preceding such Payment Date.
"DIRECT PARTICIPANT" or "DTC PARTICIPANT": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"DISQUALIFIED ORGANIZATION": The meaning set forth from time to time
in the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"ELIGIBLE INVESTMENTS": Those investments so designated pursuant to
Section 7.07 hereof.
"EXTRA PRINCIPAL DISTRIBUTION AMOUNT": As of any Payment Date, the
lesser of (x) the Monthly Excess Interest Amount for such Payment Date and (y)
the Overcollateralization Deficiency for such Payment Date.
"FANNIEMAE": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FANNIEMAE GUIDE": FannieMae's Servicing Guide, as the same may be
amended by FannieMae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"FILE": The documents delivered to the Trustee pursuant to Section
3.05 hereof pertaining to a particular Home Equity Loan and any additional
documents required to be added to the File pursuant to this Agreement.
"FINAL DETERMINATION": As defined in Section 9.03(a) hereof.
"FINAL SCHEDULED PAYMENT DATE": For each Class of Certificates, as set
out in Section 2.08(k).
"FIRST MORTGAGE LOAN": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to the related Property.
"FISCAL AGENT": State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Certificate Insurer under the Certificate Insurer Policy or any
successor thereto appointed by the Certificate Insurer.
"FITCH": Fitch IBCA, Inc.
"FIXED RATE CERTIFICATES": The Class A-1, Class A-2 Fixed, Class A-3,
Class A-4, Class A-5, Class A-6 and Class A-11 IO and Class B Certificates.
"FIXED RATE HOME EQUITY LOANS": The Home Equity Loans identified in
the related Schedule of Home Equity Loans as having fixed Coupon Rates in
Schedule I-A hereto, including any Qualified Replacement Mortgages delivered in
replacement thereof.
"FIXED RATE PAC GROUP": The Class A-2 Fixed, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates.
"FLOATING RATE CERTIFICATES": The Class A-7, Class A-8 and Class A-9
Certificates.
"FLOATING RATE PAC GROUP": The Class A-7 and Class A-8 Certificates.
"GRANTOR TRUST": The ContiMortgage Grantor Trust 1997-A formed
pursuant to the Grantor Trust Agreement.
"GRANTOR TRUST AGREEMENT": That certain Grantor Trust Agreement dated
as of December 1, 1997 between the Depositor, ContiMortgage Corporation, as
Servicer and the Grantor Trustee pursuant to which the Class A-2 Floating
Certificate are issued.
"GRANTOR TRUSTEE": Manufacturers and Traders Trust Company, as trustee
under the Grantor Trust Agreement.
"HIGHEST LAWFUL RATE": As defined in Section 11.13.
"HOME EQUITY LOANS": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
"INDEMNIFICATION AGREEMENT": The Indemnification Agreement dated
December 16, 1997 among the Certificate Insurer, the Depositor, the Sellers, the
Servicer, and the Underwriters.
"INDIRECT PARTICIPANT": Any financial institution for whom any Direct
Participant holds an interest in a Offered Certificate.
"INSURANCE AGREEMENT": The Insurance Agreement dated as of December
23, 1997, among the Depositor, the Sellers, the Servicer, the Certificate
Insurer, the Trustee and the Grantor Trustee as it may be amended from time to
time.
"INSURANCE COMMITMENT LETTER": Two letters, each dated December 22,
1997 from MBIA to ContiMortgage Corporation evidencing the commitment by MBIA to
issue the insurance policies..
"INSURANCE POLICY": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"INSURED PAYMENT": With respect to any Payment Date, without
duplication, (A) the excess, if any, of (i) the sum of the aggregate Current
Interest for the Class A Trust Certificates and the then existing related
Overcollateralization Deficit, if any, over (ii) the Total Available Funds after
taking into account the portion of any Principal Distribution Amount to be
actually distributed on such Payment Date without regard to any Insured Payment
to be made with respect to such Payment Date plus (B) an amount equal to the
Preference Amount with respect to the Class A Trust Certificates plus (C) the
excess, if any, on the December 15, 1998 Payment Date of (i) the Certificate
Principal Balance of the Class A-1 Certificates over (ii) the Principal
Remittance Amount for such Payment Date.
"INSURANCE PROCEEDS": Payments received with respect to any Insurance
Policy, except the Certificate Insurance Policy.
"INTEREST AMOUNT AVAILABLE": As of any Payment Date, the Interest
Remittance Amount less the Trustee Fee, the Premium Amount and the Auction Agent
Fee.
"INTEREST ONLY PERIOD": The period from the Startup Day through and
including the Payment Date in June 1999.
"INTEREST REMITTANCE AMOUNT": As of any Monthly Remittance Date, the
sum, without duplication, of (i) all interest due during the related Remittance
Period with respect to the Home Equity Loans (less the Servicing Fee with
respect to such Home Equity Loans), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date with respect to Home Equity Loans,
(iii) the portion of the Substitution Amount relating to interest on the Home
Equity Loans, (iv) the portion of any Loan Purchase Price relating to interest
on any Home Equity Loan repurchased during the related Remittance Period and (v)
the portion of Net Liquidation Proceeds relating to interest on the Home Equity
Loans.
"LATE PAYMENT RATE": For any Payment Date, the fluctuating rate of
interest, as it is published from time to time in the New York, New York edition
of The Wall Street Journal under the caption "Money Rates" as the "prime rate,"
to change when and as such published prime rate changes plus 2%. The Late
Payment Rate shall be computed on the basis of a year of 360 days calculating
the actual number of days elapsed. In no event shall the Late Payment Rate
exceed the maximum rate permissible under any applicable law limiting interest
rates.
"LIBOR": (A) With respect to any Accrual Period for the Floating Rate
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one- month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks. (B) With respect to the Auction Rate
Certificates, the rate calculated in accordance with the Auction Rate
Certificates.
"LIBOR DETERMINATION DATE": With respect to any Accrual Period for the
Floating Rate Certificates or the Auction Rate Certificates, the first London
Business Day preceding the commencement of such Accrual Period.
"LIQUIDATED LOAN": As defined in Section 8.13(b) hereof.
"LIQUIDATION EXPENSES": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of any
defaulted Home Equity Loan, such expenses including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.09(b) with respect to the related Home Equity
Loan.
"LIQUIDATION PROCEEDS": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"LOAN BALANCE": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such Home Equity Loan included in
previous Monthly Remittance Amounts, provided, however, that the Loan Balance
for any Home Equity Loan that has become a Liquidated Loan shall be zero as of
the first day of the Remittance Period following the Remittance Period in which
such Home Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"LOAN PURCHASE PRICE": With respect to any Home Equity Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances and Servicing Advances which the Servicer has theretofore
failed to remit with respect to such Home Equity Loan and (iii) all reimbursed
Delinquency Advances to the extent that reimbursement is not made from the
Mortgagor or from Liquidation Proceeds from the respective Home Equity Loan.
"LOAN-TO-VALUE RATIO": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"LONDON BUSINESS DAY": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"MONTHLY EXCESS CASHFLOW AMOUNT": For any Payment Date, the sum of (x)
the Monthly Excess Interest Amount and (y) the Overcollateralization Release
Amount for such Payment Date.
"MONTHLY EXCESS INTEREST AMOUNT": With respect to any Payment Date,
the excess, if any, of (i) the Interest Amount Available for the related
Remittance Period over (ii) the aggregate Current Interest plus the aggregate
Interest Carry Forward Amount, if any, with respect to the Class A Trust
Certificates on such Payment Date plus the Current Interest with respect to the
Class B Certificates.
"MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance Date, the
sum of (i) the Interest Remittance Amount and (ii) the Principal Remittance
Amount for such Monthly Remittance Date.
"MONTHLY REMITTANCE DATE": The 10th day of each month or, if such day
is not a Business Day, the Business Day succeeding such day, commencing in the
month following the Startup Day.
"MOODY'S": Moody's Investors Service, Inc.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"MORTGAGOR": The obligor on a Note.
"NET LIQUIDATION PROCEEDS": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"NOTE": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"OFFERED CERTIFICATES": Collectively, the Class A Trust Certificates
(other than the Class A-2 Fixed Certificates) and the Subordinate Certificates.
"OFFICER'S CERTIFICATE": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the Trustee.
"OPERATIVE DOCUMENTS": Collectively, this Agreement, the Underwriting
Agreement, the Certificates, the Certificate Insurance Policy, the Insurance
Agreement, the Indemnification Agreement and the Auction Agent Agreement.
"ORIGINAL AGGREGATE LOAN BALANCE": The aggregate Loan Balances of the
Home Equity Loans as of the Cut-Off Date, i.e., $1,659,999,955.95.
"OUTSTANDING": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust for the Owners
of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen
for which replacement Certificates have been issued as provided for in
Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"OVERCOLLATERALIZATION AMOUNT": As of any Payment Date, the positive
difference, if any, between (x) the outstanding aggregate Loan Balance of the
Home Equity Loans as of the last day of the immediately preceding Remittance
Period and (y) the aggregate Certificate Principal Balance of the Class A Trust
Certificates and Class B Certificates (after taking into account all
distributions of principal on such Certificates as of such Payment Date).
"OVERCOLLATERALIZATION DEFICIENCY": As of any Payment Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Payment Date over (y) the Overcollateralization Amount for such Payment Date,
calculated for this purpose after taking into account the reduction on such
Payment Date of the aggregate Certificate Principal Balance of the Class A Trust
Certificates and Class B Certificates resulting from the distribution of the
Principal Remittance Amount (but not the Extra Principal Distribution Amount or
the principal component of any Insured Payment) on such Payment Date, but prior
to taking into account any Applied Realized Loss Amount on such Payment Date.
"OVERCOLLATERALIZATION DEFICIT": For any Payment Date, the excess of
the aggregate Class A Trust Certificate Principal Balance over the outstanding
aggregate Loan Balance of the Home Equity Loans as of the last day of the
related Remittance Period, calculated after taking into account the reduction on
such Payment Date of the Class A Trust Certificate Principal Balance resulting
from the distribution of the related Principal Remittance Amount on such Payment
Date.
"OVERCOLLATERALIZATION FLOOR": $8,300,000.
"OVERCOLLATERALIZATION RELEASE AMOUNT": As of any Payment Date, the
lesser of (x) the Principal Remittance Amount for such Payment Date and (y) the
excess of (i) the Overcollateralization Amount for such Payment Date, assuming
that 100% of the Principal Remittance Amount is applied on such Payment Date to
the payment of principal on the Class A Trust Certificates and Class B
Certificates over (ii) the Targeted Overcollateralization Amount for such
Payment Date.
"OWNER": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section 5.06 and
Section 7.03 (h) hereof, respectively hereof; provided that solely for the
purposes of determining the exercise of any voting rights hereunder, if any
Offered Certificates are beneficially owned by a Seller or any affiliate
thereof, such Seller or such affiliate shall not be considered an Owner
hereunder.
"PAC CERTIFICATES": Any of the Class A-2 Fixed, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, or Class A-8 Certificates.
"PAYING AGENT": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"PAYMENT DATE": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day.
"PERCENTAGE INTEREST": With respect to a Class of the Offered
Certificates, a fraction, expressed as a percentage, the numerator of which is
the initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Certificates in such Class. With respect to the Class
A-11 IO Certificates a fraction, expressed as a percentage, the numerator of
which is the initial Class A-11 IO Notional Principal Amount represented by such
Class A-11 IO Certificate and the denominator of which is the aggregate initial
Class A-11 IO Notional Principal Amount represented by all of the Class A-11 IO
Certificates. With respect to a Class R Certificate, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate, all of which shall total 100% with respect to the related Class.
"PERSON": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLANNED PRINCIPAL BALANCE": With respect to any Class of PAC
Certificates and any Payment Date, the respective balance for such Class set
forth opposite such Payment Date in the Planned Principal Balance Schedule set
forth as Exhibit VI hereto.
"PREFERENCE AMOUNT": With respect to the Class A Trust Certificates
and Class B Certificates, any amounts of Current Interest and principal included
in previous distributions to the Owners of such Certificates which are recovered
from such Owners as a voidable preference by a trustee in bankruptcy pursuant to
the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Owners.
"PREMIUM AMOUNT": With respect to any Payment Date, one-twelfth of the
Premium Percentage multiplied by the aggregate Certificate Principal Balance of
the Class A Trust Certificates immediately prior to such Payment Date.
"PREMIUM PERCENTAGE": As defined in the Insurance Commitment Letter.
"PREPAID INSTALLMENT": With respect to any Home Equity Loan, any
installment of principal thereof and interest thereon received by the Servicer
prior to the scheduled due date for such installment, intended by the Mortgagor
as an early payment thereof and not as a Prepayment with respect to such Home
Equity Loan.
"PREPAYMENT": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment),
Substitution Amounts, the portion of the purchase price of any Home Equity Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.06(b), 8.10(b) or
8.13(a) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Home Equity
Loan shall be deemed to be Prepayments for all purposes of this Agreement.
"PRESERVATION EXPENSES": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"PRINCIPAL AND INTEREST ACCOUNT": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"PRINCIPAL DISTRIBUTION AMOUNT": As of any Payment Date, the sum of
(i) the Principal Remittance Amount (minus, for Payment Dates occurring on and
after the Stepdown Date the Overcollateralization Release Amount, if any) and
(ii) the Extra Principal Distribution Amount, if any.
"PRINCIPAL REMITTANCE AMOUNT": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the
Servicer with respect to Home Equity Loans during the related Remittance Period,
(ii) the Loan Balance of each Home Equity Loan that was purchased from the
Trustee during the related Remittance Period, (iii) any Substitution Amounts
relating to principal delivered by the Seller in connection with a substitution
of a Home Equity Loan during the related Remittance Period (iv) any Insurance
Proceeds, (v) all Net Liquidation Proceeds actually collected by the Servicer
with respect to the Home Equity Loans during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal).
"PROHIBITED TRANSACTION": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"PROPERTY": The underlying property (including all building thereon)
securing a Home Equity Loan.
"PROSPECTUS": The Prospectus dated December 16, 1997 constituting part
of the Registration Statement.
"PROSPECTUS SUPPLEMENT": The ContiMortgage Home Equity Loan Trust
1997-5 Prospectus Supplement dated December 16, 1997 to the Prospectus.
"PURCHASE OPTION PERIOD": As defined in Section 9.03(a) hereof.
"QUALIFIED LIQUIDATION": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust.
"QUALIFIED MORTGAGE": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED REPLACEMENT MORTGAGE": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a Coupon
Rate at least equal to the Coupon Rate of the Home Equity Loan being replaced,
(ii) is of the same property type or is a single family dwelling and the same
occupancy status or is a primary residence as the replaced Home Equity Loan,
(iii) shall mature no later than December 15, 2028, (iv) has a Loan-to-Value
Ratio as of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio
of the replaced Home Equity Loan at such time, (v) shall be of the same or
higher credit quality classification (determined in accordance with
ContiMortgage's credit underwriting guidelines set forth in ContiMortgage's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) has a Loan Balance as of the related Replacement Cut-Off
Date equal to or less than the Loan Balance of the replaced Home Equity Loan as
of such Replacement Cut-Off Date, (vii) shall not provide for a "balloon"
payment if the related Home Equity Loan did not provide for a "balloon" payment
(and if such related Home Equity Loan provided for a "balloon" payment, such
Qualified Replacement Mortgage shall have an original maturity of not less than
the original maturity of such related Home Equity Loan), (viii) shall be a fixed
rate Home Equity Loan if the Home Equity Loan being replaced is a Fixed Rate
Home Equity Loan and shall be a first lien adjustable rate Home Equity Loan if
the Home Equity Loan being replaced is an Adjustable Rate Home Equity Loan and
(ix) satisfies the criteria set forth from time to time in the definition
thereof at Section 860G(a)(4) of the Code (or any successor statute thereto) and
applicable to the Trust.
"RATING AGENCIES": Collectively, Moody's, Standard & Poor's and Fitch
or any successors thereto.
"REALIZED LOSS": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess of Net
Liquidation Proceeds realized thereon applied in reduction of such Loan Balance.
"RECORD DATE": With respect to the Fixed Rate Certificates (other than
the Class A-1 Certificates) and any Payment Date, the last day of the calendar
month immediately preceding the calendar month in which such Payment Date occurs
and with respect to the Floating Rate Certificates, the Class A-1 Certificates
and the Auction Rate Certificates, the day immediately preceding such Payment
Date.
"REFERENCE BANKS": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee (or the Auction Agent in the case of the Auction
Rate Certificates) which are engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business
in London, (ii) not controlling, under the control of or under common control
with either Seller or any affiliate thereof, (iii) whose quotations appear on
Telerate Page 3750 on the relevant LIBOR Determination Date and (iv) which have
been designated as such by the Trustee (or the Auction Agent in the case of the
Auction Rate Certificates).
"REGISTER": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"REGISTRAR": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"REGISTRATION STATEMENT": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39505), including all amendments thereto and including the Prospectus
relating to the Offered Certificates constituting a part thereof.
"REIMBURSEMENT AMOUNT": As of any Payment Date and as to each of the
Certificate Insurance Policy and the Certificate Insurance Policy--Grantor
Trust, the sum of (x)(i) all Insured Payments under each such policy, previously
paid to the Trustee or the Grantor Trustee by the Certificate Insurer and not
previously repaid to the Certificate Insurer pursuant to Section 7.03(b)(d) and
(f) hereof plus (ii) interest accrued on each such Insured Payment not
previously repaid calculated at the Reimbursement Late Payment Rate and (y)(i)
any amounts then due and owing to the Certificate Insurer under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee, the Depositor and the Sellers of
the amount of any Reimbursement Amount.
"REIMBURSEMENT LATE PAYMENT RATE": Means for any Payment Date, the
rate of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under any applicable law limiting interest rates.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": A REMIC established pursuant to Section 2.08 hereof.
"REMIC II": A REMIC established pursuant to Section 2.08 hereof.
"REMIC OPINION": As defined in Section 3.03 hereof.
"REMIC PROVISIONS": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"REMITTANCE PERIOD": The calendar month immediately preceding the
month in which a Monthly Remittance Date occurs.
"REO PROPERTY": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"REPLACEMENT CUT-OFF DATE": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"REPRESENTATION LETTER": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Register under the nominee name of the
Depository.
"RESIDUAL CERTIFICATES": Collectively, the Class R-I and Class R
Certificates.
"RETAINED CERTIFICATES": Collectively, the Class R-I and Class R
Certificates.
"SCHEDULE OF HOME EQUITY LOANS": Each of the schedules of Home Equity
Loans, segregated by Fixed Rate Home Equity Loans and Adjustable Rate Home
Equity Loans, listing each Home Equity Loan in such category to be conveyed on
the Startup Day. Such Schedules of Home Equity Loans shall identify each Home
Equity Loan by the Servicer's loan number and the borrower's name and address
(including the state) of the Property and shall set forth as to each Home Equity
Loan the lien status thereof (and with respect to Adjustable Rate Home Equity
Loans, the margin), the Loan-to-Value Ratio and the Loan Balance as of the
Cut-Off Date, the Coupon Rate thereof, the current scheduled monthly payment of
principal and interest and the maturity of the related Note, the property type,
occupancy status, Appraised Value and original term-to- maturity thereof,
whether or not such Home Equity Loan (including the related Note) has been
modified and the aggregate Loan Balances of all Home Equity Loans. Such
Schedules shall also identify the Seller of each Home Equity Loan.
"SCHEDULED PAYMENT": As of any date of calculation, with respect to a
Home Equity Loan, the then stated scheduled monthly installment of principal and
interest payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date).
"SECOND MORTGAGE LOAN": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SELLERS": ContiMortgage and ContiWest.
"SENIOR ENHANCEMENT PERCENTAGE": For any Payment Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balance of the Subordinate Certificates and (ii) the Overcollateralization
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount on such Payment Date by (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last day of the related Remittance
Period.
"SENIOR LIEN": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Property having a first priority lien.
"SENIOR OPTIMAL BALANCE": As of any Payment Date on and after the
Stepdown Date:
(a) if neither a Delinquency Trigger Event nor a
Cumulative Realized Loss Trigger Event is then in
effect, the lesser of
(i) the product of (x) 90.54 % and (y) the
outstanding aggregate Loan Balance of the Home
Equity Loans as of the last day of the related
Remittance Period, and
(ii) the outstanding aggregate Loan Balance of
the Home Equity Loans as of the last day of the
related Remittance Period minus $8,300,000 or
(b) a Delinquency Trigger Event is then in effect, but as
to which a Cumulative Realized Loss Trigger Event is
not in effect, the lesser of:
(i) the product of (x) 100% minus 45% of the
Three-Month Rolling Average 60+ Delinquency
Rate and (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last
day of the related Remittance Period, and
(ii) the outstanding aggregate Loan Balance of
the Home Equity Loans as of the last day of the
related Remittance Period minus $8,300,000; or
(c) if a Cumulative Realized Loss Trigger Event is in
effect but as to which a Delinquency Trigger Event is
not in effect, the lesser of:
(i) the product of (x) 93.12 % minus the
percentage equivalent of a fraction, the
numerator of which is $35,524,000 and the
denominator of which is the outstanding
aggregate Loan Balance of the Home Equity Loans
as of the last day of the related Remittance
Period and (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last
day of the related Remittance Period, and
(ii) the outstanding aggregate Loan Balance of
the Home Equity Loans of the last day of the
related Remittance Period, minus $8,300,000; or
(d) if both a Delinquency Trigger Event and a Cumulative
Realized Loss Trigger Event are then in effect, the
least of:
(i) the product (x) 100% minus 45% of the
Three-Month Rolling Average 60+ Delinquency
Rate and (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last
day of the related Remittance Period,
(ii) the product of (x) 93.12 % minus the
percentage equivalent of a fraction, the
numerator of which is $35,524,000 and the
denominator of which is the outstanding
aggregate Loan Balance of the Home Equity Loans
as of the last day of the related Remittance
Period, and (y) the outstanding aggregate Loan
Balance of the Home Equity Loans as of the last
day of the related Remittance Period and
(iii) the outstanding aggregate Loan Balance of
the Home Equity Loans as of the last day of the
related Remittance Period, minus $8,300,000.
"SENIOR SPECIFIED ENHANCEMENT PERCENTAGE": On any date of
determination thereof means 9.46%.
"SERVICER": ContiMortgage Corporation, a Delaware corporation, and its
permitted successors and assigns.
"SERVICER AFFILIATE": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"SERVICING ADVANCE": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"SERVICING FEE": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to the
Servicing Fee Rate times the then outstanding principal amount of such Home
Equity Loan as of the first day of each calendar month payable on a monthly
basis.
"SERVICING FEE RATE": 0.50% per annum.
"60+ DAY DELINQUENT LOAN": With respect to any Determination Date, all
REO Properties, each Home Equity Loan with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, two
months or more past due (without giving effect to any grace period), each Home
Equity Loan in Foreclosure and each Home Equity Loan for which the mortgagor has
filed for bankruptcy.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc.
"STARTUP DAY": December 23, 1997.
"STEPDOWN DATE": The later to occur of (x) the Payment Date in January
2001 and (y) the first Payment Date on which the Senior Enhancement Percentage
(after taking into account distributions of principal on such Payment Date) is
equal to or greater than the Senior Specified Enhancement Percentage.
"SUBORDINATE CERTIFICATES": The Class B Certificates.
"SUB-SERVICER": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"SUB-SERVICING AGREEMENT": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"SUBSTITUTION AMOUNT": As defined in Section 3.03 hereof.
"TARGETED OVERCOLLATERALIZATION AMOUNT": On any Payment Date (w) prior
to the seventh Payment Date, zero, (x) after the sixth Payment Date but prior to
the Stepdown Date, $19,920,000 and (y) on or after the Stepdown Date (A) if
neither a Delinquency Trigger Event nor a Cumulative Realized Loss Trigger Event
is in effect, the greater of (x) 2.58% of the aggregate outstanding Loan Balance
of the Home Equity Loans as of the last day of the related Remittance Period and
(y) the Overcollateralization Floor or (B) if a Delinquency Trigger Event is in
effect but a Cumulative Realized Loss Trigger Event is not in effect, the
Targeted Overcollateralization Amount will be equal to the Targeted
Overcollateralization Amount for the immediately preceding Payment Date or (C)
if a Cumulative Realized Loss Trigger Event is in effect (whether or not a
Delinquency Trigger Event is in effect), the product of (i) 2.14% and (ii) the
Original Aggregate Loan Balance.
"TAX MATTERS CERTIFICATE": Each of the Class R-I and Class R
Certificates initially issued to ContiFunding Corporation as the initial Tax
Matters Person.
"TAX MATTERS PERSON": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"TAX MATTERS PERSON RESIDUAL INTEREST": The 0.001% interest in the
Class R Certificates and the Class R-I, each of which shall be issued to and
held by ContiFunding Corporation throughout the term hereof unless another
Person shall accept an assignment of such interest and the designation of Tax
Matters Person pursuant to Section 11.18 hereof.
"TELERATE PAGE 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"TERMINATION DATE PASS-THROUGH RATE": A rate equal to the sum of (a)
Weighted Average Pass-Through Rate, (b) any portion of the Trustee Fee
(calculated as a percentage of the outstanding principal amount of the Offered
Certificates) then accrued and outstanding and (c) the Premium Amount
(calculated as a percentage of the outstanding principal amount of the Class A
Trust Certificates) then accrued and outstanding.
"TERMINATION NOTICE": As defined in Section 9.03(a) hereof.
"THREE-MONTH ROLLING AVERAGE 60+ DAY DELINQUENCY RATE": With respect
to a Payment Date, the fraction, expressed as a percentage (A) the numerator of
which is the sum of the following three percentages for each of the past three
Remittance Periods (x) the principal amount of 60+ Day Delinquent Loans by (y)
the aggregate outstanding Loan Balance as of the last day of the related
Remittance Period for each of the past three Remittance Periods and (B) the
denominator of which is 3.
"TOTAL AVAILABLE FUNDS": As of any Payment Date, the sum of (a) the
Interest Amount Available and (b) the Principal Remittance Amount, less any such
amount that cannot be distributed to the Owners of the Class A Trust
Certificates as a result of proceedings under the United States Bankruptcy Code.
"TRUST": ContiMortgage Home Equity Loan Trust 1997-5, the trust
created under this Agreement.
"TRUST ESTATE": As defined in the conveyance clause under this
Agreement.
"TRUSTEE": Manufacturers and Traders Trust Company, a New York banking
corporation, the Corporate Trust Department of which is located on the date of
execution of this Agreement at One M&T Plaza, Buffalo, New York 14240, not in
its individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"TRUSTEE FEE": The fee payable monthly on each Payment Date in an
amount equal to one-twelfth of the sum of (i) 0.0009% multiplied by the
then-outstanding Aggregate Trust Certificate Principal Balance and (ii) $5500.
"TRUSTEE FEE RATE": A fraction expressed as a percentage, the
numerator of which is the product of (x) 12 and (y) the Trustee Fee and the
denominator of which is the Aggregate Trust Certificate Principal Balance.
"UNDERWRITERS": Greenwich Capital Markets, Inc., Bear, Stearns & Co.,
ContiFinancial Services Corporation, Credit Suisse First Boston, Merrill Lynch,
Pierce, Fenner & Smith, Inc., Morgan Stanley & Co. Incorporated and Nomura
Securities International, Inc.
"UNPAID REALIZED LOSS AMOUNT": With respect to any Payment Date, the
excess of (x) the aggregate cumulative amount of Class B Applied Realized Loss
Amounts for all prior Payment Dates over (y) the aggregate, cumulative amount of
Class B Realized Loss Amortization Amounts for all prior Payment Dates.
Section 1.02 USE OF WORDS AND PHRASES.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
<PAGE>
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the
laws of the State of New York and this Agreement, the Trust, which, for
convenience, shall be known as "ContiMortgage Home Equity Loan Trust 1997-5."
Section 2.02 OFFICE.
The office of the Trust shall be in care of the Trustee, addressed to
One M&T Plaza, Buffalo, New York 14240, Attention Corporate Trust
Administration, or at such other address as the Trustee may designate by notice
to the Depositor, the Seller, the Certificate Insurer and the Servicer.
Section 2.03 PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect any of the REMIC I's or REMIC II's status as a REMIC.
Section 2.04 APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 EXPENSES OF THE TRUST.
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section 7.03(b)
hereof), (ii) any reasonable expenses of the Trustee, and (iii) any other
expenses of the Trust that have been reviewed by ContiMortgage, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
ContiMortgage. ContiMortgage shall pay directly the reasonable fees and expenses
of counsel to the Trustee. The reasonable fees and expenses of the Trustee's
counsel in connection with the review and delivery of this Agreement and related
documentation shall be paid by ContiMortgage on the Startup Day.
Section 2.06 OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in the
State of New York and payments will be received by the Trustee only in the State
of New York and payments from the Trustee will be made only from the State of
New York. The Trust's only office will be at the office of the Trustee as set
forth in Section 2.02 hereof.
Section 2.08 MISCELLANEOUS REMIC PROVISIONS.
(a) The Trustee shall elect that each of REMIC I and REMIC II
shall be treated as a REMIC under Section 860D of the Code. Any inconsistencies
or ambiguities in this Agreement or in the administration of this Agreement
shall be resolved in a manner that preserves the validity of such REMIC
elections. The assets of REMIC I shall include the Home Equity Loans, the
Accounts, any REO Property, and any proceeds of the foregoing. The REMIC I
Regular Certificates (as defined below) shall constitute the assets of REMIC II.
(b) The REMIC I will be evidenced by the REMIC I Regular
Interests, described below, which will be uncertificated and non-transferable
and are hereby designated as the "regular interests" in the REMIC I and (y) the
Class R-I Certificates, which are hereby designated as the single "residual
interest" in the REMIC I (the REMIC I Regular Certificates, together with the
Class R-I Certificates, the "REMIC I Certificates"). The REMIC I Regular
Interests shall be recorded on the records of the REMIC I as being issued to and
held by the Trustee on behalf of REMIC II.
On each of the first six Payment Dates, the Principal Remittance
Amount shall reduce the principal balances of the REMIC I Certificates in the
same manner that such collections are payable with respect to the Corresponding
Classes of Certificates. Thereafter, the Principal Remittance Amount shall
reduce the principal balances of the Class I-A-5 and Class I-A-6 Certificates to
the same extent such collections are payable with respect to the Class A-5 and
Class A-6 Certificates, respectively, and any remaining Principal Remittance
Amount shall reduce the principal balances of the REMIC I Regular Certificates
(other than the Class I-A-5 and Class I-A-6 Certificates) pro rata based on
their current principal balances. To the extent that any Monthly Excess Interest
Amount is paid to the Class A-5 Certificates as an Extra Principal Distribution
Amount, an amount of interest, equal to such payment, that would otherwise be
payable on the REMIC I Regular Certificates (other than the Class I-A-5 and
Class I- A-6 Certificates) shall instead be paid as principal on the Class I-A-5
Certificates (and will be accrued and added to principal on the REMIC I Regular
Certificate (other than the Class I-A-5 and Class I-A-6 Certificates) pro rata
based on their current principal balances). Similarly, to the extent that any
Monthly Excess Interest Amount is paid to the Class A-6 Certificates as an Extra
Principal Distribution Amount, an amount of interest, equal to such payment,
that would otherwise be payable on the REMIC I Regular Certificates (other than
the Class I-A-5 and Class I-A-6 Certificates) shall instead be paid as principal
on the Class I-A-6 Certificates (and will be accrued and added to principal on
the REMIC I Regular Certificate (other than the Class I-A-5 and Class I-A-6
Certificates) pro rata based on their current principal balances). On each of
the first six Payment Dates, Realized Losses on the Home Equity Loans shall be
allocated to a Class of REMIC I Certificates to the same extent Realized Losses
are allocable to its Corresponding Class of Certificates. For subsequent payment
dates, Realized Losses shall be allocated to the Class I-A-5 and Class I-A-6
Certificates to the same extent Realized Losses are allocated to the Class A-5
and Class A-6 Certificates, and otherwise allocated to the REMIC I Regular
Certificates, other than the Class I-A-5 and Class I-A-6 Certificates and
apportioned among such Certificates pro rata based on their current principal
balances. The REMIC I Certificates will have the following designations and
Pass-Through Rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:
<TABLE>
<CAPTION>
REMIC I INITIAL PASS-THROUGH ALLOCATION ALLOCATION
CERTIFICATES BALANCE RATE PRINCIPAL OF INTEREST
- ------------ ------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
I-A-1 $103,340,000 (1) (3) (4)
I-A-2 $675,000,000 (1) (3) (4)
I-A-3 $ 63,000,000 (1) (3) (4)
I-A-4 $140,000,000 (1) (3) (4)
I-A-5 $ 40,000,000 (2) (3) (4),(5)
I-A-6 $115,540,000 (2) (3) (4),(5)
I-A-7 $130,000,000 (1) (3) (4)
I-A-8 $109,520,000 (1) (3) (4)
I-A-9 $ 35,605,000 (1) (3) (4)
I-A-10 $194,875,000 (1) (3) (4)
I-B $ 53,120,000 (1) (3) (4)
R-I $0(6) 0% N/A N/A
- -----------------
(1) For each of the first six Payment Dates, the Pass-Through Rate for each
of these REMIC I Certificates shall be equal to the Pass-Through Rate of
its Corresponding Class of Certificates, determined except in the case of
the Class I-A-7, I-A-8, I-A-9 and I-A-10 Certificates) without regard to
the Available Funds Cap. Thereafter, the Pass-Through Rate on these REMIC I
Regular Interests shall at any time of determination equal the weighted
average of the Coupon Rates of the Home Equity Loans net of the Servicing
Fee, Trustee Fee, the Premium Percentage, and the Auction Agent Fee
(including the Broker-Dealer Fee).
(2) For each of the first six Payment Dates, the Pass-Through Rate for each
of these REMIC I Certificates shall be equal to the Pass-Through Rate of
its Corresponding Class of Certificates, determined without regard to the
Available Funds Cap, plus 25%. Thereafter, the Pass-Through Rate on these
REMIC I Regular Interests shall at any time of determination equal the
weighted average of the Coupon Rates of the Home Equity Loans net of the
Servicing Fee, Trustee Fee, the Premium Percentage, and the Auction Agent
Fee (including the Broker-Dealer Fee).
(3) Principal will be allocable to and apportioned among the Class A-1,
Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10, and Class B Certificates to the extent
and in the manner provided in Section 7.03.
(4) Except as provided in footnote (5), interest will be allocable to the
Class A-1, Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class A-10 and Class B Certificates to the
extent and in the manner provided in Section 7.03.
(5) For the first six Payment Dates, 2500 basis points of the interest on this
Class will be allocated to the Class A-11 IO Certificates and remaining
interest on this Class will be allocated to the Corresponding Class of
Certificates. For the seventh through and including the eighteenth Payment
Dates, 650 basis points of the interest on this Class will be allocated to
the Class A-11 IO and interest in excess of such amounts shall be allocable
to the Class A-1, Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class B Certificates
to the extent and in the manner provided in Section 7.03.
(6) On each Distribution Date, available funds, if any, remaining in REMIC
I after payments of interest and principal, as designated above, will be
distributed to the Class R-I Certificate.
</TABLE>
(c) The Class A-1, Class A-2 Fixed, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11 IO and
Class B Certificates are hereby designated as "regular interests" with respect
to the REMIC II (the "REMIC II Regular Certificates") and the Class R
Certificate is hereby designated as the single "residual interest" with respect
to the REMIC II.
(d) The Startup Day is hereby designated for both REMIC I and
REMIC II as the "startup day" within the meaning of Section 860G(a)(9) of the
Code.
(e) Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii)
of the Treasury regulations promulgated under Section 860G of the Code, the
"latest possible maturity date," for each of the REMIC I Regular Certificates
and each of the REMIC II Regular Certificates (other than the Class A-11 IO) is
the Payment Date in January 2029, and for the Class A-11 IO is the Payment Date
in June 1999.
(f) The Trustee shall provide to the Internal Revenue Service and
to the persons described in Section 860E(e)(3) and (6) of the Code the
information described in Treasury regulation Section 1.860D-1(b)(5)(ii), or any
successor regulation thereto, with respect to both REMIC I and REMIC II. Such
information will be provided in the manner described in Treasury regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Depositor or its
properties or the consequences of which would materially and adversely affect
its performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Servicer and each Sub-Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer is designated as
an approved seller-servicer by FannieMae for first and second mortgage loans and
has combined equity and subordinated debt of at least $1,500,000, as determined
in accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which the Servicer is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they were
made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with relevant
FannieMae guidelines.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Home Equity Loans
to the Trustee.
Upon discovery by any of either Seller, the Servicer, any
Sub-Servicer, any Owner, the Certificate Insurer or the Trustee (each, for
purposes of this paragraph, a party) of a breach of any of the representations
and warranties set forth in this Section 3.02 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
Within 60 days of its discovery or its receipt of notice of breach, the Servicer
shall cure such breach in all material respects and, upon the Servicer's
continued failure to cure such breach, may thereafter be removed by the Trustee
pursuant to Section 8.20 hereof; provided, however, that if any party can
establish to the reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Certificate Insurer.
Section 3.03 REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) ContiMortgage is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it,
make such qualification necessary. ContiMortgage has all requisite corporate
power and authority to own and operate its properties, to carry out its business
as presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by ContiMortgage
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of ContiMortgage and will not violate
ContiMortgage's Certificate of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiMortgage is a party or by which ContiMortgage is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over
ContiMortgage or any of its properties.
(c) This Agreement and the other Operative Documents to which
ContiMortgage is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of ContiMortgage, enforceable against it in accordance with
the terms hereof and thereof, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) ContiMortgage is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiMortgage or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiMortgage is a party.
(e) No litigation is pending with respect to which ContiMortgage
has received service of process or, to the best of ContiMortgage's knowledge,
threatened against ContiMortgage which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of ContiMortgage or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiMortgage is a party.
(f) No certificate of an officer, statement furnished in writing
or report delivered pursuant to the terms hereof by ContiMortgage contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiMortgage or matters or activities for which ContiMortgage is
responsible in accordance with the Operative Documents or which are attributable
to ContiMortgage therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiMortgage required to be stated therein or necessary to make
the statements contained therein with respect to ContiMortgage, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiMortgage that
materially adversely affects or in the future may (so far as ContiMortgage can
now reasonably foresee) materially adversely affect ContiMortgage or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by ContiMortgage to
the Depositor and by the Depositor to the Trustee under this Agreement, the
Trust will have good title to such Home Equity Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) Neither ContiMortgage nor any affiliate thereof will report
on any financial statement any part of the Servicing Fee as an adjustment to the
sales price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which ContiMortgage makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by
ContiMortgage of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiMortgage and the
performance by ContiMortgage of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(k) The origination practices used by ContiMortgage with respect
to the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiMortgage.
(m) ContiMortgage is not insolvent, nor will it be made insolvent
by the transfer of the Home Equity Loans, nor is ContiMortgage aware of any
pending insolvency.
(n) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiMortgage hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(o) ContiMortgage is not transferring the Home Equity Loans to
the Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03(1) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of this
paragraph, a "party") of a breach of any of the representations and warranties
set forth in this Section 3.03 which materially and adversely affects the
interests of the Owners or of the Certificate Insurer, the party discovering
such breach shall give prompt written notice to the other parties. ContiMortgage
hereby covenants and agrees that within 60 days of its discovery or its receipt
of notice of breach, it shall cure such breach in all material respects or, with
respect to a breach of clause (h) above, ContiMortgage may (or may cause an
affiliate of ContiMortgage to) on the Monthly Remittance Date next succeeding
such discovery or receipt of notice (i) substitute in lieu of any Home Equity
Loan not in compliance with clause (h) a Qualified Replacement Mortgage and, if
the outstanding principal amount of such Qualified Replacement Mortgage as of
the applicable Replacement Cut-Off Date is less than the Loan Balance of such
Home Equity Loan as of such Replacement Cut-Off Date, deliver an amount equal to
such difference together with the aggregate amount of (A) all Delinquency
Advances and Servicing Advances theretofore made with respect to such Home
Equity Loan and (B) all Delinquency Advances and Servicing Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
(a "Substitution Amount") to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at the
Loan Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless
ContiMortgage obtains for the Trustee and the Certificate Insurer an opinion of
counsel experienced in federal income tax matters to the effect that such a
repurchase or substitution would not constitute a Prohibited Transaction for the
Trust or any REMIC therein or otherwise subject the Trust or any REMIC therein
to tax and would not jeopardize the status of any REMIC therein as a REMIC (a
"REMIC Opinion") addressed to the Trustee and the Certificate Insurer and
acceptable to the Trustee and the Certificate Insurer. Any Home Equity Loan as
to which repurchase or substitution was delayed pursuant to this Section shall
be repurchased or substituted for (subject to compliance with Sections 3.03,
3.04 or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
(2) ContiWest hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) ContiWest is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it, make such
qualification necessary. ContiWest has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by ContiWest and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of ContiWest and will not violate
ContiWest's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiWest is a party or by which ContiWest is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over ContiWest or any of
its properties.
(c) Agreement and the other Operative Documents to which
ContiWest is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of ContiWest, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) ContiWest is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiWest or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest has
received service of process or, to the best of ContiWest's knowledge, threatened
against ContiWest which litigation might have consequences that would prohibit
its entering into this Agreement or any other Operative Documents to which it is
a party or that would materially and adversely affect the condition (financial
or otherwise) or operations of ContiWest or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(f) No certificate of an officer, statement furnished in writing
or report delivered pursuant to the terms hereof by ContiWest contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiWest or matters or activities for which ContiWest is responsible
in accordance with the Operative Documents or which are attributable to
ContiWest therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiWest required to be stated therein or necessary to make the
statements contained therein with respect to ContiWest, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiWest that materially
adversely affects or in the future may (so far as ContiWest can now reasonably
foresee) materially adversely affect ContiWest or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by ContiWest to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released). (i) All
actions, approvals, consents, waivers, exemptions, variances, franchises,
orders, permits, authorizations, rights and licenses required to be taken, given
or obtained, as the case may be, by or from any federal, state or other
governmental authority or agency (other than any such actions, approvals, etc.
under any state securities laws, real estate syndication or "Blue Sky" statutes,
as to which ContiWest makes no such representation or warranty), that are
necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by ContiWest of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of ContiWest and the performance by ContiWest of its obligations under
this Agreement and such of the other Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiWest.
(k) ContiWest is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is ContiWest aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and
the Mortgages by ContiWest hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(m) ContiWest is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03(2) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of this
paragraph, a "party") of a breach of any of the representations and warranties
set forth in this Section 3.03 which materially and adversely affects the
interests of the Owners or of the Certificate Insurer, the party discovering
such breach shall give prompt written notice to the other parties. ContiWest
hereby covenants and agrees that within 60 days of its discovery or its receipt
of notice of breach, it shall cure such breach in all material respects or, with
respect to a breach of clause (h) above, ContiWest may (or may cause an
affiliate of ContiWest to) on the Monthly Remittance Date next succeeding such
discovery or receipt of notice (i) substitute in lieu of any Home Equity Loan
not in compliance with clause (h) a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Loan Balance of such Home
Equity Loan as of such Replacement Cut-Off Date, deliver an amount equal to such
difference together with the aggregate amount of (A) all Delinquency Advances
and Servicing Advances theretofore made with respect to such Home Equity Loan
and (B) all Delinquency Advances and Servicing Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan (a
"Substitution Amount") to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless
ContiWest obtains for the Trustee and the Certificate Insurer an opinion of
counsel experienced in federal income tax matters to the effect that such a
repurchase or substitution would not constitute a Prohibited Transaction for the
Trust or any REMIC therein or otherwise subject the Trust or any REMIC therein
to tax and would not jeopardize the status of any REMIC therein as a REMIC (a
"REMIC Opinion") addressed to the Trustee and the Certificate Insurer and
acceptable to the Trustee and the Certificate Insurer. Any Home Equity Loan as
to which repurchase or substitution was delayed pursuant to this Section shall
be repurchased or substituted for (subject to compliance with Sections 3.03,
3.04 or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 COVENANTS OF THE SELLERS TO TAKE CERTAIN ACTIONS WITH
RESPECT TO THE HOME EQUITY LOANS IN CERTAIN SITUATIONS.
(a) Upon the discovery by either Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee (i) that any of the
statements set forth in subsection (b) below were untrue as of the Startup Day
with the result that the interests of the Owners or the Certificate Insurer are
materially and adversely affected or (ii) that statements set forth in Clauses
(ix), (x), (xiii), (xxxvi), (xl), or (xli) of subsection (b) below were untrue
in any material respect as of the Startup Day, the party discovering such breach
shall give prompt written notice to the other parties. Upon the earliest to
occur of such Seller's discovery, its receipt of notice of breach from any one
of the other parties or such time as a situation resulting from an existing
statement which is untrue materially and adversely affects the interests of the
Owners or of the Certificate Insurer, such Seller hereby covenants and warrants
that it shall promptly cure such breach in all material respects or subject to
the last two sentences of Section 3.03 it shall on the second Monthly Remittance
Date next succeeding such discovery, receipt of notice or such time (i)
substitute in lieu of each Home Equity Loan which has given rise to the
requirement for action by such Seller a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account. Other than as specified in Section 6.12 hereof, it is understood and
agreed that the obligation of a Seller so to substitute or purchase any Home
Equity Loan as to which such a statement set forth below is untrue in any
material respect and has not been remedied shall constitute the sole remedy
under this Agreement respecting a discovery of any such statement which is
untrue in any material respect in this Section 3.04 available to the Owners, the
Certificate Insurer and the Trustee, the Certificate Insurer.
(b) Unless otherwise specified, the information set out below
specifies as of the Startup Day:
(i) The information with respect to each Home Equity Loan and the
aggregate Loan Balance of all Home Equity Loans set forth in the
related Schedule of Home Equity Loans is true and correct as of the
Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Home Equity Loan has been or will be delivered to the
Trustee on the Startup Day or as otherwise provided in Section 3.05;
(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four) family
residential dwelling, which may include condominiums and townhouses,
manufactured housing or small multifamily or mixed-use property but
shall not include co-operatives or mobile homes; provided, however,
that not more than 0.05% and 0.09% of the aggregate Loan Balance of
the Fixed Rate Home Equity Loans and the Adjustable Rate Home Equity
Loans, respectively, are secured by condominiums with more than 4
stories and no more than 0.58% and 1.59% of the Loan Balance of the
Fixed Rate Home Equity Loans and the Adjustable Rate Home Equity Loans
respectively, are secured by condominiums of less than 4 stories;
(v) No Fixed Rate Home Equity Loan has a Loan-to-Value Ratio in
excess of 85%, except 15.38% of such Home Equity Loans which have a
Loan-to-Value Ratio not greater than 100%; and no Adjustable Rate Home
Equity Loan has a Loan-to-Value Ratio in excess of 85%, except 22.63%
of such Home Equity Loans which have a Loan-to-Value Ratio not greater
than 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer;
(vii) The Note related to each Fixed Rate Home Equity Loan bears
a fixed Coupon Rate of at least 7.19% per annum, and the Note related
to each Adjustable Rate Home Equity Loan bears a current Coupon Rate
of at least 6.50% per annum. The weighted average Coupon Rate of the
Fixed Rate Home Equity Loans is at least 11.038% and the weighted
average Coupon Rate of the Adjustable Home Equity Loans is at least
10.283%;
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal monthly
Scheduled Payments which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date (other
than Notes representing not more than 48.53% of the aggregate Loan
Balance of the Initial Fixed Rate Home Equity Loans, which may provide
for a "balloon" payment due at the end of the 15th year, which
maturity date is not more than 15 years from the date of origination);
(ix) As of the Startup Day, each Mortgage is a valid and
subsisting first or second lien of record on the Property subject in
the case of any Second Mortgage Loan only to a Senior Lien on such
Property and subject in all cases to the exceptions to title set forth
in the title insurance policy or attorney's opinion of title with
respect to the related Home Equity Loan, which exceptions are
generally acceptable to banking institutions in connection with their
regular mortgage lending activities, and such other exceptions to
which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the related Seller to the Depositor and by the
Depositor to the Trust herein contemplated, such Seller and the
Depositor, as the case may be, held good and indefeasible title to,
and was the sole owner of, each Home Equity Loan (including the
related Note) conveyed by such Seller subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
clause (ix) or other liens which will be released simultaneously with
such transfer and assignment; and immediately upon the transfer and
assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity Loan
subject to no liens, charges, mortgages, encumbrances or rights of
others except as set forth in paragraph (ix) or other liens which will
be released simultaneously with such transfer and assignment;
(xi) As of the Startup Day, (a) no more than 2.03% and 2.50% of
the Fixed Rate Home Equity Loans and the Adjustable Rate Home Equity
Loans, respectively, as a percentage of the outstanding aggregate Loan
Balance of such Home Equity Loans are 30-59 days Delinquent, (b) no
more than 0.206% and 0.59% of the Fixed Rate Home Equity Loans and the
Adjustable Rate Home Equity Loans, respectively, as a percentage of
the outstanding aggregate Loan Balance of such Home Equity Loans, are
60-89 days Delinquent, (c) none of the Home Equity Loans, is 90 or
more days Delinquent, (d) no Mortgagor of any Home Equity Loan has
been 30 days or more Delinquent more than once during the 12 months
immediately preceding the Startup Day except as indicated on Schedule
III attached hereto and (e) no Mortgagor of any Home Equity Loan has
been 90 or more days Delinquent during the 12 months immediately
preceding the Startup Day except as indicated on Schedule III attached
hereto;
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal of or interest on such
Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal Truth-
in-Lending Act and other consumer protection laws, usury, equal credit
opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no title policy has
been obtained (provided that no title policy has been obtained with
respect to not more than 1.0% of the Original Aggregate Loan Balance
of the Home Equity Loans), or (b) a lender's title insurance policy,
issued in standard American Land Title Association form by a title
insurance company authorized to transact business in the state in
which the related Property is situated, in an amount at least equal to
the original balance of such Home Equity Loan together, in the case of
a Second Mortgage Loan, with the then-current principal balance of the
mortgage note relating to the Senior Lien, insuring the mortgagee's
interest under the related Home Equity Loan as the holder of a valid
first or second mortgage lien of record on the real property described
in the related Mortgage, as the case may be, subject only to
exceptions of the character referred to in paragraph (ix) above, was
effective on the date of the origination of such Home Equity Loan,
and, as of the Startup Day, such policy is valid and thereafter such
policy shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as
defined in Section 8.03 with respect to the Home Equity Loans serviced
by it;
(xviii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal
balance of the related Home Equity Loan (together, in the case of a
Second Mortgage Loan, with the outstanding principal balance of the
Senior Lien), (B) the minimum amount required to compensate for damage
or loss on a replacement cost basis or (C) the full insurable value of
the Property;
(xix) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien), (B)
the minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity Loan
had full legal capacity to execute all documents relating to such Home
Equity Loan and convey the estate therein purported to be conveyed;
(xxi) Each Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by such Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the Trustee;
(xxii) As of the Startup Day, no more than 0.37% of the aggregate
Loan Balance of the Fixed Rate Home Equity Loans and 0.81% of the
Adjustable Rate Home Equity Loans, respectively, will be secured by
Properties located within any single zip code area;
(xxiii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been recorded in
the appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from
the Seller delivering the related Home Equity Loan (or, subject to
Section 3.05 hereof, are in the process of being recorded);
(xxiv) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interest of the Owners and the Certificate Insurer and which has been
delivered to the Trustee. The substance of any such alteration or
modification is reflected on the related Schedule of Home Equity
Loans;
(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Home Equity Loans were paid;
(xxvi) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvii) No Home Equity Loan was originated under a buydown plan;
(xxviii) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
(xxix) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxx) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Home Equity
Loan in the event the related Property is sold without the prior
consent of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date have been consolidated with
the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest
rate and single repayment term reflected on the respective Schedule of
Home Equity Loans. The consolidated principal amount does not exceed
the original principal amount of the related Home Equity Loan. No Note
permits or obligates the Servicer to make future advances to the
related Mortgagor at the option of the Mortgagor;
(xxxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement;
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxiv) No improvement located on or being part of any Property
is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxv) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the
benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption
available to the related Mortgagor which would materially interfere
with the right to sell the related Property at a trustee's sale or the
right to foreclose the related Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and neither the Servicer
nor the related Seller has waived any default, breach, violation or
event of acceleration;
(xxxviii) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement which has been approved by the primary mortgage guaranty
insurer, if any, and which has been delivered to the Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least
twelve months prior to the maturity date of the related first mortgage
loan if such first mortgage loan provides for a balloon payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xli) The credit underwriting guidelines applicable to each Home
Equity Loan conform in all material respects to the description
thereof set forth in the Prospectus Supplement;
(xlii) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xliii) The Home Equity Loans were not selected for inclusion in
the Trust by the Sellers on any basis intended to adversely affect the
Trust;
(xliv) No more than 5.83% and 6.23% of the aggregate Loan Balance
of the Fixed Rate Home Equity Loans and the Adjustable Rate Home
Equity Loans, respectively, are secured by Properties that are
non-owner occupied Properties (i.e., investor-owned and vacation);
(xlv) No more than 5.24% and 6.66% of the aggregate Loan Balance
of the Fixed Rate Home Equity Loans and the Adjustable Rate Home
Equity Loans, respectively, are secured by Home Equity Loans which
were originated under ContiMortgage's non-income verification program;
(xlvi) Neither Seller has any actual knowledge that there exist
any hazardous substances, hazardous wastes or solid wastes, as such
terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery
Act of 1976, or other federal, state or local environmental
legislation on any Property;
(xlvii) Both Sellers were properly licensed or otherwise
authorized, to the extent required by applicable law, to originate or
purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home Equity
Loans by the Trustee as trustee of the Trust will not involve the
violation of such laws;
(xlviii) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item; (vi) the Trust has the
right to cure defaults on the ground lease; and (vii) the terms and
conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Loan
Balance of the Home Equity Loans with related Properties subject to
ground leases does not exceed 1% of the Original Aggregate Loan
Balance;
(xlix) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not
yet due and payable;
(l) As of the Startup Day, neither Seller has received a notice
of default of any first mortgage loan secured by any Property which
has not been cured by a party other than such Seller;
(li) All of the Adjustable Rate Home Equity Loans are in a
first lien position;
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $450,000;
(liii) Each Home Equity Loan is secured by a mortgage on
property which, at the time of origination of each Home Equity Loan,
has an appraised value of not more than $1,350,000;
(liv) No more than 6.12% of the Fixed Rate Home Equity Loans
and none of the Adjustable Rate Home Equity Loans are in a second
priority position; and
(lv) The weighted average margin of the Adjustable Rate Home
Equity Loans is 6.197%.
(c) In the event that any such repurchase results in a prohibited
transaction tax, the Trustee shall immediately notify the related Seller in
writing thereof and such Seller will, within 10 days of receiving notice thereof
from the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In the event that any Qualified Replacement Mortgage is delivered by
either Seller to the Trust pursuant to Section 3.03, Section 3.04 or Section
3.06 hereof, such Seller shall be obligated to take the actions described in
Section 3.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the other Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee that the statements set
forth in clause (ix), (x), (xiii), (xxxvi), (xl) or (xli) of subsection (b)
above are untrue in any material respect on the date such Qualified Replacement
Mortgage is conveyed to the Trust or that any of the other statements set forth
in subsection (b) above are untrue on the date such Qualified Replacement
Mortgage is conveyed to the Trust such that the interests of the Owners or the
Certificate Insurer in the related Qualified Replacement Mortgage are materially
and adversely affected; provided, however, that for the purposes of this
subsection (c) the statements in subsection (b) above referring to items "as of
the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to such
items as of the date such Qualified Replacement Mortgage is conveyed to the
Trust. Notwithstanding the fact that a representation contained in subsection
(b) above may be limited to a Seller's knowledge, such limitation shall not
relieve a Seller of its repurchase obligation under this Section and Section
3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05 CONVEYANCE OF THE HOME EQUITY LOANS AND QUALIFIED
REPLACEMENT MORTGAGES.
(a) On the Startup Day each Seller, concurrently with the execution
and delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
to the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys, without recourse,
to the Trust all of their respective right, title and interest in and to the
Trust Estate; provided, however, that each Seller reserves and retains all of
its right, title and interest in and to principal (including Prepayments)
collected and interest accrued on each Home Equity Loan on or prior to the
Cut-Off Date. The transfer by the Depositor of the Home Equity Loans set forth
on the Schedule of Home Equity Loans to the Trustee is absolute and is intended
by the Owners and all parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Home Equity Loans conveying good
title thereto free and clear of any liens and encumbrances from each Seller to
the Depositor and from the Depositor to the Trust and that the Home Equity Loans
not be part of the Depositor's or either Seller's estate in the event of
insolvency. In the event that such conveyance is deemed to be a loan, the
parties intend that each Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a first
priority perfected security interest in the Trust Estate, and that this
Agreement shall constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance
from the Sellers to the Depositor, each Seller has filed, in the appropriate
office or offices in the States of Delaware, Pennsylvania and Nevada, as the
case may be, a UCC-1 financing statement executed by such Seller as debtor,
naming the Depositor as secured party and listing the Home Equity Loans and the
other property described above as collateral. The characterization of a Seller
as debtor and the Depositor as secured party on such financing statements is
solely for protective purposes and shall in no way be construed as being
contrary to the intent of the parties that this transaction be treated as a sale
of such Seller's entire right, title and interest in and to the Trust Estate. In
connection with such filing, each Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's, the Certificate Insurer's and the Owners' interest in the Trust
Estate.
In connection with such sale, transfer, assignment, and conveyance
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of New York and Delaware, a UCC-1 financing
statement executed by the Depositor as debtor, naming the Trustee as secured
party and listing the Home Equity Loans and the other property described above
as collateral. The characterization of the Depositor as debtor and the Trustee
as secured party in such financing statements is solely for protective purposes
and shall in no way be construed as being contrary to the intent of the parties
that this transaction be treated as a sale of the Depositor's entire right,
title and interest in and to the Trust Estate. In connection with such filing,
the Depositor agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's, the
Certificate Insurer's and the Owners' interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Home Equity
Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the Startup Day
with respect to each Home Equity Loan (A) the original Notes endorsed
in blank or to the order of the Trustee, (B) the original title
insurance policy or a copy certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening assignments, showing a complete
chain of title from origination to the Trustee, if any, including
warehousing assignments, with evidence of recording thereon, (D)
originals of all assumption and modification agreements, if any and
(E) either: (1) the original Mortgage, with evidence of recording
thereon (if such original Mortgage has been returned to the related
Seller from the applicable recording office or a certified copy
thereof if such original Mortgage has not been returned to the related
Seller from the applicable recording office), or (2) a copy of the
Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost;
(ii) cause, within 15 days following the receipt from the
relevant state authorities, assignments of the Mortgages to
"Manufacturers and Traders Trust Company, as Trustee of ContiMortgage
Home Equity Loan Trust 1997-5 under the Pooling and Servicing
Agreement dated as of December 1, 1997" to be submitted for recording
in the appropriate jurisdictions; provided, however, that the
Depositor shall not be required to record an assignment of a Mortgage
if the Depositor furnishes to the Trustee and the Certificate Insurer,
on or before the Startup Day, at the Depositor's expense an opinion of
counsel with respect to the relevant jurisdiction that such recording
is not necessary to perfect the Trustee's interest in the related Home
Equity Loans (in form and substance and from counsel satisfactory to
the Rating Agencies and the Certificate Insurer); notwithstanding the
furnishing of such opinion of counsel, however, the Certificate
Insurer may, in its reasonable discretion after consultation with the
Depositor prior to the date on which all assignments of Mortgages are
required to be filed hereunder, require the filing of assignments of
Mortgages in any state that is the subject of such opinions; and
(iii) deliver the title insurance policy or title searches, the
original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments,
to the Trustee within 15 days of receipt thereof by the Depositor (but
in any event, with respect to any Mortgage as to which original
recording information has been made available to the Depositor, within
one year after the Startup Day).
Notwithstanding the delivery of opinions specified in clause (iii)
above the Trustee shall cause to be recorded each assignment of a Mortgage upon
the earliest to occur of (a) the reasonable direction of the Certificate
Insurer, (b) the removal of the Servicer pursuant to Section 8.20 hereof or (c)
notification to the Trustee of the occurrence of a bankruptcy or insolvency
relating to the Mortgagor.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period
referred in clause (ii) of the second preceding paragraph, each Seller shall
deliver to the Trustee a list of all Mortgages with respect to Home Equity Loans
delivered by such Seller for which no Mortgage assignment has yet been submitted
for recording by such Seller, which list shall state the reason why such Seller
has not yet submitted such Mortgage assignments for recording. With respect to
any Mortgage assignment disclosed on such list as not yet submitted for
recording for a reason other than a lack of original recording information, the
Trustee shall make an immediate demand on such Seller to prepare such Mortgage
assignments, and shall inform the Certificate Insurer of such Seller's failure
to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in
executing any documents prepared by the Certificate Insurer and submitted to the
Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (ii) of the second preceding paragraph, each
Seller shall promptly prepare a Mortgage assignment for any Mortgage with
respect to Home Equity Loans delivered by such Seller for which original
recording information is subsequently received by such Seller, and shall
promptly deliver a copy of such Mortgage assignment to the Trustee. Each Seller
agrees that it will follow its normal servicing procedures and attempt to obtain
the original recording information necessary to complete a Mortgage assignment
with respect to Home Equity Loans delivered by such Seller. In the event that a
Seller is unable to obtain such recording information with respect to any
Mortgage prior to the end of the 18th calendar month following the Startup Day
and has not provided to the Trustee a Mortgage assignment with evidence of
recording thereon relating to the assignment of such Mortgage to the Trustee,
the Trustee shall notify such Seller of such Seller's obligation to provide a
completed assignment (with evidence of recording thereon) on or before the end
of the 20th calendar month following the Startup Day with respect to the Home
Equity Loans. A copy of such notice shall be sent by the Trustee to the
Certificate Insurer. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation contained
in clause (xxiii) of Section 3.04(b) hereof; provided, however, that if as of
the end of such 20th calendar month either Seller then required to deliver such
a completed assignment demonstrates to the satisfaction of the Certificate
Insurer that it is exercising its best efforts to obtain such completed
assignment and, during each month thereafter until such completed assignment is
delivered to the Trustee, such Seller continues to demonstrate to the
satisfaction of the Certificate Insurer that it is exercising its best efforts
to obtain such completed assignment, the related Home Equity Loan will not be
deemed to have breached such representation. The requirement to deliver a
completed assignment with evidence of recording thereon will be deemed satisfied
upon delivery of a copy of the completed assignment certified by the applicable
public recording office.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 with respect to
one or more Home Equity Loans shall be accomplished at the expense of the Seller
delivering such Home Equity Loan.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of such Seller in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by such Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all
its right, title and interest to principal and interest due on such Qualified
Replacement Mortgage after the applicable Replacement Cut-Off Date; provided,
however, that such Seller shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such Qualified Replacement
Mortgage on or prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the order of the Seller delivering such Home Equity Loan, all
of its right, title and interest in and to such released Home Equity Loan and
all the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such released Home
Equity Loan on or prior to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, each Seller agrees
to (i) deliver without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating thereto, endorsed in
blank or to the order of the Trustee, (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by such Seller (but in any event
within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title in the same manner required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and on
the order of the Seller delivering such Qualified Replacement Mortgage (i) the
original Note relating thereto, endorsed without recourse or representation, to
such Seller, (ii) the original Mortgage so released and all assignments relating
thereto and (iii) such other documents as constituted the File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller that delivered the corresponding Home Equity Loan shall prepare a
substitute assignment or cure such defect, as the case may be, and thereafter
cause each such assignment to be duly recorded.
Section 3.06 ACCEPTANCE BY TRUSTEE; CERTAIN SUBSTITUTIONS OF HOME
EQUITY LOANS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee agrees, for the
benefit of the Owners, to review such items within 45 days after the Startup Day
(or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Qualified Replacement Mortgage, within
45 days after the assignment thereof) and to deliver to the Depositor, each of
the Sellers, the Certificate Insurer and the Servicer a certification in the
form attached hereto as Exhibit F (a "Pool Certification") to the effect that,
as to each Home Equity Loan listed in the Schedule of Home Equity Loans (other
than any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it pursuant to
Section 3.05(b)(i) of this Agreement are in its possession, (ii) such documents
have been reviewed by it and have not been mutilated, damaged or torn and relate
to such Home Equity Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Schedule of Home Equity
Loans accurately reflects the information set forth in the File. The Trustee
shall have no responsibility for reviewing any File except as expressly provided
in this subsection 3.06(a). Without limiting the effect of the preceding
sentence, in reviewing any File, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face, nor shall the Trustee
be under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any Home
Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers, the Certificate Insurer and the
Owners. In performing any such review, the Trustee may conclusively rely as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the items delivered by each
of the Sellers pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. Each Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File delivered by such Seller of which it is so notified
by the Trustee. If, however, within 60 days after the Trustee's notice to it
respecting such defect the related Seller has not remedied the defect and the
defect materially and adversely affects the interest of the Owners or the
Certificate Insurer in the related Home Equity Loan such Seller will (or will
cause an affiliate of such Seller to) on the next succeeding Monthly Remittance
Date (i) substitute in lieu of such Home Equity Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 12th month after the Startup Day indicating the current status
of the exceptions previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the Trustee and the
Servicer shall monitor and upon request from the Certificate Insurer provide no
less frequently than monthly, updated certifications indicating the then current
status of exceptions, until all such exceptions have been eliminated.
END OF ARTICLE III
<PAGE>
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Depositor of
an executed Delivery Order in the form set forth as Exhibit G hereto, the
Trustee shall execute, authenticate and deliver the Certificates on behalf of
the Trust.
Section 4.02 SALE OF CERTIFICATES.
At 11 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New
York (or at such other location acceptable to the Seller), the Sellers will sell
and convey the Home Equity Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters the Class A
Trust Certificates (other than the Class A-2 Fixed Certificates) and the Class B
Certificates with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co., or in such other names as the Underwriters
shall direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee; (ii) to the Depositor, the Class A-2
Fixed Certificates with an aggregate Percentage Interest in such Class equal to
100%, registered in the name of the Grantor Trustee or in such other name as the
Depositor shall direct; and (iii) to the respective registered Owners thereof, a
Class R-I and a Class R Certificate each with a Percentage Interest equal to
99.999%, registered in the name of ContiSecurities Holding Corporation and a
Class R-I and a Class R Certificate each with a Percentage Interest equal to
.001%, registered in the name of ContiFunding Corporation.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
<PAGE>
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law) and except for the rights of
the Trustee on behalf of the Owners of the Class A Trust Certificates with
respect to the Certificate Insurance Policy. The Certificates are payable solely
from payments received on or with respect to the Home Equity Loans (other than
the Servicing Fees), moneys in the Principal and Interest Account, earnings on
moneys and the proceeds of property held as a part of the Trust Estate. Each
Certificate entitles the Owner thereof to receive monthly on each Payment Date,
in order of priority of distributions with respect to such Class of Certificates
as set forth in Section 7.03, a specified portion of such payments with respect
to the Home Equity Loans, pro rata in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 FORMS.
The Class A-1 Certificates, the Class A-2 Fixed Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates, the Class A-8
Certificates, the Class A-9 Certificates, the Class A-10 Certificates, the Class
A-11 IO Certificates, the Class B Certificates and the Class R-I and Class R
Certificates shall be in substantially the forms set forth in Exhibits A-1, A-2
Fixed, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10, A-11 IO, B, C-1 and C-2 hereof,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement or as may in the
Depositor's judgment be necessary, appropriate or convenient to comply, or
facilitate compliance, with applicable laws, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any applicable securities laws or
as may, consistently herewith, be determined by the Authorized Officer of the
Depositor executing such Certificates, as evidenced by his execution thereof.
Section 5.03 EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed and authenticated by the manual or
facsimile signature of one of the Trustee's Authorized Officers. Upon proper
authentication by the Trustee, the Certificates shall bind the Trust.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners, the Certificate Insurer and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Trust Certificates then Outstanding with the consent of the Certificate
Insurer, or if there are no longer any Offered Certificates then Outstanding, by
such majority of the Percentage Interests represented by the Class R-I
Certificates, the Trustee will give the Owners and the Certificate Insurer
prompt written notice of the appointment of such Registrar and of the location,
and any change in the location, of the Register. In connection with any such
appointment the annual fees of the bank then serving as Trustee and Registrar
shall thenceforth be reduced by the amount to be agreed upon by the Trustee and
the Depositor at such time and the reasonable fees of the Registrar shall be
paid, as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or percentage interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration
of transfer or exchange of Certificates, but the Registrar or Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so as
to participate in a global book- entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Certificate of such Class. Upon initial issuance, the ownership of each such
Certificate shall be registered in the Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository.
On the Startup Day, the Offered Certificates (other than the Auction
Rate Certificates and the Class A-11 IO Certificates) shall be issued in
denominations of no less than $1,000 and integral multiples thereof. On the
Startup Day, the Class A-11 IO Certificates shall be issued in denominations of
no less than $1,000 (based on the Class A-11 IO Notional Principal Amount
thereof) and integral multiples thereof; the Auction Rate Certificates shall be
issued in denominations of $25,000 and in integral multiples thereof and the
Class A-2 Fixed Certificates shall be issued in a single Certificate to
represent the entire Class.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Sellers, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Offered Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Offered Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of an Offered Certificate as shown in the Register, of any
notice with respect to the Offered Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered Owners
of Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Offered Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Offered Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in whatever name or names registered Owners of Offered Certificates
transferring the Offered Certificates shall designate, in accordance with the
provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the Offered Certificates is registered in the name
of Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Offered Certificates and all notices with respect to such
Offered Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless, then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, the Depositor shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 PERSONS DEEMED OWNERS.
The Trustee and the Certificate Insurer and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever and the Trustee and the
Certificate Insurer or any agent of the Trustee shall not be affected by notice
to the contrary.
Section 5.07 CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of record or beneficial ownership of a
Residual Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Residual Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Residual Certificate nor authenticate and make
available any new Residual Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Residual Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
The Class R-I and Class R-II certificates are not transferable except that the
Owner of the Tax Matters Person Residual Interest in the REMIC I or REMIC II may
assign its interest to another Person who accepts such assignment and the
designation as Tax Matters Person pursuant to Section 11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Class A-2 Fixed, a Class R-I or Class R Certificate shall be made unless
such transfer is exempt from the registration requirements of the Securities Act
and any applicable state securities laws or is made in accordance with said Act
and laws. In the event such a transfer is to be made within three years from the
Startup day, (i) the Trustee or the Depositor shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the Depositor
and the Certificate Insurer in the event that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from said Act and laws or is being made pursuant to said Act and laws, which
opinion of counsel shall not be an expense of the Trustee, the Certificate
Insurer or the Trust Estate, and (ii) the Trustee shall require the Transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to each of the Sellers certifying to the Trustee, the Certificate
Insurer and each of the Sellers and the Certificate Insurer the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee, the Trust Estate, the Certificate Insurer or either of the Sellers.
The Owner of a Class R-I or Class R Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Certificate Insurer and each of the Sellers against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
(c) [RESERVED]
(d) [RESERVED]
(e) No transfer of a Residual Certificate shall be made unless the Trustee
shall have received a representation letter from the transferee of such Residual
Certificate, acceptable to and in form and substance satisfactory to the Trustee
to the effect that such transferee is not an employee benefit plan subject to
Section 406 of ERISA nor a plan or other arrangement subject to Section 406 of
ERISA nor a plan or other arrangement subject to Section 4975 of the Code
(collectively, a "Plan"), nor is acting on behalf of any Plan nor using the
assets of any Plan to effect such transfer. By its acceptance or acquisition of
a Class B Certificate, the transferee shall be deemed to have represented that
it either (i) is not a Plan and is not acquiring its interest in such Class B
Certificates with assets of a Plan or (ii) is an insurance company acquiring its
interest as permitted in accordance with Prohibited Transaction Exemption 95-60.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to or on behalf of any Plan without the delivery to the Trustee a
representation letter as described above shall be null and void and of no
effect.
(f) No sale or other transfer of any Offered Certificate may be made
to the Depositor, the Sellers or the Servicer. No sale or other transfer of any
Offered Certificate may be made to an affiliate of either Seller unless the
Trustee and the Certificate Insurer shall have been furnished with an opinion of
counsel acceptable to the Trustee and the Certificate Insurer experienced in
federal bankruptcy matters to the effect that such sale or transfer would not
adversely affect the character of the conveyance of the Home Equity Loans to the
Trust as a sale. No sale or other transfer of the Residual Certificate issued to
ContiFunding Corporation on the Startup Day may be transferred or sold to any
Person, except to a person who accepts the appointment of Tax Matters Person
pursuant to Section 11.18 hereof.
Section 5.09 ASSIGNMENT OF RIGHTS.
An Owner may pledge, encumber, hypothecate or assign all or any part
of its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
<PAGE>
ARTICLE VI
COVENANTS
Section 6.01 DISTRIBUTIONS.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) an Offered Certificate (other than the
Class A-11 IO Certificates) having an original principal balance of not less
than $1,000,000, (B) a Class A-11 IO Certificate having an original Notional
Principal Amount of not less than $1,000,000 or (C) Class R Certificate having a
Percentage Interest of not less than 10% in writing not later than one Business
Day prior to the applicable Record Date (which request does not have to be
repeated unless it has been withdrawn), to such Owner by wire transfer to an
account within the United States designated no later than five Business Days
prior to the related Record Date, made on each Payment Date, in each case to
each Owner of record on the immediately preceding Record Date.
Section 6.02 MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST;
WITHHOLDING.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account, shall be made by and on behalf of the Trustee, and no amounts so
withdrawn from the Certificate Account, for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to
the Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid to the Owners of the
Class R Certificates; and the Owner of such Offered Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent before being
required to make any such payment, may, at the expense of the Trust, cause to be
published once, in the eastern edition of The Wall Street Journal, notice that
such money remains unclaimed and that, after a date specified therein, which
shall be not fewer than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be paid to the Owners of the Class R
Certificates. The Trustee shall, at the direction of the Depositor, also adopt
and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 PROTECTION OF TRUST ESTATE.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Trustee, and the ownership interests of the Owners represented
thereby, in such Trust Estate against the claims of all Persons and
parties.
The Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement and the
obligations of the Certificate Insurer under the Certificate Insurance Policy;
in addition, the Certificate Insurer or the Owners, by action, suit or
proceeding at law or equity and shall also have the power to enjoin, by action
or suit in equity, and acts or occurrences which may be unlawful or in violation
of the rights of the Certificate Insurer and/or the Owners as such rights are
set forth in this Agreement, provided, however, that nothing in this Section
shall require any action by the Trustee unless the Trustee shall first (i) have
been furnished indemnity satisfactory to it and (ii) when required by this
Agreement, have been requested by the Certificate Insurer or Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding with the consent of the Certificate Insurer or, if there are no
longer any Offered Certificates then outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates; provided, further,
however, that if there is a dispute with respect to payments under a Certificate
Insurance Policy the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 PERFORMANCE OF OBLIGATIONS.
The Trustee will not take any action that would release any Person
from any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 NEGATIVE COVENANTS.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except pursuant
to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to
be impaired, or permit any Person to be released from any covenants or
obligations with respect to the Trust or to the Certificates under
this Agreement, except as may be expressly permitted hereby or (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof.
Section 6.06 NO OTHER POWERS.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 LIMITATION OF SUITS.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, the Insurance Agreement, the
Indemnification Agreement or the Certificate Insurance Policies or for the
appointment of a receiver or trustee of the Trust, or for any other remedy with
respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by the Class A Trust and Class B
Certificates then Outstanding or, if there are no Class A Trust
or Class B Certificates then Outstanding, by such percentage of
the Percentage Interests represented by the Class R Certificates,
shall have made written request to the Trustee to institute such
proceeding in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Trust Certificates are Outstanding or
any Reimbursement Amount remains unpaid, the Certificate Insurer
consented in writing thereto (unless the Certificate Insurer is
the party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners of a
majority of the Percentage Interests represented by the Class A
Trust and Class B Certificates or, if there are no Class A Trust
or Class B Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates;
it being understood and intended that no one or more Owners shall have
any right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Owner of the same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce any right under
this Agreement, except in the manner herein provided and for the equal and
ratable benefit of all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(5) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed).
Section 6.08 UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or the Owners
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10 DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect to
any event described in Section 8.20(a) or (b) shall impair any such right or
remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer or the
Owners, as the case may be.
Section 6.11 CONTROL BY OWNERS.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Offered Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A Trust
or Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates then Outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory
to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with such
direction; provided, however, that neither of the Sellers nor the
Trustee, as the case may be, need take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12 INDEMNIFICATION.
The Depositor agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Certificate Insurer and any
Owner may sustain in any way related to the failure of the Depositor to perform
its duties in compliance with the terms of this Agreement. The Depositor shall
immediately notify the Trustee, the Certificate Insurer and each Owner if such a
claim is made by a third party with respect to this Agreement, and the Depositor
shall assume (with the consent of the Trustee) the defense of any such claim and
pay all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, either of the Sellers, the Trustee, the Certificate
Insurer and/or any Owner in respect of such claim. The Trustee may, if
necessary, reimburse the Depositor from amounts otherwise distributable on the
Class R Certificates for all amounts advanced by it pursuant to the preceding
sentence, except when the claim relates directly to the failure of the Depositor
to perform its duties in compliance with the terms of this Agreement. In
addition to the foregoing, ContiMortgage agrees to indemnify and hold the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and other costs, fees and expenses that the Trustee, the Certificate
Insurer and any Owner may sustain in any way related to the breach by
ContiMortgage of its representations and warranties set forth in Section
3.04(b)(xiii) or (xv) hereof with respect to a Home Equity Loan if such Home
Equity Loan qualifies as a "high cost mortgage" pursuant to Section 226.32 of
the Truth-in- Lending Act, as amended. The provisions of this Section 6.12 shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.
Section 6.13 ACCESS TO NAMES AND ADDRESSES OF OWNERS OF CERTIFICATES.
(a) If any Owner (for purposes of this Section 6.13, an "Applicant")
applies in writing to the Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their rights
under this Agreement or under the Certificates and is accompanied by a copy of
the communication which such Applicant proposes to transmit, then the Trustee
shall, at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
<PAGE>
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee shall
demand payment or delivery of all money and other property payable to or
receivable by the Trustee pursuant to this Agreement or the Certificate
Insurance Policy, including all payments due on the Home Equity Loans in
accordance with the respective terms and conditions of such Home Equity Loans
and required to be paid over to the Trustee by the Servicer or by any
Sub-Servicer. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(e) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 ESTABLISHMENT OF ACCOUNTS.
The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account and the Auction Remainder Account, which are to be held by the Trustee
on behalf of the Owners of the Certificates, the Certificate Insurer and the
Trustee.
Section 7.03 FLOW OF FUNDS.
(a) The Trustee shall deposit to the Certificate Account, without
duplication, upon receipt, any Insured Payments, the proceeds of any liquidation
of the assets of the Trust, all remittances made to the Trustee pursuant to
Section 8.08(d)(ii) and the Monthly Remittance Amount remitted by the Servicer.
(b) On each Payment Date, the Trustee shall make the following
disbursements from the Interest Remittance Amount (including the interest
component of any Insured Payments which is available only for the payment of the
amount described in Second below), in the following order of priority, and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) First, concurrently, (a) to the Trustee, the Trustee Fee, (b)
to the Certificate Insurer, the Premium Amount and (c) to the
Auction Agent, the Auction Agent Fee;
(ii) Second, to the Owners of the Class A Trust Certificates
(including the Class A-11 IO Certificates), the related Class A
Current Interest plus the related Class A Interest Carry
Forward Amount with respect to each such Class of Class A Trust
Certificates without any priority among such Class A Trust
Certificates; provided, that if the Interest Amount Available
plus the interest component of any Insured Payment is not
sufficient to make a full distribution of interest with respect
to all Classes of the Class A Trust Certificates, such amount
will be distributed among the outstanding Classes of Class A
Trust Certificates pro rata based on the aggregate amount of
interest due on each such Class, and the amount of the
shortfall will be carried forward as the Class A Interest Carry
Forward Amount;
(iii) Third, to the extent of the Interest Amount Available then
remaining, to the Owners of the Class B Certificates, the Class
B Current Interest; and
(iv) Fourth, the Monthly Excess Interest Amount shall be applied
or distributed as provided in subsection (f) of this Section
7.03.
(c) [reserved];
(d) On each Payment Date, the Trustee shall make the following
disbursements from amounts relating to principal (including the principal
component of any Insured Payments) in the following order of priority and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) On each Payment Date before the Stepdown Date the Owners of the
Class A Trust Certificates (other than the Class A-11 IO
Certificates) will be entitled to receive payment of 100% of
the Principal Distribution Amount, together with the principal
component of any Insured Payment for such Payment Date, as
follows: (I) to the Owners of the Class A-1 Certificates until
the Certificate Principal Balances thereof have been reduced to
zero, (II) to (x) the Owners of the Class A-2 Fixed, Class A-3,
Class A-4, Class A-5 and Class A-6 and (y) the Owners of Class
A-7 and Class A-8 Certificates (pro rata based on the
outstanding aggregate Certificate Principal Balance of each
Group between the Fixed Rate PAC Group and the Floating Rate
PAC Group and sequentially within each group in that order), an
amount up to the amount necessary to reduce the Certificate
Principal Balances thereof to their respective Planned
Principal Balances for such Payment Date, (III) sequentially,
to the Owners of the Class A-9 and Class A-10 (in the case of
the Class A-10 Certificate, distributions of principal shall
include any amounts in deposit in the Auction Remainder
Account) Certificates, in that order, until their respective
Certificate Principal Balances are reduced to zero and (IV) to
(x) the Owners of the Class A-2 Fixed, Class A-3, Class A-4,
Class A-5, Class A-6 and (y) the Owners of the Class A-7 and
Class A-8 Certificates (pro rata based on the outstanding
aggregate Certificate Principal Balance of each Group between
the Fixed Rate PAC Group and the Floating Rate PAC Group and
sequentially within each group in that order), without regard
to their respective Planned Principal Balances and until the
Certificate Principal Balances thereof are reduced to zero.
Notwithstanding the foregoing, on any Payment Date on which the
Class B Certificate Principal Balance and the
Overcollateralization Amount is zero and a Certificate Insurer
Default has occurred and is continuing, any amounts of
principal payable to the Owners of the Class A Trust
Certificates on such Payment Date shall be distributed pro rata
without regard to any Planned Principal Balances or other order
of priority. If on any Payment Date the Class A Trust
Certificate Principal Balance has been reduced to zero, 100% of
the Principal Distribution Amount shall be distributed to the
Class B Certificates until the Certificate Principal Balances
thereof have been reduced to zero.
(ii) On each Payment Date on or after the Stepdown Date the
Owners of the Class A Trust Certificates (other than the Class
A-11 IO Certificates) and Class B Certificates will be entitled
to receive payments of principal, in the order of priority, in
the amounts set forth below and to the extent of the Principal
Distribution Amount (together, in the case of the Class A Trust
Certificates (other than the Class A-11 IO Certificates), the
principal component of any Insured Payment) as follows:
(A) First, the lesser of (x) the Principal Distribution
Amount together with the principal component of any
Insured Payment and (y) the Class A Principal
Distribution Amount shall be distributed (I) to the (x)
the Owners of Class A-2 Fixed, Class A-3, Class A-4,
Class A-5, Class A-6, and (y) the Owners of the Class
A-7 and Class A-8 Certificates (pro rata based on the
outstanding aggregate Certificate Principal Balance of
each Group between the Fixed Rate PAC Group and the
Floating Rate PAC Group and sequentially within each
group in that order), an amount up to the amount
necessary to reduce the Certificate Principal Balances
thereof to their respective Planned Principal Balances
for such Payment Date, (II) sequentially, to the Owners
of the Class A-9 and Class A-10 Certificates (in the
case of the Class A-10 Certificate, distributions of
principal shall include any amounts in deposit in the
Auction Remainder Account), in that order, until their
respective Certificate Principal Balances are reduced
to zero and (III) to (x) the Owners of the Class A-2
Fixed, Class A-3, Class A-4, Class A-5, Class A-6, and
(y) the Owners of the Class A-7 and Class A-8
Certificates (pro rata based on the outstanding
aggregate Certificate Principal Balance of each Group
between the Fixed Rate PAC Group and the Floating Rate
PAC Group and sequentially within each group in that
order), without regard to their respective Planned
Principal Balances and until the Certificate Principal
Balances thereof are reduced to zero. Notwithstanding
the foregoing, on any Payment Date on which the Class B
Certificate Principal Balance and the
Overcollateralization Amount is zero and a Certificate
Insurer Default has occurred and is continuing, any
amounts of principal payable to the Owners of the Class
A Trust Certificates on such Payment Date shall be
distributed pro rata without regard to any Planned
Principal Balances or other order of priority;
(B) Second, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the amount
distributed to the Owners of the Class A Trust
Certificates in clause (A) above and (y) the Class B
Principal Distribution Amount shall be distributed to
the Owners of the Class B Certificates, until the Class
B Certificate Principal Balance has been reduced to
zero; and
(C) Third, any portion of the Principal Remittance Amount
remaining after making all of the distributions in
clauses (A) and (B) above shall be distributed as
provided in subsection (f) of this Section 7.03.
(e) [reserved];
(f) On any Payment Date, the Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to pay the Class A Interest Carry Forward Amount from prior
periods, if any;
(2) to pay the Certificate Insurer any Reimbursement Amount for such
Payment Date (provided that any amount paid in respect of the
Insurance Agreement--Grantor Trust shall be deemed for federal
income tax purposes to have been distributed to the Owners of the
Class R Certificates);
(3) to pay the Extra Principal Distribution Amount for such Payment
Date;
(4) to pay the Class B Interest Carry Forward Amount, if any;
(5) to pay the Class B Realized Loss Amortization Amount for such
Payment Date; and
(6) as provided in Section 7.03(h) hereof.
(g) [reserved]:
(h) On any Payment Date, any Monthly Excess Cashflow Amount remaining
after the application of Section 7.03(f)(1)-(6) shall be distributed as follows:
(1) to the Servicer to the extent of any unreimbursed Delinquency
Advances or Servicing Advances;
(2) to pay any expenses or other amounts due under the Auction Agent
Agreement (other than the Auction Agent Fee);
(3) [reserved];
(4) to fund a distribution to the Owners of the Residual
Certificates, the remainder.
(i) [reserved];
(j) [reserved];
(k) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clause (d) shall not exceed the original Certificate Principal
Balance of the related Certificates.
(l) On any Payment Date during the continuance of any Certificate
Insurer Default any amounts otherwise payable to the Certificate Insurer as
Premium Amounts shall be retained in the Certificate Account.
(m) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Class A Trust Certificates, the Trustee shall
deposit such Insured Payments in the Certificate Account and shall distribute
such Insured Payments, or the proceeds thereof as provided in paragraphs (d)(i)
and (d)(ii) above.
(n) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Trust Certificates
which is made with moneys received pursuant to the terms of the Certificate
Insurance Policy shall not be considered payment of such Certificates from the
Trust and shall not result in the payment of or the provision for the payment of
the principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner by
its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee or the Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on any
Class A Trust Certificates to the Owners of such Certificates, the Certificate
Insurer will be fully subrogated to the rights of such Owners to receive such
principal and interest together with any interest thereon of the applicable
Pass- Through Rate from the Trust and (b) the Certificate Insurer shall be paid
such principal and interest only from the sources and in the manner provided
herein for the payment of such principal and interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it unless on such Payment Date the Owners of
the Class A Trust Certificates shall also have received the full amount of the
Class A Distribution Amount for such Payment Date.
The Trustee or Paying Agent shall (i) receive as attorney-in-fact of
each Owner of Class A Trust Certificates any Insured Payment from the
Certificate Insurer and (ii) disburse the same to the Owners of the related
Class A Trust Certificates as set forth in Section 7.03(d). Insured Payments
disbursed by the Trustee or Paying Agent from proceeds of a Certificate
Insurance Policy shall not be considered payment by the Trust, nor shall such
payments discharge the obligation of the Trust with respect to such Class A
Trust Certificates and the Certificate Insurer shall be entitled to receive the
related Reimbursement Amount pursuant to Section 7.03(f)(2) hereof.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Residual Certificates to receive distributions in
respect of Residual Certificates, and all ownership interests of the Owners of
the Residual Certificates in and to such distributions, shall be subject and
subordinate to the preferential rights of the holders of the Offered
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Residual Certificates in
amounts deposited in the Accounts from time to time shall not vest unless and
until such amounts are distributed in respect of the Residual Certificates in
accordance with the terms of this Agreement. Notwithstanding anything contained
in this Agreement to the contrary, the Owners of the Residual Certificates shall
not be required to refund any amount properly distributed on the Residual
Certificates pursuant to this Section 7.03.
Section 7.04 AUCTION RATE CERTIFICATES.
Principal payments will be made to the Auction Rate Certificates only
in amounts equal to $25,000 and integral multiples in excess thereof. If the
amount in the Certificate Account otherwise required to be applied as a payment
of principal on the Auction Rate Certificates either (i) is less than $25,000 or
(ii) exceeds an integral multiple of $25,000, then, in the case of (i), such
entire amount or, in the case of (ii), such excess amount, will not be paid as
principal on the upcoming Payment Date, but will be retained in the Auction
Remainder Account as Amount held for Future Distribution until the amount
therein available for payment of principal on the Auction Rate Certificates
equals $25,000 or any integral multiple thereof. In no event, however, shall
amounts remain in the Auction Remainder Account as Amounts held for Future
Distribution more than 13 months after the related payments are deposited into
the Trust. The amount being distributed to the Auction Rate Certificates as
principal will be allocated to the specific Certificates of such Class selected
no later than 5 Business Days prior to the related Payment Date by lot or such
other manner as may be determined, which allocations will be made only in
amounts equal to $25,000 and integral multiples of $25,000 in excess thereof.
Section 7.05 INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Trustee in the name
of the Trustee for the benefit of the Owners and the Certificate Insurer, as
directed in writing by the Depositor, in one or more Eligible Investments
bearing interest or sold at a discount. The bank serving as Trustee or any
affiliate thereof may be the obligor on any investment which otherwise qualifies
as an Eligible Investment. No investment in any Account shall mature later than
the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held
by the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Depositor shall have failed to give investment directions to
the Trustee then the Trustee shall invest in money market funds described in
Section 7.07(h); to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Trustee shall be for the account of the Owners of the Class R-I Certificates
and distributed to the Owners of the Class R-I Certificates immediately prior to
any distribution under Section 7.03 hereof on any Payment Date, and any loss
resulting from such investments shall be for the account of the Servicer and
promptly upon the realization of such loss the Servicer shall contribute funds
in an amount equal to such loss to such Account.
Section 7.06 PAYMENT OF TRUST EXPENSES.
(a) The Trustee shall make demand on ContiMortgage to pay the amount
of the expenses of the Trust (other than payments of premiums to the Certificate
Insurer) (including Trustee's fees and expenses not covered by Section
7.03(b)(i)) and ContiMortgage shall promptly pay such expenses directly to the
Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Trustee.
Section 7.07 ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated in
one of the two highest ratings categories by each Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated F-1+
or better by Fitch, A-1+ or better by Standard & Poor's and P-1 by Moody's;
(d) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB by each
of Standard & Poor's and Fitch) which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by the FDIC
and held up to the limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
(i) The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations
rated Aa2 or better by Moody's and AA or better by each of
Standard & Poor's and Fitch, and
(ii) Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
(iii) The agreement is not subordinated to any other obligations of
such insurance company or bank, and
(iv) The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
(v) The Trustee receives an opinion of counsel that such agreement
is an enforceable obligation of such insurance company or bank;
(f) Repurchase agreements collateralized by securities described in
(a) above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
Moody's A-1+ or AA, respectively or better by Standard & Poor's and F- 1+ or AA,
respectively, or better by Fitch, provided:
(i) master repurchase agreement or specific written repurchase
agreement governs the transaction, and
(ii) The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent
for the Trustee, and such third party is (a) a Federal Reserve
Bank or (b) a bank which is a member of the FDIC and which has
combined capital, surplus and undivided profits of not less
than $125 million, or (c) a bank approved in writing for such
purpose by the Certificate Insurer and the Trustee shall have
received written confirmation from such third party that it
holds such securities, free and clear of any lien, as agent for
the Trustee, and
(iii) perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for
the benefit of the Trustee, and
(iv) The repurchase agreement has a term of thirty days or less and
the Trustee will value the collateral securities no less
frequently than weekly and will liquidate the collateral
securities if any deficiency in the required collateral
percentage is not restored within two business days of such
valuation, and
(v) The fair market value of the collateral securities in relation
to the amount of the repurchase obligation, including principal
and interest, is equal to at least 106% and such collateral
securities must be valued weekly and market-to-market at
current market price plus accrued interest.
(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if
rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 ACCOUNTING AND DIRECTIONS BY TRUSTEE.
(a) The Trustee shall determine whether an Insured Payment will be
required to be made by the Certificate Insurer on the following Payment Date and
if so then no later than 12:00 noon on the second Business Day immediately
preceding the related Payment Date the Trustee shall furnish the Certificate
Insurer and the Depositor with a completed Notice in the form set forth as
Exhibit A to the Certificate Insurance Policy Agreement. The Notice shall
specify the amount of Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
Each month for so long as a Class of Auction Rate Certificates is
Outstanding, not later than 12:00 noon New York time on the Auction Reporting
Date, the Servicer shall deliver to the Certificate Insurer and the Trustee, by
telecopy, the receipt and legibility of which shall be confirmed telephonically,
with hard copy thereof to be delivered on the Business Day following the
Determination Date, a certificate signed by a Servicing Officer stating the date
(day, month and year), the Series number of the Certificates, the date of this
Agreement, and the amount to be distributed on the upcoming Remittance Date to
each Class of Auction Rate Certificates as a payment of principal.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and the
Trustee), the Trustee shall notify (subject to the terms of Section 10.03(j)
hereof, based solely on information provided to the Trustee by the Servicer) the
Depositor, each of the Sellers, the Certificate Insurer and each Owner of the
following information with respect to the next Payment Date (which notification
may be given by facsimile or by telephone promptly confirmed in writing):
(i) The aggregate amount then on deposit in the Certificate
Account;
(ii) The Class A Distribution Amount, with respect to each Class
individually and all Classes of the Class A Trust Certificates
in the aggregate, on the next Payment Date and the related
Class B Distribution Amount;
(iii) The amount of any Insured Payment to be made by the Certificate
Insurer on such Payment Date;
(iv) The application of the amounts described in clause (i)
preceding to the allocation and distribution of the related
Class A Distribution Amount, and the related Class B
Distribution Amount, on such Payment Date in accordance with
Section 7.03 hereof; (v) The Certificate Principal Balance of
each Class of the Class A Trust and Class B Certificates, the
Class A-11 IO Notional Principal Amount, the aggregate amount
of the principal of each Class of Certificates to be paid on
such Payment Date and the remaining Certificate Principal
Balance (or Class A-11 IO Notional Principal Amount) of each
Class of Certificates following any such payment;
(vi) The amount, if any, of any Realized Losses for the related
Remittance Period and the amount of Cumulative Realized Losses
as of the last day of the related Remittance Period; and
(vii) The amount of 60+ Day Delinquent Loans and the Three-Month
Rolling Average 60+ Day Delinquency Rate.
Section 7.09 REPORTS BY TRUSTEE TO OWNERS AND THE CERTIFICATE
INSURER.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Certificate Insurer, the Underwriters and the Rating
Agencies:
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal
amount of $1,000 or, in the case of the Class A-10
Certificates, the original principal amount of $25,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other recoveries of principal included therein
and any Extra Principal Distribution Amount;
(iii) the amount of such Owner's distributions allocable to interest
(based on a Certificate in the original principal amount of
$1,000 or, in the case of the Auction Rate Certificates, in the
original principal amount of $25,000);
(iv) the Interest Carry Forward Amount for each Class;
(v) the principal amount (or notional principal amount) and the
Planned Principal Balance, if any, of each Class of Class A
Trust and Class B Certificates (based on a Certificate in the
original principal amount of $1,000 or, in the case of the
Auction Rate Certificates, per $25,000) which will be
Outstanding after giving effect to any payment of principal on
such Payment Date;
(vi) the aggregate Loan Balance of all Home Equity Loans, the
Fixed-Rate Loans and the Adjustable-Rate Loans after giving
effect to any payment and any prepayments of principal on such
Payment Date;
(vii) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the
Code and the regulations promulgated thereunder to assist the
Owners in computing their market discount;
(viii) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution with respect to
each Group;
(ix) the weighted average Coupon Rate of the Home Equity Loans, the
Fixed-Rate Loans and the Adjustable-Rate Loans;
(x) whether a Delinquency Trigger Event has occurred and/or a
Cumulative Realized Loss Trigger Event and/or a Cumulative
Realized Loss Termination Event has occurred;
(xi) the Senior Enhancement Percentage;
(xii) the Overcollateralization Amount and the Certificate Principal
Balance of each Class of the Offered Certificates then
outstanding after giving effect to any payment of principal on
such Payment Date;
(xiii) the amount of any Applied Realized Loss Amount, Class B
Realized Loss Amortization Amount and Class B Unpaid Realized
Loss Amount as of the close of such Payment Date;
(xiv) the Pass-Through Rate for the Floating Rate Certificates and
the Auction Rate Certificates applicable to the related Accrual
Period and if any such Pass-Through Rate was based on the
Available Funds Cap, then what such Pass-Through Rate would
have been in the absence thereof;
(xv) the Available Funds Cap for such Payment Date;
(xvi) the amount of any Insured Payment included in the distribution
to Owners of Class A Trust Certificates; and
(xvii) any Reimbursement Amount paid on such Payment Date and any
Reimbursement Amount remaining unpaid.
(xviii) such other information as the Certificate Insurer may
reasonably request with respect to Delinquent Home Equity
Loans;
(xix) the largest Home Equity Loan Balance outstanding; and
(xx) any amount remaining in the Auction Remainder Account pursuant
to Section 7.04.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (vii), (viii), (ix), (xi), (xii),
(xiii) and (xiv) shall be based solely upon information contained in the monthly
servicing report provided by the Servicer to the Trustee pursuant to Section
8.01 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, the Certificate Insurer, each Owner, the Underwriters and the
Rating Agencies, together with the information described in Subsection (a)
preceding, the following information with respect to the Home Equity Loans which
is hereby required to be prepared by the Servicer and furnished to the Trustee
for such purpose on or prior to the related Monthly Remittance Date:
(i) the related Class A Trust Certificate Principal Balance, as of
such Payment Date;
(ii) the number and aggregate Loan Balances of all Home Equity
Loans; the Fixed Rate Loans and the Adjustable Rate Loans (a)
30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or
more days Delinquent, as of the close of business on the last
Business Day of the calendar month next preceding such Payment
Date and the number and aggregate Loan Balances of such Loans;
(iii) the status and the number and dollar amounts of all Home Equity
Loans, the Fixed Rate Loans and the Adjustable Rate Loans in
foreclosure proceedings as of the close of business on the last
Business Day of the calendar month next preceding such Payment
Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were
commenced in the immediately preceding calendar month;
(iv) the number of Mortgagors and the Loan Balances of Home Equity
Loans, the Fixed Rate Loans and the Adjustable Rate Loans (a)
the related Mortgages involved in bankruptcy proceedings as of
the close of business on the last Business Day of the calendar
month next preceding such Payment Date and (b) Home Equity
Loans in each Group that are "balloon" loans;
(v) the existence and status of any REO Properties for all Home
Equity Loans, the Fixed Rate Loans and the Adjustable Rate
Loans as of the close of business of the last Business Day of
the month next preceding the Payment Date;
(vi) the book value of any REO Property for all Home Equity Loans,
the Fixed Rate Loans and the Adjustable Rate Loans as of the
close of business on the last Business Day of the calendar
month next preceding the Payment Date;
(vii) the amount of Cumulative Realized Losses for all Home Equity
Loans, the Fixed Rate Loans and the Adjustable Rate Loans;
(viii) the aggregate Loan Balance of 60+ Day Delinquent Loans for all
Home Equity Loans, the Fixed Rate Loans and the Adjustable Rate
Loans; and
(ix) the Three-Month Rolling Average 60+ Day Delinquency Rate for
all Home Equity Loans, the Fixed Rate Loans and the Adjustable
Rate Loans and whether a Delinquency Trigger Event or a
Cumulative Realized Loss Trigger Event is in effect.
(c) The Servicer shall furnish to the Trustee and to the Certificate
Insurer during the term of this Agreement, such periodic, special, or other
reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee or the Certificate Insurer may reasonably require; provided, that the
Servicer shall be entitled to be reimbursed by the requesting party for the fees
and actual expenses associated with providing such reports, if such reports are
not generally produced in the ordinary course of business.
Section 7.10 REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, each of the Sellers,
the Underwriters, the Certificate Insurer and each Owner, with respect to the
amount on deposit in the Certificate Account and the identity of the investments
included therein, as the Depositor, the Certificate Insurer or the Seller may
from time to time request. Without limiting the generality of the foregoing, the
Trustee shall, at the request of the Depositor, the Certificate Insurer or
either of the Sellers transmit promptly to the Depositor, the Certificate
Insurer and each of the Sellers copies of all accounting of receipts in respect
of the Home Equity Loans furnished to it by the Servicer and shall notify the
Certificate Insurer and each of the Sellers if any Monthly Remittance Amount has
not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 PREFERENCE PAYMENTS.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Fiscal Agent of (i) a certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the Certificate
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Certificate Insurer, irrevocably
assigning to the Certificate Insurer all rights and claims of the Owners
relating to or arising under the Class A Trust Certificates against the debtor
which made such preference payment or otherwise with respect to such preference
payment and (iv) appropriate instruments to effect the appointment of the
Certificate Insurer as agent for such Owner in any legal proceeding related to
such preference payment, such instruments being in a form satisfactory to the
Certificate Insurer, provided that if such documents are received after 12:00
noon New York City time on such Business Day, they will be deemed to be received
on the following Business Day. Such payment shall be disbursed to the receiver
or trustee in bankruptcy named in the final court order of the court exercising
jurisdiction on behalf of the Owner and not to any Owner directly unless such
Owner has returned principal or interest paid on the Class A Trust Certificates
to such receiver or trustee in bankruptcy in which case payment will be
disbursed to the Owner.
Each Owner of a Class A Trust Certificate, by its purchase of Class A
Trust Certificates, the Servicer and the Trustee hereby agree that the
Certificate Insurer may at any time during the continuation of any proceeding
relating to a preference claim direct all matters relating to such preference
claim, including, without limitation, the direction of any appeal of any order
relating to such preference claim and the posting of any surety or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Certificate Insurer shall be subrogated to the rights of the
Servicer, the Trustee and the Owner of each Class A Trust Certificate in the
conduct of any such preference claim, including, without limitation, all rights
of any party to an adversary proceeding action with respect to any court order
issued in connection with any such preference claim.
END OF ARTICLE VII
<PAGE>
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the servicing standards set forth in the
FannieMae Guide and shall have full power and authority, acting alone, to do or
cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. It is the intent of the
parties hereto that the Servicer shall have all of the servicing obligations
hereunder which a lender would have under the FannieMae Guide (as such
provisions relate to second lien mortgages); provided, however, that to the
extent that such standards, such obligations or the FannieMae Guide are amended
by FannieMae after the date hereof and the effect of such amendment would be to
impose upon the Servicer any material additional costs or other burdens relating
to such servicing obligations, the Servicer may, at its option, determine not to
comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and provided further, however, that Section
8.14(a) shall constitute an authorization from the Trustee to the Servicer to
execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Home Equity Loan paid in full (or with respect to
which payment in full has been escrowed). The Trustee shall execute any
documentation furnished to it by the Servicer for recordation by the Servicer in
the appropriate jurisdictions as shall be necessary to effectuate the foregoing.
Subject to Sections 8.13 and 8.14, the Trustee shall execute any authorizations
and other documents as the Servicer or such Sub-Servicer shall reasonably
request that are furnished to the Trustee to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder.
The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FannieMae Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND
SUB-SERVICERS.
The Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution that is acceptable
to the Certificate Insurer and that is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub-Servicing
Agreement and (x) has (i) been designated an approved seller-servicer by FHLMC
or FannieMae for second mortgage loans and (ii) has equity of at least
$5,000,000, as determined in accordance with generally accepted accounting
principles or (y) is a Servicer Affiliate. The Servicer shall give notice to the
Trustee, the Certificate Insurer and the Rating Agencies of the appointment of
any Sub-Servicer. For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Home Equity Loans when any Sub-Servicer has
received such payments. Each Sub-Servicer shall be required to service the Home
Equity Loans in accordance with this Agreement and any such Sub-Servicing
Agreement shall be consistent with and not violate the provisions of this
Agreement. Each Sub-Servicing Agreement shall provide that a successor Servicer
shall have the option to terminate such agreement without payment of any fees if
the original Servicer is terminated or resigns.
Section 8.04 SUCCESSOR SUB-SERVICERS.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement and to either itself directly service the related Home Equity Loans or
enter into a Sub-Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 8.03.
Section 8.05 LIABILITY OF SERVICER; INDEMNIFICATION.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Home Equity Loans in
compliance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee, the Certificate Insurer and each Owner if a claim is made by
a third party with respect to this Agreement, and the Servicer shall assume
(with the consent of the Trustee and the Certificate Insurer) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Certificate Insurer
and/or Owner in respect of such claim. The Trustee may, if necessary, reimburse
the Servicer from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence except when
the claim relates directly to the failure of the Servicer to service and
administer the Home Equity Loans in compliance with the terms of this Agreement.
The provisions of this Section 8.05 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 8.06 NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER,
TRUSTEE OR THE OWNERS.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee, the Certificate
Insurer and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 8.07.
Section 8.07 ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on the part of the Trustee; provided, however,
that the successor Servicer may terminate the Sub-Servicer as provided in
Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account to be held
as a trust account. Each Principal and Interest Account shall be identified on
the records of the Designated Depository Institution as follows: "Manufacturers
and Traders Trust Company, as Trustee under the Pooling and Servicing Agreement
dated as of December 1, 1997." If the institution at any time holding the
Principal and Interest Account ceases to be eligible as a Designated Depository
Institution hereunder, then the Servicer shall, within 30 days, be required to
name a successor institution meeting the requirements for a Designated
Depository Institution hereunder. If the Servicer fails to name such a successor
institution, then the Principal and Interest Account shall thenceforth be held
as a trust account with a qualifying Designated Depository Institution. The
Servicer shall notify the Trustee, the Certificate Insurer and the Owners if
there is a change in the name, account number or institution holding the
Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested (up to the limits insured by the FDIC) or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trustee for the benefit of the Owners and the
Certificate Insurer. Any investment earnings on funds held in the Principal and
Interest Account shall be for the account of the Servicer and may only be
withdrawn from the Principal and Interest Account by the Servicer immediately
following the remittance of the Monthly Remittance Amount (and the Monthly
Excess Interest Amount included therein) by the Servicer. Any investment losses
on funds held in the Principal and Interest Account shall be for the account of
the Servicer and promptly upon the realization of such loss shall be contributed
by the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account
on the Business Day after receipt all principal collections on the Home Equity
Loans received, and interest collections on the Home Equity Loans accrued after
the Cut-Off Date including any Prepayments and Net Liquidation Proceeds, other
recoveries or amounts related to the Home Equity Loans received by the Servicer
and any income from REO Properties, but net of (i) the Servicing Fee with
respect to each Home Equity Loan and other servicing compensation to the
Servicer as permitted by Section 8.15 hereof, (ii) principal collected and
interest accrued on any Home Equity Loan on or prior to the Cut-Off Date, (iii)
Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the
sum of (I) the Loan Balance of the related Home Equity Loan immediately prior to
liquidation, (II) accrued and unpaid interest on such Home Equity Loan (net of
the Servicing Fee) to the date of such liquidation, and (III) any Realized
Losses incurred during the related Remittance Period, (iv) reimbursements for
Delinquency Advances and (v) reimbursements for amounts deposited in the
Principal and Interest Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amount herein referred to as
"Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Principal and Interest Account, with respect to the
Home Equity Loans, only in the following priority and for the following
purposes:
(A) to withdraw interest paid with respect to any Home Equity
Loans that had accrued for periods prior to the Cut-Off
Date;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the
Principal and Interest Account in error; and
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article
IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds
available in immediately available funds, without duplication,
the Daily Collections allocable to a Remittance Period not
later than the related Monthly Remittance Date and Loan
Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each
Monthly Remittance Date, deliver to the Trustee and the
Certificate Insurer a monthly servicing report, with respect to
the Home Equity Loans, containing the following information:
principal and interest collected, scheduled interest,
Liquidated Loans, summary and detailed delinquency reports,
Liquidation Proceeds and other similar information concerning
the servicing of the Home Equity Loans. In addition, the
Servicer shall inform the Trustee and the Certificate Insurer
on each Monthly Remittance Date with respect to the Home Equity
Loans of the amounts of any Loan Purchase Prices or
Substitution Amounts so remitted during the related Remittance
Period.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(c) to
enable the Trustee to perform its reporting requirements under
Section 7.09 and the Trustee shall forward such information to
the Underwriters within five Business Days of receipt thereof.
Section 8.09 DELINQUENCY ADVANCES AND SERVICING ADVANCES.
(a) If the amount on deposit in the Certificate Account as of any
Monthly Remittance Date is less than the sum of (I) the Interest Remittance
Amount on such Monthly Remittance Date and (II) the Principal Remittance Amount
on such Monthly Remittance Date, the Servicer shall remit to the Trustee for
deposit into the Certificate Account a sufficient amount of its own funds to
make the total amount remitted to the Trustee equal to such sum. Such amounts of
the Servicer's own funds so deposited are "Delinquency Advances," including but
not limited to any amount advanced due to the invocation by a Mortgagor of the
relief provisions provided by the Soldiers' and Sailors' Civil Relief Act of
1940.
The Servicer shall be permitted to fund its payment of Delinquency
Advances on any Business Day and to reimburse itself for any Delinquency
Advances paid from the Servicer's own funds from collections on any Home Equity
Loan deposited to the Principal and Interest Account subsequent to the related
Remittance Period and shall deposit into the Principal and Interest Account with
respect thereto (i) collections from the Mortgagor whose Delinquency gave rise
to the shortfall which resulted in such Delinquency Advance and (ii) Net
Liquidation Proceeds recovered on account of the related Mortgage Loan to the
extent of the amount of aggregate Delinquency Advances related thereto. If not
recovered from the related Mortgagor or the related Net Liquidation Proceeds,
the Servicer shall recover Delinquency Advances pursuant to Section 7.03(h).
Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
aggregate remaining Scheduled Payments due on the Home Equity Loans, the
Servicer shall not be required to make any future Delinquency Advances, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided above. The Servicer shall give written notice of such
determination to the Trustee and the Certificate Insurer; and the Trustee shall
promptly furnish a copy of such notice to the Owners of the Class R
Certificates; provided, that the Servicer shall be entitled to recover any
unreimbursed Delinquency Advances from the aforesaid Liquidation Proceeds prior
to the payment of the Liquidation Proceeds to any other party to this Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a "Servicing
Advance". The Servicer may recover Servicing Advances (x) from the Mortgagors to
the extent permitted by the Home Equity Loans or, if not recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(h). The Servicer shall be entitled to recover the
Servicing Advances from the aforesaid Liquidation Proceeds prior to the payment
of the Liquidation Proceeds to any other party to this Agreement. Except as
provided in the previous sentence, in no case may the Servicer recover Servicing
Advances from the principal and interest payments on any Home Equity Loan or
from any amounts relating to any other Home Equity Loan except as provided in
Section 7.03(h).
Section 8.10 COMPENSATING INTEREST; REPURCHASE OF HOME EQUITY LOANS.
(a) If a Prepayment of a Home Equity Loan occurs during any calendar
month or if the amount received with respect to a date-of-payment or simple
interest Home Equity Loan represents less than a full month's interest, any
difference between the interest collected from the Mortgagor and the full
month's interest at the Coupon Rate less the Servicing Fee ("Compensating
Interest") that is due shall be deposited by the Servicer (but not in excess of
the aggregate Servicing Fee for the related Remittance Period) to the Principal
and Interest Account on the next succeeding Monthly Remittance Date and shall be
included in the Monthly Remittance to be made available to the Trustee on such
Monthly Remittance Date. The Servicer shall not be entitled to reimbursement for
amounts paid as Compensating Interest.
(b) The Servicer, and in the absence of exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, for administrative convenience, to purchase for its own account any
Home Equity Loan which becomes Delinquent, in whole or in part, as to four
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 8.13;
provided, however, that the Servicer or the Certificate Insurer, as the case may
be, may not purchase any such Home Equity Loan unless the Servicer or the
Certificate Insurer, as the case may be, has delivered to the Trustee an opinion
of counsel experienced in federal income tax matters acceptable to the Trustee
and the Certificate Insurer to the effect that such a purchase would not
constitute a Prohibited Transaction for the Trust or otherwise subject the Trust
to tax and would not jeopardize the status any REMIC therein as a REMIC. Any
such Loan so purchased shall be purchased by the Servicer or the Certificate
Insurer, as the case may be, on a Monthly Remittance Date at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
deposited in the Principal and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 MAINTENANCE OF INSURANCE.
(a) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage, and which provides for a recovery
by the Trust of insurance proceeds relating to such Home Equity Loan in an
amount not less than the least of (i) the outstanding principal balance of the
Home Equity Loan (plus the related senior lien loan, if any), (ii) the minimum
amount required to compensate for damage or loss on a replacement cost basis and
(iii) the full insurable value of the premises. The Servicer shall maintain the
insurance policies required hereunder in the name of the mortgagee, its
successors and assigns, as loss payee. The policies shall require the insurer to
provide the mortgagee with 30 days' notice prior to any cancellation or as
otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by each Rating Agency. Upon the request of the Trustee or
the Certificate Insurer, the Servicer will cause to be delivered to such
requesting Person a certified true copy of such blanket policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable carrier in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 8.12 DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel to the
foregoing effect shall conclusively establish the reasonableness of such belief.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such agreement, obtain the prior written
consent of the Certificate Insurer. The Home Equity Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this Agreement. The Servicer shall notify the Trustee that any such assumption
or substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement (indicating the File
to which it relates) which copy shall be added by the Trustee to the related
File and which shall, for all purposes, be considered a part of such File to the
same extent as all other documents and instruments constituting a part thereof.
The Servicer shall be responsible for recording any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Home Equity Loan shall
not be changed but shall remain as in effect immediately prior to the assumption
or substitution, the stated maturity or outstanding principal amount of such
Home Equity Loan shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Servicer
or the Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 REALIZATION UPON DEFAULTED HOME EQUITY LOANS;
MODIFICATION.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FannieMae Guide, including, but not limited
to, advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property before the start of the 12th month of the 3rd
taxable year following the taxable year in which the Trust acquired such
property, at such price as the Servicer deems necessary to comply with this
covenant unless the Seller which delivered the related Home Equity Loan obtains
for the Trustee, the Certificate Insurer and the Servicer an opinion of counsel
experienced in federal income tax matters acceptable to the Trustee and the
Certificate Insurer, addressed to the Trustee, the Certificate Insurer, and the
Servicer, to the effect that the holding by the Trust of such REO Property for
any greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust or any REMIC therein as defined in Section 860F of
the Code or cause any REMIC therein to fail to qualify as a REMIC under the
REMIC Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by any REMIC
of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Owners, rent the same, or any part thereof, as the Servicer deems to be in the
best interest of the Owners for the period prior to the sale of such REO
Property. The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Property in determining whether to foreclose
upon or otherwise comparably convert the ownership of such Property. The
Servicer shall not take any such action with respect to any Property known by
the Servicer to contain such wastes or substances, without the prior written
consent of the Certificate Insurer. With respect to any Home Equity Loan secured
by a mixed use Property, the Servicer shall, prior to foreclosing upon or
otherwise comparably effecting the ownership in the name of the Servicer on
behalf of the Trust, either (x) perform a "phase one environmental study" of
such Property or (y) repurchase such Property at the Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the FannieMae
Guide, when it has recovered, whether through trustee's sale, foreclosure sale
or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan." After a Home Equity Loan has become a Liquidated Loan, the
Servicer shall promptly prepare and forward to the Depositor, the Certificate
Insurer and the Trustee a report detailing the Liquidation Proceeds received
from the Liquidated Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; provided, however, that no such
modification, waiver or amendment shall extend the maturity date of such Home
Equity Loan beyond the Remittance Period related to the Final Scheduled Payment
Date of the latest Class of Certificates remaining in the Trust. Notwithstanding
anything set out in this Section 8.13(c) or elsewhere in this Agreement to the
contrary, the Servicer shall be permitted to modify, waive or amend any
provision of a Home Equity Loan if required by statute or a court of competent
jurisdiction to do so.
(d) The Servicer shall deliver to the Trustee for deposit in the
related File, an original counterpart of any agreement relating to such
modification, waiver or amendment, promptly following the execution thereof.
Section 8.14 Trustee to Cooperate; Release of Files.
Section 8.14 TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee the FannieMae "Request for Release of Documents" (FannieMae Form 2009).
Upon receipt of such Request for Release of Documents, the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer is authorized to give,
as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of the Servicer and
delivery to the Trustee of a receipt signed by an Authorized Officer of the
Servicer, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer; provided that there shall not be released and
unreturned at any one time more than 10% of the entire number of Files. Such
receipt shall obligate the Servicer to return the File to the Trustee when the
need therefor by the Servicer no longer exists unless the Home Equity Loan shall
be liquidated, in which case, upon receipt of the FannieMae "Liquidation
Schedule" relating to such liquidation, the receipt shall be released by the
Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio after any release does not exceed the Loan-to-Value Ratio of
such Home Equity Loan as of the date of origination thereof and any increase in
the Loan-to-Value Ratio shall not exceed 15% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of a particular Home Equity Loan and certifying that the criteria set forth in
the immediately preceding sentence have been satisfied, the Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above without
approval in writing by the Certificate Insurer.
Section 8.15 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer.
Section 8.16 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Certificate Insurer and the Rating Agencies, on or before March
31 of each year, commencing in 1998, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
Section 8.17 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS.
On or before June 30 of any year, commencing in 1998, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Depositor, which in no event shall exceed $1,000 per annum), shall cause to
be delivered to the Trustee, the Certificate Insurer and the Rating Agencies a
letter or letters of a firm of independent, nationally recognized certified
public accountants reasonably acceptable to the Certificate Insurer, dated as of
the date of the Servicer's fiscal audit for subsequent letters, stating that
such firm has examined the Servicer's overall servicing operations in accordance
with the requirements of the Uniform Single Attestation Program for Mortgage
Bankers, and stating such firm's conclusions relating thereto.
Section 8.18 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE HOME EQUITY LOANS.
The Servicer shall provide to the Trustee, the Certificate Insurer,
the FDIC and the supervisory agents and examiners of each of the foregoing
(which, in the case of supervisory agents and examiners, may be required by
applicable state and federal regulations) access to the documentation regarding
the Home Equity Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
Section 8.19 ASSIGNMENT OF AGREEMENT.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Trustee and the Certificate Insurer, which consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.20(i) hereof for a successor servicer.
Section 8.20 REMOVAL OF SERVICER; RESIGNATION OF SERVICER.
(a) The Certificate Insurer (or Trustee with the consent of the
Certificate Insurer and acting upon the request of a majority of the Percentage
Interests of the Offered Certificates then Outstanding), may remove the Servicer
upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or
custodian or similar entity with respect to itself or its
property, (II) admit in writing its inability to pay its
debts generally as they become due, (III) make a general
assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a
voluntary case under the federal bankruptcy laws of the
United States of America or file a voluntary petition or
answer seeking reorganization, an arrangement with
creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency
proceeding or (VI) take corporate action for the purpose
of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of
debtors, seeking in respect of the Servicer an order for
relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or
custodian or similar entity with respect to the Servicer
or of all or any substantial part of its assets, or other
like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested
by the Servicer in good faith, the same shall (A) result
in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of seventy-five (75)
consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default
thereof for a period of thirty (30) days (one (1) Business
Day in the case of a delay in making a required payment to
the Trustee under Section 8.08(d)(ii)(a)) after the
earlier of (a) actual knowledge of an officer of the
Servicer or (b) receipt of notice from the Trustee or the
Certificate Insurer of said failure; provided, however,
that if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period
may be extended with the written approval of the
Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of
the Owners or the Certificate Insurer for a period of
sixty (60) days after the earlier of the Servicer's
discovery or receipt of notice thereof; provided however,
that if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period
may be extended with the written approval of the
Certificate Insurer; or
(v) The merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the
Servicer is the surviving entity of such combination or
(2) the surviving entity is a corporation or a
state-chartered or national bank acceptable to the
Certificate Insurer (acceptable to the Owners of the Class
R Certificates as provided below but if such Owners and
the Certificate Insurer cannot agree, the Certificate
Insurer shall control) organized and doing business under
the laws of any state or the United States; or
(vi) The occurrence of a Cumulative Realized Loss Termination
Trigger.
(b) The Certificate Insurer may remove the Servicer upon the
occurrence of any of the following events:
(i) an Insured Payment is made by the Certificate Insurer,
provided, however, that in the event that the Trustee shall become the
Servicer hereunder, if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that such event was due to
circumstances beyond the control of the Servicer, the right of removal
hereunder shall not be considered a default by the Servicer;
(ii) the failure by the Servicer to make any required
Servicing Advance when due;
(iii) Cumulative Realized Losses has exceeded 7% of the
Original Aggregate Loan Balance; provided, however, that in the event
that the Trustee shall become the Servicer hereunder, if the Servicer
can demonstrate to the reasonable satisfaction of the Certificate
Insurer that such event was due to circumstances beyond the control of
the Servicer, the right of removal hereunder shall not be considered a
default by the Servicer; or
(iv) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating Interest when due;
PROVIDED, HOWEVER, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate Insurer
and by registered or certified mail, notice of the occurrence of one or more of
the events set forth in clause (iii) above and the Servicer shall not have
remedied, or shall not have taken actions satisfactory to the Certificate
Insurer to remedy, such event or events within 60 days after the Servicer's
receipt of such notice and (y) upon the Trustee's determination that a required
Delinquency Advance or payment of Compensating Interest has not been made by the
Servicer, the Trustee shall so notify an Authorized Officer of the Servicer, the
Owners, if any, and the Certificate Insurer as soon as is reasonably practical.
(c) If any event described in subsection (b)(iii) above occurs and is
continuing, during the thirty (30) day period following receipt of notice, the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
shall cooperate with each other to determine if the occurrence of such event is
more likely than not the result of the acts or omissions of the Servicer or more
likely than not the result of events beyond the control of the Servicer. If the
Trustee, the Owners of the Class R Certificates and the Certificate Insurer
conclude that the event is the result of the latter, the Servicer may not be
terminated, unless and until some other event set forth in subsection (b) (i),
(ii) or (iv) has occurred and is continuing. If the Trustee, the Owners of the
Class R Certificates and the Certificate Insurer conclude that the event is the
result of the former, the Certificate Insurer may terminate the Servicer in
accordance with this Section and the Trustee shall act as successor Servicer,
provided that the Trustee shall have until the 30th day following the date of
receipt of notice of the event to become the successor Servicer or to appoint a
successor Servicer pursuant to this Section.
If the Trustee, the Owners of the Class R Certificates and the
Certificate Insurer cannot agree, and the basis for such disagreement is not
arbitrary or unreasonable, as to the cause of the event, the decision of the
Certificate Insurer shall control; provided, however, that if the Certificate
Insurer decides to terminate the Servicer, the Trustee shall be relieved of its
obligation to assume the servicing or to appoint a successor, which shall be the
exclusive obligation of the Certificate Insurer.
The Certificate Insurer agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of the Certificate Insurer from time to
time.
(d) If any event described in sections (a) and (b) above (other than
(b)(iii) for which Section 8.20(c) controls) occurs and is continuing, the
Certificate Insurer shall notify the Owners of the Class R Certificates in
writing if the Certificate Insurer intends to terminate the Servicer in its
capacity as Servicer under this Agreement. During the 30 day period following
receipt of such notice by the Owners of the Class R Certificates, such Owners
and the Certificate Insurer shall cooperate with each other to determine if the
occurrence of such event is more likely than not the result of the acts or
omissions of the Servicer or more likely than not the result of events beyond
the control of the Servicer. If the Owners of the Class R Certificates and the
Certificate Insurer conclude that the event is the result of the latter, the
Servicer may not be terminated. If the Owners of the Class R Certificates and
the Certificate Insurer conclude that the event is the result of the former, the
Certificate Insurer may terminate the Servicer in accordance with this Section
and the Trustee shall act as successor Servicer, provided that the Trustee shall
have until the 30th day following the date of receipt of notice of the event to
become the successor Servicer or to appoint a successor Servicer pursuant to
this Section. If the Owners of the Class R Certificates and the Certificate
Insurer cannot agree as to the cause of the event, the decision of the
Certificate Insurer shall control.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Trustee and the Certificate Insurer,
which opinion shall be at the Servicer's expense.
(f) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(i) Upon removal or resignation of the Servicer, the Trustee (x) may
solicit bids for a successor servicer as described below, and (y) pending the
appointment of a successor servicer as a result of soliciting such bids, shall
serve as Servicer. The Trustee shall, if it is unable to obtain a qualifying bid
and is prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing and home finance institution,
bank or mortgage servicing institution which has been designated as an approved
seller-servicer by FannieMae or FHLMC for first and second mortgage loans and
having equity of not less than $10,000,000 (or such lower level as may be
acceptable to the Certificate Insurer), as determined in accordance with
generally accepted accounting principles and acceptable to the Certificate
Insurer and the Owners of the Class R Certificates (provided that if the
Certificate Insurer and such Owners cannot agree as to the acceptability of such
successor Servicer, the decision of the Certificate Insurer shall control) as
the successor to the Servicer hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Servicer hereunder. The
compensation of any successor Servicer (including, without limitation, the
Trustee) so appointed shall be the aggregate Servicing Fee, together with the
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in Sections 8.08 and 8.15; provided, however,
that if the Trustee acts as successor Servicer then ContiMortgage agrees to pay
to the Trustee at such time that the Trustee becomes such successor Servicer a
set-up fee of twenty-five dollars ($25.00) for each Home Equity Loan then
included in the Trust Estate. The Trustee shall be obligated to serve as
successor Servicer whether or not the fee described in the preceding sentence is
paid by ContiMortgage, but shall in any event be entitled to receive, and to
enforce payment of, such fee from ContiMortgage.
(j) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain servicing. The Trustee shall deduct from any sum received by
the Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust from the Servicer shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the successor
Servicer.
(k) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Servicer, as applicable, all amounts
which then have been or should have been deposited in the Principal and Interest
Account by the Servicer or which are thereafter received with respect to the
Home Equity Loans. Neither the Trustee nor any other successor Servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer. If the Servicer resigns or is replaced hereunder, the Seller
agrees to reimburse the Trust, the Certificate Insurer and the Owners for the
costs and expenses associated with the transfer of servicing to the replacement
Servicer, but subject to a maximum reimbursement to all such parties in the
amount of twenty-five dollars ($25.00) for each Home Equity Loan then included
in the Trust Estate.
(l) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately make all Delinquency Advances
and deposit them to the Principal and Interest Account which the Servicer has
theretofore failed to remit with respect to the Home Equity Loans; provided,
however, that if the Trustee is acting as successor Servicer, the Trustee shall
only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (l)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the Home Equity Loans.
(m) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, the Certificate Insurer and the Rating Agencies of the
transfer of the servicing to the successor Servicer.
(n) The Trustee shall give notice to the Owners, the Trustee, the
Seller, the Certificate Insurer and the Rating Agencies of the occurrence of any
event described in paragraphs (a) or (b) above of which the Trustee is aware.
Section 8.21 INSPECTIONS BY CERTIFICATE INSURER; ERRORS AND OMISSIONS
INSURANCE.
At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer or any agents thereof may inspect the
Servicer's servicing operations and discuss the servicing operations of the
Servicer during the Servicer's normal business hours with any of its officers or
directors; provided, however, that the costs and expenses incurred by the
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer;
The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FannieMae Guide or any successor provision thereof; provided, however, that
if the Trustee shall become the Servicer, any customary insurance coverage that
the Trustee maintains shall be deemed sufficient hereunder; provided, further,
that in the event that the fidelity bond or the errors and omissions coverage is
no longer in effect, the Trustee shall promptly give such notice to the
Certificate Insurer and the Owners. Upon the request of the Trustee or the
Certificate Insurer, the Servicer shall cause to be delivered to such requesting
Person a certified true copy of such fidelity bond or errors and omission
policy.
END OF ARTICLE VIII
<PAGE>
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance Policy,
of all amounts held by the Trustee and required to be paid to such Owners
pursuant to this Agreement upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate, (c) at any time
when a Qualified Liquidation of the Home Equity Loans included within the Trust
is effected as described below and (d) the final payment to the Certificate
Insurer of all amounts then owing to it. To effect a termination of this
Agreement pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of the each REMIC
to adopt a plan of complete liquidation for the of the Home Equity Loans as
contemplated by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
an opinion of counsel experienced in federal income tax matters acceptable to
the Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the Home
Equity Loans and distribute the proceeds of the liquidation of the Trust Estate,
or shall distribute equitably in kind all of the assets of the Trust Estate to
the remaining Owners of the Certificates each in accordance with such plan, so
that the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of this Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of Saint James, living on the date hereof. The Trustee shall give
written notice of termination of the Agreement to each Owner in the manner set
forth in Section 11.05.
Section 9.02 TERMINATION UPON OPTION OF OWNERS OF CLASS R-I
CERTIFICATES.
On any Monthly Remittance Date on or after the Clean-Up Call Date, the
Owners of a majority of the Percentage Interests represented by the Class R-I
Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R-I Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Termination
Date Pass-Through Rate, plus all accrued and unpaid Servicing Fees plus the
aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances
and any Delinquency Advances which the Servicer has theretofore failed to remit
plus any amounts due and owing to the Certificate Insurer under the Insurance
Agreement, provided that any such purchase price pursuant to clause (i) or (ii)
shall be sufficient to pay the Outstanding Certificate Principal Balance of and
accrued and unpaid interest on all Classes of outstanding Class A Trust and
Class B Certificates plus any amounts due and owing the Certificate Insurer
under the Insurance Agreement. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase.
In connection with any such purchase, such Owners of the Class R-I
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to each REMIC, a plan of complete liquidation of all Home Equity as
contemplated by Section 860F(a)(4) of the Code and shall provide to the Trustee
and the Certificate Insurer an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee and the Certificate Insurer to the effect
that such purchase and liquidations constitutes, as to the REMIC, a Qualified
Liquidation. In addition, such Owners of the Class R-I Certificates shall
provide to the Trustee and the Certificate Insurer an opinion of counsel
acceptable to the Trustee and the Certificate Insurer to the effect that such
purchase and liquidation does not constitute a preference payment pursuant to
the United States Bankruptcy Code.
The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates may be exercised
by the Certificate Insurer if (i) not exercised by such owners and (ii) the
Servicer as of the Closing Date is no longer the Servicer hereunder.
Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R-I Certificates or
the Certificate Insurers, as the case may be, or otherwise upon their order, in
a manner similar to that described in Section 8.14 hereof.
Section 9.03 TERMINATION UPON LOSS OF REMIC STATUS.
Following a final determination by the Internal Revenue Service or by
a court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal or, if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that any REMIC in the Trust does not and will no longer qualify as
a REMIC pursuant to Section 860D of the Code (the "Final Determination"), at any
time on or after the date which is 30 calendar days following such Final
Determination (i) the Certificate Insurer or the Owners of a majority in
Percentage Interests represented by the Class A Trust and Class B Certificates
then Outstanding may direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation, as contemplated by Section 860F(a)(4) of the Code and
(ii) the Certificate Insurer may notify the Trustee of the Certificate Insurer's
determination to purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise then remaining in the Trust Estate at a price equal
to the sum of (x) the greater of (i) 100% of the aggregate Loan Balances of the
Home Equity Loans as of the day of purchase minus amounts remitted from the
Principal and Interest Account representing collections of principal on the Home
Equity Loans during the current Remittance Period, and (ii) the fair market
value of such Home Equity Loans (disregarding accrued interest), (y) one month's
interest on such amount computed at the Adjusted Pass-Through Rate and (z) the
aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances
and any Delinquency Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Residual Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R-I Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount at the Termination
Date Pass-Through Rate, (b) the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and (c) any Delinquency Advances which the
Servicer has theretofore failed to remit. If, during the Purchase Option Period,
the Owners of the Class R-I Certificates have not exercised the option described
in the immediately preceding paragraph, then upon the expiration of the Purchase
Option Period in the event that the Certificate Insurer or the Owners of the
Class A Trust Certificates with the consent of the Certificate Insurer have
given the Trustee the direction described in clause (a)(i) above, the Trustee
shall sell the Home Equity Loans and distribute the proceeds of the liquidation
of the Trust Estate, each in accordance with the plan of complete liquidation,
such that, if so directed, the liquidation of the Trust Estate, the distribution
of the proceeds of the liquidation and the termination of this Agreement occur
no later than the close of the 60th day, or such later day as the Certificate
Insurer or the Owners of the Class A Trust Certificates with the consent of the
Certificate Insurer shall permit or direct in writing, after the expiration of
the Purchase Option Period and (ii) in the event that the Certificate Insurer
has given the Trustee notice of the Certificate Insurer's determination to
purchase the Trust Estate described in clause (a)(ii) above the Certificate
Insurer shall, within 60 days, purchase all (but not fewer than all) Home Equity
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise then remaining in the Trust Estate. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R-I Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer selected by the Owners of the Class R-I Certificates, which opinion
shall be reasonably satisfactory in form and substance to the Certificate
Insurer, to the effect that the effect of the Final Determination is to increase
substantially the probability that the gross income of the Trust will be subject
to federal taxation, purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise then remaining in the Trust Estate at a purchase
price equal to the aggregate Loan Balances of all Home Equity Loans as of the
date of such purchase, plus (a) one month's interest on such amount computed at
the Termination Date Pass-Through Rate, (b) the aggregate amount of unreimbursed
Delinquency Advances and (c) any Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase. The foregoing
opinion shall be deemed satisfactory unless the Certificate Insurer gives the
Owners of a majority of the Percentage Interests of the Class R-I Certificates
notice that such opinion is not satisfactory within thirty days after receipt of
such opinion. In connection with any such purchase, such Owners shall direct the
Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.04 DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer from
the proceeds of the Trust Estate.
END OF ARTICLE IX
<PAGE>
ARTICLE X
THE TRUSTEE
Section 10.01 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) the banking institution that is the Trustee shall serve as the Trustee
at all times under this Agreement, and (ii) in the absence of bad faith on its
part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, shall be under a duty
to examine the same to determine whether or not they conform to the requirements
of this Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicer, the Servicer and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer, have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by
Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect
of subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error
of judgment made in good faith by an Authorized Officer,
unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer
or the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or Classes and the
Certificate Insurer relating to the time, method and place
of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement relating to such
Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
Section 10.02 REMOVAL OF TRUSTEE FOR CAUSE.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for
distribution in accordance with the terms hereof;
(provided, however, that any such failure which is due to
circumstances beyond the control of the Trustee shall not
be a cause for removal hereunder); or
(ii) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this
Agreement, or if any representation or warranty of the
Trustee made in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection
herewith shall prove to be incorrect in any material
respect as of the time when the same shall have been made,
and such failure or breach shall continue or not be cured
for a period of 30 days after there shall have been given,
by registered or certified mail, to the Trustee by the
Sellers, the Certificate Insurer or by the Owners of at
least 25% of the aggregate Percentage Interests in the
Trust Estate represented by the Offered Certificates then
Outstanding, or, if there are no Offered Certificates then
Outstanding, by such Percentage Interests represented by
the Class R Certificates, a written notice specifying such
failure or breach and requiring it to be remedied; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have
remained in force undischarged or unstayed for a period of
75 days; or
(iv) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in
any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to
the Trustee or relating to all or substantially all of its
property; or
(v) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come
due, file or consent to the filing of a petition to take
advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations,
or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give notice to the Certificate Insurer and the Rating
Agencies of the occurrence of any such event of which the Depositor is aware.
(b) If any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Offered Certificates or if there are no Offered Certificates
then outstanding by such majority of the Percentage Interests represented by the
Retained Certificates, may, whether or not the Trustee resigns pursuant to
Section 10.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Depositor, either of the Sellers,
the Certificate Insurer or the Owners of any Class of Certificates mentioned
herein shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodians;
(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and to make
various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good faith
on any such information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the Trustee has actual
knowledge, or is advised by any Owner of a Certificate (either in writing or
orally with prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
CERTIFICATES.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, either of the Sellers or the
Servicer in respect of the Home Equity Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by the Depositor,
the Servicer or either of the Sellers, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 MAY HOLD CERTIFICATES.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 COMPENSATION AND REIMBURSEMENT; NO LIEN FOR FEES.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(b)(i) and Section 7.06 hereof.
The Trustee shall have no lien on the Trust Estate for the payment of such fees
and expenses.
Section 10.08 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A2 by Moody's (or such lower rating as may be acceptable to Moody's), and
deposit rating of A- by Standard & Poor's (or such lower rating as may be
acceptable to Standard & Poor's) and, if rated by Fitch, having a rating of at
least A- from Fitch (or such lower rating as may be acceptable to Fitch). If
such Trustee publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of ContiMortgage with the
consent of the Certificate Insurer (which consent shall not be unreasonably
withheld) or of the Certificate Insurer, resign immediately in the manner and
with the effect hereinafter specified in this Article X.
Section 10.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure to receive the
Trustee Fee. A copy of such notice shall be sent by the resigning Trustee to the
Rating Agencies. Upon receiving notice of resignation, the Depositor shall
promptly appoint a successor trustee or trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of ContiMortgage, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees. If no successor trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor or the Certificate Insurer, the Certificate Insurer or the
Depositor with the consent of the Certificate Insurer may remove the Trustee and
appoint a successor trustee acceptable to the Certificate Insurer by written
instrument, in duplicate, executed on behalf of the Trust by an Authorized
Officer of the Depositor, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented
by the Class A Trust Certificates with the consent of the Certificate Insurer
or, if there are no Class A Trust Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R Certificates,
may at any time remove the Trustee and appoint a successor trustee acceptable to
the Certificate Insurer by delivering to the Trustee to be removed, to the
successor trustee so appointed, to the Depositor, to the Certificate Insurer and
to the Servicer copies of the record of the act taken by the Owners, as provided
for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
ContiMortgage shall promptly appoint a successor trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Trust Certificates then
Outstanding with the consent of the Certificate Insurer, the successor trustee
so appointed shall forthwith upon its acceptance of such appointment become the
successor trustee and supersede the successor trustee appointed by the
Depositor. If no successor trustee shall have been so appointed by the Depositor
or the Owners and shall have accepted appointment in the manner hereinafter
provided, any Owner may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time
of such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF THE TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 REPORTING; WITHHOLDING.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with respect to
such allocation of expenses. The Trustee shall, upon request of the Depositor,
collect any forms or reports from the Owners determined by the Depositor to be
required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Depositor, either of the Sellers, the Servicer, the Certificate
Insurer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor, each of the Sellers and Servicer covenant and agree to indemnify
the Trustee, and when the Trustee is acting as Servicer, the Servicer, from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses (including legal fees and expenses) of whatsoever kind arising out of
or in connection with the performance of its duties hereunder other than those
resulting from the negligence or bad faith of the Trustee, and the Depositor
shall pay all amounts not otherwise paid pursuant to Sections 2.05 and 7.06
hereof. The Trustee and any director, officer, employee or agent of the Trustee
may rely and shall be protected in acting or refraining from acting in good
faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee
or co-Trustee jointly (it being understood that such separate
Trustee or co-Trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Trustee or co-Trustee,
but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee
hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee acting
jointly may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in- fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
The Servicer and the Trustee hereby appoint First Union National Bank
(the "Initial Co-Trustee") as co-trustee with respect to the Mortgage Loans
secured by Mortgaged Properties situated in New Jersey and any other part of the
Trust Estate or property securing the same that at any time may be situated in
New Jersey.
END OF ARTICLE X
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.01 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, either of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02 FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matters upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, either of the Sellers or
the Servicer, stating that the information with respect to such factual matters
is in the possession of the Depositor, such Seller or the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any opinion of counsel may be based on the written opinion of
other counsel, in which event such opinion of counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably rely
upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to one or both of
the Sellers. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 NOTICES, ETC. TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Depositor, the Certificate Insurer or either of the Sellers shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at the Corporate Trust Office.
Section 11.05 NOTICES AND REPORTS TO OWNERS; WAIVER OF NOTICES.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 RULES BY TRUSTEE.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.09 BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 11.10 LEGAL HOLIDAYS.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New York,
and any appellate court from any thereof, in any action, suit or proceeding
brought against it or in connection with this Agreement or any of the related
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. The parties hereto agree that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. To the extent permitted by applicable law, the parties
hereto hereby waive and agree not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the subject
matter thereof may not be litigated in or by such courts.
(c) Each of the Depositor, the Sellers and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful attorney
and duly authorized agent for acceptance of service of legal process with
respect to any action, suit or proceeding set forth in paragraph (b) hereof.
Each of the Sellers and the Servicer agrees that service of such process upon
the Trustee shall constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, the Seller, the Certificate Insurer or the Servicer or
any third-party beneficiary hereunder, as the case may be, to serve process in
any other manner permitted by law or to start legal proceedings relating to any
of the Home Equity Loans against any Mortgagor in the courts of any
jurisdiction.
Section 11.12 COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 USURY.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 AMENDMENT.
(a) The Trustee, the Depositor, either of the Sellers and the Servicer
may, at any time and from time to time, and without notice to or the consent of
the Owners but with the consent of the Certificate Insurer amend this Agreement,
subject to the provisions of Section 11.16 and 11.17 and the Trustee shall
consent to such amendment, for the purpose of (i) curing any ambiguity,
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or adding provisions hereto which are not
inconsistent with the provisions hereof; (ii) upon receipt of an opinion of
counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the Trust or upon the transferor of a
Residual Certificate as a result of the ownership of any Residual Certificate by
a Disqualified Organization, removing the restriction on transfer set forth in
Section 5.08(b) hereof or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder including any amendments
necessary to maintain REMIC status or (iv) for any other purpose, provided that
in the case of this clause (iv) such amendment shall not adversely affect in any
material respect any Owner. Any such amendment shall be deemed not to adversely
affect in any material respect any Owner if there is delivered to the Trustee
written notification from each Rating Agency that such amendment will not cause
such Rating Agency to reduce its then current rating assigned to the Class A
Trust Certificates without regard to the Certificate Insurance Policy.
Notwithstanding anything to the contrary herein, no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Owner without the consent of the Owner of such
Certificate, or (b) which affects in any manner the terms or provisions of the
Certificate Insurance Policy.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to the
Certificate Insurer and each Owner in the manner set forth in Section 11.05, and
to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any
amendments to this Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.02, that such Paying Agent
will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to such Owners or otherwise disposed of as
herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee. In the event of the resignation or removal of any Paying Agent
other than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no successor,
to the Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC STATUS.
(a) The parties hereto intend that each REMIC shall constitute, and
that the affairs of each REMIC shall be conducted so as to qualify it as a REMIC
in accordance with the REMIC Provisions. In furtherance of such intention,
ContiFunding Corporation or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as "tax matters person" (as
defined in the REMIC Provisions) for the Trust and in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely manner, annual tax
returns and any other tax return required to be filed by each REMIC established
hereunder using a calendar year as the taxable year for each REMIC established
hereunder; (ii) in the related first such tax return, make (or cause to be made)
an election satisfying the requirements of the REMIC Provisions, on behalf of
each REMIC, for it to be treated as a REMIC; (iii) prepare and forward, or cause
to be prepared and forwarded, to the Owners all information, reports or tax
returns required with respect to each REMIC as, when and in the form required to
be provided to the Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the REMIC Provisions
and any other applicable federal, state or local laws, including without
limitation information reports relating to "original issue discount" as defined
in the Code based upon the prepayment assumption and calculated by using the
"Issue Price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or omit to take any
action that would cause the termination of the REMIC status of a REMIC, except
as provided under this Agreement; (v) represent the Trust of a REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to a
taxable year of the Trust or the REMIC, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust or the REMIC, and otherwise act on behalf of the Trust
or the REMIC therein in relation to any tax matter involving the Trust or the
REMIC therein; (vi) comply with all statutory or regulatory requirements with
regard to its conduct of activities pursuant to the foregoing clauses of this
Section 11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Residual Certificates
required of a "tax matters person" pursuant to subtitle F of the Code and the
Treasury Regulations thereunder; (vii) make available information necessary for
the computation of any tax imposed (A) on transferors of residual interests to
certain Disqualified Organizations or (B) on pass-through entities, any interest
in which is held by a Disqualified Organization; and (viii) acquire and hold the
Tax Matters Person Residual Interest. The obligations of ContiFunding
Corporation or such other designated Tax Matters Person pursuant to this Section
11.16 shall survive the termination or discharge of this Agreement.
(b) Each of the Sellers, the Depositor, the Trustee and the Servicer
covenant and agree for the benefit of the Owners and the Certificate Insurer (i)
to take no action which would result in the termination of "REMIC" status for a
REMIC, (ii) not to engage in any "prohibited transaction," as such term is
defined in Section 860F(a)(2) of the Code, (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes under
the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent the Sellers are aware of any such proposed action by the
Servicer.
(c) Each REMIC shall, for federal income tax purposes, maintain books
on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee shall
enter into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither the
Trustee nor either of the Sellers may engage in any of the transactions
prohibited by such clauses, unless the Trustee shall have received an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that such transaction does not result in a
tax imposed on the Trustee or cause a termination of REMIC status for a REMIC;
provided, however, that such transaction is otherwise permitted under this
Agreement.
(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or a REMIC as a result of their negligence.
Section 11.17 ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer to the effect
that such transaction does not result in a tax imposed on the Trust or a REMIC
or cause a termination of REMIC status for a REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of a REMIC and use such income, to the extent necessary, to pay
such tax; provided that, to the extent that any such income is paid to the
Internal Revenue Service, the Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of Offered Certificates to the
extent they are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or assessments,
additional amounts or additions to tax, is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the owners of the Class R
Certificates on a pro rata basis. The Trustee is hereby authorized to and shall
retain from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18 APPOINTMENT OF TAX MATTERS PERSON.
A Tax Matters Person will be appointed for each REMIC for all purposes
of the Code and such Tax Matters Person will perform, or cause to be performed,
such duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person under the Code. The Tax Matters
Person for each REMIC shall be ContiFunding Corporation as long as it owns a
Class R-1 or Class R Certificate. If ContiFunding Corporation does not own a
Class R-1 or Class R Certificate, as the case may be, the Tax Matters Person may
be any other entity that owns such a Class R-1 or Class R Certificate and
accepts a designation hereunder as Tax Matters person by delivering an affidavit
in the form of Exhibit I. ContiFunding Corporation shall notify the Trustee in
writing of the name and address of another person who accepts a designation as
Tax Matters Person hereunder.
Section 11.19 THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. At such time as the Class A Trust Certificates and
any Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20 RESERVED.
Section 11.21 THIRD PARTY RIGHTS.
The Trustee, each of the Sellers, the Depositor and the Owners agree
that the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
Section 11.22 NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-5589
Fax: (716) 842-4474
Attention: Corporate Trust Administration
The Depositor: ContiSecurities Asset Funding Corp.
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel
Tel: (212) 207-2822
Fax: (212) 207-5251
The Sellers: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: President and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
ContiWest Corporation
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Servicer: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President
and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
The Certificate
Insurer: MBIA Insurance Corporation
113 King St.
Armonk, NY 10504
Attention: Insured Portfolio Management - SF
(ContiMortgage Home Equity Loan Trust 1997-5)
Tel: (914) 273-4545
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring
Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Tel: (800) 753-4824
Fax: (212) 376-6964
Standard & Poor's: Standard & Poor's
26 Broadway, 15th Floor
New York, New York 10004
Tel: (212) 208-8000
Fax: (212) 412-0224
Attention: Manager of Structured
Finance Operations Group
Underwriters: Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Bear, Stearns & Co.
245 Park Avenue, 4th Floor
New York, New York 10167
Tel: (212) 272-3311
Fax: (212) 272-7294
ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel, Chief
Financial Officer and Chief Operating Officer
Tel: (212) 207-2822
Fax: (212) 207-5251
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Asset Finance
Tel: (212) 325-2000
Fax: (212) 325-8261
Merrill Lynch, Pierce, Fenner & Smith, Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Tel: (212) 449-1000
Fax: (212) 449-9015
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Tel: (212) 761-4000
Fax: (212) 761-0782
Nomura Securities International, Inc.
2 World Financial Center Building B,
21st Floor
New York, New York 10281-1198
Tel: (212) 667-9087
Fax: (212) 667-1391
Attention: Helaine Hebble
Owners: As set forth in the Register.
Others: Any notice to the Depositor, either Seller
or the Servicer shall also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
END OF ARTICLE XI
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ John A. Banu
Title: Authorized Signatory
By: /s/ Mary Bogdan
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION, as Seller
By: /s/ Daniel J. Egan
Title: Senior Vice President
By: /s Jerry Schiano
Title: Senior Vice President
CONTIWEST CORPORATION, as Seller
By: /s/ Peter Abeles
Title: President
By: /s/ Robert E. Riedl
Title: Secretary
CONTIMORTGAGE CORPORATION, as Servicer
By: /s/ Daniel J. Egan
Title: Senior Vice President
By: /s/ Jerry Schiano
Title: Senior Vice President
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By: /s/ Neil B. Witoff
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 23rd day of December 1997, before me personally came John Banu, to
me known, who, being by me duly sworn, did depose and say that he/she resides at
277 Park Avenue, NY, NY that he/she is an Authorized Signatory of
ContiSecurities Asset Funding Corp., a Delaware Corporation; and that he/she
signed his/her name thereto by order of the respective Boards of Directors of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 23rd day of December 1997, before me personally came Mary Bogdan, to
me known, who, being by me duly sworn, did depose and say that he/she resides at
277 Park Ave NY, NY; that he/she is a Authorized Signatory of ContiSecurities
Asset Funding Corp., a Delaware Corporation; and that he/she signed his/her name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and a affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the 23rd day of December, 1997, before me personally came Jerry Schiano,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at Chester County; that he/she is a Senior Vice President of ContiMortgage
Corporation, a Delaware Corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the 23rd day of December, 1997, before me personally came Daniel J.
Egan, to me known, who, being by me duly sworn, did depose and say that he/she
resides at Montgomery County; that he/she is a Sr. Vice President of
ContiMortgage Corporation, a Delaware corporation; and that he signed his name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF CALIFORNIA )
): ss.:
COUNTY OF LOS ANGELES )
On the 23th day of December, 1997, before me personally came Peter Abeles,
to me known, who, being by me duly sworn, did depose and say that he resides at
10244 Ojai-Santa Paula Road, Ojai, CA 93023 that he is the President of
ContiWest Corporation, a Nevada corporation; and that he signed his name thereto
by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
STATE OF CALIFORNIA )
):ss.:
COUNTY OF LOS ANGELES )
On the 17th day of December, 1997 before me personally came Robert E.
Riedl, to me known, who, being by me duly sworn, did depose and say that he
resides at 10417 Eastborne Ave #5, LA., CA 90024; that he is a President of
ContiWest Corporation, a Nevada corporation; and that he signed his name thereto
by order of the respective Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my had and affixed my official seal
the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 23rd day of December, 1997, before me personally came Neil B.
Witoff, to me known, who, being by me duly sworn did depose and say that he
resides at Clarence, New York; that he is an Assistant Vice President of
Manufacturers and Traders Trust Company, the New York banking corporation
described in and that executed the above instrument as Trustee; and that he
signed his name thereto by order of the Board of Directors of said New York
banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
SCHEDULE I-A
SCHEDULE OF GROUP I HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE I-B
SCHEDULE OF GROUP II HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE II
RESERVED
<PAGE>
SCHEDULE III
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE IV
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
<PAGE>
SCHEDULE V
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Seller at its principal office.
Exhibit 4.3
GRANTOR TRUST AGREEMENT
Dated as of December 1, 1997
among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Servicer,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Grantor Trustee
Pass-Through Certificates
Series 1997-A
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.................................3
Section 1.01 Definitions.....................................................3
Section 1.02 Use of Words and Phrases.......................................10
Section 1.03 Captions; Table of Contents....................................10
Section 1.04 Opinions.......................................................10
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST......................11
Section 2.01 Establishment of the Trust.....................................11
Section 2.02 Office.........................................................11
Section 2.03 Purposes and Powers............................................11
Section 2.04 Appointment of the Grantor Trustee; Declaration of Trust.......11
Section 2.05 Expenses of the Trust..........................................11
Section 2.06 Ownership of the Trust.........................................12
Section 2.07 Situs of the Trust.............................................12
Section 2.08 [RESERVED].....................................................12
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE DEPOSITOR..........................................13
Section 3.01 Representations and Warranties of the Depositor................13
Section 3.02 Representations and Warranties of the Servicer.................15
Section 3.03 [RESERVED].....................................................16
Section 3.04 [RESERVED].....................................................16
Section 3.05 Conveyance of the Class A-2 Fixed Certificates.................16
Section 3.06 Acceptance by Trustee..........................................17
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES................................18
Section 4.01 Issuance of Certificates.......................................18
Section 4.02 Sale of Certificates...........................................18
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS............................19
Section 5.01 Terms..........................................................19
Section 5.02 Forms..........................................................19
Section 5.03 Execution, Authentication and Delivery.........................19
Section 5.04 Registration and Transfer of Certificates......................20
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates..............22
Section 5.06 Persons Deemed Owners..........................................22
Section 5.07 Cancellation...................................................22
Section 5.08 Limitation on Transfer of Ownership Rights.....................22
Section 5.09 Assignment of Rights...........................................23
ARTICLE VI COVENANTS........................................................24
Section 6.01 Distributions..................................................24
Section 6.02 Money for Distributions to be Held in Trust; Withholding.......24
Section 6.03 Protection of Trust Estate.....................................25
Section 6.04 Performance of Obligations.....................................26
Section 6.05 Negative Covenants.............................................26
Section 6.06 No Other Powers................................................26
Section 6.07 Limitation of Suits............................................26
Section 6.08 Unconditional Rights of Owners to Receive Distributions........27
Section 6.09 Rights and Remedies Cumulative.................................27
Section 6.10 Delay or Omission Not Waiver...................................28
Section 6.11 Control by Owners..............................................28
Section 6.12 Indemnification................................................28
Section 6.13 Access to Owners of Certificates' Names and Addresses..........28
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES............................30
Section 7.01 Collection of Money............................................30
Section 7.02 Establishment of Accounts......................................30
Section 7.03 Flow of Funds..................................................30
Section 7.04 [RESERVED].....................................................31
Section 7.05 Investment of Accounts.........................................32
Section 7.06 Payment of Trust Expenses......................................32
Section 7.07 Eligible Investments...........................................33
Section 7.08 Accounting and Directions by Grantor Trustee...................34
Section 7.09 Reports by Grantor Trustee to Owners and
the Certificate Insurer......................................35
Section 7.10 Reports by Grantor Trustee.....................................36
Section 7.11 Preference Payments............................................37
ARTICLE VIII SERVICING AND ADMINISTRATION OF ASSETS.........................38
Section 8.01 Servicer and Sub-Servicers.....................................38
Section 8.02 RESERVED.......................................................38
Section 8.03 RESERVED.......................................................38
Section 8.04 RESERVED.......................................................38
Section 8.05 Liability of Servicer; Indemnification.........................38
Section 8.06 [RESERVED].....................................................38
Section 8.07 [RESERVED].....................................................38
Section 8.08 Grantor Trust Account..........................................38
Section 8.09 RESERVED......................................................40
Section 8.10 Servicing Compensation.........................................40
Section 8.11 Annual Statement as to Compliance..............................40
Section 8.12 RESERVED.......................................................40
Section 8.13 Access to Certain Documentation and Information
Regarding the Class A-2 Fixed Certificates..................40
Section 8.14 Assignment of Agreement........................................40
Section 8.15 Removal of Servicer; Resignation of Servicer...................41
Section 8.16 Inspections by Certificate Insurer;
Errors and Omissions Insurance...............................42
ARTICLE IX TERMINATION OF TRUST.............................................43
Section 9.01 Termination of Trust...........................................43
Section 9.02 [RESERVED].....................................................43
Section 9.03 [RESERVED].....................................................43
Section 9.04 Disposition of Proceeds........................................43
ARTICLE X THE GRANTOR TRUSTEE...............................................44
Section 10.01 Certain Duties and Responsibilities...........................44
Section 10.02 Removal of Grantor Trustee for Cause..........................45
Section 10.03 Certain Rights of the Grantor Trustee.........................46
Section 10.04 Not Responsible for Recitals or Issuance of Certificates......47
Section 10.05 May Hold Certificates.........................................48
Section 10.06 Money Held in Trust...........................................48
Section 10.07 Compensation and Reimbursement; No Lien for Fees..............48
Section 10.08 Corporate Grantor Trustee Required; Eligibility...............48
Section 10.09 Resignation and Removal; Appointment of Successor.............48
Section 10.10 Acceptance of Appointment by Successor Grantor Trustee........50
Section 10.11 Merger, Conversion, Consolidation or Succession
to Business of the Grantor Trustee..........................50
Section 10.12 Tax Returns and Reports.......................................51
Section 10.13 Liability of the Grantor Trustee..............................51
Section 10.14 Appointment of Co-Grantor Trustee or
Separate Grantor Trustee.....................................51
ARTICLE XI MISCELLANEOUS....................................................54
Section 11.01 Compliance Certificates and Opinions..........................54
Section 11.02 Form of Documents Delivered to the Grantor Trustee............54
Section 11.03 Acts of Owners................................................55
Section 11.04 Notices, etc. to Grantor Trustee..............................55
Section 11.05 Notices and Reports to Owners; Waiver of Notices..............55
Section 11.06 Rules by Grantor Trustee......................................56
Section 11.07 Successors and Assigns........................................56
Section 11.08 Severability..................................................56
Section 11.09 Benefits of Agreement.........................................56
Section 11.10 Legal Holidays................................................57
Section 11.11 Governing Law; Submission to Jurisdiction.....................57
Section 11.12 Counterparts..................................................57
Section 11.13 Usury.........................................................58
Section 11.14 Amendment.....................................................58
Section 11.15 Paying Agent; Appointment and Acceptance of Duties............58
Section 11.16 RESERVED......................................................59
Section 11.17 Additional Limitation on Action and Imposition of Tax.........59
Section 11.18 RESERVED......................................................59
Section 11.19 The Certificate Insurer.......................................59
Section 11.20 RESERVED......................................................60
Section 11.21 Third Party Rights............................................60
Section 11.22 Notices.......................................................60
<PAGE>
GRANTOR TRUST AGREEMENT, relating to CONTIMORTGAGE GRANTOR TRUST 1997-A
(the "Trust"), dated as of December 1, 1997 by and among CONTISECURITIES ASSET
FUNDING CORP., a Delaware corporation, in its capacity as Depositor (the
"Depositor"), CONTIMORTGAGE CORPORATION, a Delaware corporation in its capacity
as a Servicer (the "Servicer") and MANUFACTURERS AND TRADERS TRUST COMPANY, a
New York banking corporation, in its capacity as the Grantor Trustee (the
"Grantor Trustee").
WHEREAS, the Depositor wishes to establish the Trust and provide for
the allocation and sale of the beneficial interests therein and the maintenance
and distribution thereof;
WHEREAS, the Servicer has agreed to service the ContiMortgage Home
Equity Loan Trust 1997-A Pass Through Certificates Class A-2 Fixed (the "Class
A-2 Fixed Certificates") which, along with the Swap Agreement dated December 1,
1997 between National Westminster Bank, Plc (the "Swap Counterparty") and the
Grantor Trustee (the "Swap Agreement"), and the related MBIA Certificate
Insurance Policy constitute the principal assets of the Trust Estate;
WHEREAS, pursuant to the Swap Agreement the Grantor Trustee will
distribute to the Swap Counterparty on each Payment Date all amounts in respect
of interest received on the Class A-2 Fixed Certificates on such Payment Date
and shall have the right to receive from the Swap Counterparty on the related
Swap Payment Date an amount equal to interest due on such Payment Date on the
Class A-2 Floating Certificates at the Class A-2 Floating Pass-Through Rate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Grantor Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done;
WHEREAS, Manufacturers and Traders Trust Company is willing
to serve in the capacity of Grantor Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Servicer, and the Grantor
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal of
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Depositor hereby bargains, sells,
conveys, assigns and transfers to the Trust, without recourse and for the
exclusive benefit of the Owners of the Certificates and the Certificate Insurer,
all of its respective right, title and interest in and to any and all benefits
accruing to it from (a) the Class A-2 Fixed Certificates issued by the
ContiMortgage Home Equity Loan Trust 1997-5 (the "Home Equity Trust") pursuant
to a Pooling and Servicing Agreement dated December 1, 1997 among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage Corporation, as
Seller and Servicer, ContiWest Corporation, as Seller and Manufacturers and
Traders Trust Company, as Trustee (the "Pooling and Servicing Agreement"); (b)
the Insurance Agreement; (c) the Certificate Insurance Policy; (d) the Swap
Agreement and (e) proceeds of all the foregoing (including, but not by way of
limitation, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified herein ((a)-(e) above shall be
collectively referred to herein as the "Trust Estate").
The Grantor Trustee acknowledges such sale, accepts the Trust
hereunder in accordance with the provisions hereof and agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
<PAGE>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"ACCOUNT": Any account established in accordance with
Section 7.02 or 8.08 hereof.
"ACCRUAL PERIOD": With respect to the Certificates and any Payment
Date, the period commencing on the immediately preceding Payment Date (or the
Closing Date in the case of the first Payment Date) to and including the day
prior to the current Payment Date. All calculations of interest on the
Certificates will be made on the basis of the actual number of days elapsed in
the related Accrual Period and in a year of 360 days.
"AGREEMENT": This Grantor Trust Agreement, as it may be
amended from time to time, including the Exhibits and Schedules
hereto.
"AUTHORIZED OFFICER": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Servicer, initially including those individuals whose names
appear on the lists of Authorized Officers delivered at the Closing; with
respect to the Grantor Trustee, any Vice President, Assistant Vice President,
Trust Officer or any Officer of the Grantor Trustee located at the Corporate
Trust Office.
"BUSINESS DAY": Any day that is not a Saturday, Sunday or other day on
which the Certificate Insurer or commercial banking institutions in The City of
New York, or in the city in which the principal corporate trust office of the
Grantor Trustee is located, are authorized or obligated by law or executive
order to be closed.
"CERTIFICATE": Any of the Class A-2 Floating Certificates,
each representing the interests and rights described under this
Agreement.
"CERTIFICATE INSURANCE POLICY": The certificate guaranty insurance
policy (number 25457) dated December 23, 1997 issued by the Certificate Insurer
for the benefit of the Owners of the Certificates pursuant to which the
Certificate Insurer guarantees Insured Payments.
"CERTIFICATE INSURER": MBIA Insurance Corporation, a New York stock
insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
"CERTIFICATE INSURER DEFAULT": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under the
Certificate Insurance Policy in accordance with its terms; or
(b) (i) the entry by a court having jurisdiction in the premises of (A)
a final and nonappealable decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (B) a final and nonappealable decree or
order adjudging the Certificate Insurer as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganizing, rehabilitation, arrangement,
adjustment or composition of or in respect of the Certificate Insurer under any
applicable United States federal or state law, or appointing a custodian,
receiver, liquidator, rehabilitator, assignee, Grantor Trustee, sequestrator or
other similar official of the Certificate Insurer or of any substantial part of
its property, or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver, liquidator, assignee, Grantor
Trustee, sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate Insurer to
pay debts generally as they become due, or the admission by the Certificate
Insurer in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Certificate Insurer in furtherance
of any such action.
"CERTIFICATE PRINCIPAL BALANCE": As of any time of determination, the
Certificate Principal Balance as of the Startup Day of all Class A-2 Floating
Certificates less any amounts actually distributed on such Class A- 2 Floating
Certificates with respect to the Principal Distribution Amount pursuant to
Section 7.03(d) hereof with respect to principal thereon on all prior Payment
Dates.
"CLASS": The Class A-2 Floating Certificates.
"CLASS A-2 FLOATING CERTIFICATE": Any one of the Certificates
designated on the face thereof as a Class A-2 Floating Certificate,
substantially in the form annexed hereto as Exhibit A, authenticated and
delivered by the Grantor Trustee, representing the right to distributions as set
forth herein.
"CLASS A-2 FLOATING DISTRIBUTION AMOUNT": With respect to any Payment
Date, the sum of Current Interest, the Interest Carry Forward Amount and the
Principal Distribution Amount.
"CLASS A-2 FLOATING TERMINATION DATE": The Payment Date on which the
Certificate Principal Balance the Certificates has been reduced to zero.
"CLASS A-2 FLOATING PASS-THROUGH RATE": For any Payment Date, the
lessor of (i) LIBOR plus 0.17% per annum and (ii) 10% per annum.
"CLOSING": As defined in Section 4.02 hereof.
"CODE": The Internal Revenue Code of 1986, as amended.
"CONTIMORTGAGE": ContiMortgage Corporation, a Delaware corporation
that is the Servicer.
"CORPORATE TRUST OFFICE": The principal office of the Grantor Trustee
at One M&T Plaza, Buffalo, New York 14240.
"CURRENT INTEREST": With respect to any Payment Date, the amount of
interest accrued on the Certificate Principal Balance immediately prior to such
Payment Date during the related Accrual Period at the Class A-2 Floating
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-2
Floating Certificates as it relates to interest previously paid on the Class A-2
Floating Certificates.
"DEPOSITOR": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"DEPOSITORY": The Depository Trust Company, 7 Hanover Square, New
York, New York 10004, and any successor Depository hereafter named.
"DESIGNATED DEPOSITORY INSTITUTION": With respect to the Grantor Trust
Account, a trust account maintained by the trust department of a federal or
state chartered depository institution acceptable to the Certificate Insurer
acting in its fiduciary capacity, having combined capital and surplus of at
least $50,000,000; PROVIDED, HOWEVER, that if the Grantor Trust Account is not
maintained with the Grantor Trustee, (i) such institution shall have a long-term
debt rating of at least "A2" by Moody's, and, if rated by Fitch, at least "A" by
Fitch (ii) a short-term debt rating of at least "A-1" by Standard & Poor's and
(iii) if such Principal and Interest Account is moved to a new institution, the
Servicer shall provide the Grantor Trustee, the Certificate Insurer and the
Owners with a statement identifying the location of the Grantor Trust Account.
"DETERMINATION DATE": As to each Payment Date, the third Business Day
next preceding such Payment Date.
"DIRECT PARTICIPANT" or "DTC PARTICIPANT": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"ELIGIBLE INVESTMENTS": Those investments so designated pursuant to
Section 7.07 hereof.
"FANNIEMAE": Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FANNIEMAE GUIDE": FannieMae's Servicing Guide, as the same may be
amended by FannieMae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"FINAL DETERMINATION": [Reserved]
"FINAL SCHEDULED PAYMENT DATE": October 15, 2012.
"FISCAL AGENT": State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Certificate Insurer under the Certificate Insurer Policy or any
successor thereto appointed by the Certificate Insurer.
"FITCH": Fitch IBCA, Inc.
"GRANTOR TRUST ACCOUNT": The certificate account established in
accordance with Section 7.02 hereof and maintained in the corporate trust
department of the Grantor Trustee; provided that the funds in such account shall
not be commingled with other funds held by the Grantor Trustee.
"GRANTOR TRUSTEE": Manufacturers and Traders Trust Company, a New York
banking corporation, the Corporate Trust Department of which is located on the
date of execution of this Agreement at One M&T Plaza, Buffalo, New York 14240,
not in its individual capacity but solely as Grantor Trustee under this
Agreement, and any successor hereunder.
"GRANTOR TRUSTEE FEE": The fee payable monthly on each Payment Date
under the Pooling and Servicing Agreement as the "Trustee Fee" shall be deemed
to include any fee payable to the Grantor Trustee.
"HIGHEST LAWFUL RATE": As defined in Section 11.13.
"INSURANCE AGREEMENT": The Insurance Agreement dated as of December
23, 1997, among the Depositor, the Sellers, the Servicer, the Certificate
Insurer and the Grantor Trustee, as it may be amended from time to time.
"INSURANCE COMMITMENT LETTER": The letter dated December 22, 1997 from
MBIA to ContiMortgage Corporation.
"INSURED PAYMENT": With respect to any Payment Date, without
duplication, (A) the excess, if any, of (i) the Current Interest for the Class
A-2 Floating Certificates over (ii) the amounts available to the Grantor Trustee
for distribution of Current Interest on the Class A-2 Floating Certificates
(less any such amounts that cannot be distributed to the Owners of the Class A-2
Floating Certificates as a result of proceedings under the United States
Bankruptcy Code) without regard to any related Insured Payment to be made with
respect to such Payment Date plus (B) an amount equal to the Preference Amount
with respect to the Class A-2 Floating Certificates.
"INSURANCE PROCEEDS": Payments received with respect to any Insurance
Policy, except the Certificate Insurance Policy.
"INTEREST AMOUNT AVAILABLE": As of any Payment Date, the Interest
Remittance Amount.
"INTEREST CARRY FORWARD AMOUNT": With respect to any Payment Date, the
sum of (x) the amount, if any, by which (i) the sum of (A) the Current Interest
as of the immediately preceding Payment Date and (B) any unpaid Interest Carry
Forward Amount from all previous Payment Dates exceeds (ii) the amount of the
actual distribution with respect to interest made to the Owners of the
Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class A-2 Floating Pass-Through Rate.
"INTEREST REMITTANCE AMOUNT": As of any Payment Date, all interest due
on such Payment Date with respect to the Class A-2 Fixed Certificates.
"LIBOR": (A) With respect to any Accrual Period for the Certificates,
the rate determined by the Grantor Trustee on the related LIBOR Determination
Date on the basis of the offered rate for one-month U.S. dollar deposits as such
rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such date;
provided that if such rate does not appear on Telerate Page 3750, the rate for
such date will be determined on the basis of the rates at which one-month U.S.
dollar deposits are offered by the Reference Banks at approximately 11:00 a.m.
(London time) on such date to prime banks in the London interbank market. In
such event, the Grantor Trustee will request the principal London office of each
of the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If fewer than two quotations are provided as requested, the rate for
that date will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Servicer, at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loan to leading European banks.
"LIBOR DETERMINATION DATE": With respect to any Accrual Period for the
Certificates, the first London Business Day preceding the commencement of such
Accrual Period.
"LONDON BUSINESS DAY": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"MONTHLY EXCESS INTEREST AMOUNT": [Reserved]
"MONTHLY REMITTANCE AMOUNT": As of any Payment Date, the sum of (i)
the Interest Remittance Amount and (ii) the Principal Remittance Amount for such
Payment Date.
"MOODY'S": Moody's Investors Service, Inc.
"OFFERED CERTIFICATES": Collectively, the Class A-2 Floating
Certificates.
"OFFICER'S CERTIFICATE": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the Grantor
Trustee.
"OPERATIVE DOCUMENTS": Collectively, this Agreement, the Underwriting
Agreement, the Certificates, the Certificate Insurance Policy, the Insurance
Agreement and the Indemnification Agreement.
"OUTSTANDING": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Grantor Trustee or any Paying Agent in trust for the Owners of
such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Grantor Trustee is
presented that any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Grantor Trustee has made the
final distribution thereon, whether or not such Certificate is ever
returned to the Grantor Trustee.
"OWNER": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section 5.06
hereof, respectively hereof; provided that solely for the purposes of
determining the exercise of any voting rights hereunder, if any Offered
Certificates are beneficially owned by a Seller or any affiliate thereof, such
Seller or such affiliate shall not be considered an Owner hereunder.
"PAYING AGENT": Initially, the Grantor Trustee, and thereafter, the
Grantor Trustee or any other Person that meets the eligibility standards for the
Paying Agent specified in Section 11.15 hereof and is authorized by the Grantor
Trustee and the Depositor to make payments on the Certificates on behalf of the
Grantor Trustee.
"PAYMENT DATE": Any date on which the Grantor Trustee is required to
make distributions to the Owners, which shall be the 15th day of each month or
if such day is not a Business Day, the next Business Day thereafter, commencing
in the month following the Startup Day.
"PERCENTAGE INTEREST": With respect to a Class of the Offered
Certificates, a fraction, expressed as a percentage, the numerator of which is
the initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Certificates in such Class.
"PERSON": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"POOLING AND SERVICING AGREEMENT": The Pooling and Servicing
Agreement, dated as of December 1, 1997, among the Depositor, ContiMortgage,
ContiWest Corporation and Manufacturers and Traders Trust Company, as Trustee.
"PREFERENCE AMOUNT": With respect to the Offered Certificates, any
amounts of Current Interest and principal included in previous distributions to
the Owners of such Certificates which are recovered from such Owners as a
voidable preference by a Grantor Trustee in bankruptcy pursuant to the United
States Bankruptcy Code in accordance with a final, nonappealable order of a
court having competent jurisdiction and which have not theretofore been repaid
to such Owners.
"PREMIUM AMOUNT": As defined in the Insurance Commitment Letter.
"PRINCIPAL DISTRIBUTION AMOUNT": As of any Payment Date, an amount
equal to the Principal Remittance Amount.
"PRINCIPAL REMITTANCE AMOUNT": As of any Payment Date, the principal
received by the Trust with respect to the payment due under the Class A-2 Fixed
Certificates for such Payment Date.
"PROHIBITED TRANSACTION": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"PROSPECTUS": The Prospectus dated December 16, 1997 constituting part
of the Registration Statement.
"PROSPECTUS SUPPLEMENT": The ContiMortgage Home Equity Loan
Pass-Through Certificates, Series 1997-5 Prospectus Supplement dated December
16, 1997 to the Prospectus.
"QUALIFIED LIQUIDATION": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust.
"RATING AGENCIES": Collectively, Moody's, Standard & Poor's and Fitch
or any successors thereto.
"RECORD DATE": With respect to the Class A-2 Floating Certificates,
the day immediately preceding such Payment Date.
"REFERENCE BANKS": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank Plc, PROVIDED that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Grantor Trustee (or the Auction Agent in the case of the
Auction Rate Certificates) which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with either Seller or any affiliate thereof, (iii) whose
quotations appear on Telerate Page 3750 on the relevant LIBOR Determination Date
and (iv) which have been designated as such by the Grantor Trustee (or the
Auction Agent in the case of the Auction Rate Certificates).
"REGISTER": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"REGISTRAR": The Grantor Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"REGISTRATION STATEMENT": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39505), including all amendments thereto and including the Prospectus
relating to the Offered Certificates constituting a part thereof.
"REPRESENTATION LETTER": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Register under the nominee name of the
Depository..
"SERVICER": ContiMortgage Corporation, a Delaware corporation, and its
permitted successors and assigns.
"SERVICER AFFILIATE": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"SERVICING FEE": The fees payable under the Pooling and Servicing
Agreement as the "Servicing Fee" thereunder shall be deemed to include any fee
payable under this Agreement to the Servicer.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc.
"STARTUP DAY": December 23, 1997.
"SWAP PAYMENT": On each Swap Payment Date, (A) the amount that is
payable to the Grantor Trustee from the Swap Counterparty equal to Current
Interest on the Class A-2 Floating Certificates or (B) the amount that is
payable to the Swap Counterparty from the Grantor Trustee, equal to
interest received on such Payment Date on the Class A-2 Fixed Certificates, in
each case in accordance with the terms of the Swap Agreement.
"SWAP PAYMENT DATE": (A) In the case of the Swap Counterparty the
third Business Day prior to a Payment Date and (B) in the case of the Grantor
Trustee such Payment Date.
"TAX RETURN": The federal income tax return to be filed on behalf of
the Trust together with any and all other information reports or returns that
may be required to be furnished to the Owners of the Certificates or filed with
the Internal Revenue Service as any other governmental taxing authority under
any applicable provision of federal, state or local tax laws.
"TELERATE PAGE 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"TOTAL AVAILABLE FUNDS": As of any Payment Date, the Interest Amount
Available, less any such amount that cannot be distributed to the Owners of the
Class A-2 Fixed Certificates as a result of proceedings under the United States
Bankruptcy Code.
"TRUST": ContiMortgage Grantor Trust 1997-A, the trust created under
this Agreement.
"TRUST ESTATE": As defined in the conveyance clause under this
Agreement.
"UNDERWRITERS": Greenwich Capital Markets, Inc., Bear, Stearns & Co.,
ContiFinancial Services Corporation, Credit Suisse First Boston Corporation,
Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley Dean Witter and
Nomura Securities International, Inc.
Section 1.02 USE OF WORDS AND PHRASES.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
<PAGE>
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the
laws of the State of New York and this Agreement, the Trust, which, for
convenience, shall be known as "ContiMortgage Grantor Trust 1997-A".
Section 2.02 OFFICE.
The office of the Trust shall be in care of the Grantor Trustee,
addressed to One M&T Plaza, Buffalo, New York 14240, Attention Corporate Trust
Administration, or at such other address as the Grantor Trustee may designate by
notice to the Depositor, the Seller, the Certificate Insurer and the Servicer.
Section 2.03 PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and distribution of
payments thereon and the acquiring, owning and holding of the ContiMortgage Home
Equity Loan Trust 1997-5, Pass Through Certificates, Class A-2 Fixed
Certificates, executing the Swap Agreement and making and receiving payments
thereunder and the Trust Estate in connection therewith, and the Certificate
Insurance Policy; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners.
Section 2.04 APPOINTMENT OF THE GRANTOR TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Grantor Trustee as Grantor Trustee
of the Trust effective as of the Startup Day, to have all the rights, powers and
duties set forth herein. The Grantor Trustee hereby acknowledges and accepts
such appointment, represents and warrants its eligibility as of the Startup Day
to serve as Grantor Trustee pursuant to Section 10.08 hereof and declares that
it will hold the Trust Estate in trust upon and subject to the conditions set
forth herein for the benefit of the Owners.
Section 2.05 EXPENSES OF THE TRUST.
The expenses of the Trust, including (i) the fees of the Grantor
Trustee (including any portion of the Grantor Trustee Fee not paid pursuant to
Section 7.03(b) hereof), (ii) any reasonable expenses of the Grantor Trustee,
and (iii) any other expenses of the Trust that have been reviewed by
ContiMortgage, which review shall not be required in connection with the
enforcement of a remedy by the Grantor Trustee resulting from a default under
this Agreement, shall be paid directly by ContiMortgage. ContiMortgage shall pay
directly the reasonable fees and expenses of counsel to the Grantor Trustee. The
reasonable fees and expenses of the Grantor Trustee's counsel in connection with
the review and delivery of this Agreement and related documentation shall be
paid by ContiMortgage on the Startup Day.
Section 2.06 OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Grantor Trustee on behalf of
the Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property located in any state
other than in the State of New York and payments will be received by the Grantor
Trustee only in the State of New York and payments from the Grantor Trustee will
be made only from the State of New York. The Trust's only office will be at the
office of the Grantor Trustee as set forth in Section 2.02 hereof.
Section 2.08 [RESERVED]
END OF ARTICLE II
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Grantor
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Class A-2 Fixed Certificates, nor is the Depositor aware of
any pending insolvency.
(k) The transfer, assignment and conveyance of the Class A-2 Fixed
Certificates by the Depositor hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(l) The Depositor is not transferring the Class A-2 Fixed Certificates
to the Grantor Trustee with any intent to hinder, delay or defraud its
creditors.
(m) The transfer of the Class A-2 Fixed Certificates is not required
to be registered under the Securities Act of 1933, as amended.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive delivery of the respective Class
A-2 Fixed Certificates to the Grantor Trustee.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Grantor
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is in compliance with
the laws of each state to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which the Servicer is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they were
made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Class A-2 Fixed
Certificates to the Grantor Trustee.
Upon discovery by any of either the Servicer, any Owner, the
Certificate Insurer or the Grantor Trustee (each, for purposes of this
paragraph, a party) of a breach of any of the representations and warranties set
forth in this Section 3.02 which materially and adversely affects the interests
of the Owners or of the Certificate Insurer, the party discovering such breach
shall give prompt written notice to the other parties. Within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Grantor Trustee pursuant to
Section 8.20 hereof; provided, however, that if any party can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Certificate Insurer.
Section 3.03 [RESERVED]
Section 3.04 [RESERVED]
Section 3.05 CONVEYANCE OF THE CLASS A-2 FIXED CERTIFICATES.
On the Startup Day the Depositor, concurrently with the execution and
delivery hereof, transfers, assigns, sets over and otherwise conveys, without
recourse, to the Trust all of its respective right, title and interest in and to
the Trust Estate. The transfer by the Depositor of the Class A-2 Fixed
Certificates to the Trustee is absolute and is intended by the Owners and all
parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Class A-2 Fixed Certificates
conveying good title thereto free and clear of any liens and encumbrances from
the Depositor to the Trust and that the Class A-2 Fixed Certificates not be part
of the Depositor's estate in the event of insolvency. In the event that such
conveyance is deemed to be a loan, the parties intend that the Depositor shall
be deemed to have granted to the Trustee a first priority perfected security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
Section 3.06 ACCEPTANCE BY TRUSTEE .
The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners.
END OF ARTICLE III
<PAGE>
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Grantor Trustee's receipt from the
Depositor of an executed Delivery Order in the form set forth as Exhibit G
hereto, the Grantor Trustee shall execute, authenticate and deliver the
Certificates on behalf of the Trust.
Section 4.02 SALE OF CERTIFICATES.
At 11 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New
York, the Depositor will sell and convey the Class A-2 Fixed Certificates,
instruments and other property related thereto to the Grantor Trustee, and the
Grantor Trustee will deliver to the Underwriters the Class A-2 Floating
Certificates with an aggregate Percentage Interest equal to 100%, registered in
the name of Cede & Co., or in such other names as the Underwriters shall direct,
against payment of the purchase price thereof by wire transfer of immediately
available funds to the Grantor Trustee.
Upon the Grantor Trustee's receipt of the entire net proceeds of the
sale of the Class A-2 Floating Certificates, the Grantor Trustee shall remit the
entire balance of such net proceeds to the Depositor in accordance with
instructions delivered by the Depositor.
END OF ARTICLE IV
<PAGE>
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates guaranteed by any Person except
for the rights of the Grantor Trustee on behalf of the Owners of the
Certificates with respect to the Certificate Insurance Policy. The Certificates
are payable solely from payments received on or with respect to the Class A-2
Fixed Certificates, payments received by the Grantor Trustee under the Swap
Agreement, moneys in the Grantor Trust Account, earnings on moneys and the
proceeds of property held as a part of the Trust Estate and the Certificate
Insurance Policy. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Certificates as set forth in Section 7.03, a specified portion of such payments
with respect to the Class A-2 Fixed Certificates, PRO RATA in accordance with
such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Grantor Trustee any Certificate with respect to which the Grantor Trustee has
made the final distribution due thereon. Any such Certificate as to which the
Grantor Trustee has made the final distribution thereon shall be deemed canceled
and shall no longer be Outstanding for any purpose of this Agreement, whether or
not such Certificate is ever returned to the Grantor Trustee.
Section 5.02 FORMS.
The Class A-2 Fixed Certificates shall be in substantially the forms
set forth in Exhibit A hereof, respectively, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement or as may in the Depositor's judgment be necessary, appropriate
or convenient to comply, or facilitate compliance, with applicable laws, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
applicable securities laws or as may, consistently herewith, be determined by
the Authorized Officer of the Depositor executing such Certificates, as
evidenced by his execution thereof.
Section 5.03 EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed and authenticated by the manual or
facsimile signature of one of the Grantor Trustee's Authorized Officers. Upon
proper authentication by the Grantor Trustee, the Certificates shall bind the
Trust.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Grantor Trustee shall cause to be kept a register (the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Grantor Trustee shall provide for the registration of
Certificates and the registration of transfer of Certificates. The Grantor
Trustee is hereby initially appointed Registrar for the purpose of registering
Certificates and transfers of Certificates as herein provided. The Owners, the
Certificate Insurer and the Grantor Trustee shall have the right to inspect the
Register during the Grantor Trustee's normal hours and to obtain copies thereof,
and the Grantor Trustee shall have the right to rely upon a certificate executed
on behalf of the Registrar by an Authorized Officer thereof as to the names and
addresses of the Owners of the Certificates and the principal amounts and
numbers of such Certificates.
If a Person other than the Grantor Trustee is appointed as Registrar
by the Owners of a majority of the aggregate Percentage Interests represented by
the Certificates then Outstanding with the consent of the Certificate Insurer,
the Grantor Trustee will give the Owners and the Certificate Insurer prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register. In connection with any such appointment
the annual fees of the bank then serving as Grantor Trustee and Registrar shall
thenceforth be reduced by the amount to be agreed upon by the Grantor Trustee
and the Depositor at such time and the reasonable fees of the Registrar shall be
paid, as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Grantor Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of a like Class and in the aggregate principal amount or percentage interest of
the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Grantor Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration
of transfer or exchange of Certificates, but the Registrar or Grantor Trustee
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Certificates be registered so as to
participate in a global book entry system with the Depository, as set forth
herein. The Certificates shall, except as otherwise provided in Subsection (h),
be initially issued in the form of a single fully registered Certificate of such
Class. Upon initial issuance, the ownership of each such Certificate shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
On the Startup Day, the Offered Certificates shall be issued in
denominations of no less than $1,000 and integral multiples thereof.
The Depositor and the Grantor Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to the Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Servicer,
the Certificate Insurer and the Grantor Trustee shall have no responsibility or
obligation to Direct or Indirect Participants or beneficial owners for which the
Depository holds Offered Certificates from time to time as a Depository. Without
limiting the immediately preceding sentence, the Depositor, the Servicer, the
Certificate Insurer and the Grantor Trustee shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Certificates, (ii) the delivery to any Direct or Indirect
Participant or any other Person, other than a registered Owner of a Certificate
as shown in the Register, of any notice with respect to the Certificates or
(iii) the payment to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Certificate as shown in the Register, of any
amount with respect to any distribution of principal or interest on the
Certificates. No Person other than a registered Owner of a Certificate as shown
in the Register shall receive a certificate evidencing such Certificate.
Upon delivery by the Depository to the Grantor Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
registered Owners of Certificates appearing as registered Owners in the
registration books maintained by the Grantor Trustee at the close of business on
a Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Grantor Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Certificates and the Depositor or the Grantor Trustee is unable to locate
a qualified successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Certificates shall
no longer be restricted to being registered in the Register in the name of Cede
& Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Certificates shall be registered in the name of
and deposited with a successor depository operating a global book-entry system,
as may be acceptable to the Depositor and at the Depositor's expense, or such
depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in whatever name or names registered Owners of the Certificates
transferring the Certificates shall designate, in accordance with the provisions
hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the Certificates is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Grantor
Trustee, or the Grantor Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (ii) in the case of any
mutilated Certificate, such mutilated Certificate shall first be surrendered to
the Grantor Trustee, and in the case of any destroyed, lost or stolen
Certificate, there shall be first delivered to the Grantor Trustee such security
or indemnity as may be reasonably required by it to hold the Grantor Trustee and
the Certificate Insurer harmless, then, in the absence of notice to the Grantor
Trustee or the Registrar that such Certificate has been acquired by a bona fide
purchaser, the Depositor shall execute and the Grantor Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Grantor Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto; any other expenses in connection with such issuance shall be an expense
of the Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 PERSONS DEEMED OWNERS.
The Grantor Trustee and the Certificate Insurer and any agent of the
Grantor Trustee may treat the Person in whose name any Certificate is registered
as the Owner of such Certificate for the purpose of receiving distributions with
respect to such Certificate and for all other purposes whatsoever and the
Grantor Trustee and the Certificate Insurer or any agent of the Grantor Trustee
shall not be affected by notice to the contrary.
Section 5.07 CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Grantor Trustee, be delivered
to the Grantor Trustee and shall be promptly canceled by it. No Certificate
shall be authenticated in lieu of or in exchange for any Certificate canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates may be held by the Grantor Trustee in accordance with its
standard retention policy.
Section 5.08 LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of any Offered Certificate may be made
to the Depositor or the Servicer.
Section 5.09 ASSIGNMENT OF RIGHTS.
An Owner may pledge, encumber, hypothecate or assign all or any part
of its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
<PAGE>
ARTICLE VI
COVENANTS
Section 6.01 DISTRIBUTIONS.
On each Payment Date, the Grantor Trustee will withdraw amounts from
the Grantor Trust Account and make the distributions with respect to the
Certificates and the Swap Agreement in accordance with the terms of the
Certificates, the Swap Agreement and this Agreement. Such distributions shall be
made (i) by check or draft mailed on each Payment Date or (ii) if requested by
any Owner of (A) Certificate in writing not later than one Business Day prior to
the applicable Record Date (which request does not have to be repeated unless it
has been withdrawn), to such Owner by wire transfer to an account within the
United States designated no later than five Business Days prior to the related
Record Date, made on each Payment Date, in each case to each Owner of record on
the immediately preceding Record Date.
Section 6.02 MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST; WITHHOLDING.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Grantor Trust
Account, shall be made by and on behalf of the Grantor Trustee, and no amounts
so withdrawn from the Grantor Trust Account, for payments of Certificates and
under the Swap Agreement except as provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Grantor Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to
the Grantor Trustee all sums held in trust by such Paying Agent, such sums to be
held by the Grantor Trustee upon the same trusts as those upon which the sums
were held by such Paying Agent; and upon such payment by any Paying Agent to the
Grantor Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
(d) The Depositor shall require each Paying Agent, including the
Grantor Trustee on behalf of the Trust to comply with all requirements of the
Code and applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Grantor Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Certificate and remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and paid to the Servicer; and the
Owner of such Certificate shall thereafter, as an unsecured general creditor,
look only to Servicer for payment thereof and all liability of the Grantor
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; PROVIDED, HOWEVER, that the Grantor Trustee or such Paying Agent before
being required to make any such payment, may, at the expense of the Trust, cause
to be published once, in the eastern edition of THE WALL STREET Journal, notice
that such money remains unclaimed and that, after a date specified therein,
which shall be not fewer than 30 days from the date of such publication. The
Grantor Trustee shall, at the direction of the Depositor, also adopt and employ,
at the expense of the Trust, any other reasonable means of notification of such
payment (including but not limited to mailing notice of such payment to Owners
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Registrar, the Grantor Trustee or any
Paying Agent, at the last address of record for each such Owner).
Section 6.03 PROTECTION OF TRUST ESTATE.
(a) The Grantor Trustee will hold the Trust Estate in trust for the
benefit of the Owners and the Certificate Insurer and, upon request of the
Certificate Insurer or, with the consent of the Certificate Insurer at the
request of the Depositor, will from time to time execute and deliver all such
supplements and amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will take such other
action upon such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce the Class A-2 Fixed Certificate;
(iv) enforce the Swap Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Grantor Trustee, and the ownership interests of the
Owners represented thereby, in such Trust Estate against the claims of
all Persons and parties.
The Grantor Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Grantor Trustee shall have the power to enforce, and shall
enforce the obligations and rights of the other parties to this Agreement, the
obligations of the ContiMortgage Home Equity Loan Trust 1997-5 under the Class
A-2 Fixed Certificate, the obligations of the Swap Counterparty under the Swap
Agreement and the obligations of the Certificate Insurer under the Certificate
Insurance Policy; in addition, the Certificate Insurer or the Owners, by action,
suit or proceeding at law or equity and shall also have the power to enjoin, by
action or suit in equity, and acts or occurrences which may be unlawful or in
violation of the rights of the Certificate Insurer and/or the Owners as such
rights are set forth in this Agreement, PROVIDED, HOWEVER, that nothing in this
Section shall require any action by the Grantor Trustee unless the Grantor
Trustee shall first (i) have been furnished indemnity satisfactory to it and
(ii) when required by this Agreement, have been requested by the Certificate
Insurer or Owners of a majority of the Percentage Interests represented by the
Certificates then Outstanding with the consent of the Certificate Insurer;
PROVIDED, FURTHER, HOWEVER, that if there is a dispute with respect to payments
under a Certificate Insurance Policy, the Grantor Trustee's sole responsibility
is to the Owners.
(c) The Grantor Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Grantor Trustee's fiduciary duties, or adversely affect its rights
and immunities hereunder.
Section 6.04 PERFORMANCE OF OBLIGATIONS.
The Grantor Trustee will not take any action that would release any
Person from any of such Person's covenants or obligations under any instrument
or document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Grantor Trustee may contract with other Persons to assist it in
performing its duties hereunder pursuant to Section 10.03(g).
Section 6.05 NEGATIVE COVENANTS.
The Grantor Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of
any of the Trust Estate except as expressly permitted by
this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien, charge, adverse claim,
security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof.
Section 6.06 NO OTHER POWERS.
The Grantor Trustee will not permit the Trust to engage in any
business activity or transaction other than those activities permitted by
Section 2.03 hereof.
Section 6.07 LIMITATION OF SUITS.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, the Insurance Agreement, the Swap
Agreement, the Certificate Insurance Policies or for the appointment of a
receiver or Grantor Trustee of the Trust, or for any other remedy with respect
to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Grantor Trustee of
such Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Offered Certificates then Outstanding,
shall have made written request to the Grantor Trustee to
institute such proceeding in its own name as Grantor Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Grantor Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Grantor Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute such proceeding;
(5) as long as any Certificates are Outstanding or any
Reimbursement Amount (as defined in the Insurance Agreement)
remains unpaid, the Certificate Insurer consented in writing
thereto (unless the Certificate Insurer is the party against
whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Grantor Trustee during such 60-day period by the
Owners of a majority of the Percentage Interests represented
by the Certificates or;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Grantor Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Owners, each
representing less than a majority of the applicable Class of Certificates and
each conforming to paragraphs (1)-(5) of this Section 6.07, the Certificate
Insurer in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provision of this Agreement (unless the
Certificate Insurer is the party against whom the proceeding is directed).
Section 6.08 UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Grantor Trustee, the Certificate Insurer or
the Owners is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. Except as otherwise provided herein,
the assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 6.10 DELAY OR OMISSION NOT WAIVER.
No delay of the Grantor Trustee, the Certificate Insurer or any Owner
of any Certificate to exercise any right or remedy under this Agreement with
respect to any event described in Section 8.20(a) or (b) shall impair any such
right or remedy or constitute a waiver of any such event or an acquiescence
therein. Every right and remedy given by this Article VI or by law to the
Grantor Trustee, the Certificate Insurer or the Owners may be exercised from
time to time, and as often as may be deemed expedient, by the Grantor Trustee,
the Certificate Insurer or the Owners, as the case may be.
Section 6.11 CONTROL BY OWNERS.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Certificates then Outstanding with the consent of
the Certificate Insurer may direct the time, method and place of conducting any
proceeding for any remedy available to the Grantor Trustee with respect to the
Certificates or exercising any trust or power conferred on the Grantor Trustee
with respect to the Certificates or the Trust Estate, including, but not limited
to, those powers set forth in Section 6.03, PROVIDED THAT:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Grantor Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Grantor Trustee may take any other action deemed proper
by the Grantor Trustee, as the case may be, which is not
inconsistent with such direction; PROVIDED, HOWEVER, that
the Grantor Trustee need take any action which it determines
might involve it in liability or may be unjustly prejudicial
to the Owners not so directing.
Section 6.12 INDEMNIFICATION.
The Depositor agrees to indemnify and hold the Grantor Trustee, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Grantor Trustee, the Certificate Insurer
and any Owner may sustain in any way related to the failure of the Depositor to
perform its duties in compliance with the terms of this Agreement. The Depositor
shall immediately notify the Grantor Trustee, the Certificate Insurer and each
Owner if such a claim is made by a third party with respect to this Agreement,
and the Depositor shall assume (with the consent of the Grantor Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, either of the
Sellers, the Grantor Trustee, the Certificate Insurer and/or any Owner in
respect of such claim. The provisions of this Section 6.12 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
Section 6.13 ACCESS TO OWNERS OF CERTIFICATES' NAMES AND ADDRESSES.
(a) If any Owner (for purposes of this Section 6.13, an "Applicant")
applies in writing to the Grantor Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their rights
under this Agreement or under the Certificates and is accompanied by a copy of
the communication which such Applicant proposes to transmit, then the Grantor
Trustee shall, at the expense of such Applicant, within ten (10) Business Days
after the receipt of such application, furnish or cause to be furnished to such
Applicant a list of the names and addresses of the Owners of record as of the
most recent Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Grantor Trustee that the Grantor Trustee shall not be held accountable in any
way by reason of the disclosure of any information as to the names and addresses
of the Owners hereunder, regardless of the source from which such information
was derived.
END OF ARTICLE VI
<PAGE>
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Grantor Trustee
shall demand payment or delivery of all money and other property payable to or
receivable by the Grantor Trustee pursuant to this Agreement, the Swap
Agreement, the Class A-2 Fixed Certificate, or the Certificate Insurance Policy.
The Grantor Trustee shall hold all such money and property received by it, other
than pursuant to or as contemplated by Section 6.02(e) hereof, as part of the
Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 ESTABLISHMENT OF ACCOUNTS.
The Depositor shall cause to be established on the Startup Day, and
the Grantor Trustee shall maintain, at the Corporate Trust Office, the Grantor
Trust Account, which is to be held by the Grantor Trustee on behalf of the
Owners of the Certificates, the Certificate Insurer and the Grantor Trustee.
Section 7.03 FLOW OF FUNDS.
(a) The Grantor Trustee shall deposit to the Grantor Trust Account,
without duplication, upon receipt, any payments received under the Swap
Agreement, any Insured Payments, the proceeds of any liquidation of the assets
of the Trust, all remittances made to the Grantor Trustee pursuant to Section
8.08(b) and the Monthly Remittance Amount received from the ContiMortgage Home
Equity Loan Trust 1997-5.
(b) On each Payment Date, the Grantor Trustee shall make the following
disbursements from the Interest Remittance Amount (including the interest
component of any Insured Payments which is available only for the payment of the
amount described in SECOND below), in the following order of priority, and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) First, to the Swap Counterparty, any regularly scheduled
payment due to the Swap Counterparty under Section 2(a) of the
Swap Agreement;
(ii) Second, to the Owners of the Certificates, the Current
Interest plus the related Interest Carry Forward
Amount with respect the Certificates without any
priority among the Certificateholders; PROVIDED, that
if the Interest Amount Available plus the interest
component of any Insured Payment is not sufficient to
make a full distribution of interest with respect to
all Certificates, and the amount of the shortfall will
be carried forward as the Interest Carry Forward
Amount.
(iii) RESERVED
(c) RESERVED
(d) On each Payment Date, the Trustee shall make the following
disbursements from amounts relating to principal and each such disbursement
shall be treated as having occurred only after all preceding disbursements have
occurred: 100% of the Principal Distribution Amount to the Owners of the Class
A-2 Floating Certificates.
(e) RESERVED
(f) RESERVED
(g) RESERVED
(h) RESERVED
(i) RESERVED
(j) RESERVED
(k) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Certificates, the Grantor Trustee shall deposit such
Insured Payments in the Grantor Trust Account and shall distribute such Insured
Payments, or the proceeds thereof as provided in paragraphs (d) above.
(l) Anything herein to the contrary notwithstanding, any payment with
respect to interest on any of the Certificates which is made with moneys
received pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of such Certificates from the Trust and shall not result in
the payment of or the provision for the payment of the interest on such
Certificates within the meaning of Section 7.03. The Depositor, the Servicer and
the Grantor Trustee acknowledge, and each Owner by its acceptance of a
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicer, the Grantor Trustee or the
Registrar (a) to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of interest on any Certificates to the Owners of such
Certificates, the Certificate Insurer will be fully subrogated to the rights of
such Owners to receive such interest together with any interest thereon of the
applicable Pass-Through Rate from the Trust and (b) the Certificate Insurer
shall be paid such interest only from the sources and in the manner provided
herein for the payment of such interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it unless on such Payment Date the Owners of
the Certificates shall also have received the full amount of the Class A-2
Floating Distribution Amount for such Payment Date.
The Grantor Trustee or Paying Agent shall (i) receive as
attorney-in-fact of each Owner of Certificates any Insured Payment from the
Certificate Insurer and (ii) disburse the same to the Owners of the related
Certificates as set forth in Section 7.03(b). Insured Payments disbursed by the
Grantor Trustee or Paying Agent from proceeds of a Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such payments discharge
the obligation of the Trust with respect to such Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to the Pooling and Servicing Agreement.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement.
Section 7.04 [RESERVED]
Section 7.05 INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Grantor Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Grantor Trustee in
the name of the Grantor Trustee for the benefit of the Owners and the
Certificate Insurer, as directed in writing by the Depositor, in one or more
Eligible Investments bearing interest or sold at a discount. The bank serving as
Grantor Trustee or any affiliate thereof may be the obligor on any investment
which otherwise qualifies as an Eligible Investment. No investment in any
Account shall mature later than the Business Day immediately preceding the next
Payment Date.
(b) If any amounts are needed for disbursement from any Account held
by the Grantor Trustee and sufficient uninvested funds are not available to make
such disbursement, the Grantor Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. No
investments will be liquidated prior to maturity unless the proceeds thereof are
needed for disbursement.
(c) Subject to Section 10.01 hereof, the Grantor Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Grantor Trustee resulting from any loss on any Eligible Investment included
therein (except to the extent that the bank serving as Grantor Trustee is the
obligor thereon).
(d) The Grantor Trustee shall invest and reinvest funds in the
Accounts held by the Grantor Trustee, in accordance with the written
instructions delivered to the Grantor Trustee on the Startup Day, but only in
one or more Eligible Investments bearing interest or sold at a discount.
If the Depositor shall have failed to give investment directions to
the Grantor Trustee then the Grantor Trustee shall invest in money market funds
described in Section 7.07(g); to be redeemable without penalty no later than the
Business Day immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Grantor Trustee shall be for the account of the Servicer and shall be
distributed to the Servicer immediately prior to any distribution under Section
7.03 hereof on any Payment Date, and any loss resulting from such investments
shall be for the account of the Servicer and promptly upon the realization of
such loss the Servicer contribute funds in an amount equal to such loss to such
Account.
Section 7.06 PAYMENT OF TRUST EXPENSES.
(a) The Grantor Trustee shall make demand on ContiMortgage to pay the
amount of the expenses of the Trust (other than payments of premiums to the
Certificate Insurer and the Grantor Trustee's Fees) and ContiMortgage shall
promptly pay such expenses directly to the Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Grantor Trustee.
Section 7.07 ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated in
one of the two highest ratings categories by each Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch, A-1+ or better by Standard & Poor's and P-1 by Moody's;
(d) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB by each
of Standard & Poor's and Fitch) which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by the FDIC
and held up to the limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations
rated Aa2 or better by Moody's and AA or better by each of
Standard & Poor's and Fitch, and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Grantor Trustee receives an opinion of counsel
that such agreement is an enforceable obligation of
such insurance company or bank;
(f) Repurchase agreements collateralized by securities described in
(a) above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
Moody's A-1+ or AA, respectively or better by Standard & Poor's and F- 1+ or AA,
respectively, or better by Fitch, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any
lien by the Grantor Trustee or an independent
third party acting solely as agent for the
Grantor Trustee, and such third party is (a) a
Federal Reserve Bank or (b) a bank which is a
member of the FDIC and which has combined
capital, surplus and undivided profits of not
less than $125 million, or (c) a bank approved
in writing for such purpose by the Certificate
Insurer and the Grantor Trustee shall have
received written confirmation from such third
party that it holds such securities, free and
clear of any lien, as agent for the Grantor
Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed
at 31 CFR 306.1 et seq. or 31 CFR 350.0 et seq., in
such securities is created for the benefit of the
Grantor Trustee, and
d. The repurchase agreement has a term of thirty days or
less and the Grantor Trustee will value the
collateral securities no less frequently than weekly
and will liquidate the collateral securities if any
deficiency in the required collateral percentage is
not restored within two business days of such
valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation,
including principal and interest, is equal to at
least 106% and such collateral securities must be
valued weekly and market-to-market at current market
price plus accrued interest.
(f) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
and
(g) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if
rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 ACCOUNTING AND DIRECTIONS BY GRANTOR TRUSTEE.
(a) (i) The Grantor Trustee shall determine whether an Insured Payment
will be required to be made by the Certificate Insurer on the following Payment
Date and if so then no later than 12:00 noon on the second Business Day
immediately preceding the related Payment Date the Grantor Trustee shall furnish
the Certificate Insurer and the Depositor with a completed Notice in the form
set forth as Exhibit A to the Certificate Insurance Policy. The Notice shall
specify the amount of Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
(ii) The Grantor Trustee shall determine (a) the payment due
to the Grantor Trustee under the Swap Agreement (which shall equal Current
Interest for the related Payment Date on the Class A-2 Floating Certificates)
and (b) the payment due to the Swap Counterparty under the Swap Agreement (which
shall equal interest to be received on the related Payment Date on the Class A-2
Fixed Certificates) not later than 12:00 noon on the fourth Business Day
immediately preceding the related Payment Date and the Grantor Trustee shall
notify the Swap Counterparty and the Certificate Insurer of such amounts to be
received and to be paid under the Swap Agreement.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and the
Grantor Trustee), the Grantor Trustee shall notify (subject to the terms of
Section 10.03(j) hereof, based solely on information provided to the Grantor
Trustee by the Servicer) the Depositor, the Certificate Insurer and each Owner
of the following information with respect to the next Payment Date (which
notification may be given by facsimile or by telephone promptly confirmed in
writing):
(1) The aggregate amount then on deposit in the Grantor
Trust Account;
(2) The Class A-2 Floating Distribution Amount, with respect to
the Class A-2 Floating Certificates, on the next Payment Date;
(3) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(4) The application of the amounts described in clause (1)
preceding to the allocation and distribution of the related
Class A-2 Floating Distribution Amount, on such Payment Date
in accordance with Section 7.03 hereof;
(5) The Certificate Principal Balance of the Certificates, the
aggregate amount of the principal of each Class of
Certificates to be paid on such Payment Date and the remaining
Certificate Principal Balance of the Class A-2 Floating
Certificates following any such payment;
(6) The amount of any Swap Payment due to the Grantor Trustee on
the related Swap Payment Date; and
(7) The amount of any Swap Payment received by the Grantor Trustee
on the related Swap Payment Date.
Section 7.09 REPORTS BY GRANTOR TRUSTEE TO OWNERS AND THE CERTIFICATE
INSURER.
(a) On each Payment Date the Grantor Trustee shall report in writing
to the Depositor, each Owner, the Certificate Insurer, the Underwriters and the
Rating Agencies:
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000;
(iv) the Interest Carry Forward Amount;
(v) the principal amount of the Certificates (based on a
Certificate in the original principal amount of $1,000 which will be
Outstanding after giving effect to any payment of principal on such
Payment Date;
(vi) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(vii) the amount of any Insured Payment included in the
distribution to Owners of Certificates;
(viii) the amount of the Swap Payment received from the Swap
Counterparty and the amount of the Swap Payment paid by the Grantor
Trustee to the Swap Counterparty on the applicable Swap Payment Date;
(ix) all information received by the Grantor Trust Owner of
the Class A-2 Fixed Certificate; and
(x) the Class A-2 Floating Pass-Through Rate.
The Servicer shall provide to the Grantor Trustee the information
described in Section 8.08(d)(iii) and in clause (b) below to enable the Grantor
Trustee to perform its reporting obligations under this Section, and such
obligations of the Grantor Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ix) shall be
based solely upon information contained in the monthly servicing report provided
by the Servicer to the Grantor Trustee pursuant to Section 8.01 hereof.
(b) The Servicer shall furnish to the Grantor Trustee and to the
Certificate Insurer during the term of this Agreement, such periodic, special,
or other reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Grantor Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Grantor Trustee or the Certificate Insurer may reasonably require; provided,
that the Servicer shall be entitled to be reimbursed by the requesting party for
the fees and actual expenses associated with providing such reports, if such
reports are not generally produced in the ordinary course of business.
Section 7.10 REPORTS BY GRANTOR TRUSTEE.
(a) The Grantor Trustee shall report to the Depositor, each of the
Sellers, the Underwriters, the Certificate Insurer and each Owner, with respect
to the amount on deposit in the Grantor Trust Account and the identity of the
investments included therein, as the Depositor or the Certificate Insurer may
from time to time request. Without limiting the generality of the foregoing, the
Grantor Trustee shall, at the request of the Depositor or the Certificate
Insurer transmit promptly to the Depositor and the Certificate Insurer copies of
all accounting of receipts in respect of the Class A-2 Fixed Certificates
furnished to it by the Servicer and shall notify the Certificate Insurer if any
Monthly Remittance Amount has not been received by the Grantor Trustee when due.
(b) The Grantor Trustee shall report to the Certificate Insurer and
each Owner with respect to any written notices it may from time to time receive
which provide an Authorized Officer with actual knowledge that any of the
statements set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 PREFERENCE PAYMENTS.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Fiscal Agent of (i) a certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the Certificate
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Certificate Insurer, irrevocably
assigning to the Certificate Insurer all rights and claims of the Owners
relating to or arising under the Class A-2 Floating Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment and (iv) appropriate instruments to effect the appointment of
the Certificate Insurer as agent for such Owner in any legal proceeding related
to such preference payment, such instruments being in a form satisfactory to the
Certificate Insurer, provided that if such documents are received after 12:00
noon New York City time on such Business Day, they will be deemed to be received
on the following Business Day. Such payment shall be disbursed to the receiver
or trustee in bankruptcy named in the final court order of the court exercising
jurisdiction on behalf of the Owner and not to any Owner directly unless such
Owner has returned principal or interest paid on the Class A-2 Floating
Certificates to such receiver or trustee in bankruptcy in which case payment
will be disbursed to the Owner.
Each Owner by its purchase of Class A-2 Floating Certificates, the
Servicer and the Grantor Trustee hereby agree that the Certificate Insurer may
at any time during the continuation of any proceeding relating to a preference
claim direct all matters relating to such preference claim, including, without
limitation, the direction of any appeal of any order relating to such preference
claim and the posting of any surety or performance bond pending any such appeal.
In addition and without limitation of the foregoing, the Certificate Insurer
shall be subrogated to the rights of the Servicer, the Grantor Trustee and the
Owners of each Certificate in the conduct of any such preference claim,
including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such preference claim.
END OF ARTICLE VII
<PAGE>
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF ASSETS
Section 8.01 SERVICER.
The Servicer shall give prompt notice to the Grantor Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Section 8.02 RESERVED.
Section 8.03 RESERVED.
Section 8.04 RESERVED.
Section 8.05 INDEMNIFICATION.
(a) RESERVED
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Grantor Trustee, the Certificate Insurer and each Owner harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Grantor Trustee, the
Certificate Insurer and any Owner may sustain in any way related to the failure
of the Servicer to perform its duties and service the Class A-2 Fixed
Certificates in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Grantor Trustee, the Certificate Insurer and each Owner
if a claim is made by a third party with respect to this Agreement, and the
Servicer shall assume (with the consent of the Grantor Trustee and the
Certificate Insurer) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Grantor Trustee, the Certificate Insurer and/or Owner in respect
of such claim. The provisions of this Section 8.05 shall survive the termination
of this Agreement and the payment of the outstanding Certificates.
Section 8.06 [RESERVED]
Section 8.07 [RESERVED]
Section 8.08 GRANTOR TRUST ACCOUNT.
(a) The Grantor Trustee shall establish and maintain at one or more
Designated Depository Institutions selected by the Servicer the Grantor Trust
Account to be held as a trust account. The Grantor Trust Account shall be
identified on the records of the Designated Depository Institution as follows:
"Manufacturers and Traders Trust Company, as Grantor Trustee under the Grantor
Trust Agreement dated as of December 1, 1997". If the institution at any time
holding the Grantor Trust Account ceases to be eligible as a Designated
Depository Institution hereunder, then the Servicer shall, within 30 days, be
required to name a successor institution meeting the requirements for a
Designated Depository Institution hereunder and notify the Grantor Trustee
thereof. If the Servicer fails to name such a successor institution, then the
Grantor Trust Account shall thenceforth be held as a trust account with a
qualifying Designated Depository Institution selected by the Grantor Trustee.
The Grantor Trustee shall notify the Certificate Insurer and the Owners if there
is a change in the name, account number or institution holding the Grantor Trust
Account.
(b) All funds in the Grantor Trust Account shall be held (i) uninvested (up
to the limits insured by the FDIC) or (ii) invested in Eligible Investments. Any
investments of funds in the Grantor Trust Account shall mature or be
withdrawable at par on or prior to the immediately succeeding Payment Date. The
Grantor Trust Account shall be held in trust in the name of the Grantor Trustee
for the benefit of the Owners and the Certificate Insurer. Any investment
earnings net of investment losses (which losses have not previously been
contributed by the Servicer) on funds held in the Grantor Trust Account shall be
for the account of the Servicer and shall be disbursed by the Grantor Trustee
from the Grantor Trust Account by the Servicer immediately prior to the
distributions under Section 7.03 hereof on any Payment Date. Any investment
losses on funds held in the Grantor Trust Account shall be for the account of
the Servicer and promptly upon the realization of such loss shall be contributed
by the Servicer to the Grantor Trust Account. Any references herein to amounts
on deposit in the Grantor Trust Account shall refer to amounts net of such
investment earnings.
(c) RESERVED.
(d) (i) The Trustee may make withdrawals for its own account from the
amounts on deposit in the Grantor Trust Account, with respect to the Class A-2
Fixed Certificates, for the following purposes:
(A) to make a disbursement to the Servicer on
each Payment Date immediately prior to the
disbursements under Section 7.03 hereof of
investment earnings (net of investment losses)
on amounts on deposit in the Grantor Trust Account;
(B) RESERVED;
(C) to withdraw amounts that have been deposited to the
Grantor Trust Account in error; and
(D) to clear and terminate the Grantor Trust Account
following the termination of the Trust pursuant to
Article IX.
(ii) On the Business Day preceding each Payment Date,
the Servicer shall deliver to the Grantor
Trustee and the Certificate Insurer, a monthly
servicing report with respect to the Class A-2
Fixed Certificates, containing the following
information: principal and interest to be
received on the related Payment Date with respect
to the Class A-2 Fixed Certificates, any Swap
Payments to be received by the Grantor Trustee or
to be made by the Grantor Trustee under the Swap
Agreement on the applicable Swap Payment Date,
the Class A-2 Floating Pass-Through Rate,
principal and interest to be paid on the related
Payment Date to the Owners of the Class A-2
Floating Certificates, the amount of the Insured
Payment, if any, to be received by the Grantor
Trustee with respect to the related Payment Date
and other similar information concerning the
Trust Estate.
(iii) The Servicer shall provide to the Grantor Trustee
the information described in Section 8.08(d)(ii)
and in Section 7.09(a) to enable the Grantor
Trustee to perform its reporting requirements
under Section 7.09 and the Grantor Trustee shall
forward such information to the Underwriters
within five Business Days of receipt thereof.
Section 8.09 RESERVED.
Section 8.10 SERVICING COMPENSATION.
The fee payable to the Servicer under the Pooling and Servicing
Agreement shall be, in part, compensation for the activities of the Servicer
hereunder and the Servicer shall not be entitled to any further compensation
other than earnings (net of losses) on investments in the Grantor Trust Account.
Section 8.11 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Grantor Trustee,
the Depositor, the Certificate Insurer and the Rating Agencies, on or before
March 31 of each year, commencing in 1998, an Officer's Certificate stating, as
to each signer thereof, that (i) a review of the activities of the Servicer
during such preceding calendar year and of performance under this Agreement has
been made under such officers' supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a default
in the fulfillment of all such obligations, specifying each such default known
to such officers and the nature and status thereof including the steps being
taken by the Servicer to remedy such default.
Section 8.12 RESERVED
Section 8.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE CLASS A-2 FIXED CERTIFICATES.
The Grantor Trustee shall provide to the Certificate Insurer, the FDIC
and the supervisory agents and examiners of each of the foregoing (which, in the
case of supervisory agents and examiners, may be required by applicable state
and federal regulations) access to the documentation regarding the Class A-2
Fixed Certificates, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Grantor Trustee designated by it.
Section 8.14 ASSIGNMENT OF AGREEMENT.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Grantor Trustee and the Certificate Insurer, which consent shall not be
unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.20(i) of the Pooling and
Servicing Agreement for a successor servicer.
Section 8.15. REMOVAL OF SERVICER; RESIGNATION OF Servicer.
(a) The removal or resignation pursuant to the Pooling and Servicing
Agreement of the Servicer as defined in the Pooling and Servicing Agreement
shall also constitute a removal or resignation of the Servicer hereunder. The
Certificate Insurer shall have the same rights concerning removal or resignation
of the Servicer hereunder as it does in the Pooling and Servicing Agreement.
(b) The successor servicer appointed pursuant to the Pooling and
Servicing Agreement shall become the successor servicer hereunder.
(c) No removal or resignation of the Servicer shall become effective
hereunder until the Trustee under the Pooling and Servicing Agreement or a
successor servicer shall have assumed the Servicer's responsibilities and
obligations in accordance with the Pooling and Servicing Agreement.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Grantor Trustee and the Certificate
Insurer, which opinion shall be at the Servicer's expense.
(e) RESERVED.
(f) RESERVED.
(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Grantor Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Class A-2 Fixed Certificates, including all tax bills, assessment
notices, insurance premium notices and all other documents as well as all
original documents then in the Servicer's possession.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Grantor Trustee and remitted directly
and immediately to the Grantor Trustee or the successor Servicer.
(i) RESERVED
(j) RESERVED
(k) The Grantor Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Grantor Trustee and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Grantor
Trustee or such successor Servicer, as applicable, all documents and records
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and shall promptly also transfer to the Grantor Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Class A-2. Neither the Grantor
Trustee nor any other successor Servicer shall be held liable by reason of any
failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer. If
the Servicer resigns or is replaced hereunder, the Servicer agrees to reimburse
the Trust, the Certificate Insurer and the Owners for the costs and expenses
associated with the transfer of servicing to the replacement Servicer.
(l) The Servicer which is being removed or is resigning shall give
notice to the, the Certificate Insurer and the Rating Agencies of the transfer
of the servicing to the successor Servicer.
(m) The Grantor Trustee shall give notice to the Owners, the Grantor
Trustee, the Certificate Insurer and the Rating Agencies of the occurrence of
any event described in paragraphs (a) or (b) above of which the Grantor Trustee
is aware.
Section 8.16 INSPECTIONS BY CERTIFICATE INSURER; ERRORS AND OMISSIONS
INSURANCE.
(a) At any reasonable time and from time to time upon reasonable
notice, the Grantor Trustee, the Certificate Insurer or any agents thereof may
inspect the Servicer's servicing operations and discuss the servicing operations
of the Servicer during the Servicer's normal business hours with any of its
officers or directors; provided, however, that the costs and expenses incurred
by the Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer;
(b) The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FannieMae Guide or any successor provision thereof; provided, however, that
if the Grantor Trustee shall become the Servicer, any customary insurance
coverage that the Grantor Trustee maintains shall be deemed sufficient
hereunder; provided, further, that in the event that the fidelity bond or the
errors and omissions coverage is no longer in effect, the Grantor Trustee shall
promptly give such notice to the Certificate Insurer and the Owners. Upon the
request of the Grantor Trustee or the Certificate Insurer, the Servicer shall
cause to be delivered to such requesting Person a certified true copy of such
fidelity bond or errors and omission policy.
END OF ARTICLE VIII
<PAGE>
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance Policy,
of all amounts held by the Grantor Trustee and required to be paid to such
Owners pursuant to this Agreement upon the latest to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
Class A-2 Fixed Certificates in the Trust Estate and (b) the final payment to
the Certificate Insurer of all amounts then owing to it. In no event, however,
will the Trust created by this Agreement continue beyond the expiration of
twenty-one (21) years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of
Saint James, living on the date hereof. The Grantor Trustee shall give written
notice of termination of the Agreement to each Owner in the manner set forth in
Section 11.05.
Section 9.02 [RESERVED]
Section 9.03 [RESERVED].
Section 9.04 DISPOSITION OF PROCEEDS.
The Grantor Trustee shall, upon receipt thereof, deposit the proceeds
of any liquidation of the Trust Estate pursuant to this Article IX to the
Certificate Account.
END OF ARTICLE IX
<PAGE>
ARTICLE X
THE GRANTOR TRUSTEE
Section 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Grantor Trustee (i) (A) undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Grantor
Trustee and (B) the banking institution that is the Grantor Trustee shall serve
as the Grantor Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Grantor Trustee, shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Grantor Trustee is hereby empowered to perform the duties of the Servicer it
being expressly understood, however, that the foregoing describes a power and
not an obligation of the Grantor Trustee, and that all parties hereto agree
that, prior to any termination of the Servicer, the Servicer and, thereafter,
the Grantor Trustee or any other successor servicer shall perform such duties.
(c) No provision of this Agreement shall be construed to relieve the
Grantor Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(1) this subsection shall not be construed to limit
the effect of subsection (a) of this Section;
(2) the Grantor Trustee shall not be personally liable
for any error of judgment made in good faith by an
Authorized Officer, unless it shall be proved that
the Grantor Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Grantor Trustee shall not be liable with
respect to any action taken or omitted to be
taken by it in good faith in accordance with the
direction of the Certificate Insurer or the
Owners of a majority in Percentage Interest of
the Certificates of the affected Class or
Classes and the Certificate Insurer relating to
the time, method and place of conducting any
proceeding for any remedy available to the
Grantor Trustee, or exercising any trust or
power conferred upon the Grantor Trustee, under
this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Grantor Trustee shall be subject to the provisions
of this Section.
(e) No provision of this Agreement shall require the Grantor Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Grantor Trustee to perform, or be responsible for
the manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Grantor Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Grantor Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Grantor
Trustee shall not be answerable for other than its own negligence or willful
misconduct.
(g) The Grantor Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken.
Section 10.02. REMOVAL OF GRANTOR TRUSTEE FOR CAUSE.
(a) The Grantor Trustee may be removed pursuant to paragraph (b)
hereof upon the occurrence of any of the following events (whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Grantor Trustee shall fail to distribute to
the Owners entitled hereto on any Payment Date
amounts available for distribution in accordance
with the terms hereof; (provided, however, that
any such failure which is due to circumstances
beyond the control of the Grantor Trustee shall
not be a cause for removal hereunder); or
(2) the Grantor Trustee shall fail in the performance
of, or breach, any covenant or agreement of the
Grantor Trustee in this Agreement, or if any
representation or warranty of the Grantor
Trustee made in this Agreement or in any
certificate or other writing delivered pursuant
hereto or in connection herewith shall prove to
be incorrect in any material respect as of the
time when the same shall have been made, and
such failure or breach shall continue or not be
cured for a period of 30 days after there shall
have been given, by registered or certified mail,
to the Grantor Trustee by the Depositor, the
Certificate Insurer or by the Owners of at least
25% of the aggregate Percentage Interests in the
Trust Estate represented by the Certificates then
Outstanding, a written notice specifying such
failure or breach and requiring it to be
remedied; or
(3) a decree or order of a court or agency or
supervisory authority having jurisdiction for
the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been
entered against the Grantor Trustee, and such
decree or order shall have remained in force
undischarged or unstayed for a period of 75
days; or
(4) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the
Grantor Trustee is appointed in any insolvency,
readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating
to the Grantor Trustee or relating to all or
substantially all of its property; or
(5) the Grantor Trustee shall become insolvent
(however insolvency is evidenced), generally
fail to pay its debts as they come due, file or
consent to the filing of a petition to take
advantage of any applicable insolvency or
reorganization statute, make an assignment for
the benefit of its creditors, voluntarily suspend
payment of its obligations, or take corporate
action for the purpose of any of the foregoing.
The Depositor shall give notice to the Certificate Insurer and the Rating
Agencies of the occurrence of any such event of which the Depositor is aware.
(b) if any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Offered Certificates or if there are no Offered Certificates
then outstanding by such majority of the Percentage Interests represented by the
Retained Certificates, may, whether or not the Grantor Trustee resigns pursuant
to Section 10.09(b) hereof, immediately, concurrently with the giving of notice
to the Grantor Trustee, and without delaying the 30 days required for notice
therein, appoint a successor Grantor Trustee pursuant to the terms of Section
10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Grantor Trustee or the appointment of a new Grantor Trustee.
Section 10.03 CERTAIN RIGHTS OF THE GRANTOR TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(a) the Grantor Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Depositor, the Certificate Insurer
or the Owners of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Grantor
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Grantor Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate;
(d) the Grantor Trustee may consult with counsel, and the written
advice of such counsel (selected in good faith by the Grantor Trustee) shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable reliance
thereon;
(e) the Grantor Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request or
direction of any of the Owners pursuant to this Agreement, unless such Owners
shall have offered to the Grantor Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Grantor Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Grantor Trustee in its discretion may
make such further inquiry or investigation into such facts or matters as it may
see fit;
(g) the Grantor Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys or custodians;
(h) the Grantor Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Grantor Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Grantor
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Grantor Trustee from time to time certain information and to
make various calculations which are relevant to the performance of the Grantor
Trustee's duties under this Agreement. The Grantor Trustee shall be entitled to
rely in good faith on any such information and calculations in the performance
of its duties hereunder, (i) unless and until an Authorized Officer of the
Grantor Trustee has actual knowledge, or is advised by any Owner of a
Certificate (either in writing or orally with prompt written or telecopies
confirmation), that such information or calculations is or are incorrect, or
(ii) unless there is a manifest error in any such information; and
(k) the Grantor Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Estate created hereby or the
powers granted hereunder.
Section 10.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
CERTIFICATES.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Grantor Trustee, shall be taken as the statements of the Depositor and the
Grantor Trustee assumes no responsibility for their correctness. The Grantor
Trustee makes no representation as to the validity or sufficiency of this
Agreement, of the Certificates, or the Trust Estate or document related thereto
other than as to validity and sufficiency of its authentication of the
Certificates. The Grantor Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor, in respect of the Class A-2 Fixed Certificates deposited into or
withdrawn from the Grantor Trust Account by the Servicer and shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien or to prepare or file any tax returns or Securities
and Exchange Commission filings for the Trust or to record this Agreement. The
Grantor Trustee shall not be required to take notice or be deemed to have notice
or knowledge of any default unless an Authorized Officer of the Grantor Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Grantor Trustee
may conclusively assume that no default has occurred.
Section 10.05 MAY HOLD CERTIFICATES.
The Grantor Trustee, any Paying Agent, Registrar or any other agent of
the Trust, in its individual or any other capacity, may become an Owner or
pledgee of Certificates and may otherwise deal with the Trust with the same
rights it would have if it were not Grantor Trustee, any Paying Agent, Registrar
or such other agent.
Section 10.06 MONEY HELD IN TRUST.
Money held by the Grantor Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law,
however such money shall be kept in a separate and segregated trust account in
accordance with Section 7.02 hereof. The Grantor Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Seller and except to the extent of income or other gain on
investments which are deposits in or certificates of deposit of the Grantor
Trustee in its commercial capacity.
Section 10.07 COMPENSATION AND REIMBURSEMENT; NO LIEN FOR FEES.
The Grantor Trustee shall receive compensation for fees and
reimbursement for expenses pursuant to Section 2.05 and Section 7.06 hereof. The
Grantor Trustee shall have no lien on the Trust Estate for the payment of such
fees and expenses.
Section 10.08 CORPORATE GRANTOR TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Grantor Trustee hereunder which shall be
a corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A2 by Moody's (or such lower rating as may be acceptable to Moody's), and
deposit rating of A- by Standard & Poor's (or such lower rating as may be
acceptable to Standard & Poor's) and, if rated by Fitch, having a rating of at
least A- from Fitch (or such lower rating as may be acceptable to Fitch). If
such Grantor Trustee publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Grantor Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
ContiMortgage with the consent of the Certificate Insurer (which consent shall
not be unreasonably withheld) or of the Certificate Insurer, resign immediately
in the manner and with the effect hereinafter specified in this Article X.
Section 10.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Grantor Trustee and no
appointment of a successor Grantor Trustee pursuant to this Article X shall
become effective until the acceptance of appointment by the successor Grantor
Trustee under Section 10.10 hereof.
(b) The Grantor Trustee, or any Grantor Trustee or Grantor Trustees
hereafter appointed, may resign at any time by giving written notice of
resignation to the Depositor and by mailing notice of resignation by first-class
mail, postage prepaid, to the Certificate Insurer and the Owners at their
addresses appearing on the Register; provided, that the Grantor Trustee cannot
resign solely for the failure to receive the Grantor Trustee Fee. A copy of such
notice shall be sent by the resigning Grantor Trustee to the Rating Agencies.
Upon receiving notice of resignation, the Depositor shall promptly appoint a
successor Grantor Trustee or Grantor Trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of ContiMortgage, one copy of which instrument shall be
delivered to the Grantor Trustee so resigning and one copy to the successor
Grantor Trustee or Grantor Trustees. If no successor Grantor Trustee shall have
been appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Grantor Trustee may petition any court
of competent jurisdiction for the appointment of a successor Grantor Trustee, or
any Owner may, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor Grantor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and appropriate,
appoint a successor Grantor Trustee.
(c) If at any time the Grantor Trustee shall cease to be eligible
under Section 10.08 hereof and shall fail to resign after written request
therefor by the Depositor or the Certificate Insurer, the Certificate Insurer or
the Depositor with the consent of the Certificate Insurer may remove the Grantor
Trustee and appoint a successor Grantor Trustee acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Grantor Trustee so removed and one copy to the successor
Grantor Trustee.
(d) The Owners of a majority of the Percentage Interests represented
by the Class A-2 Floating Certificates with the consent of the Certificate
Insurer, may at any time remove the Grantor Trustee and appoint a successor
Grantor Trustee acceptable to the Certificate Insurer by delivering to the
Grantor Trustee to be removed, to the successor Grantor Trustee so appointed, to
the Depositor, to the Certificate Insurer and to the Servicer copies of the
record of the act taken by the Owners, as provided for in Section 11.03 hereof.
(e) If the Grantor Trustee fails to perform its duties in accordance
with the terms of this Agreement, or becomes ineligible pursuant to Section
10.08 to serve as Grantor Trustee, the Certificate Insurer may remove the
Grantor Trustee and appoint a successor Grantor Trustee by written instrument,
in triplicate, signed by the Certificate Insurer duly authorized, one complete
set of which instruments shall be delivered to the Depositor, one complete set
to the Grantor Trustee so removed and one complete set to the successor Grantor
Trustee so appointed.
(f) If the Grantor Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Grantor
Trustee for any cause, ContiMortgage shall promptly appoint a successor Grantor
Trustee acceptable to the Certificate Insurer. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor Grantor Trustee shall be appointed by act of the Certificate Insurer
or the Owners of a majority of the Percentage Interests represented by the
Certificates then Outstanding with the consent of the Certificate Insurer, the
successor Grantor Trustee so appointed shall forthwith upon its acceptance of
such appointment become the successor Grantor Trustee and supersede the
successor Grantor Trustee appointed by the Depositor. If no successor Grantor
Trustee shall have been so appointed by the Depositor or the Owners and shall
have accepted appointment in the manner hereinafter provided, any Owner may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Grantor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Grantor Trustee.
(g) The Depositor shall give notice of any removal of the Grantor
Trustee by mailing notice of such event by first-class mail, postage prepaid, to
the Certificate Insurer, the Rating Agencies and to the Owners as their names
and addresses appear in the Register. Each notice shall include the name of the
successor Grantor Trustee and the address of its corporate trust office.
Section 10.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR GRANTOR TRUSTEE.
Every successor Grantor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust and to its
predecessor Grantor Trustee an instrument accepting such appointment hereunder
and stating its eligibility to serve as Grantor Trustee hereunder, and thereupon
the resignation or removal of the predecessor Grantor Trustee shall become
effective and such successor Grantor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the Depositor or
the successor Grantor Trustee, such predecessor Grantor Trustee shall, upon
payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Grantor Trustee all of the rights, powers and
trusts of the Grantor Trustee so ceasing to act, and shall duly assign, transfer
and deliver to such successor Grantor Trustee all property and money held by
such Grantor Trustee so ceasing to act hereunder. Upon request of any such
successor Grantor Trustee, the Depositor on behalf of the Trust shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Grantor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Grantor Trustee as
provided in this Section, the Depositor shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Grantor Trustee, the successor Grantor Trustee
shall cause such notice to be mailed at the expense of the Trust.
No successor Grantor Trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and eligible under
this Article X.
Section 10.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF THE GRANTOR TRUSTEE.
Any corporation or association into which the Grantor Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Grantor Trustee shall be a party, or any corporation or association succeeding
to all or substantially all of the corporate trust business of the Grantor
Trustee, shall be the successor of the Grantor Trustee hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation or association shall be
otherwise qualified and eligible under this Article X. In case any Certificates
have been executed, but not delivered, by the Grantor Trustee then in office,
any successor by merger, conversion or consolidation to such Grantor Trustee may
adopt such execution and deliver the Certificates so executed with the same
effect as if such successor Grantor Trustee had itself executed such
Certificates.
Section 10.12 TAX RETURNS AND REPORTS.
(a) The Grantor Trustee, upon request, will furnish the Servicer with
all such information as may be reasonably required in connection with the
Servicer's preparation of all Tax Returns of the Trust and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
the Trust any Tax Return that the Grantor Trustee is required to sign pursuant
to applicable federal, state or local tax laws, and (ii) cause such Tax Return
to have been returned to the Servicer for filing.
(b) The Servicer shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to the
Trust and the Certificates containing such information and at the times and in
the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Owner of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. The Grantor Trustee
shall sign all tax information returns filed pursuant to this Section and any
other returns as may be required by the Code, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Servicer.
Section 10.13 LIABILITY OF THE GRANTOR TRUSTEE.
The Grantor Trustee shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Grantor Trustee herein. Neither the Grantor Trustee nor any of the directors,
officers, employees or agents of the Grantor Trustee shall be under any
liability on any Certificate or otherwise to the Depositor, the Servicer, the
Certificate Insurer or any Owner for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Grantor
Trustee, its directors, officers, employees or agents or any such Person against
any liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Grantor Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Grantor Trustee is the obligor). In
addition, the Depositor and Servicer covenant and agree to indemnify the Grantor
Trustee, and when the Grantor Trustee is acting as Servicer, the Servicer, from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses (including legal fees and expenses) of whatsoever kind arising out
of or in connection with the performance of its duties hereunder other than
those resulting from the negligence or bad faith of the Grantor Trustee, and the
Depositor shall pay all amounts not otherwise paid pursuant to Sections 2.05 and
7.06 hereof. The Grantor Trustee and any director, officer, employee or agent of
the Grantor Trustee may rely and shall be protected in acting or refraining from
acting in good faith on any certificate, notice or other document of any kind
prima facie properly executed and submitted by the Authorized Officer of any
Person respecting any matters arising hereunder. The provisions of this Section
10.13 shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 APPOINTMENT OF CO-GRANTOR TRUSTEE OR SEPARATE GRANTOR
TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Grantor Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Grantor Trustee and reasonably acceptable to the Certificate Insurer to act
as co-Grantor Trustee or co-Grantor Trustees, jointly with the Grantor Trustee,
of all or any part of the Trust Estate or separate Grantor Trustee or separate
Grantor Trustees of any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Owners, such title to the
Trust Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and trusts as the
Servicer and the Grantor Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case any event indicated in
Section 8.20(a) shall have occurred and be continuing, the Grantor Trustee
subject to reasonable approval of the Certificate Insurer alone shall have the
power to make such appointment. No co-Grantor Trustee or separate Grantor
Trustee hereunder shall be required to meet the terms of eligibility as a
successor Grantor Trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Grantor Trustee or separate Grantor Trustee shall be
required under Section 10.09.
Every separate Grantor Trustee and co-Grantor Trustee shall, to the
extent permitted, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred
or imposed upon the Grantor Trustee shall be
conferred or imposed upon and exercised or performed
by the Grantor Trustee and such separate Grantor
Trustee or co-Grantor Trustee jointly (it being
understood that such separate Grantor Trustee or
co-Grantor Trustee is not authorized to act separately
without the Grantor Trustee joining in such act),
except to the extent that under any law of any
jurisdiction in which any particular act or acts are
to be performed (whether as Grantor Trustee hereunder
or as successor to the Servicer hereunder), the
Grantor Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such
rights, powers, duties and obligations (including the
holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Grantor Trustee
or co- Grantor Trustee, but solely at the direction of
the Grantor Trustee;
(ii) No co-Grantor Trustee hereunder shall be held personally
liable by reason of any act or omission of any other
co-Grantor Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Grantor Trustee
acting jointly may at any time accept the resignation of or
remove any separate Grantor Trustee or co-Grantor Trustee.
Any notice, request or other writing given to the Grantor Trustee
shall be deemed to have been given to each of the then separate Grantor Trustees
and co-Grantor Trustees, as effectively as if given to each of them. Every
instrument appointing any separate Grantor Trustee or co-Grantor Trustee shall
refer to this Agreement and the conditions of this Section 10.14. Each separate
Grantor Trustee and co-Grantor 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 Grantor 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
Grantor Trustee. Every such instrument shall be filed with the Grantor Trustee
and a copy thereof given to the Servicer.
Any separate Grantor Trustee or co-Grantor Trustee may, at any time,
constitute the Grantor 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
Grantor Trustee or co- Grantor Trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Grantor Trustee, to the extent
permitted by law, without the appointment of a new or successor Grantor Trustee.
END OF ARTICLE X
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.01 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Depositor, the Certificate
Insurer or the Owners to the Grantor Trustee to take any action under any
provision of this Agreement, the Depositor, the Certificate Insurer or the
Owners, as the case may be, shall furnish to the Grantor Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02 FORM OF DOCUMENTS DELIVERED TO THE GRANTOR TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Grantor
Trustee may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such Authorized Officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
of an Authorized Officer of the Grantor Trustee or any opinion of counsel may be
based, insofar as it relates to factual matters upon a certificate or opinion
of, or representations by, one or more Authorized Officers of the Depositor, or
the Servicer, stating that the information with respect to such factual matters
is in the possession of the Depositor or the Servicer, unless such Authorized
Officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any opinion of counsel may also be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Grantor Trustee, stating that the information with
respect to such matters is in the possession of the Grantor Trustee, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous. Any opinion of counsel may be based on the written opinion of other
counsel, in which event such opinion of counsel shall be accompanied by a copy
of such other counsel's opinion and shall include a statement to the effect that
such counsel believes that such counsel and the Grantor Trustee may reasonably
rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Grantor Trustee. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Owners signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Grantor Trustee
and the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Grantor Trustee or the Trust in reliance thereon,
whether or not notation of such action is made upon such Certificates.
Section 11.04 NOTICES, ETC. TO GRANTOR TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Grantor Trustee by any
Owner, the Depositor or the Certificate Insurer shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Grantor Trustee at the Corporate Trust Office.
Section 11.05 NOTICES AND REPORTS TO OWNERS; WAIVER OF NOTICES.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Grantor Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Grantor Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06. RULES BY GRANTOR TRUSTEE.
The Grantor Trustee may make reasonable rules for any meeting of
Owners.
Section 11.07. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.09 BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 11.10 LEGAL HOLIDAYS.
In any case where the date of any Payment Date, any other date on
which any distribution to any Owner is proposed to be paid, or any date on which
a notice is required to be sent to any Person pursuant to the terms of this
Agreement shall not be a Business Day, then (notwithstanding any other provision
of the Certificates or this Agreement) payment or mailing need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made or mailed on the nominal date of any such Payment
Date, or such other date for the payment of any distribution to any Owner or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 11.11 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New York,
and any appellate court from any thereof, in any action, suit or proceeding
brought against it or in connection with this Agreement or any of the related
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. The parties hereto agree that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. To the extent permitted by applicable law, the parties
hereto hereby waive and agree not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the subject
matter thereof may not be litigated in or by such courts.
(c) Each of the Depositor and the Servicer hereby irrevocably appoints
and designates the Grantor Trustee as its true and lawful attorney and duly
authorized agent for acceptance of service of legal process with respect to any
action, suit or proceeding set forth in paragraph (b) hereof. The Servicer
agrees that service of such process upon the Grantor Trustee shall constitute
personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, the Certificate Insurer or the Servicer or any
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to the
Class A-2 Floating Certificate in the courts of any jurisdiction.
Section 11.12 COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 USURY.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Grantor Trustee acting on behalf of the Trust and the Owner
receiving such excess payment shall promptly, upon discovery of such error or
upon notice thereof from the Grantor Trustee on behalf of the Trust, refund the
amount of such excess or, at the option of such Owner, apply the excess to the
payment of principal of such Certificate, if any, remaining unpaid. In addition,
all sums paid or agreed to be paid to the Grantor Trustee for the benefit of
Owners of Certificates for the use, forbearance or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such Certificates.
Section 11.14 AMENDMENT.
(a) The Grantor Trustee, the Depositor, and the Servicer may, at any
time and from time to time, and without notice to or the consent of the Owners
but with the consent of the Certificate Insurer amend this Agreement, subject to
the provisions of Section 11.17 and the Grantor Trustee shall consent to such
amendment, for the purpose of (i) curing any ambiguity, correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or adding provisions hereto which are not inconsistent with
the provisions hereof; (ii) upon receipt of an opinion of counsel experienced in
federal income tax matters to the effect that no entity-level tax will be
imposed on the Trust, removing the restriction on transfer set forth in Section
5.08(b) hereof or (iii) complying with the requirements of the Code and the
regulations proposed or promulgated thereunder or (iv) for any other purpose,
provided that in the case of this clause (iv) such amendment shall not adversely
affect in any material respect any Owner. Any such amendment shall be deemed not
to adversely affect in any material respect any Owner if there is delivered to
the Grantor Trustee written notification from each Rating Agency that such
amendment will not cause such Rating Agency to reduce its then current rating
assigned to the Certificates without regard to the Certificate Insurance Policy.
Notwithstanding anything to the contrary herein, no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Owner without the consent of the Owner of such
Certificate, or (b) which affects in any manner the terms or provisions of the
Certificate Insurance Policy.
(b) Promptly after the execution of any such amendment, the Grantor
Trustee shall furnish written notification of the substance of such amendment to
the Certificate Insurer and each Owner in the manner set forth in Section 11.05,
and to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any
amendments to this Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Grantor Trustee is hereby appointed Paying Agent. The Depositor
may, subject to the eligibility requirements for the Grantor Trustee set forth
in Section 10.08 hereof, appoint one or more other Paying Agents or successor
Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Grantor Trustee.
Each such Paying Agent other than the Grantor Trustee shall execute
and deliver to the Grantor Trustee an instrument in which such Paying Agent
shall agree with the Grantor Trustee, subject to the provisions of Section 6.02,
that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Grantor
Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to such Owners or otherwise disposed of as
herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Grantor Trustee may at any time resign
and be discharged of the duties and obligations created by this Agreement by
giving at least sixty (60) days written notice to the Grantor Trustee. Any such
Paying Agent may be removed at any time by an instrument filed with such Paying
Agent and signed by the Grantor Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Grantor Trustee such Paying Agent shall pay over, assign and deliver
any moneys held by it as Paying Agent to its successor, or if there be no
successor, to the Grantor Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Grantor Trustee shall notify the Certificate Insurer and the Owners
by mailing notice thereof at their addresses appearing on the Register.
Section 11.16 [RESERVED]
Section 11.17 ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Grantor Trustee shall not, without having obtained an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
to the effect that such transaction does not result in a tax imposed on the
Trust (i) sell any assets in the Trust Estate, (ii) accept any contribution of
assets after the Startup Day or (iii) agree to any modification of this
Agreement.
Section 11.18 [RESERVED]
Section 11.19 THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. At such time as the Certificates and any
Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20. [RESERVED]
Section 11.21. THIRD PARTY RIGHTS.
The Grantor Trustee, the Depositor and the Owners agree that the
Certificate Insurer shall be deemed a third-party beneficiary of this Agreement
as if it were a party hereto.
Section 11.22. NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Grantor Trustee: Manufacturers and Traders Trust Company One M&T
Plaza Buffalo, New York 14203-2399 Tel: (716) 842-5589 Fax: (716) 842-4474
Attention: Corporate Trust Administration
The Depositor: ContiSecurities Asset Funding Corp.
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel
Tel: (212) 207-2822
Fax: (212) 207-5251
The Servicer: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President
and Chief Counsel
Tel: (215) 347-3000
Fax:
The Certificate
Insurer: MBIA Insurance Corporation
113 King St.
Armonk, NY 10504
Attention: Insured Portfolio
Management - SF (ContiMortgage
Grantor Trust 1997-A)
Tel: (914) 273-4545
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Tel: (800) 753-4824
Fax: (212) 376-6964
Standard & Poor's: Standard & Poor's
26 Broadway, 15th Floor
New York, New York 10004
Tel: (212) 208-8000
Fax: (212) 412-0224
Attention: Manager of Structured
Finance Operations Group
Underwriters: Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Bear, Stearns & Co.
245 Park Avenue, 4th Floor
New York, New York 10167
Tel: (212) 272-3311
Fax: (212) 272-7294
ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel, Chief
Financial Officer and Chief
Operating Officer
Tel: (212) 207-2822
Fax: (212) 207-5251
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Asset Finance
Tel: (212) 325-2000
Fax: (212) 325-8261
Merrill Lynch, Pierce, Fenner &
Smith, Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Tel: (212) 449-1000
Fax: (212) 449-9015
Morgan Stanley Dean Witter
1585 Broadway
New York, New York 10036
Tel: (212) 761-4000
Fax: (212) 761-0782
Nomura Securities International, Inc.
2 World Financial Center Building B
21st Floor
New York, New York 10281-1198
Tel: (212) 667-9087
Fax: (212) 667-1391
Attention: Helaine Hebble
Owners: As set forth in the Register.
Others: Any notice to the Depositor or the
Servicer shall also be furnished
to:
ContiTrade Services L.L.C.
Chief Counsel
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
END OF ARTICLE XI
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Grantor Trustee have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ John A. Banu
Title: Authorized Signatory
By: /s/ Mary E. Brogdan
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION, as
Servicer
By: /s/ Daniel J. Egan
Title: Senior Vice President
By: /s/ Jerry Schiano
Title: Senior Vice President
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Grantor Trustee
By: /s/ Neil B. Witoff
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 23rd day of December 1997, before me personally came John A. Banu,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at 277 Park Avenue, NY, NY; that he/she is an Authorized Signatory of
ContiSecurities Asset Funding Corp., a Delaware Corporation; and that he/she
signed his/her name thereto by order of the respective Boards of Directors of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 23rd day of December 1997, before me personally came Mary Bogdan, to
me known, who, being by me duly sworn, did depose and say that he/she resides at
277 Park Ave NY, NY; that he/she is a Authorized Signatory of ContiSecurities
Asset Funding Corp., a Delaware Corporation; and that he/she signed his/her name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and a affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the 23rd day of December, 1997, before me personally came Daniel J.
Egan, to me known, who, being by me duly sworn, did depose and say that he/she
resides at Montgomery County; that he/she is a Senior Vice President of
ContiMortgage Corporation, a Delaware Corporation; and that he signed his name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF PENNSYLVANIA )
):ss
COUNTY OF MONTGOMERY )
On the 23rd day of December, 1997, before me personally came Jerry Schiano,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at Chester County; that he/she is a Senior Vice President of ContiMortgage
Corporation, a Delaware Corporation; and that he signed his name thereto by
order of the respective Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first written.
NOTARIAL SEAL
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 23rd day of December, 1997, before me personally came Neil B.
Witoff, to me known, who, being by me duly sworn did depose and say that he
resides at Clarence, New York; that he is an Assistant Vice President of
Manufacturers and Traders Trust Company, the New York banking corporation
described in and that executed the above instrument as Grantor Trustee; and that
he signed his name thereto by order of the Board of Directors of said New York
banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
