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As filed with the Securities and Exchange Commission on October 16, 1998
Registration No. 333-54027
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 4
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
CHEC ASSET RECEIVABLE CORPORATION
(Depositor)
(Exact name of Registrant as Specified in its Charter)
Nevada Applied For
(State of incorporation) (I.R.S. Employer Identification Number)
-------------------------
2728 North Harwood
Dallas, Texas 75201
(214) 981-5000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------------
Anne Duffield, Esq.
2728 North Harwood
Dallas, Texas 75201
(214) 981-5045
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------
Copy to:
Reed D. Auerbach, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
--------------------------
Approximate date of commencement of proposed
sale to the public: From time to time after the
effective date of this Registration Statement.
--------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, please check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
Proposed maximum Proposed Amount
Title of each class of securities to be Amount to offering price per maximum aggregate of registration
registered be registered (1) unit (1) offering price (1) fee(2)(3)
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<S> <C> <C> <C> <C>
Asset-Backed Notes.......................... $1,000,000,000 100% $1,000,000,000 $295,000.00
- --------------------------------------------------------------------------------------------------------------------------
Asset-Backed Certificates................... $ 500,000,000 100% $ 500,000,000 $147,500.00
==========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(a) under the Securities Act of 1933.
(3) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
SEC Registration Fee ......................... 88,500.00
Printing and Engraving ....................... 50,000.00
Trustee's Fees ............................... 20,000.00
Legal Fees and Expenses ...................... 125,000.00
Blue Sky Fees and Expenses ................... 15,000.00
Accountant's Fees and Expenses ............... 15,000.00
Rating Agency Fees ........................... 25,000.00
Miscellaneous Fees and Expenses .............. 10,000.00
--------------
Total Expenses ........................... 348,500.00
==============
* To be filed by Amendment.
Item 15. Indemnification of Directors and Officers
Article 12 of the Articles of Incorporation of the Seller provides for the
indemnification of any person who is or was an officer or director of the Seller
with respect to actions taken or omitted by such person in any capacity in which
such person serves or served the Issuer, to the full extent authorized or
permitted by the Nevada Private Corporation Law. Reference is made to the
Articles of Incorporation filed as an exhibit to this Registration Statement for
the complete text of Article 12 of the Articles of Incorporation.
The Registrant maintains liability insurance policies such that each of the
directors and officers of the Registrant is insured against certain liabilities
which they might incur in their capacity as a director or officer.
The Underwriting Agreement filed as Exhibit 1.1 hereto provides for
indemnification by the Underwriters of the Registrant and its directors,
officers and controlling persons for certain liabilities arising under the
Securities Act of 1933 or otherwise.
The general effect of any statute, charter provision, by-law, contract or other
arrangement under which any controlling person, director or officer of the
Registrant is insured or indemnified against liability when acting on behalf of
the Registrant is to reduce the deterrent effect for such indemnified
individuals for violating the Securities Act of 1933.
The Registrant is aware that the Securities and Exchange Commission takes the
position that indemnification of directors and officers is against public policy
and is therefore unenforceable.
Item 16. Exhibits
1.1. Form of Underwriting Agreement*
3.1. Articles of Incorporation of CHEC Asset Receivable Corporation*
3.2. By-laws of CHEC Asset Receivable Corporation*
4.1. Form of Pooling and Servicing Agreement*
4.2. Form of Certificate (included as part of Exhibit 4.1) *
4.3 Form of Indenture*
4.4 Form of Trust Agreement*
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5.1. Opinion of Stroock & Stroock & Lavan LLP with respect to legality*
8.1. Opinion of Stroock & Stroock & Lavan LLP with respect to federal income
tax matters (contained in Exhibit 5.1) *
10.1 Form of Sale and Servicing Agreement*
23.1. Consent of Stroock & Stroock & Lavan LLP (contained in Exhibit 5.1) *
24.1. Powers of Attorney (included as part of signature page)*
25.1 Statement of Eligibility and Qualification of Indenture Trustee
(Form T-1) **
- -------------------------
* Previously filed.
** To be filed.
Item 17. Undertakings
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), the information
omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide
offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(4) For purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(5) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
(6) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a) (3) of
the Securities Act of 1933;
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(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(7) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(8) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CHEC Asset
Receivable Corporation certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3, it believes that the
securities rating requirement for use of Form S-3 will be met by the time of
sale of the securities and it has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the State
of Texas on October 15, 1998.
CHEC Asset Receivable Corporation
By: *
------------------------------
Name: Anthony H. Barone
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
* President and Director October 15, 1998
- ------------------------- (principal executive officer)
Anthony H. Barone
* Executive Vice President October 15, 1998
- ------------------------- (principal financial officer
Bill Cukr and principal accounting
officer)
* Director October 15, 1998
- -------------------------
Stephen Janowsky
/s/ Anne E. Duffield Director October 15, 1998
- -------------------------
Anne E. Duffield
*By: /s/ Anne E. Duffield
---------------------
Anne E. Duffield
Attorney-in-fact
October 15, 1998
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INDEX TO EXHIBITS
Exhibit
Number Exhibit Page
- ------ ------- ----
1.1. Form of Underwriting Agreement*
3.1. Articles of Incorporation of CHEC Asset
Receivable Corporation*
3.2. By-laws of CHEC Asset Receivable Corporation*
4.1. Form of Pooling and Servicing Agreement*
4.2. Form of Certificate (included as part of
Exhibit 4.1)*
4.3. Form of Indenture*
4.4 Form of Trust Agreement*
5.1. Opinion of Stroock & Stroock & Lavan LLP with
respect to legality*
8.1 Opinion of Stroock & Stroock & Lavan LLP with
respect to federal income tax matters (contained
in Exhibit 5.1)*
10.1 Form of Sale and Servicing Agreement*
23.1. Consent of Stroock & Stroock & Lavan LLP
(contained in Exhibit 5.1)*
24.1. Powers of Attorney (included as part of
signature page)*
25.1. Statement of Eligibility and Qualification
of Indenture Trustee (Form T-1)**
- ----------
* Previously filed.
** To be filed.
1
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Exhibit 1.1
ASSET-BACKED CERTIFICATES, SERIES 199_-_
$________ Class A-1 Certificates ___% Pass-Through Rate
$________ Class A-2 Certificates ___% Pass-Through Rate
$________ Class A-3 Certificates ___% Pass-Through Rate
$________ Class A-4 Certificates ___% Pass-Through Rate
$________ Class A-5 Certificates ___% Pass-Through Rate
$________ Class A-6 Certificates Adjustable Rate
CHEC Asset Receivable Corporation
Depositor
Centex Credit Corporation d/b/a Centex Home Equity Corporation
Servicer
FORM OF UNDERWRITING AGREEMENT
------, -----
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- --------------
- --------------
Ladies and Gentlemen:
CHEC Asset Receivable Corporation, a Nevada corporation ("Depositor"),
proposes to sell $_______ aggregate principal amount of Asset-Backed
Certificates, Series 199_-_, of the classes described in Schedule I hereto (the
"Certificates") to be issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") to be dated as of _____ 1, 199_ (the "Cut-Off
Date"), among the Depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation y (the "Servicer"), _________, a ________, as trustee (the
"Trustee"), and proposes to sell the Certificates to you (the "Underwriter").
The assets of the Trust Fund will include, among other things, a pool of
fixed-rate Home Equity Loans secured primarily by first and second liens on
one-to-four family dwellings and units in condominium developments. The
Certificates are described more fully in a registration statement which the
Seller has furnished to you. This is to confirm the arrangements with respect to
your purchase of the Certificates. To the extent not defined herein, capitalized
terms used herein have the meanings assigned in the Pooling and Servicing
Agreement.
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1. Representations and Warranties. Each of the Depositor and the Seller and
warrants to, and agrees with, the Underwriter as set forth below in this Section
1. Certain terms used in this Section 1 are defined in paragraph (c) hereof.
(a) The Seller meets the requirements for the use of Form S-3 under
the Securities Act of 1933, as amended (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file no. 333-_______), including a related preliminary base
prospectus and a preliminary form of prospectus supplement, on Form S-3 for
the registration under the Act of the offering and sale of asset-backed
notes and asset-backed certificates, including the Certificates. The Seller
may have filed one or more amendments thereto, including a preliminary
basic prospectus and preliminary prospectus supplement, each of which has
previously been furnished to you. The Seller will next file with the
Commission either (i) prior to effectiveness of such registration
statement, a further amendment thereto (including the form of final base
prospectus and final form of prospectus supplement), (ii) after
effectiveness of such registration statement, a final base prospectus and a
final prospectus supplement relating to the Certificates in accordance with
Rules 430A and 424(b)(1) or (4) or (iii) a final base prospectus and final
prospectus supplement relating to the Certificates in accordance with Rules
415 and 424(b)(2) or (5). In the case of clauses (ii) and (iii) above, the
Seller has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in the Final Prospectus
with respect to the Certificates and the offering thereof. As filed, such
amendment and form of final prospectus, or such final prospectus, as the
case may be, shall include all Rule 430A Information together with all
other such required information with respect to the Certificates and the
offering thereof and, except to the extent the Underwriter shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest preliminary basic prospectus and preliminary prospectus supplement,
if any, that have previously been furnished to you) as the Seller has
advised you, prior to the Execution Time, will be included or made therein.
If the Registration Statement contains the undertaking specified in
Regulation S-K Item 512(a), the Registration Statement, at the Execution
Time, meets the requirements set forth in Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Final Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Exchange Act and the respective
rules thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective Date,
the Final Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date (as defined in Section 3 below) the Final Prospectus (together
with any supplement thereto)
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will not, include 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, however, that neither the Depositor nor the Seller makes any
representations or warranties as to the information contained in or omitted
from (x) the Registration Statement or the Final Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Seller by or on behalf of the Underwriter
specifically for inclusion in the Registration Statement or the Final
Prospectus (or any supplement thereto) and (y) any Derived Information set
forth in the Computational Materials (each as defined in Section 9 below),
or in any amendment thereof or supplement thereto, incorporated by
reference in such Registration Statement or such Final Prospectus (or any
amendment thereof or supplement thereto) except to the extent such Derived
Information results from an error or omission in any Seller-Provided
Information (as defined in Section 9 below).
(c) For purposes of this Agreement, "Effective Time" means the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission, and "Effective Date" means the date of the Effective Time and
each date after the date hereof on which a document incorporated by
reference in the Registration Statement is filed. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by the
parties hereto. Such registration statement, as amended at the Effective
Time, including all information deemed to be a part of such registration
statement as of the Effective Time pursuant to Rule 430A(b) under the Act,
the exhibits thereto and any material and documents incorporated by
reference therein, is hereinafter referred to as the "Registration
Statement." "Basic Prospectus" shall mean the basic prospectus referred to
in paragraph (a) above contained in the Registration Statement at the
Effective Date; provided, that, if the Basic Prospectus used in connection
with any Preliminary Prospectus Supplement or the Final Prospectus shall
differ from the Basic Prospectus contained in the Registration Statement at
the Effective Date, then "Basic Prospectus" shall mean the Basic Prospectus
included with such Preliminary Prospectus Supplement or the Final
Prospectus, as filed pursuant to Rule 424(b). "Preliminary Prospectus
Supplement" shall mean a preliminary prospectus supplement, if any, to the
Basic Prospectus which describes the Certificates and the offering thereof
and is used prior to the filing of the Final Prospectus. "Final Prospectus"
shall mean the prospectus supplement relating to the Certificates that is
first filed pursuant to Rule 424(b) after the Execution Time, together with
the Basic Prospectus or, if no filing pursuant to Rule 424(b) is required,
shall mean the prospectus supplement relating to the Certificates,
including the Basic Prospectus, included in the Registration Statement at
the Effective Date including in each such case any material and documents
incorporated by reference therein. "Rule 430A Information" means
information with respect to the Certificates and the offering of the
Certificates permitted to be omitted from the Registration Statement when
it becomes effective pursuant to Rule 430A. "Rule 415," "Rule 424," "Rule
430A" and "Regulation S-K" refer to such rules or regulations under the
Act. Any reference herein to the Registration Statement, any Preliminary
Prospectus Supplement or the Final Prospectus shall be deemed to refer to
and include the material and documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were
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filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or before the Effective Date of the Registration Statement or the
issue date of the Basic Prospectus, such Preliminary Prospectus Supplement
or the Final Prospectus, as the case may be; and any reference herein to
the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Prospectus
Supplement or the Final Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the Effective Date
of the Registration Statement, or the issue date of the Basic Prospectus,
any Preliminary Prospectus Supplement or the Final Prospectus, as the case
may be, deemed to be incorporated therein by reference.
(d) No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required to be obtained or made
by the Depositor or the Seller for the consummation of the transactions
contemplated by this Agreement except such as have been obtained, made
under the Act or as may be required under state securities laws.
(e) Niether of the Depositor or the Seller is in violation of its
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any agreement or
instrument to which it is a party or by which it or its properties is bound
that would have a material adverse effect on the transactions contemplated
herein or in the Pooling and Servicing Agreement. The execution, delivery
and performance of this Agreement and the Pooling and Servicing Agreement
and the issuance and sale of the Certificates and compliance with the terms
and provisions thereof will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any statute,
rule, regulation or order of any governmental agency or body or any court
having jurisdiction over any of the Depositor or the Seller or any of their
properties or any agreement or instrument to which any of them is a party
or by which any of them is bound or to which any of the properties of any
of them is subject or the charter or by-laws of any of them, and each of
them has full power and authority to authorize, issue and sell the Home
Equity Loans and the Certificates as contemplated by this Agreement and to
enter into this Agreement and the Pooling and Servicing Agreement.
(f) The computer tape of the Home Equity Loans created as of _____,
____ and made available to you by the Depositor and the Seller, was
complete and accurate as of the date thereof and includes a description of
the Home Equity Loans that are described in a schedule to the Pooling and
Servicing Agreement.
(g) This Agreement has been duly authorized, executed and delivered by
each of the Depositor and the Seller.
(h) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement and the Pooling and
Servicing Agreement or the execution, delivery and sale of the Certificates
have been or will be paid at or prior to the Closing Date, to the extent
then due and payable.
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(i) (a) Immediately prior to the assignment of the Home Equity Loans
to the Seller as contemplated by the Pooling and Servicing Agreement, each
Originator (i) will have good title to, and will be the sole owner of, each
Home Equity Loan it has conveyed to the Seller and the other property
purported to be transferred by it to the Seller pursuant to the Pooling and
Servicing Agreement free and clear of any pledge, mortgage, lien, security
interest or other encumbrance (collectively, "Liens"), (ii) will not have
assigned to any person any of its right, title or interest in such Home
Equity Loans and (iii) will have the power and authority to sell such Home
Equity Loans and property to the Seller, and upon the execution and
delivery of the Pooling and Servicing Agreement by the parties thereto, the
Seller will have acquired all of the Originators' right, title and interest
in and to such Home Equity Loans and property free and clear of any Lien.
(b) Immediately prior to the assignment of the Home Equity Loans to
the Trustee as contemplated by the Pooling and Servicing Agreement, the
Seller (i) will have good title to, and will be the sole owner of, each
Home Equity Loan and the other property purported to be transferred by it
to the Trustee pursuant to the Pooling and Servicing Agreement free and
clear of any pledge, mortgage, lien, security interest or other encumbrance
(collectively, "Liens"), (ii) will not have assigned to any person any of
its right, title or interest in such Home Equity Loans and (iii) will have
the power and authority to sell such Home Equity Loans and property to the
Trustee, and upon the execution and delivery of the Pooling and Servicing
Agreement by the parties thereto, the Trustee will have acquired all of the
Seller's right, title and interest in and to such Home Equity Loans and
property free and clear of any Lien.
(j) All actions required to be taken by the Depositor and the Seller
as a condition to the offer and sale of the Certificates as described
herein or the consummation of any of the transactions described in the
Final Prospectus have been or, prior to the Closing Date, will be taken.
(k) The representations and warranties of each of the Depositor, the
Seller and the Servicer in (or incorporated in) the Pooling and Servicing
Agreement and made in any Officers' Certificate of the Depositor, the
Seller and the Servicer delivered pursuant to the Pooling and Servicing
Agreement, will be true and correct at the time made and on and as of the
Closing Date as if set forth herein.
(l) The Home Equity Loans conveyed to the Trust Fund had aggregate
outstanding balances determined as of the Cut-off Date in the amount set
forth in the Final Prospectus.
(m) Niether the Depositor nor the Seller will grant, assign, pledge or
transfer to any Person a security interest in, or any other right, title or
interest in, the Home Equity Loans, except as provided in the Pooling and
Servicing Agreement, and each will take all action necessary in order to
maintain the security interest in the Home Equity Loans granted pursuant to
the Pooling and Servicing Agreement.
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(n) There are no actions, proceedings or investigations pending, or to
the best knowledge of either the Depositor or the Seller, threatened
against the Depositor, the Seller or the Servicer before any court or
before any governmental authority, arbitration board or tribunal which, if
adversely determined, could materially and adversely affect, either in the
individual or in the aggregate, the financial position, business,
operations or prospects of the Seller and the Servicer.
(o) Under generally accepted accounting principles, the Seller will
record its transfer of the Home Equity Loans to the Depositor and the
Depositor will record its transfer of Home Equity Loans to the Trustee,
both pursuant to the Pooling and Servicing Agreement as a sale of the Home
Equity Loans.
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Depositor agrees
to sell to the Underwriter, and the Underwriter agrees to purchase from the
Depositor, $______ aggregate principal amount of the Certificates, in the
principal amounts and at the purchase prices set forth in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Certificates shall
be made at 10:00 a.m. New York time, on _________, ____, at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038, or
such later time or date not later than five business days thereafter as the
Underwriter shall designate (such date and time of delivery and payment for the
Certificates being herein called the "Closing Date"). Delivery of 5 (five)
global certificates, each certificate evidencing the full principal amount of
each of the classes of the Certificates, shall be made to the Underwriter,
against payment by the Underwriter of the purchase price thereof to the
Depositor by wire transfer in immediately available funds. The global
certificates to be so delivered to the Underwriter shall be registered in the
name of Cede & Co., as nominee for The Depository Trust Company ("DTC"). The
interest of beneficial owners of the Certificates will be represented by book
entries on the records of DTC and participating members thereof. Definitive
certificates evidencing the Certificates will be available only under limited
circumstances.
The Depositor agrees to have the Certificates available for inspection,
checking and packaging by the Underwriter in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
4. Offering by Underwriter. It is understood that the Underwriter proposes
to offer the Certificates for sale to the public (which may include selected
dealers) as set forth in the Final Prospectus.
5. Agreements. Each of the Seller and the Depositor agrees with the
Underwriter that:
(a) The Depositor will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, to become effective. Prior to the termination of the offering of
the Certificates, the Depositor will not file any amendment of the
Registration Statement or supplement to the Final Prospectus or any
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Preliminary Prospectus Supplement unless the Depositor has furnished you a
copy for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Final Prospectus is
otherwise required under Rule 424(b), the Depositor will cause the Final
Prospectus, properly completed, and any supplement thereto to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to the
Underwriter of such timely filing. The Depositor will promptly advise the
Underwriter (i) when the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, shall have become effective,
(ii) when the Final Prospectus, and any supplement thereto shall have been
filed with the Commission pursuant to Rule 424(b), (iii) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (iv) of
any request by the Commission for any amendment of the Registration
Statement or supplement to the Final Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi) of
the receipt by the Depositor or the Trust of any notification with respect
to the suspension of the qualification of the Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and will use their best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Final Prospectus to comply
with the Act or the Exchange Act or the respective rules thereunder, the
Depositor promptly will (i) prepare and file with the Commission, subject
to the second sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (ii) supply any supplemented Final Prospectus to you in such
quantities as you may reasonably request.
(c) The Depositor will furnish to the Underwriter and counsel for the
Underwriter, without charge, copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by
the Underwriter or a dealer may be required by the Act, as many copies of
any Preliminary Prospectus Supplement and the Final Prospectus and any
supplement thereto as the Underwriter may reasonably request. The Depositor
will pay the expenses of printing or other production of all documents
relating to the offering.
(d) The Depositor will cooperate, when and if requested by the
Underwriter at Depositor's sole expense, in the qualification of the
Certificates for sale under the laws of
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such jurisdictions as the Underwriter may designate and will maintain such
qualifications in effect so long as required for the distribution of the
Certificates; provided, however, that the Depositor shall not be required
to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now so
subject.
(e) The Depositor will file with the Commission such reports on Form
SR as may be required pursuant to Rule 463 under the Act.
(f) As soon as practicable, the Depositor will cause the Trust Fund to
make generally available to the Certificateholders and to the Underwriter
an earnings statement or statements of the Trust Fund which will satisfy
the provisions of Section 11(a) of the Act and will satisfy the
requirements of Rule 158.
(g) The Depositor will cause any Computational Materials (as defined
in Section 9 hereof) with respect to the Certificates which are delivered
by an Underwriter to the Depositor pursuant to Section 9 hereof to be filed
with the Commission on a Current Report on Form 8-K on or before the date
of the filing of the Final Prospectus pursuant to Rule 424.
(h) The Seller and the Depositor will cooperate with the Underwriter
and use their best efforts to permit the Certificates to be eligible for
clearance and settlement through The Depository Trust Company.
(i) For a period from the date of this Agreement until the retirement
of the Certificates, the Servicer will deliver to you the monthly servicing
report, the annual statements of compliance and the annual independent
certified public accountants' reports furnished to the Trustee pursuant to
the Pooling and Servicing Agreement, as soon as such statements and reports
are furnished to the Trustee.
(j) So long as any of the Certificates is outstanding, the
Representative will furnish to you (i) as soon as practicable after the end
of the fiscal year all documents required to be distributed to holders of
Certificates or filed with the Commission pursuant to the Exchange Act or
any order of the Commission thereunder and (ii) from time to time, any
other information concerning the Depositor filed with any government or
regulatory authority that is otherwise publicly available, as you may
reasonably request.
(k) To the extent, if any, that the rating provided with respect to
the Certificates by _____________ ("_____") or ______________ ("___" and
together with _____, the "Rating Agencies") is conditional upon the
furnishing of documents or the taking of any actions by the Depositor and
the Seller shall furnish such documents and take such actions.
(l) Until 30 days following the Closing Date, neither the Depositor,
the Seller nor any trust or other entity originated, directly or
indirectly, by the Seller or the will, without the prior written consent of
the Underwriter, offer, sell or contract to sell, or
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otherwise dispose of, directly or indirectly, or announce the offering of,
any asset-backed securities collateralized by Home Equity Loans (other than
the Certificates).
6. Conditions to the Obligations of the Underwriter. The obligations of the
Underwriter to purchase the Certificates shall be subject to the accuracy of the
representations and warranties on the part of the Depositor and the Seller
contained herein as of the Execution Time and the Closing Date, to the accuracy
of the statements of the Representative and the Seller made in any certificates
pursuant to the provisions hereof, to the performance by each of the
Depositorative and the Seller of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Underwriter agrees in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 p.m. New York City time, on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 p.m. New
York City time on such date or (ii) 12:00 noon on the business day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 p.m. New York City time on such
date; if filing of the Final Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Final Prospectus, and any such
supplement, shall have been filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) The Underwriter shall have received the opinion of
_______________, counsel for the Seller, the Servicer and the Depositor,
dated the Closing Date, to the effect that:
(i) Each of the Depositor, the Seller and the Servicer is a
corporation duly organized and validly existing under the laws of the
state of its incorporation with all corporate power and authority
necessary to own or hold its properties, to conduct its business as
described in the Final Prospectus and to enter into and perform its
obligations under this Agreement and the Pooling and Servicing
Agreement and is duly qualified to do business where its ownership or
lease of property or the conduct of its business requires such
qualification.
(ii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by, and constitutes a legal, valid
and binding instrument enforceable against each of the Depositor, the
Seller and the Servicer in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws affecting creditors' rights
generally from time to time in effect) (such opinion may also state
that the enforceability of the obligations of the Depositor, the
Seller and the Servicer is subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)).
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(iii) The Certificates and the Class R Certificates have been
duly authorized and, when executed and authenticated in accordance
with the provisions of the Pooling and Servicing Agreement and
delivered to and paid for by the Underwriter pursuant to this
Agreement, will be validly issued and outstanding and will be entitled
to the benefits of the Pooling and Servicing Agreement.
(iv) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Depositor,
the Seller and the Servicer or any of their subsidiaries, of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Final Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Final Prospectus, or to be
filed as an exhibit, which is not described or filed as required.
(v) The Certificates and the Pooling and Servicing Agreement
conform in all material respects to the descriptions thereof contained
in the Registration Statement and the Final Prospectus.
(vi) The Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, any Preliminary
Prospectus Supplement, and the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened, and the Registration
Statement and the Final Prospectus (other than Computational
Materials, the financial statements and other financial and
statistical information contained therein as to which such counsel
need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act, the Exchange Act and the
respective rules thereunder; and such counsel has no reason to believe
that at the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Final Prospectus, at the date
thereof or at the Closing Date, included or includes any untrue
statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (other
than Computational Materials, the financial statements and other
financial and statistical information contained therein as to which
such counsel need express no opinion).
(vii) This Agreement has been duly authorized, executed and
delivered by the Depositor and the Seller.
(viii) The statements in the Registration Statement and the Final
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Prospectus under the headings "Summary--Federal Income Tax
Consequences", "Federal Income Tax Consequences" and "ERISA
Considerations" in the prospectus supplement and "Summary--Federal
Income Tax Consequences", "Summary--ERISA Considerations", "Federal
Income Tax Consequences", "State Tax Consequences" and "ERISA
Considerations" in the basic prospectus, to the extent that they
constitute matters of law or legal conclusions with respect thereto,
are correct in all material respects.
(ix) The statements in the Final Prospectus under the heading
"Certain Legal Aspects of the Home Equity Loans" in the basic
prospectus, to the extent that they constitute matters of law or legal
conclusions with respect thereto, provide a fair and accurate summary
of such law or conclusions.
(x) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and
neither the Depositor nor the Trust Fund is required to be registered
under the Investment Company Act of 1940, as amended.
(xi) The trust fund as described in the Final Prospectus and the
Pooling and Servicing Agreement will qualify as a "real estate
mortgage investment conduit" ("REMIC") within the meaning of Section
860D of the Internal Revenue Code of 1986, as amended (the "Code"),
the Certificates will be treated as "regular interests" in such REMIC
and the Class R Certificates will be treated as the single class of
"residual interests" in such REMIC, assuming: (i) an election is made
to treat the trust funds as a REMIC, (ii) compliance with the Pooling
and Servicing Agreement and (iii) compliance with changes in the law,
including any amendments to the Code or applicable Treasury
regulations thereunder.
(xii) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein except such as have been obtained
under the Act, such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Certificates by the Underwriter, and such other approvals (specified
in such opinion) as have been obtained.
(xiii) Neither the execution and delivery of the Pooling and
Servicing Agreement, the issue and sale of the Certificates, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof or of the Pooling and Servicing
Agreement will conflict with, result in a breach of, or constitute a
default under the charter or by-laws of the Depositor, the Seller or
the Servicer or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Depositor, the
Servicer or the Seller is a party or bound, or, to the knowledge of
such counsel, any law, order or regulation applicable to the
Depositor, the Servicer or the Seller of any court, regulatory body,
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administrative agency, governmental body or arbitrator having
jurisdiction over the Depositor, the Servicer or the Seller.
(xiv) to the best knowledge of such counsel and except as set
forth in the Prospectus, no default exists and no event has occurred
which, with notice, lapse of time or both, would constitute a default
in the due performance and observance of any term, covenant or
condition of any agreement to which the Depositor, the Seller, or the
Servicer is a party or by which it is bound, which default is or would
have a material adverse effect on the financial condition, earnings,
prospects, business or properties of the Depositor, the Seller, or the
Servicer, taken as a whole;
(xv) to the best knowledge of such counsel, the Depositor, Seller
and the Servicer has obtained all material licenses, permits and other
governmental authorizations that are necessary to the conduct of its
business; such licenses, permits and other governmental authorizations
are in full force and effect, and the Depositor, the Seller and the
Servicer is in all material respects complying therewith; and the
Depositor, the Seller and the Servicer is otherwise in compliance with
all laws, rules, regulations and statutes of any jurisdiction to which
it is subject, except where non-compliance would not have a material
adverse effect on the Seller, the Representative, the Servicer or any
of the Originators;
(xvi) such counsel shall state that they have participated in the
preparation of the Registration Statement and the Final Prospectus,
and that no facts have come to their attention which cause them to
believe that the Registration Statement relating to the Certificates
as of its effective date, and the Final Prospectus, as of the date of
this Agreement, and any amendment or supplement thereto, as of its
date when it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus on its date contained or on
the Closing Date contains, any untrue statement of 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 such counsel need not express any view with respect to the
financial, statistical or computational material included in or
incorporated by reference into the Registration Statement relating to
the Certificates, the Final Prospectus or any amendment or supplement
thereto.
In rendering such opinions, such counsel may rely as to matters of fact, to
the extent deemed proper by such counsel, on certificates of responsible
officers of the Depositor, the Seller and the Servicer and the other
parties to this Agreement and the Pooling and Servicing Agreement, and of
public officials. References to the Final Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date.
(c) The Underwriter shall have received from _____________, counsel
for the Underwriter, such opinion or opinions as the Underwriter may
reasonably require, and shall
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have furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass on such matters.
(d) The Underwriter shall have received from ___________, certified
public accountants, two letters, one such letter dated the date hereof and
satisfactory in form and substance to the Underwriter and its counsel,
confirming that they are independent accountants within the meaning of the
Act and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating to the effect that they have performed
certain specified procedures as a result of which they determined that
certain information of an accounting, financial or statistical nature set
forth in the Final Prospectus, agrees with the provisions of the Pooling
and Servicing Agreement and the records of the Representative, the Servicer
and the Originators, and the other such letter dated the Closing Date and
satisfactory in form and substance to the Underwriter and its counsel,
confirming that the first such letter remains true as of the Closing Date.
(e) The representations and warranties in this Agreement and the
representations and warranties of the Depositor, the Seller and the
Servicer in the Pooling and Servicing Agreement shall be true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and
the Underwriter shall have been furnished a certificate of each of the
Depositor and the Seller, signed by the Chairman of the Board or the
President and by the principal financial or accounting officer of the
Depositor and the Seller, respectively, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any supplement to the Final
Prospectus, this Agreement and the Pooling and Servicing Agreement and
that:
(i) the representations and warranties of the Depositor and the
Seller in this Agreement and in the Pooling and Servicing Agreement
are true and correct in all material respects on and as of the Closing
Date with the same effect, as if made on the Closing Date, and each of
the Depositor and the Seller has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been instituted or, to such officer's knowledge,
threatened; and
(iii) since the date of the Representative's most recent audited
financial statements, there has been no material adverse change, or
any development respecting a prospective change, in the condition
(financial or other) of the Depositor, the Seller or the Servicer,
whether or not arising from transactions in the ordinary course of
business.
(f) Prior to the Closing Date, the Depositor, the Servicer and the
Seller shall have furnished to the Underwriter such further information,
certificates and documents as
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the Underwriter may reasonably request.
(g) The Certificates shall have been given the rating of ____ by
__________ and ___ by ___________.
(h) The Underwriter shall have received from counsel to the Trustee an
opinion, dated the Closing Date and satisfactory in form and substance to
the Underwriter and its counsel to the effect that:
(i) the Trustee is duly organized and validly existing as a
_________ with the power and authority under the laws of _____ to
conduct business and affairs as a trustee;
(ii) the Trustee has the corporate power and lawful authority to
perform the duties and obligation of trustee under, to act as
successor Servicer upon the terms and conditions set forth in, and to
accept the trust contemplated by, the Pooling and Servicing Agreement;
(iii) the Pooling and Servicing Agreement has been duly
authorized, executed, delivered and accepted by the Trustee, and the
Pooling and Servicing Agreement is a legal, valid and binding
obligation enforceable against the Trustee in accordance with its
terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization and other laws affecting creditors' rights
generally from time to time in effect) (such opinion may also state
that the enforceability of the Trustee's obligations is subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law));
(iv) the Certificates have been duly authenticated by the
Trustee; and
(v) neither the execution nor delivery by the Trustee of the
Pooling and Servicing Agreement nor the consummation of any of the
transactions contemplated thereby require the consent or approval of,
the giving of notice to, the registration with, or the taking of any
other action with respect to, any governmental authority or agency
under any existing federal or state law governing the banking or trust
powers of the Trustee.
(i) The Underwriter shall have received such opinions, addressed
to the Underwriter and dated the Closing Date, as are delivered to the
Rating Agencies.
(j) The Underwriter shall have received an opinion from
____________, counsel for the Depositor and the Seller, dated the
Closing Date and satisfactory in form and substance to the Underwriter
regarding the true-sale of the Home Equity Loans by the Seller to the
Depositor and by the Depositor to the Trustee, for the benefit of
Certificateholders.
(k) The Underwriter shall have received an opinion from counsel
for the
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Depositor and the Seller, dated the Closing Date and satisfactory in form
and substance to the Underwriter regarding substantive consolidation.
(l) The Underwriter shall have received a fully executed Insurance
Agreement by and among the Depositor, the Seller and the Insurer, dated as
of ______, ____ (the "Insurance Agreement"), and all representations and
warranties thereunder or made pursuant thereto shall be true and correct,
and each of the Depositor and the Seller shall have performed its
obligations thereunder.
(m) The Policy relating to the Certificates 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 Final Prospectus.
(n) The Underwriter shall have received an opinion from counsel to the
___________ (the "Insurer"), dated the Closing Date and satisfactory in
form and substance to the Underwriter, addressed to the Underwriter and the
Trustee.
(o) Subsequent to the Execution Time, there shall not have been any
reduction or withdrawal by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities
Act) of the current rating of any securities issued or originated by the
Depositor or the Seller or any notice given of any intended or potential
reduction in or withdrawal of any such rating or of a possible change in
any such rating that does not indicate the direction of the possible
change.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus and the date
of the most recent audited financial statements of the Representative,
there shall not have been any change, or any development involving a
prospective change, which has not been disclosed to the Underwriter on or
before the date hereof in or affecting the condition, financial or
otherwise, of the Depositor, the Servicer or the Seller, the effect of
which is, in the reasonable judgment of the Underwriter, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or the delivery of the Certificates as contemplated by the
Registration Statement and the Final Prospectus.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and counsel for the Underwriter, this Agreement
and all obligations of the Underwriter hereunder may be canceled at, or at any
time prior to, the Closing Date by the Underwriter. Notice of such cancellation
shall be given to the Depositor and the Seller in writing or by telephone or
telegraph confirmed in writing.
7. Reimbursement of Underwriter's Expenses. If the sale of the Certificates
provided for herein is not consummated because any condition to the obligations
of the Underwriter set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or
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because of any refusal, inability or failure on the part of the Depositor or the
Seller to perform any agreement herein or comply with any provision hereof other
than by reason of a default by the Underwriter, the Seller will reimburse the
Underwriter upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by it in
connection with the proposed purchase and sale of the Certificates.
8. Indemnification and Contribution. (a) the Depositor and the Seller,
jointly and severally, agree to indemnify and hold harmless the Underwriter and
each person who controls the Underwriter within the meaning of either the Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Basic Prospectus, any Preliminary Prospectus
Supplement or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that (i) neither the
Depositor nor the Seller will be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made (x) therein in reliance upon and in conformity with written information
furnished to the Depositor or the Seller by the Underwriter specifically for
inclusion therein, or (y) in any Derived Information (as defined in Section 9
below) included by the Underwriter in any Computational Materials provided by
the Underwriter to the Depositor or Seller or any amendment or supplement
thereof unless such untrue statement or alleged untrue statement or omission or
alleged omission made in any Derived Information results from an error or
omission in any Seller-Provided Information (as defined herein), and (ii) such
indemnity with respect to any Preliminary Prospectus Supplement or Computational
Materials shall not inure to the benefit of the Underwriter (or any person
controlling the Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the Certificates which are the subject
thereof if such person did not receive a copy of the Final Prospectus (or the
Final Prospectus as supplemented) at or prior to the confirmation of the sale of
such Certificates to such person in any case where such delivery is required by
the Act and the untrue statement or omission of a material fact contained in the
Preliminary Prospectus Supplement was corrected in the Final Prospectus (or the
Final Prospectus as supplemented). This indemnity agreement will be in addition
to any liability which the Representative or the Seller may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Depositor and the Seller, each of their respective directors, each of their
respective officers who signs the Registration Statement, and each person
who controls the Depositor or the Seller within the meaning of either the
Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Depositor and the Seller to the Underwriter, but only with reference to
(x) written information relating to the Underwriter furnished to the
Depositor or the Seller by the Underwriter specifically
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for inclusion in the documents referred to in the foregoing indemnity or
(y) any Derived Information included by the Underwriter in any
Computational Materials provided by the Underwriter to the Depositor or
theSeller or any amendment or supplement thereof; provided, however that
the indemnity with respect to clause (y) above shall not apply to any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Derived Information that results from an error or
omission in any Seller-Provided Information. This indemnity agreement will
be in addition to any liability which the Underwriter may otherwise have.
For the purpose of clause (x) of this indemnity, the Depositor and the
Seller acknowledge that the statements set forth in the last paragraph of
the cover page and under the heading "Underwriting" in any Preliminary
Prospectus Supplement or the Final Prospectus constitute the only
information furnished in writing by the Underwriter for inclusion in the
documents referred to in the foregoing indemnity, and you, as the
Underwriter, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 8. In case any such action is
brought against any indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to appoint counsel satisfactory to such indemnified party to represent the
indemnified party in such action; provided, however, that if the defendants
in any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to defend such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to appoint counsel to
defend such action and approval by the indemnified party of such counsel,
the indemnifying party will not be liable to such indemnified party under
this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i)
the indemnified party shall have employed separate counsel in accordance
with the proviso to the preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more
than one separate counsel, approved by the Underwriter in the case of
paragraph (a) of this Section 8, representing the indemnified parties under
such paragraph (a) who are parties to such action), (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party or (iv) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest; and except that, if clause (i) or
(iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of
this Section 8 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Depositor or the Seller on
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<PAGE>
<PAGE>
grounds of policy or otherwise, the Depositor and the Seller, on the one
hand, and the Underwriter, on the other, shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to
which the Depositor and the Seller, on the one hand, and the Underwriter,
on the other, may be subject in such proportion so that the Underwriter is
responsible for that portion represented by the percentage that the
underwriting discount bears to the sum of such discount and the purchase
price of the Certificates, and the Depositor and the Seller are responsible
for the balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person
who controls the Underwriter within the meaning of the Act shall have the
same rights to contribution as the Underwriter, and each person who
controls the Depositor or the Seller within the meaning of either the Act
or the Exchange Act, each officer of the Depositor or the Seller and each
director of the Depositor or the Seller shall have the same rights to
contribution as the Depositor and the Seller, subject in each case to the
proviso to the first sentence of this paragraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under this
paragraph (d).
9. Computational Materials. It is understood that the Underwriter may
provide to prospective investors certain Computational Materials and ABS Term
Sheets in connection with your offering of the Certificates, subject to the
following conditions:
(a) The Underwriter shall comply with all applicable laws and
regulations in connection with the use of Computational Materials,
including the No-Action Letter of May 20, 1994 issued by 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 (collectively, the
"Kidder/PSA Letter"), as well as the PSA Letter referred to below. The
Underwriter shall comply with all applicable laws and regulations in
connection with the use of ABS Term Sheets, including the No Action Letter
of February 17, 1995 issued by the Commission to the Public Securities
Association (the PSA Letter" and, together with the Kidder/PSA Letter, the
"No-Action Letters").
(b) For purposes hereof, "Computational Materials" as used herein
shall have the meaning given such term in the No-Action Letters, but shall
include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of the
Underwriter. For purposes hereof, "ABS Term Sheets" and "Collateral Term
Sheets" as used herein shall have the meanings given such terms in the PSA
Letter but shall include only those ABS Term Sheets or Collateral Term
Sheets that have been prepared or delivered to prospective investors by or
at the direction of the Underwriter.
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<PAGE>
<PAGE>
(c) (i) All Computational Materials and ABS Term Sheets provided to
prospective investors that are required to be filed with the Commission
pursuant to the No-Action Letters shall bear a legend on each page
including the following statement:
"THE INFORMATION HEREIN IS PRELIMINARY, AND WILL BE
SUPERSEDED BY THE APPLICABLE PROSPECTUS SUPPLEMENT AND BY
ANY OTHER INFORMATION SUBSEQUENTLY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION."
(ii) In the case of Collateral Term Sheets, such legend shall also
include the following statement:
"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY THE
DESCRIPTION OF THE MORTGAGE POOL CONTAINED IN THE PROSPECTUS
SUPPLEMENT RELATING TO THE CERTIFICATES AND [EXCEPT WITH
RESPECT TO THE INITIAL COLLATERAL TERM SHEET] SUPERSEDES ALL
INFORMATION CONTAINED IN ANY COLLATERAL TERM SHEETS RELATING
TO THE MORTGAGE POOL PREVIOUSLY PROVIDED BY SALOMON BROTHERS
INC."
(d) The Underwriter shall provide the Depositor and the Seller with
representative forms of all Computational Materials and ABS Term Sheets
prior to their first use, to the extent such forms have not previously been
approved by the Depositor or Seller for use by the Underwriter. The
Underwriter shall provide to the Depositor, for filing on Form 8-K, copies
(in such format as required by the Depositor) of all Computational
Materials and ABS Term Sheets that are required to be filed with the
Commission pursuant to the No-Action Letters. The Underwriter may provide
copies of the foregoing in a consolidated or aggregated form including all
information required to be filed. All Computational Materials and ABS Term
Sheets described in this subsection (d) must be provided to the Seller not
later than 10:00 a.m. New York time one business day before filing thereof
is required pursuant to the terms of this Agreement. The Underwriter agrees
that it will not provide to any investor or prospective investor in the
Certificates any Computational Materials or ABS Term Sheets on or after the
day on which Computational Materials and ABS Term Sheets are required to be
provided to the Depositor oeller pursuant to this Section 9(d) (other than
copies of Computational Materials or ABS Term Sheets previously submitted
to the Depositor and Seller in accordance with this Section 9(d) for filing
with the Commission), unless such Computational Materials or ABS Term
Sheets are preceded or accompanied by the delivery of a Prospectus to such
investor or prospective investor.
(e) All information included in the Computational Materials and ABS
Term Sheets shall be generated based on substantially the same methodology
and assumptions that are used to generate the information in the Prospectus
Supplement as set forth therein; provided, however, that the Computational
Materials and ABS Term Sheets may include information based on alternative
methodologies or assumptions if specified therein. If any Computational
Materials or ABS Term Sheets that are required to be filed were based on
assumptions with respect to the Home Equity Loans included in the Trust
that differ from the final Pool Information in any material
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<PAGE>
<PAGE>
respect or on Certificate structuring terms that were revised in any
material respect prior to the printing of the Prospectus, the Underwriter
shall prepare revised Computational Materials or ABS Term Sheets, as the
case may be, based on the final Pool Information and structuring
assumptions, circulate such revised Computational Materials and ABS Term
Sheets to all recipients of the preliminary versions thereof that indicated
or subsequently indicate orally to the Underwriter they will purchase all
or any portion of the Certificates, and include such revised Computational
Materials and ABS Term Sheets (marked, "as revised") in the materials
delivered to the Depositor and the Seller pursuant to subsection (d) above.
As used herein, "Pool Information" means information with respect to the
characteristics of the Home Equity Loans, as provide by or on behalf of the
Depositor to the Underwriter in final form and set forth in the Prospectus
Supplement.
(f) The Depositor shall not be obligated to file any Computational
Materials or ABS Term Sheets that have been determined to contain any
material error or omission; provided, however, that, at the request of the
Underwriter, the Depositor will file Computational Materials or ABS Term
Sheets that contain a material error or omission if clearly marked
"superseded by materials dated _____" and accompanied by corrected
Computational Materials or ABS Term Sheets that are marked, "material
previously dated _____, as corrected." In the event that, within the period
during which the Prospectus relating to the Certificates is required to be
delivered under the Act, any Computational Materials or ABS Term Sheets are
determined, in the reasonable judgment of the Depositor or the Underwriter,
to contain a material error or omission, the Underwriter shall prepare a
corrected version of such Computational Materials or ABS Term Sheets, shall
circulate such corrected Computational Materials and ABS Term Sheets to all
recipients of the prior versions thereof that either indicated orally to
the Underwriter they would purchase all or any portion of the Certificates,
and actually purchased all or any portion thereof, and shall deliver copies
of such corrected Computational Materials and ABS Term Sheets (marked, "as
corrected") to the Depositor for filing with the Commission in a subsequent
Form 8-K submission.
(g) The Depositor and the Underwriter shall receive a letter from
____________, certified public accountants, satisfactory in form and
substance to the Depositor and the Underwriter, to the effect that such
accountants have performed certain specified procedures agreed to by the
Depositor and the Underwriter, as a result of which they determined that
the specified information that is included in the Computational Materials
and ABS Term Sheets (if any) provided by the Underwriter to the Depositor
for filing on Form 8-K as provided in this Section 9 has been accurately
computed or compiled from the Seller Provided Information.
(h) If the Underwriter does not provide any Computational Materials or
ABS Term Sheets to the Depositor pursuant to subsection (d) above, the
Underwriter shall be deemed to have represented, as of the Closing Date,
that it did not provide any prospective investors with any information in
written or electronic form in connection with the offering of the
Certificates that is required to be filed with the Commission in accordance
with the No-Action Letters.
(i) In the event of any delay in the delivery by the Underwriter to
the Depositor of all Computational Materials and ABS Term Sheets required
to be delivered in accordance with subsection (d) above, or in the delivery
of the accountant's comfort letter in respect thereof pursuant to Section
9(g), the Depositor shall have the right to delay the release of the
Prospectus to investors
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<PAGE>
<PAGE>
or to the Underwriter, to delay the Closing Date and to take other
appropriate actions in each case as necessary in order to allow the
Depositor to comply with its obligation to file the Computational Materials
and ABS Term Sheets with the Commission.
(j) For purposes of this Agreement, as to the Underwriter, the term
"Derived Information" means such portion, if any, of the information that
is:
(i) delivered to the Depositor by the Underwriter pursuant to
this Section 9 for filing with the Commission on Form 8-K;
(ii) is not contained in the Final Prospectus without taking into
account information incorporated therein by reference; and
(iii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means any computer tape concerning the assets
comprising the Trust Fund and any other information with respect to the
Certificates or the Home Equity Loans furnished to the Underwriter by the
Depositor or the Seller for use as contemplated herein.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriter, by notice given to the Seller and
Depositor prior to delivery of and payment for the Certificates, if prior to
such time (i) trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities or (iii) there shall have
occurred any outbreak or material escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on the financial markets of the United States is such as to make
it, in the judgment of the Underwriter, impracticable or inadvisable to proceed
with the offering or delivery of the Certificates as contemplated by the Final
Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Depositor
or the Seller or their respective officers and of the Underwriter set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriter, the
Depositor or the Seller or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Certificates. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Underwriter, will be mailed, delivered or
telegraphed and confirmed to _________, ____________, New York, New York
________; or, if sent to the Seller or the Depositor, will be mailed, delivered
or telegraphed and confirmed to the Depositor at _______________________,
attention: ______, and to the Seller at _________________, attention: _____.
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<PAGE>
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8 hereof, and no other
person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
Counterparts will together constitute one and the same agreement.
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<PAGE>
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among, the
Seller, the Depositor and the Underwriter.
Very truly yours,
CHEC ASSET RECEIVABLE CORPORATION
By:_____________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written
- --------------------
By:_____________________
Name:
Title:
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<PAGE>
<PAGE>
SCHEDULE I
TO
UNDERWRITING
AGREEMENT
<TABLE>
<CAPTION>
Asset-Backed
Certificates, Principal Purchase
Series 199_-_ Amount Price
- -------------------- ------ -----
<S> <C> <C>
Class A-1 $__________ ________%
Class A-2 $__________ ________%
Class A-3 $__________ ________%
Class A-4 $__________ ________%
Class A-5 $__________ ________%
Class A-6 $__________ ________%
</TABLE>
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<PAGE>
<PAGE>
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
CHEC ASSET RECEIVABLE CORPORATION
The undersigned, a natural person being at least 18 years of age,
for the purpose of organizing a corporation for conducting the business and
promoting the purposes hereinafter stated, under the provisions and subject to
the requirements of Chapters 78 and 92A of the Nevada Revised Statutes (the
"Nevada Private Corporations Law") hereby certifies that:
1. The name of the corporation is CHEC Asset Receivable Corporation (the
"Corporation").
2. The purposes for which the corporation is organized are to engage in
any lawful act or activity for which corporations may be organized under the
Nevada Private Corporations Law.
3. The office of the Corporation is to be located in the State of
Nevada.
4. The total number of shares of stock that the Corporation shall have
authority to issue is 1,000 shares of Common Stock, $.01 par value.
5. The address of the Corporation's registered office is One East First
Street, Reno, Nevada 89501. The name of the resident agent at this address is
The Corporation Trust Company of Nevada.
6. (a) The affairs of the Corporation shall be managed by a Board of
Directors (the "Board" or the "Board of Directors"), which shall at all times
following the
<PAGE>
<PAGE>
issuance of Securities include at least one Outside Director. The number of
directors of the Corporation shall be no less than 1 but no more than nine. The
number of directors of the Corporation shall be from time to time fixed by, or
in the manner provided in, the By-laws of the Corporation with the initial Board
consisting of at least three members. The name and post office box or street
address, either residence or business, of each member of the initial Board of
Directors is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Anthony H. Barone 2728 N. Harwood Street
Dallas, Texas 75201
Stephen Janowsky 2728 N. Harwood Street
Dallas, Texas 75201
Anne E. Duffield 2728 N. Harwood Street
Dallas, Texas 75201
</TABLE>
The initial Board of Directors will serve as Directors until the first annual
meeting of the shareholders, or until their successors are elected and
qualified. When voting on matters subject to the vote of the Board, including
those matters specified in this Article 6 and in Article 8 hereof,
notwithstanding that the Corporation is not then insolvent, the Outside
Director(s) shall take into account the interests of the creditors of the
Corporation as well as the interests of the Corporation. An "Outside Director"
shall be an individual who, for at least five years prior to being appointed by
the Board, shall not have been, a director, officer or employee of, customer or
supplier or indirect beneficial owner of 5% or more of the voting securities of,
or customer or supplier, member of the immediate family of any such director,
officer, employee, beneficial owner, customer or supplier of Centex Credit
Corporation d/b/a Centex Home Equity Corporation, or any corporate affiliate of
Centex Credit Corporation d/b/a Centex
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<PAGE>
<PAGE>
Home Equity Corporation. Notwithstanding the foregoing, an Outside Director may
be a director or officer of one or more other corporations that is an affiliate
or are affiliates of Centex Credit Corporation d/b/a Centex Home Equity
Corporation, provided that (i) each such corporation is or was formed with
limited purposes similar to the Corporation and (ii) such person does not earn,
in the aggregate, material compensation for serving in such positions. For the
purposes of the foregoing, an "affiliate" of an entity is an entity controlling,
controlled by, or under common control with such entity. Notwithstanding any
other provision of this Certificate of Incorporation or any other provision of
law that so empowers the Corporation, in the event of the death, incapacity, or
resignation of an Outside Director or such position is otherwise vacated, a
successor Outside Director shall be appointed by the remaining directors of the
Corporation and no action requiring the unanimous affirmative vote of the Board
of Directors of the Corporation shall be taken until a successor Outside
Director is elected and qualified and approves such action.
(b) The Corporation shall not, without the affirmative vote of
100% of the members of the Board of Directors of the Corporation (including at
least one Outside Director), institute proceedings to be adjudicated a bankrupt
or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Corporation or a substantial
part of its property, or make any assignment for the benefit of creditors, or
admit in writing its inability to pay its debts generally as they become due, or
take any corporate action in furtherance of any such action.
(c) The Corporation shall maintain a separate principal office
through which its
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<PAGE>
<PAGE>
business shall be conducted, and if such office is located in identifiable space
within an affiliate of Centex Credit Corporation d/b/a Centex Home Equity
Corporation, allocate fairly and reasonably any overhead for shared office
space.
(d) The Corporation shall maintain corporate records and books of
account separate from any other person or entity and shall not commingle its
corporate records and books of account with the corporate records and books of
account of any other entity.
(e) The Board of Directors of the Corporation shall hold
appropriate meetings to authorize all of its corporate actions. Regular meetings
of the Board of Directors shall be held not less frequently than three times per
annum.
(f) The funds and other assets of the Corporation shall not be
commingled with those of any other entity.
(g) The Corporation shall pay its own expenses and shall not
guarantee or hold itself out as being liable for the debts of Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of its affiliates.
(h) The Corporation shall not form, or cause to be formed, any
subsidiaries.
(i) The Corporation shall act solely in its corporate name and
through its duly authorized officers or agents in the conduct of its business,
and shall conduct its business so as not to mislead others as to the identity of
the entity with which they are concerned.
(j) Meetings of the shareholders of the Corporation shall be held
not less frequently than one time per annum.
(k) The Corporation shall operate in such a manner that it would
not be substantively consolidated with any other entity.
(1) The Corporation shall maintain separate financial statements
from any
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<PAGE>
<PAGE>
other entity.
(m) The Corporation shall observe all corporate formalities.
(n) The Corporation shall maintain an arm's-length relationship
with its affiliates.
(o) The Corporation shall use separate stationery, invoices and
checks.
(p) The Corporation shall not pledge its assets for the benefit
of any other entity.
7. In furtherance and not in limitation of the powers conferred upon the
Board of Directors by law, the Board of Directors shall have the power to adopt,
amend and repeal from time to time By-laws of the Corporation.
8. Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without unanimous approval of the Board
of Directors of the Corporation (which shall include the approval of at least
one Outside Director), do any of the following:
(a) engage in any business or activity other than the business
and activities which the Corporation is permitted to engage in under Article 2;
(b) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity other than as contemplated by Article 2;
(c) merge or consolidate with or into any other entity or convey
or transfer its properties and assets substantially as an entirety to an entity
other than as contemplated by Article 2, unless:
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<PAGE>
<PAGE>
(i) the entity (if other than the Corporation) formed or
surviving the consolidation or merger or which acquires the properties and
assets of the Corporation, expressly assumes the due and punctual payment
of, and all obligations of the Corporation in connection with the
indebtedness of the Corporation, and has a Certificate of Incorporation
containing provisions identical to the provisions of Articles 2, 6, 10 and
this Article 8; and
(ii) immediately after giving effect to the transaction, no
default or event of default has occurred and is continuing under any
indebtedness of the Corporation or any agreements relating to such
indebtedness; or
(d) amend this Certificate of Incorporation to alter in any
manner or delete Article 2, Article 6, Article 10 or this Article 8.
9. The Corporation is to have perpetual existence.
10. Subject to the limitations set forth in Article 8(d), the
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
11. No director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director or officer; provided, that nothing contained in
this provision shall eliminate or limit the liability of a director or officer
for (a) acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (b) the payment of distributions in violation of
Nevada Revised Statutes Section 78.300. If the Nevada Private Corporations Law
is amended to
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<PAGE>
<PAGE>
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Nevada
Private Corporations Law, as so amended. No amendment or repeal of this
provision applies to or has any effect on the liability or alleged liability of
any director or officer of this Corporation for or with respect to any acts or
omissions of the director or officer occurring prior to the amendment or
repeal, except as otherwise required by law.
12. The Corporation shall, to the fullest extent permitted Nevada
Private Corporations Laws, as the same may be amended and supplemented, or by
any successor thereto, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section. The
Corporation shall advance expenses to the fullest extent permitted by the Nevada
Private Corporations Law. Such right to indemnification and advancement of
expenses shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. The indemnification and advancement of expenses
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, vote of shareholders or disinterested directors or
otherwise.
13. The name and post office address of the incorporator signing these
Articles of Incorporation are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Anne E. Duffield 2728 N. Harwood Street
Dallas, Texas 75201
</TABLE>
-7-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this certificate has been subscribed this 27th day
of May, 1998 by the undersigned, being the sole incorporator of the Corporation,
who affirms that the statements made herein are true under the penalties of
perjury.
/s/Anne E. Duffield
------------------
Sole Incorporator
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on May 27th, 1998, by Anne E.
Duffield as Incorporator of CHEC ASSET RECEIVABLE CORPORATION.
(Seal, if any) /s/Lori A. Harden
-----------------
Notary
(My commission expires: 1/29/00)
-8-
<PAGE>
<PAGE>
Exhibit 3.2
BY-LAWS
OF
CHEC ASSET RECEIVABLE CORPORATION.
(A Nevada corporation)
ARTICLE I
OFFICES
1. OFFICE.
The office of the corporation shall be located in the State of Nevada or such
other location as the Board of Directors may determine.
2. ADDITIONAL OFFICES.
The corporation may also have offices and places of business at such other
places, within or without the State of Nevada, as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
1. CERTIFICATES REPRESENTING SHARES.
Certificates representing shares shall set forth thereon the statements
prescribed by any applicable provision of law and shall be signed by the
Chairman of the Board of Directors, President or a Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
and may be sealed with the corporate seal or a facsimile thereof. The signatures
of the officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
corporation itself or its employee. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
A certificate representing shares shall not be issued until the full amount of
consideration therefor has been paid except as the Nevada Private Corporations
Law may otherwise permit.
<PAGE>
<PAGE>
No certificate representing shares shall be issued in place of any certificate
alleged to have been lost, destroyed or stolen, except on production of such
evidence of such loss, destruction or theft and on delivery to the corporation,
if the Board of Directors shall so require, of a bond of indemnity in such
amount upon such terms and secured by such surety as the Board of Directors may
in its discretion require.
2. FRACTIONAL SHARE INTERESTS.
The corporation may issue certificates for fractions of a share where necessary
to effect transactions authorized by the Nevada Private Corporations Law which
shall entitle the holder in proportion to the holder's fractional holdings, to
exercise voting rights, receive dividends and participate in liquidating
distributions; or it may pay in cash the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined; or it
may issue scrip in registered or bearer form over the manual or facsimile
signature of an officer of the corporation or of its agent, exchangeable as
therein provided for full shares, but such scrip shall not entitle the holder to
any rights of a shareholder except as therein provided.
3. SHARE TRANSFERS.
Upon compliance with provisions restricting the transferability of shares, if
any, transfers of shares of the corporation shall be made only on the share
record of the corporation by the registered holder thereof, or by such holder's
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar, if
any, and on surrender of the certificate or certificates for such shares
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR SHAREHOLDERS.
For the purpose of determining the shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or to express consent
to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the directors
may fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than fifty days nor less than ten days
before the date of such meeting, nor more than fifty days prior to any other
action. If no record date is fixed, the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if no notice is given, the day on which the meeting is held; the
record date for determining shareholders for any other purpose shall be at the
close of business on the day on which the resolution of the directors relating
thereto is adopted. When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided in
this paragraph, such determination shall apply to any adjournment thereof,
unless the directors fix a new record date under this paragraph for the
adjourned meeting.
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MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a
meeting of shareholders or a waiver thereof or to participate or vote thereat or
to consent or dissent in writing in lieu of a meeting, as the case may be, the
term "share" or "shares" or "shareholder" or "shareholders" refers to an
outstanding share or shares and to a holder or holders of record of outstanding
shares when the corporation is authorized to issue only one class of shares, and
said reference is also intended to include any outstanding share or shares and
any holder or holders of record of outstanding shares of any class upon which or
upon whom the Articles of Incorporation confers such rights where there are two
or more classes or series of shares or upon which or upon whom the Nevada
Private Corporations Law confers such rights notwithstanding that the Articles
of Incorporation may provide for more than one class or series of shares, one or
more of which are limited or denied such rights thereunder.
5. MEETINGS.
TIME. The annual meeting shall be held on the date fixed, from time to time, by
the directors; provided, however, that each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date fixed by the directors
except when the Nevada Private Corporations Law confers the right to fix the
date upon shareholders.
PLACE. Annual meetings and special meetings shall be held at such place, within
or without the State of Nevada, as the directors may, from time to time, fix.
Whenever the directors shall fail to fix such place, or, whenever shareholders
entitled to call a special meeting shall call the same, the meeting shall be
held at the office of the corporation in the State of Nevada.
CALL. Annual meetings may be called by the directors or by any officer
instructed by the directors to call the meeting or by the President. Special
meetings may be called in like manner except when the directors are required by
the Nevada Private Corporations Law to call a meeting, or except when the
shareholders are entitled by said Law to demand the call of a meeting.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. The notice of all meetings
shall be in writing, shall state the place, date, and hour of the meeting, and
shall state the name and capacity of the person issuing the same. The notice for
a special meeting shall indicate that it is being issued by or at the direction
of the person or persons calling the meeting. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting need not state the purpose or purposes for which the meeting is
called. If the directors shall adopt, amend, or repeal a By-Law regulating an
impending election of directors, the notice of the next meeting for election of
directors shall contain the statements prescribed by the Nevada Private
Corporations Law. If any action is proposed to be taken which would, if taken,
entitle shareholders to receive payment for their shares, the notice shall
include a statement of that purpose and to that effect, together with a copy of
the Nevada Private Corporations Law or an outline of its terms. A copy of the
notice of any meeting shall be given, personally or by first class mail, not
less than ten
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days nor more than fifty days before the date of the meeting, unless the lapse
of the prescribed period of time shall have been waived, to each shareholder at
such shareholder's record address or at such other address which such
shareholder may have furnished by notice in writing to the Secretary of the
corporation. If a meeting is adjourned to another time or place, and if any
announcement of the adjourned time or place is made at the meeting, it shall not
be necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice of a
meeting need not be given to any shareholder who submits a signed waiver of
notice, in person or by proxy, before or after the meeting. The attendance of a
shareholder at a meeting, in person or by proxy, without protesting prior to the
conclusion of the meeting the lack of notice of such meeting shall constitute a
waiver of notice by such shareholder.
SHAREHOLDER LIST AND CHALLENGE. A list of shareholders as of the record date,
certified by the Secretary or other officer responsible for its preparation or
by the transfer agent, if any, shall be produced at any meeting of shareholders
upon the request thereat or prior thereto of any shareholder. If the right to
vote at any meeting is challenged, the inspectors of election, or person
presiding thereat, shall require such list of shareholders to be produced as
evidence of the right of the persons challenged to vote at such meeting, and all
persons who appear from such list to be shareholders entitled to vote thereat
may vote at such meeting.
CONDUCT OF MEETING. Meetings of the shareholders shall be presided over by any
one of the following officers -- the Chairman of the Board, if any, the
President, a Vice President, or, if none of the foregoing is in office and
present, by a chairman to be chosen by the shareholders. The Secretary of the
corporation, or in such person's absence, an Assistant Secretary, shall act as
Secretary of the meeting, but if neither the Secretary nor Assistant Secretary
is present, the chairman of the meeting shall appoint a Secretary of the
meeting.
PROXY REPRESENTATION. Every shareholder may authorize another person or persons
to act for such shareholder by proxy in all matters in which a shareholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the shareholder or such shareholder's
attorney-in-fact. No proxy shall be valid after the expiration of eleven months
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the shareholder executing it, except as
otherwise provided by the Nevada Private Corporations Law.
INSPECTORS OF ELECTION. The directors, in advance of any meeting, may appoint
one or more inspectors to act at the meeting or any adjournment thereof. If
inspectors are not so appointed, the person presiding at the meeting may, and,
on the request of any shareholder shall, appoint one or more inspectors. In case
any person appointed fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, if any, before entering upon the
discharge of the duties of such office, shall take and sign an oath faithfully
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of such person's ability. The inspectors, if any, shall
determine the number of shares outstanding and the voting power of
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each, the shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result and do such acts as are proper to conduct the election or vote with
fairness to all shareholders. On request of the person presiding at the meeting
or any shareholder entitled to vote thereat, the inspector or inspectors, if
any, shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by the inspector
or inspectors.
QUORUM. Except for a special election of directors pursuant to the Nevada
Private Corporations Law, and except as herein otherwise provided, the holders
of a majority of the outstanding shares shall constitute a quorum at a meeting
of shareholders for the transaction of any business. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal of
any shareholders. The shareholders present may adjourn the meeting despite the
absence of a quorum.
VOTING. Each share shall entitle the holder thereof to one vote. In the election
of directors, a plurality of the votes cast shall elect. Any other action shall
be authorized by a majority of the votes cast except where the Nevada Private
Corporations Law prescribes a different proportion of votes.
6. SHAREHOLDER ACTION WITHOUT MEETINGS.
Whenever shareholders are required or permitted to take any action by vote, such
action may be taken without a meeting, on written consent, setting forth the
action so taken, signed by the holders of all shares entitled to vote thereon.
ARTICLE III
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITIONS.
The business of the corporation shall be managed by its Board of Directors. The
word "director" means any member of the Board of Directors. The use of the
phrase "entire Board" herein refers to the total number of directors which the
corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
Each director shall be at least eighteen years of age. A director need not be a
shareholder, a citizen of the United States, or a resident of the State of
Nevada.
The Board of Directors shall consist of three persons or such other number as
may be fixed from time to time by action of the directors or of the
shareholders; provided, however, that the number must be at least the lesser of
three (3) or the number of shareholders of the corporation. The
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number of directors may be increased or decreased by action of directors or
shareholders, provided that any action of the directors to effect such increase
or decrease shall require the vote of a majority of the entire Board. No
decrease shall shorten the term of any incumbent directors.
3. ELECTION AND TERM.
Directors who are elected at an annual meeting of shareholders, and directors
who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of shareholders
and until their successors have been elected and qualified. In the interim
between annual meetings of shareholders or of special meetings of shareholders
called for the election of directors, newly created directorships and any
vacancies in the Board of Directors, including vacancies resulting from the
removal of directors for cause or without cause, may be filled by the vote of
the remaining directors then in office, although less than a quorum exists.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix, except that
the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.
PLACE. Meetings shall be held at such place within or without the State of
Nevada as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by the President, a Vice
President, the Secretary, an Assistant Secretary or a majority of the directors
in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular
meetings for which the time and place have been fixed. Notice of the time and
place of special meetings shall be given to each director orally or by mailing
prior to the meeting. The notice of any meeting need not specify the purpose of
the meeting. Any requirement of furnishing a notice shall be waived by any
director who signs a waiver of notice before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to him.
QUORUM AND ACTION. A majority of the entire Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided such majority
shall constitute at least one-third of the entire Board. A majority of the
directors present, whether or not a quorum is present, may adjourn a meeting to
another time and place. Except as otherwise provided herein or in any applicable
provision of law, the vote of a majority of the directors present at the time of
the vote at a meeting of the Board, if a quorum is present at such time, shall
be the act of the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present, shall
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preside at all meetings. Otherwise, the President, if present, or any other
director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or without cause by the
shareholders. Any of the directors may be removed for cause by the Board of
Directors.
6. COMMITTEES OF DIRECTORS.
The Board of Directors may, by resolution passed by a majority of the entire
Board, designate from their number three or more directors to constitute an
Executive Committee which shall possess and may exercise all the powers and
authority of the Board of Directors in the management of the affairs of the
corporation between meetings of the Board (except to the extent prohibited by
applicable provisions of the Nevada Private Corporations Law) and/or designate
any number of directors to constitute such other committee or committees, which,
to the extent provided in the resolution, shall have and may exercise the powers
of the Board of Directors in the management of the business affairs of the
corporation and may authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors. All such committees shall serve at the pleasure of the
Board. Each committee shall keep regular minutes of its meetings and report the
same to the Board of Directors when required.
7. CONFERENCE TELEPHONE.
Any one or more members of the Board of Directors or any committee thereof may
participate in a meeting of such Board or committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Such participation shall
constitute presence in person at such meeting.
8. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or the committee, as the case may be, consent in writing to the
adoption of a resolution authorizing the action, and the resolution and the
written consents thereto are filed with the minutes of the proceedings of the
Board or committee.
ARTICLE IV
OFFICERS
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1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of Directors, a
President, one or more Vice Presidents (one or more of whom may be denominated
"Executive Vice President", "Senior Vice President" or other variations
thereof), a Secretary, one or more Assistant Secretaries, a Treasurer, one or
more Assistant Treasurers, and such other officers as they may determine. Any
two or more offices may be held by the same person, except the offices of
President and Secretary; provided, however, that when all of the issued and
outstanding shares of the corporation are owned by one person, such person may
hold all or any combination of offices.
2. TERM OF OFFICE; REMOVAL.
Unless otherwise provided in the resolution of election or appointment, each
officer shall hold office until the meeting of the Board of Directors following
the next meeting of shareholders and until such officer's successor has been
elected and qualified. The Board of Directors may remove any officer for cause
or without cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall have such
authority and perform such duties in the management of the corporation as may be
provided in these By-Laws, or, to the extent not so provided, by the Board of
Directors.
4. THE PRESIDENT.
The President shall be the chief executive officer of the corporation. Subject
to the direction and control of the Board of Directors, such person shall be in
general charge of the business and affairs of the corporation.
5. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or disability of
the President shall perform the duties and exercise the power of the President,
in the order of their seniority, and shall perform such other duties as the
Board of Directors shall prescribe.
6. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the corporation and affix
it to any instrument when authorized by the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors.
7. THE TREASURER.
The Treasurer shall have the care and custody of the corporate funds, and other
valuable effects, including securities, and shall keep full and accurate
accounts of receipts and disbursements in
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books belonging to the corporation and shall deposit all moneys and other
valuable effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors. The Treasurer shall
disburse the funds of the corporation as may be ordered by the Board, taking
proper vouchers for such disbursements, and shall render to the President and
directors, at the regular meetings of the Board, or whenever they may require
it, an account of all transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, the Treasurer shall
give the corporation a bond for such term, in such sum and with such surety or
sureties as shall be satisfactory to the Board for the faithful performance of
the duties of office and for the restoration to the corporation, in case of
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in such person's possession
or under such person's control belonging to the corporation.
ARTICLE V
BOOKS AND RECORDS
The corporation shall keep correct and complete books and records of account and
shall keep minutes of the proceedings of the shareholders, of the Board of
Directors, and any committee which the directors may appoint, and shall keep at
the office of the corporation in the State of Nevada or at the office of the
transfer agent or registrar, if any, in said state, a record containing the
names and addresses of all shareholders, the number and class of shares held by
each, and the date when they respectively became the owners of record thereof.
Any of the foregoing books, minutes, or records may be in written form or in any
other form capable of being converted into written form within a reasonable
time.
ARTICLE VI
CORPORATE SEAL
The corporate seal, if any, shall be in such form as the Board of Directors
shall prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be as fixed by the Board of Directors.
ARTICLE VIII
CONTROL OVER BY-LAWS
The shareholders entitled to vote in the election of directors or the directors
upon compliance with any statutory requisite may amend or repeal the By-Laws and
may adopt new By-Laws, except that the directors may not amend or repeal any
By-Law or adopt any new By-Law, the
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statutory control over which is vested exclusively in the said shareholders or
in the incorporators. By-Laws adopted by the incorporators or directors may be
amended or repealed by the said shareholders.
ARTICLE IX
INDEMNIFICATION
1. The corporation shall indemnify any person made, or threatened to be made, a
party to an action or proceeding, whether civil or criminal or investigative (a
"proceeding"), including an action by or in the right of the corporation or any
other corporation of any type or kind, domestic or foreign, or any partnership,
joint venture, trust, employee benefit plan or other enterprise, which any
director or officer of the corporation served in any capacity at the request of
the corporation, by reason of the fact that such person, his or her testator or
intestate, was a director or officer of the corporation, or served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorney's fees actually and necessarily
incurred as a result of such proceeding, or any appeal therein, if such director
or officer acted, in good faith, for a purpose which such person reasonably
believed to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation and, in criminal
proceedings, in addition, had no reasonable cause to believe that his or her
conduct was unlawful.
2. The termination of any such civil or criminal proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not in itself create a presumption that any such director of officer did
not act, in good faith, for a purpose which such person reasonably believed to
be in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the corporation or that such person had reasonable cause
to believe that his or her conduct was unlawful.
3. For the purpose of this Article, the corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his or her duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
4. The right to indemnification conferred in this Article shall be a contract
right and shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Nevada Private Corporations Law requires, the
payment of such expenses incurred by a director or officer in his or her
capacity as a
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director or officer in advance of the final disposition of a proceeding shall be
made only upon receipt by the corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this Article or otherwise.
5. Any determination as to whether a person has met an applicable standard of
conduct shall be made in accordance with the provisions of the Nevada Private
Corporations Law.
6. If a claim for indemnification under this Article is not paid in full by the
corporation within thirty days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the corporation) that the claimant has
not met the standards of conduct prescribed hereunder, but the burden of proving
such defense shall be on the corporation. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth herein or
in the Nevada Private Corporations Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
7. The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Articles of Incorporation,
By-Laws, agreement, vote of shareholders or disinterested directors or
otherwise. The corporation is authorized to provide for such additional
indemnification by (a) a resolution of shareholders, (b) a resolution of
directors, or (c) an agreement providing for such indemnification.
8. Notwithstanding any provision hereof, no indemnification shall be made to or
on behalf of any person if a judgment or other final adjudication adverse to
such person establishes that his or her acts were committed in bad faith or were
the result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that such person personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled.
9. If any provision of this Article is determined to be unenforceable in whole
or in part, such provision shall nonetheless be enforced to the fullest extent
permissible, it being the intent of this Article to provide indemnification to
all persons eligible hereunder to the fullest extent permitted under law.
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Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
CENTEX HOME EQUITY LOAN TRUST A
Among
CHEC ASSET RECEIVABLE CORPORATION
as Depositor,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Seller,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Servicer
and
-------------------------
as Trustee
Dated as of _____ 1, 199_
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TABLE OF CONTENTS
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CONVEYANCE.......................................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.....................................................................2
Section 1.02 Use of Words and Phrases.......................................................36
Section 1.03 Captions; Table of Contents....................................................36
Section 1.04 Opinions.......................................................................36
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.....................................................37
Section 2.02 Office.........................................................................37
Section 2.03 Purposes and Powers............................................................37
Section 2.04 Appointment of the Trustee; Declaration of Trust...............................37
Section 2.05 Expenses of the Trust..........................................................37
Section 2.06 Ownership of the Trust.........................................................38
Section 2.07 Situs of the Trust.............................................................38
Section 2.08 Miscellaneous REMIC Provisions.................................................38
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE
SERVICER AND THE SELLER; COVENANT OF SELLER TO CONVEY HOME EQUITY
LOANS
Section 3.01 Representations and Warranties of the Depositor................................40
Section 3.02 Representations and Warranties of the Servicer.................................42
Section 3.03 Representations and Warranties of the Seller...................................44
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the Home
Equity Loans in Certain Situations.............................................48
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages..........................................................57
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee.......................................................63
Section 3.07 Conveyance of the Subsequent Home Equity Loans.................................64
Section 3.08 Custodian......................................................................67
Section 3.09 Cooperation Procedures.........................................................67
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
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Section 4.01. Issuance of Certificates.......................................................69
Section 4.02 Sale of Certificates...........................................................69
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms..........................................................................70
Section 5.02 Forms..........................................................................70
Section 5.03 Execution, Authentication and Delivery.........................................70
Section 5.04 Registration and Transfer of Certificates......................................71
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates..............................73
Section 5.06 Persons Deemed Owners..........................................................74
Section 5.07 Cancellation...................................................................74
Section 5.08 Limitation on Transfer of Ownership Rights.....................................74
Section 5.09 Assignment of Rights...........................................................76
ARTICLE VI
COVENANTS
Section 6.01 Distributions..................................................................77
Section 6.02 Money for Distributions to be Held in Trust; Withholding.......................77
Section 6.03 Protection of Trust Estate.....................................................78
Section 6.04 Performance of Obligations.....................................................79
Section 6.05 Negative Covenants.............................................................79
Section 6.06 No Other Powers................................................................80
Section 6.07 Limitation of Suits............................................................80
Section 6.08 Unconditional Rights of Owners to Receive Distributions........................81
Section 6.09 Rights and Remedies Cumulative.................................................81
Section 6.10 Delay or Omission Not Waiver...................................................81
Section 6.11 Control by Owners..............................................................82
Section 6.12 Indemnification by the Seller..................................................82
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money............................................................83
Section 7.02 Establishment of Accounts......................................................83
Section 7.03 Flow of Funds..................................................................84
Section 7.04 Pre-Funding Account and Capitalized Interest Account...........................88
Section 7.05 Investment of Accounts.........................................................90
Section 7.06 Payment of Trust Expenses......................................................90
Section 7.07 Eligible Investments...........................................................91
Section 7.08 Accounting and Directions by Trustee...........................................92
Section 7.09 Reports by Trustee to Owners and Certificate Insurer...........................93
Section 7.10 Reports by Trustee.............................................................96
</TABLE>
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.....................................................97
Section 8.02 Collection of Certain Home Equity Loan Payments................................98
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers....................98
Section 8.04 Successor Sub-Servicers........................................................99
Section 8.05 Liability of Servicer; Indemnification.........................................99
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the
Owners........................................................................100
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee...............100
Section 8.08 Principal and Interest Account................................................100
Section 8.09 Delinquency Advances and Servicing Advances...................................102
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans........................103
Section 8.11 Maintenance of Insurance......................................................104
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements...................105
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of Home
Equity Loans..................................................................106
Section 8.14 Trustee to Cooperate; Release of Files........................................107
Section 8.15 Servicing Compensation........................................................109
Section 8.16 Annual Statement as to Compliance.............................................109
Section 8.17 Annual Independent Certified Public Accountants' Reports......................109
Section 8.18 Access to Certain Documentation and Information Regarding the Home
Equity Loans..................................................................110
Section 8.19 Assignment of Agreement.......................................................110
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of Servicer...........110
Section 8.21 Inspections by Certificate Insurer Errors and Omissions Insurance.............114
Section 8.22 Additional Servicing Responsibilities for Second Mortgage Loans...............115
Section 8.23 The Adjustable Rate Group Home Equity Loans...................................115
Section 8.24 Merger, Conversion, Consolidation or Succession to Business of Servicer.......116
Section 8.25 Notices of Material Events....................................................116
Section 8.26 Indemnification by the Servicer...............................................116
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust..........................................................118
Section 9.02 Termination Upon Option of the Servicer.......................................118
Section 9.03 Termination Upon Loss of REMIC Status.........................................119
Section 9.04 Disposition of Proceeds.......................................................121
Section 9.05 Netting of Amounts............................................................121
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities...........................................122
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Section 10.02 Removal of Trustee for Cause..................................................124
Section 10.03 Certain Rights of the Trustee.................................................126
Section 10.04 Not Responsible for Recitals or Issuance of Certificates......................127
Section 10.05 May Hold Certificates.........................................................127
Section 10.06 Money Held in Trust...........................................................128
Section 10.07 Compensation and Reimbursement................................................128
Section 10.08 Corporate Trustee Required: Eligibility.......................................128
Section 10.09 Resignation and Removal; Appointment of Successor.............................129
Section 10.10 Acceptance of Appointment by Successor Trustee................................130
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
Trustee.......................................................................131
Section 10.12 Reporting; Withholding........................................................131
Section 10.13 Liability of the Trustee......................................................131
Section 10.14 Appointment of Co-Trustee or Separate Trustee.................................132
Section 10.15 Appointment of Custodians.....................................................133
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions..........................................134
Section 11.02 Form of Documents Delivered to the Trustee....................................134
Section 11.03 Acts of Owners................................................................135
Section 11.04 Notices, etc. to Trustee.....................................................136
Section 11.05 Notices and Reports to Owners; Waiver of Notices..............................136
Section 11.06 Rules by Trustee..............................................................136
Section 11.07 Successors and Assigns........................................................137
Section 11.08 Severability..................................................................137
Section 11.09 Benefits of Agreement.........................................................137
Section 11.10 Legal Holidays................................................................137
Section 11.11 Governing Law; Submission to Jurisdiction.....................................137
Section 11.12 Counterparts..................................................................138
Section 11.13 Usury.........................................................................138
Section 11.14 Amendment.....................................................................139
Section 11.15 Paving Agent; Appointment and Acceptance of Duties............................139
Section 11.16 REMIC Status..................................................................140
Section 11.17 Additional Limitation on Action and Imposition of Tax.........................142
Section 11.18 Appointment of Tax Matters Person.............................................143
Section 11.19 The Certificate Insurer.......................................................143
Section 11.20 Reserved......................................................................143
Section 11.21 Third Party Rights............................................................143
Section 11.22 Notices.......................................................................143
Section 11.23 Rule 144A Information.........................................................145
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the Certificate Insurer.........146
Section 12.02 Claims Upon the Policy; Policy Payments Account...............................146
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Section 12.03 Effect of Payments by the Certificate Insurer: Subrogation....................147
Section 12.04 Notices to the Certificate Insurer............................................148
Section 12.05 Third-Party Beneficiary.......................................................148
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of Owners................148
SCHEDULE I-A SCHEDULE OF THE FIXED RATE GROUP HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE ADJUSTABLE RATE GROUP HOME EQUITY
LOANS
EXHIBIT A-1.... FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2.... FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3.... FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4.... FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5.... FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6.... FORM OF CLASS A-6 CERTIFICATE
EXHIBIT B...... RESERVED
EXHIBIT C...... FORM OF CLASS R CERTIFICATE
EXHIBIT D...... FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT F-1.... FORM OF TRUSTEE'S RECEIPT
EXHIBIT F-2.... FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G...... FORM OF POOL CERTIFICATION
EXHIBIT H...... FORM OF DELIVERY ORDER
EXHIBIT I...... FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT L...... DEFINITION OF ADJUSTABLE RATE GROUP SPECIFIED
SUBORDINATED AMOUNT
EXHIBIT M...... DEFINITION OF FIXED RATE GROUP SPECIFIED
SUBORDINATED AMOUNT
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POOLING AND SERVICING AGREEMENT, relating to CENTEX HOME EQUITY LOAN
TRUST A, dated as of ____1, 199_ by and among CHEC ASSET RECEIVABLE CORPORATION,
a Delaware corporation, in its capacity as Depositor (the "Depositor"), CENTEX
CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION, a Nevada corporation in
its capacities as the Seller (in such capacity, the "Seller") and as the
Servicer (in such capacity, the "Servicer") and _______________, in its capacity
as the trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
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, _________________________, is willing to serve in the capacity
of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, the Servicer, and the
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Class A Certificates and the Class R Certificates in accordance with their
terms, all of the sums distributable under this Agreement with respect to the
Certificates and the performance of the covenants contained in this Agreement,
the Depositor hereby bargains, sells, conveys, assigns and transfers to the
Trustee, in trust, without recourse and for the exclusive benefit of the Owners
of the Certificates and the Certificate Insurer, all of the its right, title and
interest in and to any and all benefits accruing from (a) the Initial Home
Equity Loans (other than any principal payments received and interest payments
due thereon prior to ____ 1, 199_) listed in Schedules I-A and I-B to this
Agreement which the Depositor is causing to be delivered to the Custodian on
behalf of the Trustee herewith and the Subsequent Home Equity Loans (other than
any principal payments received and interest payments due thereon prior to the
related Subsequent Cut-Off Date) listed in Schedule I-A and I-B to any
Subsequent Transfer Agreement, which the Seller will cause to be delivered to
the Custodian on behalf of the Trustee (and all substitutions for such Home
Equity Loans as provided by Sections 3.03, 3.04 and 3.06), together with the
related Home Equity Loan documents and the Depositor's interest in any Property,
and all payments thereon
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and proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts as may be held by the Trustee in the Certificate Account, the
Pre-Funding Account, the Capitalized Interest Account together with investment
earnings on such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive of investment
earnings thereon (except as otherwise provided herein), whether in the form of
cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer), (c) the Depositor's rights (except with
respect to Sections 4.03 and 4.04 of the Loan Sale Agreement), but none of its
obligations under the Loan Sale Agreement and (d) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood 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)-(d) above shall be
collectively referred to herein as the "Trust Estate"). In addition to the
foregoing, the Seller shall cause the Certificate Insurer to deliver two
Certificate Insurance Policies to the Trustee for the benefit of the Owners of
the Class A Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Class A Certificates (other than
the Class A-6 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which the Payment Date occurs. A "calendar month" shall
be deemed to be 30 days. With respect to the Class A-6 Certificates and any
Payment Date, the period commencing on the immediately preceding Payment Date
(or the Startup Day 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 Class
A Certificates (other than the Class A-6 Certificates) will be made on the basis
of a 360-day year assumed to consist of twelve 30-day months. Calculations of
interest on the Class A-6 Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent Home
Equity Loans to the Trust pursuant to Section 3.07 hereof, written notice given
not less than five Business Days prior
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to the related Subsequent Transfer Date of the Depositor's designation of
Subsequent Home Equity Loans to be sold to the Trust and the aggregate Loan
Balance of such Subsequent Home Equity Loans as of the related Subsequent
Cut-Off Date.
"Adjustable Rate Group": The pool of Home Equity Loans identified in the
related Schedule of Home Equity Loans as having been assigned to the Adjustable
Rate Group in Schedule I-B hereto or Schedule I-B of a Subsequent Transfer
Agreement, including any Qualified Replacement Mortgage delivered in replacement
thereof.
"Adjustable Rate Group Available Funds": As defined in Section 7.02(c)
hereof.
"Adjustable Rate Group Available Funds Shortfall": As defined in Section
7.03(b)(ii)(A).
"Adjustable Rate Group Capitalized Interest Requirement": With respect
to any Pre-Funding Payment Date, the excess, if any, of (x) the sum of (a) the
interest due on the Class A-6 Certificates on such Payment Date plus (b) the
Premium Amount allocable to the Adjustable Rate Group over (y) the sum of (i)
one month's interest on the aggregate Loan Balance of the Home Equity Loans in
the Adjustable Rate Group (except for Home Equity Loans with a first Monthly
Payment after ____30, 199_) as of the first day of the immediately preceding
Remittance Period, calculated at the Class A-6 Pass-Through Rate as of such
Payment Date and (ii) any Adjustable Rate Group Pre-Funding Account Earnings to
be transferred to the Certificate Account on such Payment Date, if any.
"Adjustable Rate Group Certificate Insurance Policy": The Certificate
Guaranty Insurance Policy (number: 26752) dated ____ __, 199_ issued by the
Certificate Insurer for the benefit of the Owners of the Class A-6 Certificates
pursuant to which the Certificate Insurer guarantees Insured Payments.
"Adjustable Rate Group Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all interest due during
the related Remittance Period with respect to the Home Equity Loans in the
Adjustable Rate Group, (ii) all Compensating Interest paid by the Servicer on
such Monthly Remittance Date with respect to the Adjustable Rate Group and (iii)
the portion of the Loan Purchase Prices and Substitution Amount relating to
interest on the Home Equity Loans in the Adjustable Rate Group paid by the
Seller or the Servicer on or prior to such Monthly Remittance Date and (iv) the
interest portion of all Net Liquidation Proceeds actually collected by the
Servicer with respect to such Home Equity Loans in the Fixed Rate Group during
the related Remittance Period.
"Adjustable Rate Group Maximum Collateral Amount": $_________.
"Adjustable Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Adjustable Rate Group Interest Remittance
Amount for such Monthly Remittance Date and (ii) the Adjustable Rate Group
Principal Remittance Amount for such Monthly Remittance Date.
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"Adjustable Rate Group Pre-Funding Account Earnings": With respect to
each Pre-Funding Payment Date, the actual investment earnings earned during the
previous calendar month on the portion of the Pre-Funded Account allocated to
the Adjustable Rate Group during such period as determined by the Trustee
pursuant to Section 3.07(e) hereof.
"Adjustable Rate Group Principal Distribution Amount": With respect to
the Class A-6 Certificates for any Payment Date, the lesser of:
(a) the Adjustable Rate Group Total Available Funds plus any
Insured Payment with respect to the Class A-6 Certificates minus the sum of the
Class A-6 Current Interest, the related Premium Amount and the related Trustee
Fee allocable to the Adjustable Rate Group for such Payment Date; and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) the Preference Amount with respect to principal owed
to the Owners of the Class A-6 Certificates that remains unpaid
as of such Payment Date,
(B) the principal portion of all scheduled monthly
payments on the Home Equity Loans in the Adjustable Rate Group
due on or prior to the related Due Date thereof and received by
the Servicer during the related Remittance Period, and any
Prepayments made by the Mortgagors and actually received by the
Servicer during the related Remittance Period each to the extent
such amounts are received by the Trustee on or prior to the
related Monthly Remittance Date,
(C) the outstanding principal balance of each Home Equity
Loan in the Adjustable Rate Group that was repurchased by the
Seller or purchased by the Servicer on or prior to the related
Monthly Remittance Date, to the extent such outstanding principal
balance is actually received by the Trustee on or prior to the
related Monthly Remittance Date,
(D) any Substitution Amounts delivered by the Seller on
the related Monthly Remittance Date in connection with a
substitution of a Home Equity Loan in the Adjustable Rate Group
(to the extent such Substitution Amounts relate to principal), to
the extent such Substitution Amounts are actually received by the
Trustee on or prior to the related Monthly Remittance Date,
(E) all Net Liquidation Proceeds actually collected by
the Servicer with respect to the Home Equity Loans in the
Adjustable Rate Group during the related Remittance Period (to
the extent such Net Liquidation Proceeds relate to principal) to
the extent such Net Liquidation Proceeds are actually received by
the Trustee on or prior to the related Monthly Remittance Date.
(F) the amount of any Subordination Deficit with respect
to the Adjustable Rate Group for such Payment Date,
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(G) the principal portion of the proceeds received by the
Trustee with respect to the Adjustable Rate Group from any
termination of the Trust (to the extent such proceeds related to
principal),
(H) with respect to the Payment Date immediately
following the last day of the Funding Period, all amounts
remaining on deposit in the Pre-Funding Account allocated to the
Adjustable Rate Group to the extent not used to purchase
Subsequent Home Equity Loans for inclusion in the Adjustable Rate
Group during such Funding Period, and
(I) the amount of any Subordination Increase Amount with
respect to the Adjustable Rate Group for such Payment Date, to
the extent of any Total Monthly Excess Cashflow available for
such purpose,
over
(ii) the amount of any Subordination Reduction Amount with
respect to the Adjustable Rate Group for such Payment Date.
"Adjustable Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Adjustable
Rate Group during the related Remittance Period, (ii) the outstanding principal
balance of each such Home Equity Loan in the Adjustable Rate Group that was
purchased from the Trustee on or prior to such Monthly Remittance Date, to the
extent such outstanding principal balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered by the Seller in connection with a substitution of a Home
Equity Loan in the Adjustable Rate Group, to the extent such Substitution
Amounts were actually deposited in the Principal and Interest Account on or
prior to such Monthly Remittance Date, (iv) the principal portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans in the Adjustable Rate Group during the related Remittance
Period (to the extent such Net Liquidation Proceeds related to principal) and
(v) the amount of investment losses to be deposited pursuant to Section 8.08(b).
"Adjustable Rate Group Servicing Fee": With respect to any Home Equity
Loan in the Adjustable Rate Group, 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 one month's interest at ____%
per annum of the then outstanding principal balance of such Home Equity Loan as
of the first day of each Remittance Period payable on a monthly basis, provided,
however, that if a successor Servicer is appointed pursuant to Section 8.20
hereof, the Adjustable Rate Group Servicing Fee shall be such amount as agreed
upon by the Trustee, the Certificate Insurer and the successor Servicer, and
such amount shall not to exceed ____% per annum.
"Adjustable Rate Group Specified Subordinated Amount": As defined
in Exhibit L.
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"Adjustable Rate Group Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances of the Home
Equity Loans in the Adjustable Rate Group as of the close of business on the
last day of the immediately proceeding Remittance Period and (ii) any amount on
deposit in the Pre-Funding Account relating to the Adjustable Rate Group at such
time exclusive of any Adjustable Rate Group Pre-Funding Account Earnings over
(y) the Class A-6 Certificate Principal Balance for such Payment Date (after
taking into account the payment of the Adjustable Rate Group Principal
Distribution Amount thereon (except for any Subordination Reduction Amount
relating to the Adjustable Rate Group or Subordination Increase Amount relating
to the Adjustable Rate Group) on such Payment Date).
"Adjustable Rate Group Total Available Funds": As defined in Section
7.02(c) hereof.
"Adjustable Rate Group Total Monthly Excess Spread": With respect to the
Adjustable Rate Group and any Payment Date, the excess of (i) the aggregate of
all interest which is collected on the Home Equity Loans in the Adjustable Rate
Group during the related Remittance Period (net of the Servicing Fee and the
Trustee Fee with respect to the Adjustable Rate Group and net of any
reimbursement for Nonrecoverable Advances) plus the sum of (x) any Delinquency
Advances and (y) Compensating Interest paid by the Servicer with respect to the
Adjustable Rate Group for such Remittance Period over (ii) the sum of the Class
A-6 Current Interest and the Premium Amount relating to the Adjustable Rate
Group for such Payment Date.
"Adjusted Pass-Through Rate": As of any date of determination thereof, a
rate equal to the sum of (a) the Weighted Average Pass-Through Rate and (b) any
portion of the Premium Amount and the Trustee Fee (calculated as a percentage of
the outstanding principal amount of the Certificates) then accrued and
outstanding.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the calendar
month of each Remittance Period for the twelve immediately preceding Remittance
Periods and the denominator of which is the Maximum Collateral Amount.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity
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Loan which is a purchase money mortgage, the sales price of the Property at such
time of origination, if such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Assistant
Vice President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"Available Funds": The Fixed Rate Group Available Funds or the
Adjustable Rate Group Available Funds, as the case may be.
"Available Funds Shortfall": The Fixed Rate Group Available Funds
Shortfall or the Adjustable Rate Group Available Funds Shortfall.
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in The City of New York, Dallas, Texas, the city
in which the Corporate Trust Office is located or the city in which the
Certificate Insurer is located are authorized or obligated by law or executive
order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(a) hereof and maintained by the
Trustee. The Capitalized Interest Account shall be an Eligible Account.
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates and any Payment Date, the sum of (x) the amount, if any, by which
(i) the Current Interest for such Class for the immediately preceding Payment
Date exceeded (ii) the amount of the actual distribution made to the Owners of
such Class of Class A Certificates on such immediately preceding Payment Date
pursuant to Section 7.03(b)(iii) hereof plus (y) 30 days' interest on such
excess at the Pass-Through Rate for the related Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates or the Class R
Certificates, each representing the interests and the rights described in this
Agreement.
"Certificate Account": The segregated certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "_________________________ as Trustee on behalf of the Owners of
the Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates." The Certificate Account shall be an Eligible Account.
"Certificate Insurance Policies": The Fixed Rate Group Certificate
Insurance Policy and the Adjustable Rate Group Certificate Insurance Policy.
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"Certificate Insurer": MBIA Insurance Corporation, a New York
stock insurance company and any successor thereto, as issuer of the Certificate
Insurance Policies.
"Certificate Insurer Default": The existence and continuance of
any of the following:
(a) the Certificate Insurer fails to make a payment required under
either of the Certificate Insurance Policies in accordance with its terms; or
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Certificate Insurer or for all or any material portion
of its property or (ii) authorizing the taking of possession by a custodian,
trustee, agent, or receiver of the Certificate Insurer of all or any material
portion of its property.
"Certificate Principal Balance": As of the Startup Day as to each
of the following Classes of Class A Certificates, the Certificate Principal
Balances thereof, as follows:
<TABLE>
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Class A-l Certificates - $__________
Class A-2 Certificates - $__________
Class A-3 Certificates - $__________
Class A-4 Certificates - $__________
Class A-5 Certificates - $__________
Class A-6 Certificates - $__________
</TABLE>
As of any day after the Startup Day, the Class A-1 Certificate Principal
Balance, the Class A-2 Certificate Principal Balance, the Class A-3 Certificate
Principal Balance, the Class A-4 Certificate Principal Balance, the Class A-5
Certificate Principal Balance and the Class A-6 Certificate Principal Balance.
The Class R Certificates do not have a Certificate Principal Balance.
"Civil Relief Interest Shortfalls": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailers' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
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Equity Loans during the most recently ended Remittance Period is less than
interest accrued thereon for such Remittance Period pursuant to the Note at the
Coupon Rate.
"Class": Any Class of the Class A Certificates or the Class R
Certificates.
"Class A Certificate": Any one of the Fixed Rate Certificates or
the Class A-5 Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less the aggregate of all amounts actually distributed on
account of the related Principal Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A Certificate Principal
Balance shall not be reduced by any principal amount paid to the Owner thereof
from Insured Payments.
"Class A Certificate Termination Date": With respect to the Class A-l
Certificates, the Class A-l Certificate Termination Date, with respect to the
Class A-2 Certificates, the Class A-2 Certificate Termination Date, with respect
to the Class A-3 Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate Termination
Date, with respect to the Class A-5 Certificates, the Class A-5 Certificate
Termination Date, with respect to the Class A-6 Certificates, the Class A-6
Certificate Termination Date.
"Class A Distribution Amount": The Fixed Rate Group Distribution
Amount and the Class A-6 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-l Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC Provisions .
"Class A-l Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-l Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-l Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-l Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from Insured Payments.
"Class A-l Certificate Termination Date": The Payment Date on
which the Class A-l Certificate Principal Balance is reduced to zero.
"Class A-l Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-l Certificate Principal
Balance immediately prior to such
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Payment Date during the related Accrual Period at the Class A-l Pass-Through
Rate plus the Preference Amount owed and unpaid to the Owners of the Class A-l
Certificates as it relates to interest previously paid on the Class A-l
Certificates, plus the Carry Forward Amount, if any, with respect to the Class
A-l Certificates; provided, however, such amount will be reduced by the Class
A-l Certificates' pro rata share of any Civil Relief Interest Shortfalls
relating to Home Equity Loans in the Fixed Rate Group.
"Class A-l Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-l Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-1 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(i) for such Payment Date.
"Class A-1 Pass-Through Rate": ____% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-2 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-2 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from the Insured Payments.
"Class A-2 Certificate Termination Date": The Payment Date on
which the Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-2 Pass-Through Rate plus the Preference Amount owed and unpaid to
the Owners of the Class A-2 Certificates as it relates to interest previously
paid on the Class A-2 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-2 Certificates; provided, however, such amount will be
reduced by the Class A-2 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-2 Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-2 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(ii) for such Payment Date.
"Class A-2 Pass-Through Rate": ____% per annum.
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"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"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 the aggregate of all amounts actually distributed
with respect to the Class A-3 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-3 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from the Insured Payments.
"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, an
amount equal to 30 days' 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 and unpaid to
the Owners of the Class A-3 Certificates as it relates to interest previously
paid on the Class A-3 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-3 Certificates; provided, however, such amount will be
reduced by the Class A-3 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-3 Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-3 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(iii) for such Payment Date.
"Class A-3 Pass-Through Rate": ____% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"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 the aggregate of all amounts actually distributed
with respect to the Class A-4 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee,
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the Class A-4 Certificate Principal Balance shall not be reduced by any
principal amounts paid to the Owners thereof from the Insured Payments.
"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, an
amount equal to 30 days' 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 and unpaid to
the Owners of the Class A-4 Certificates as it relates to interest previously
paid on the Class A-4 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-4 Certificates; provided, however, such amount will be
reduced by the Class A-4 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-4 Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-4 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(iv) for such Payment Date.
"Class A-4 Pass Through Rate" ____% per annum.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"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 the aggregate of all amounts actually distributed
with respect to the Class A-5 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-5 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from Insured Payments.
"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, an
amount equal to 30 days' 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 and unpaid to
the Owners of the Class A-5 Certificates as it relates to interest previously
paid on the Class A-5 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-5 Certificates; provided, however, such amount will be
reduced by
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the Class A-5 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-5 Current Interest, (y) the Class A-5 Lockout Distribution
Amount payable to the owners of the Class A-5 Certificates pursuant to Section
7.03(b)(iii)(B)(I) and (z) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(b)(iii)(B)(II)(v) for such Payment Date; provided, however, that the Class
A-5 Distribution Amount shall in no event be greater than the sum of (a) the
Class A-5 Current Interest and (b) lesser of (i) the Class A-5 Certificate
Principal Balance and (ii) the Fixed Rate Group Principal Distribution Amount
for such Payment Date.
"Class A-5 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-5 Lockout Percentage for such Payment Date
and (ii) the Class A-5 Lockout Pro Rata Distribution Amount for such Payment
Date; provided, that the Class A-5 Lockout Distribution Amount shall not exceed
the Class A-5 Certificate Principal Balance.
"Class A-5 Lockout Percentage": For each Payment Date, the
percentage set forth below:
<TABLE>
<CAPTION>
Class A-5
Payment Date Lockout Percentage
<S> <C>
</TABLE>
"Class A-5 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-5 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate of Certificate Principal Balances
of the Fixed Rate Certificates immediately prior to such Payment Date and (y)
the Fixed Rate Group Principal Distribution Amount for such Payment Date.
"Class A-5 Pass-Through Rate": ___% per annum.
"Class A-6 Available Funds Cap Rate": With respect to any Accrual Period
and any Payment Date, a rate per annum equal to the fraction, expressed as a
percentage, the numerator of which is (i) an amount equal to (A) 1/12 of the
weighted average of the Net Coupon Rates of the Home Equity Loans in the
Adjustable Rate Group (by outstanding principal balance) at the beginning of the
related Remittance Period, times the aggregate Loan Balance of the Home Equity
Loans in the Adjustable Rate Group as of the beginning of the Remittance Period
minus (B) the Premium Amount for the Adjustable Rate Group for such Payment
Date, and the denominator of which is (ii) the outstanding Class A-6 Certificate
Principal Balance at the beginning of such Accrual Period such rate, as
calculated on the basis of a 360 day year and the actual number of days elapsed
in the related Accrual Period.
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"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"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 the aggregate of all amounts actually distributed
with respect to the Adjustable Rate Group Principal Distribution Amount pursuant
to Section 7.03(b)(iii) hereof on all prior Payment Dates; provided, however,
that solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-6 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"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 Certificateholders' Interest Index Carryover": With respect
to any Accrual Period and any related Payment Date, an amount equal to the
excess, if any, of (i) the Class A-6 Pass-Through Rate (calculated without
regard to clause (y) of the definition thereof) over (ii) the amount of Class
A-6 Current Interest for such Payment Date if clause (ii) of the definition of
"Class A-6 Pass-Through Rate" were to used to calculate such Class A-6 Current
Interest.
"Class A-6 Current Interest": With respect to any Payment Date, an
amount equal to 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 and unpaid to the Owners of the Class A-6 Certificates as it relates to
interest previously paid on the Class A-6 Certificates plus the Carry-Forward
Amount, if any, with respect to the Class A-6 Certificates; provided, however,
such amount will be reduced by the amount of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in the Adjustable Rate Group.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-6 Current Interest and (y) the Adjustable Rate Group
Principal Distribution Amount payable to the Owners of the Class A-6
Certificates pursuant to Section 7.03(b)(iii)(C) for such Payment Date.
"Class A-6 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 ___% per annum and (ii) the Class A-6 Available Funds Cap Rate
for such Payment Date and for any month following the month in which the
Clean-Up Call Date occurs, the lesser of (i) LIBOR plus ___% per annum and (ii)
the Class A-6 Available Funds Cap Rate 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, authenticated and
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delivered by the Trustee, representing the right to distributions as set forth
herein, and evidencing an interest designated as the "residual interest" in the
REMIC created hereunder for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate outstanding principal balances of the Home Equity Loans as of the
close of business on the last day of the immediately preceding Remittance Period
has declined to 10% or less of the Maximum Collateral Amount.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal office of the Trustee at
_________________________, Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0070 or the principal office of any successor Trustee hereunder.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Home Equity Loan, the
amount of such reduction. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the aggregate of all Realized Losses since the Startup Day as a percentage of
the Maximum Collateral Amount.
"Current Interest": With respect to any Payment Date, the sum of (a) the
Class A-1 Current Interest, (b) the Class A-2 Current Interest, (c) the Class
A-3 Current Interest, (d) the Class A-4 Current Interest, (e) the Class A-5
Current Interest and (f) the Class A-6 Current Interest for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of ____l, 199_
among the Custodian and the Trustee.
"Custodian": First Chicago National Processing, as Custodian on behalf
of the Trustee pursuant to the Custodial Agreement and any successor Custodian.
"Cut-Off Date": ____1, 199_.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
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"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit H
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": CHEC Asset Receivable Corporation, a Delaware corporation,
or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York, 10004, and any successor Depository named herein.
"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 $________; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A" by Standard & Poor's and "A2" by Moody's
and (ii) the Servicer shall provide the Trustee and the Certificate Insurer with
a statement, which the Trustee will send to the Owners, identifying the location
and account information of the Principal and Interest Account upon a change in
the location of such account.
"Determination Date": The 15th day of each month, or if such day is not
a Business Day, on the preceding Business Day, commencing in July 199_.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization" shall have the
meaning set forth from time to time in the definition thereof at Section
860E(e)(5) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Due Date": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized long term date obligations of which institution
shall be rated AA or higher by S&P and Aa2 or higher by
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Moody's and in the highest short term rating category by each of the Rating
Agencies, and which is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and each of the Rating Agencies or (B) a
segregated trust account or accounts maintained with the trust department of a
federal or state chartered depository institution acceptable to each Rating
Agency and the Certificate Insurer, having capital and surplus of not less than
$_________, acting in its fiduciary capacity.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Excess Subordinated Amount": With respect to either Home Equity Loan
Group and Payment Date, the excess, if any, of (x) the Subordinated Amount that
would apply to such Home Equity Loan Group on such Payment Date after taking
into account the payment of the related Principal Distribution Amount on such
Payment Date (except for any distributions of related Subordination Reduction
Amounts on such Payment Date), over (y) the related Specified Subordinated
Amount for such Payment Date.
"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 Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Home
Equity Loan and any additional documents required to be added to the File
pursuant to this Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Recovery Determination": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the Servicer), a determination made by the Servicer
that all recoveries which the Servicer, in its reasonable business judgment
expects to be finally recoverable in respect thereof have been so recovered or
that the Servicer believes in its reasonable business judgment the cost of
obtaining any additional recoveries therefrom would exceed the amount of such
recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"Final Scheduled Payment Date": As set out in Section 2.08(a) hereof.
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"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Fixed Rate Certificates": Any one of the Class A-l Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates and Class A-5
Certificates.
"Fixed Rate Group": The pool of Home Equity Loans identified in the
related Schedule of Home Equity Loans as having been assigned to the Fixed Rate
Group in Schedule I-A hereto or Schedule 1-A of a Subsequent Transfer Agreement,
including any Qualified Replacement Mortgage delivered in replacement thereof.
"Fixed Rate Group Available Funds": As defined in Section 7.02(b)
hereof.
"Fixed Rate Group Available Funds Shortfall": As defined in Section
7.03(b)(ii)(A).
"Fixed Rate Group Capitalized Interest Requirement": As to any
Pre-Funding Payment Date, the excess, if any, of (x) the sum of (a) the interest
due on the Fixed Rate Certificates on such Payment Date plus (b) the Premium
Amount allocable to the Fixed Rate Group over (y) the sum of (i) one month's
interest on the aggregate Loan Balance of the Home Equity Loans in the Fixed
Rate Group (except for Home Equity Loans with a first Monthly Payment after
____30, 199_) as of the beginning of business on the first day of the
immediately preceding Remittance Period, calculated at the weighted average of
the Pass-Through Rates of the Fixed Rate Certificates as of such Payment Date
and (ii) any Fixed Rate Group Pre-Funding Account Earnings to be transferred to
the Certificate Account on such Payment Date, if any.
"Fixed Rate Group Certificate Insurance Policy": The Certificate
Guaranty Insurance Policy (number: 26751) dated ____ __, 199_ issued by the
Certificate Insurer for the benefit of the Fixed Rate Certificates pursuant to
which the Certificate Insurer guarantees Insured Payments.
"Fixed Rate Group Distribution Amount": The sum of the Class A-1
Distribution Amount, Class A-2 Distribution Amount, Class A-3 Distribution
Amount, Class A-4 Distribution Amount and Class A-5 Distribution Amount.
"Fixed Rate Group Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all interest due during
the related Remittance Period with respect to the Home Equity Loans in the Fixed
Rate Group, (ii) all Compensating Interest paid by the Servicer on such Monthly
Remittance Date with respect to the Fixed Rate Group and (iii) the portions of
the Loan Purchase Prices and the Substitution Amount relating to interest on the
Home Equity Loans in the Fixed Rate Group paid by the Seller or Servicer on or
prior to such Monthly Remittance Date and (iv) the interest portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans in the Fixed Rate Group during the related Remittance Period.
"Fixed Rate Group Maximum Collateral Amount": $__________.
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"Fixed Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Fixed Rate Group Interest Remittance Amount
for such Monthly Remittance Date and (ii) the Fixed Rate Group Principal
Remittance Amount for such Monthly Remittance Date.
"Fixed Rate Group Pre-Funding Account Earnings": As to any Pre-Funding
Payment Date, the actual investment earnings earned during the previous
Remittance Period on that portion of the Pre-Funding Account allocated to the
Fixed Rate Group during such period as calculated by the Trustee pursuant to
Section 3.07(e) hereof.
"Fixed Rate Group Principal Distribution Amount": With respect to the
Fixed Rate Certificates for any Payment Date, the lesser of:
(a) the Fixed Rate Group Total Available Funds plus any Insured
Payment with respect to the Fixed Rate Certificates minus the sum of the related
Current Interest with respect to the Fixed Rate Certificates, the related
Premium Amount and the related Trustee Fee allocable to the Fixed Rate Group for
such Payment Date; and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) the Preference Amount with respect to principal owed
to the Owners of the related Fixed Rate Certificates that remains
unpaid as of such Payment Date,
(B) the principal portion of all scheduled monthly
payments on the Home Equity Loans in the Fixed Rate Group due on
or prior to the related Due Date thereof and received by the
Servicer during the related Remittance Period, and any
Prepayments made by the Mortgagors and actually received by the
Servicer during the related Remittance Period, each to the extent
such amounts are received by the Trustee on or prior to the
related Monthly Remittance Date,
(C) the outstanding principal balance of each Home Equity
Loan in the Fixed Rate Group that was repurchased by the Seller
or purchased by the Servicer on or prior to the related Monthly
Remittance Date, to the extent such outstanding principal balance
is actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(D) any Substitution Amounts delivered by the Seller on
the related Monthly Remittance Date in connection with a
substitution of a Home Equity Loan in the Fixed Rate Group (to
the extent such Substitution Amounts relate to principal), to the
extent such Substitution Amounts are actually received by the
Trustee on or prior to the related Monthly Remittance Date,
(E) all Net Liquidation Proceeds actually collected by
the Servicer with respect to the Home Equity Loans in the Fixed
Rate Group during the related Remittance Period (to the extent
such Net Liquidation Proceeds relate to
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principal) to the extent such Net Liquidation Proceeds are
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(F) the amount of any Subordination Deficit with respect
to the Fixed Rate Group for such Payment Date,
(G) the principal portion of the proceeds received by the
Trustee with respect to the Fixed Rate Group from any termination
of the Trust (to the extent such proceeds related to principal),
(H) with respect to the Payment Date immediately
following the last day of the Funding Period, all amounts
remaining on deposit in the Pre-Funding Account allocated to the
Fixed Rate Group to the extent not used to purchase Subsequent
Home Equity Loans for inclusion in the Fixed Rate Group during
such Funding Period, and
(I) the amount of any Subordination Increase Amount with
respect to the Fixed Rate Group for such Payment Date, to the
extent of any Total Monthly Excess Cashflow available for such
purpose,
over
(ii) the amount of any Subordination Reduction Amount with
respect to the Fixed Rate Group for such Payment Date.
"Fixed Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Fixed Rate
Group during the related Remittance Period, (ii) the outstanding principal
balance of each such Home Equity Loan in the Fixed Rate Group that was purchased
from the Trustee on or prior to such Monthly Remittance Date, to the extent such
outstanding principal balance was actually deposited in the Principal and
Interest Account, (iii) any Substitution Amounts relating to principal delivered
by the Seller in connection with a substitution of a Home Equity Loan in the
Fixed Rate Group, to the extent such Substitution Amounts were actually
deposited in the Principal and Interest Account on or prior to such Monthly
Remittance Date, (iv) the principal portion of all Net Liquidation Proceeds
actually collected by the Servicer with respect to such Home Equity Loans in the
Fixed Rate Group during the related Remittance Period (to the extent such Net
Liquidation Proceeds related to principal) and (v) the amount of investment
losses required to be deposited pursuant to Section 8.08(b).
"Fixed Rate Group Servicing Fee": With respect to any Home Equity Loan
in the Fixed Rate Group, 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 one month's interest at ___% per annum of the then
outstanding principal balance of such Home Equity Loan as of the first day of
each Remittance Period payable on a monthly basis; provided, however, that if a
successor Servicer is appointed pursuant to Section 8.20 hereof, the Fixed Rate
Group
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Servicing Fee shall be the amount as agreed upon by the Trustee, the Certificate
Insurer and the successor Servicer, and such amount shall not exceed ___% per
annum.
"Fixed Rate Group Specified Subordinated Amount": As defined in Exhibit
M.
"Fixed Rate Group Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances of the Home
Equity Loans in the Fixed Rate Group as of the close of business on the last day
of the immediately proceeding Remittance Period and (ii) any amount on deposit
in the Pre-Funding Account relating to the Fixed Rate Group at such time
exclusive of any the Fixed Rate Group Pre-Funding Account Earnings over (y) the
aggregate of Certificate Principal Balances of the Fixed Rate Certificates for
such Payment Date (after taking into account the payment of the Fixed Rate Group
Principal Distribution Amount thereon (except for any Subordination Reduction
Amount relating to the Fixed Rate Group and Subordination Increase Amount
relating to the Fixed Rate Group) on such Payment Date).
"Fixed Rate Group Total Available Funds": As defined in Section 7.02(b)
hereof.
"Fixed Rate Group Total Monthly Excess Spread": With respect to the
Fixed Rate Group and any Payment Date, the excess of (i) the aggregate of all
interest which is collected on the Home Equity Loans in the Fixed Rate Group
during the related Remittance Period (net of the Servicing Fee and the Trustee
Fee with respect to the Fixed Rate Group and net of any reimbursement for
Nonrecoverable Advances) plus the sum of (x) any Delinquency Advances and (y)
Compensating Interest paid by the Servicer with respect to the Fixed Rate Group
for such Remittance Period over (ii) the sum of the Current Interest on the
Fixed Rate Certificates and the Premium Amount relating to the Fixed Rate Group
for such Payment Date.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time, and the Servicer shall elect to apply such amendments in
accordance with Section 8.01 hereof.
"Funding Period": With respect to each Group, the period commencing on
the Startup Day and ending on the earlier to occur of (i) the date on which the
Servicer may be removed pursuant to Section 8.20(a) hereof and (ii) _____ __,
199_.
"Highest Lawful Rate": As defined in Section 11.13 hereof.
"Home Equity Loan Group" or "Group": The Fixed Rate Group or the
Adjustable Rate Group, as the case may be. References herein to the related
Class of Class A Certificates, when used with respect to a Home Equity Loan
Group, shall mean (A) in the case of the Fixed Rate Group, the Fixed Rate
Certificates and (B) in the case of the Adjustable Rate Group, the Class A-5
Certificates.
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"Home Equity Loans": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan." The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a Home Equity Loan" for all
purposes of this Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
____ __, 199_ among the Certificate Insurer, the Seller and the Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Initial Home Equity Loans": The Home Equity Loans to be conveyed to the
Trust by the Depositor on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of ____1, 199_,
among the Depositor, the Seller, the Servicer, the Trustee and the Certificate
Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"Insured Payment": As defined in the Fixed Rate Group Certificate
Insurance Policy or as defined in the Adjustable Rate Group Certificate
Insurance Policy.
"Interest Remittance Amount": The sum of the Fixed Rate Group Interest
Remittance Amount and the Adjustable Rate Group Interest Remittance Amount.
"Late Payment Rate": As defined in the Insurance Agreement.
"LIBOR": With respect to any Accrual Period for the Class A-6
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)
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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 ___%). If fewer
than two quotations are provided as requested, the rate for that date will be
the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Servicer, at approximately 11:00 a.m. (New York City time) on
such date for one-month U.S. dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Class A-6 Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
"Liquidated Loan": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"Liquidation Proceeds": With respect to any Liquidated Loan, all 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 actual outstanding principal balance thereof on the
Cut-Off Date with respect to the Initial Home Equity Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans or
relevant replacement Cut-Off Date with respect to the Qualified Replacement
Mortgages excluding payments of principal due prior to the Cut-Off Date,
Subsequent Cut-Off Date or Replacement Cut-Off Date, as the case may be, whether
or not received, 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 or prior to a Monthly Remittance Date pursuant to Section
3.03, 3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the outstanding
principal 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 all accrued and unpaid interest
on such Home Equity Loan at the Coupon Rate to but not including the date of
such purchase 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 which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
and (iii) all reimbursed Delinquency Advances and Servicing Advances to the
extent that reimbursement is not made from the Mortgagor.
"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
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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.
"Loan Sale Agreement": The Loan Sale Agreement dated as of ____1, 199_
between the Seller and the Depositor, as it may be amended from time to time.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"Maximum Collateral Amount": $__________.
"Maximum Rate": With respect to any Home Equity Loan in the Adjustable
Rate Group, means the maximum rate at which interest may accrue on such Home
Equity Loan.
"Minimum Spread": Shall be a percentage per annum equal to 0% for
Payment Dates which occur prior to July 1999 and equal to ____% for Payment
Dates which occur in July 1999 or thereafter.
"Monthly Payment": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Note.
"Monthly Remittance Amount": The sum of the Fixed Rate Group Monthly
Remittance Amount and the Adjustable Rate Group Monthly Remittance Amount.
"Monthly Remittance Date": The 18th day of each month, or if such day is
not a Business Day, on the preceding Business Day, commencing in ____ 199_.
"Moody's": Moody's Investors Service Inc. or any successor thereto.
"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 Coupon Rate": With respect to any Home Equity Loan in the
Adjustable Rate Group, means a rate per annum equal to the Coupon Rate of such
Home Equity Loan minus the sum of (i) the rate at which the Servicing Fee
accrues, (ii) the rate at which the Trustee Fee accrues, and (iii) the Minimum
Spread.
"Net Maximum Rate": With respect to any Home Equity Loan in the
Adjustable Rate Group, a rate per annum equal to the Maximum Rate of such Home
Equity Loan minus the sum
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of (i) the rate at which the Servicing Fee accrues, (ii) the rate at which the
Trustee Fee accrues, and (iii) the Minimum Spread.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity Loan
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.
"90-Day Delinquent Loan": With respect to any Determination Date, all
REO Properties and 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, three
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the three immediately preceding Remittance Periods the
numerator of each of which is equal to the sum of (without duplication) (i) the
aggregate Loan Balance of 90-Day Delinquent Loans, (ii) the aggregate
outstanding principal balance of Home Equity Loans in foreclosure and (iii) the
aggregate outstanding principal balance of Home Equity Loans relating to REO
Properties as of the end of such Remittance Period and the denominator of which
is the Loan Balance of all of the Home Equity Loans as of the end of such
Remittance Period.
"Nonrecoverable Advance" means with respect to any Home Equity Loan for
which a Final Recovery Determination has been made, any Delinquency Advance
previously made and not reimbursed from proceeds on the related Home Equity Loan
or under Section 7.03(b)(iii)(F) hereof which the Servicer has determined, in
good faith business judgment, as evidenced by an Officer's Certificate delivered
to the Certificate Insurer and the Trustee no later than the Business Day
following such determination, would not be ultimately recovered.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee and the
Certificate Insurer.
"Operative Documents": Collectively, this Agreement, the Loan Sale
Agreement, the Certificate Insurance Policies, the Certificates, the Custodial
Agreement, the Indemnification Agreement and the Insurance Agreement.
"Opinion of Counsel": A written Opinion of Counsel acceptable, in form
and substance, to the Trustee and the Certificate Insurer and delivered to the
Trustee and the Certificate Insurer.
"Original Adjustable Rate Group Capitalized Interest Deposit": $__.
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"Original Adjustable Rate Group Pre-Funded Amount": $_______.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Home Equity Loans as of the Cut-Off Date, which is $___________.
"Original Aggregate Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the sale of the
Certificates, which amount is equal to $______.
"Original Fixed Rate Group Capitalized Interest Deposit": $____.
"Original Fixed Rate Group Pre-Funded Amount": $________.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen
for which replacement Certificates have been issued as provided for in
Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Owner": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 12.06
hereof.
"Pass-Through Rate": Means either the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate, or the Class A-6
Pass-Through Rate.
"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.
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"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th 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. The first Payment Date will be _______ __,
199_.
"Percentage Interest": With respect to a Class of Class A Certificates,
a fraction, expressed as a decimal, the numerator of which is the initial Class
A Certificate Principal Balance represented by such Class A Certificate and the
denominator of which is the aggregate initial Class A Certificate Principal
Balance represented by all the Class A Certificates of such Class. With respect
to the Class R Certificates, 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, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Policy Payments Account": The policy payments account maintained by the
Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account shall
be an Eligible Account.
"Preference Amount": With respect to the Class A Certificates means any
amount previously distributed to the Owners of the Class A Certificates which
are recoverable and sought to be recovered as a voidable preference by a trustee
in bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.) as
amended from time to time in accordance with a final, nonappealable order of a
court having competent jurisdiction.
"Preference Claim": As defined in Section 12.02(d) hereafter.
"Pre-Funded Amount": With respect to any Determination Date, the amount
remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in accordance
with Section 7.02(a) hereof and maintained by the Trustee. The Pre-Funding
Account shall be an Eligible Account.
"Pre-Funding Account Earnings": The Fixed Rate Group Pre-Funding Account
Earnings or the Adjustable Rate Group Pre-Funding Account Earnings as the case
may be.
"Pre-Funding Payment Date": The _____ 199_ Payment Date.
"Premium Amount": As defined in the Insurance Agreement.
"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 and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution
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Amounts, the portion of the purchase price of any Home Equity Loan purchased
from the Trust pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b) hereof
representing principal and the proceeds of any Insurance Policy which are to be
applied as a payment of principal on the related Home Equity Loan shall be
deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Principal Distribution Amount": The Fixed Rate Group Principal
Distribution Amount or the Adjustable Rate Group Principal Distribution Amount.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"Principal Remittance Amount": The Fixed Rate Group Principal Remittance
Amount or the Adjustable Rate Group Principal Remittance Amount.
"Prohibited Transaction": "Prohibited Transaction" shall have the
meaning set forth from time to time in the definition thereof at Section
860F(a)(2) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Depositor's Prospectus dated ____ __, 199_
constituting part of the Registration Statement.
"Prospectus Supplement": The Centex Home Equity Loan Trust A Prospectus
Supplement dated ____ __, 199_ 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 and 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 or better property type or is a single family
dwelling and the same or better occupancy status or is a primary residence as
the Home Equity Loan being replaced, (iii) shall mature no later than the Final
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Scheduled Payment Date with respect to the related Home Equity Loan Group, (iv)
has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall be
of the same or higher credit quality classification (determined in accordance
with the Seller's credit underwriting guidelines set forth in the Seller's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) shall be a First Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a First Mortgage Loan and
shall be a First Mortgage Loan or Second Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a Second Mortgage Loan,
(vii) has an outstanding principal balance as of the related Replacement Cut-Off
Date equal to or less than the outstanding principal balance of the replaced
Home Equity Loan as of such Replacement Cut-Off Date, (viii) 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), (ix)
shall be a fixed rate Home Equity Loan if the Home Equity Loan being replaced is
in the Fixed Rate Group or an adjustable rate Home Equity Loan if the Home
Equity Loan being replaced is in the Adjustable Rate Group, (x) 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, (xi) satisfies the representations and warranties set forth in Section
3.04(b) hereof, (xii) shall not be 30 days or more delinquent and (xiii) if such
Home Equity Loan being replaced is in the Adjustable Rate Group, shall adjust
based on the same index, have no lower margin, have the same interval between
adjustment dates and have a maximum Coupon Rate no lower than, and a minimum
Coupon Rate no lower than the Home Equity Loan being replaced. In the event that
one or more home equity loans are proposed to be substituted for one or more
Home Equity Loans, the Certificate Insurer may allow the foregoing tests to be
met on a weighted average basis or other aggregate basis acceptable to the
Certificate Insurer, as evidenced by a written approval delivered to the Trustee
by the Certificate Insurer, except that the requirements of clauses (i), (iii),
(iv), (ix), (x), (xi) and (xii) hereof must be satisfied as to each Qualified
Replacement Mortgage.
"Rating Agencies": Collectively, Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon and (z) the amount of any Cram Down Loss with respect thereto is in
excess of (B) the Net Liquidation Proceeds realized thereon applied in reduction
of such Loan Balance.
"Record Date": With respect to the Fixed Rate Certificates and each
Payment Date, the last Business Day of the calendar month immediately preceding
the calendar month in which such Payment Date occurs and with respect to the
Class A-6 Certificates, the Business Day immediately preceding such Payment
Date.
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"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 Seller which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established place of
business in London, (ii) not controlling, under the control of or under common
control with the Seller or any affiliate thereof, (iii) whose quotations appear
on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv) which
have been designated as such by the Seller.
"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
333-39325), including all amendments thereto and including the Prospectus and
Prospectus Supplement relating to the Class A Certificates.
"Reimbursement Amount": With respect to each Home Equity Loan Group and
any Payment Date, the sum of (x)(i) all Insured Payments previously paid to the
Trustee by the Certificate Insurer and not previously repaid to the Certificate
Insurer pursuant to Section 7.03(b)(iii) hereof plus (ii) interest accrued on
each such Insured Payment not previously repaid calculated at the Late Payment
Rate and (y)(i) any amounts then due and owing to the Certificate Insurer under
the Insurance Agreement (including, without limitation, any unpaid Premium
Amount relating to such Payment Date or an earlier Payment Date) plus (ii)
interest on such amounts at the Late Payment Rate. The Certificate Insurer shall
notify the Trustee, the Depositor and the Seller in writing of the amount of any
Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Estate": The segregated pool of assets referred to as the Trust
Estate (other than the Pre-Funding Account and the Capitalized Interest Account)
constituting the REMIC created hereunder.
"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": With respect to each Monthly Remittance Date, the
calendar month immediately preceding such Monthly Remittance Date.
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"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Total Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(b)(i), 7.03(b)(ii) and 7.03(b)(i)(iii) hereof.
"Schedule of Home Equity Loans": The schedules of Home Equity Loans with
respect to the Initial Home Equity Loans listing each Initial Home Equity Loan
to be conveyed on the Startup Day and with respect to Subsequent Home Equity
Loans listing each Subsequent Home Equity Loan conveyed to the Trust as of each
Subsequent Transfer Date. Such Schedules of Home Equity Loans shall identify
each Home Equity Loan by the Servicer's loan number, borrower's name and address
(including the state and zip code) of the Property and shall set forth as to
each Home Equity Loan the lien status thereof, the Loan-to-Value Ratio and the
Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the original Loan
Balance thereof, the current scheduled monthly payment of principal and interest
and the maturity date of the related Note, the property type, occupancy status,
Appraised Value and the original term-to-maturity thereof and whether or not
such Home Equity Loan (including related Note) has been modified.
"Scheduled Principal Payment": As of any date of calculation, with
respect to a Home Equity Loan, the then stated scheduled monthly installment of
principal 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), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation.
"Senior Lien": With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
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"Servicer": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, and its pertained 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 home equity loans.
"Servicer Loss Test": The Servicer Loss Test for any period set out
below is satisfied, if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below (provided, that for purposes
of the calculation of the Servicer Loss Test, Realized Losses attributable
solely to Cram Down Losses should be excluded from the calculation of Cumulative
Loss Percentage):
<TABLE>
<CAPTION>
Cumulative Loss
Period Percentage
<S> <C>
</TABLE>
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if (w) the Servicer's Tangible Net Worth
is at least $________, (x) the 90+ Delinquency Percentage (Rolling Three Month)
is less than ____%, (y) the Servicer Loss Test is satisfied and (z) the Annual
Loss Percentage (Rolling Twelve Month) for the twelve month period immediately
preceding the date of determination thereof is not greater than ____%.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": The Fixed Rate Group Servicing Fee or the Adjustable
Rate Group Servicing Fee, as the context may require.
"Specified Subordinated Amount": The Fixed Rate Group Specified
Subordinated Amount or the Adjustable Rate Group Specified Subordinated Amount.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies or any successor thereto.
"Startup Day": ____ __, 199_.
"Subordinated Amount": The Fixed Rate Group Subordinated Amount or the
Adjustable Rate Group Subordinated Amount, as the case may be.
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"Subordination Deficiency Amount": With respect to either Home Equity
Loan Group and Payment Date, the excess, if any, of (i) the Specified
Subordinated Amount applicable to such Home Equity Loan Group and Payment Date
over (ii) the Subordinated Amount applicable to such Home Equity Loan Group and
Payment Date prior to taking into account the payment of any related
Subordination Increase Amounts on such Payment Date.
"Subordination Deficit": With respect to either Home Equity Loan Group
and Payment Date, the amount, if any, by which (x) the related aggregate of the
Certificate Principal Balances with respect to such Group, after taking into
account the payment of the related Class A Distribution Amount with respect to
such Group on such Payment Date (without regard to any Insured Payment to be
made on such Payment Date and except for any Subordination Deficit with respect
to such Group), exceeds (y) the sum of (a) the aggregate Loan Balances of the
Home Equity Loans in such Home Equity Loan Group as of the close of business on
the last day of the related Remittance Period and (b) the amount, if any, on
deposit in the Pre-Funding Account with respect to such Group on the last day of
the related Remittance Period exclusive of any Pre-Funding Account Earnings with
respect to such Group.
"Subordination Increase Amount": With respect to any Home Equity Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amount on such Payment Date (except for any
Subordination Increase Amount with respect to such Group)) and (ii) the
aggregate amount of Total Monthly Excess Cashflow allocated to such Home Equity
Loan Group pursuant to Section 7.03(b)(ii)(E) or (G) on such Payment Date.
"Subordination Reduction Amount": With respect to any Home Equity Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Home Equity Loan Group and Payment Date and (y) the
Principal Remittance Amount with respect to such Group for the related
Remittance Period.
"Subsequent Cut-Off Date": The later of (x) the opening of business of
the first day of the month in which such Subsequent Home Equity Loan was
transferred to the Trust and (y) the date of origination of any such Home Equity
Loan which is originated in the month of the related Subsequent Transfer Date.
"Subsequent Home Equity Loans": The Home Equity Loans sold to the Trust
pursuant to Section 3.07 hereof, which shall be listed on the Schedule of Home
Equity Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee, the Depositor
and the Seller substantially in the form of Exhibit D hereto, by which
Subsequent Home Equity Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement.
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"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.
"Tangible Net Worth": Shall mean the difference between: (A) the
tangible assets of the Seller or Servicer, as applicable, and its affiliates and
subsidiaries calculated in accordance with GAAP, as reduced by adequate reserves
in each case where a reserve is appropriate; and (B) all indebtedness, including
subordinated debt, of the Seller or Servicer, as applicable, and its affiliates
and subsidiaries; provided, however, that (i) intangible assets such as patents,
trademarks, trade names, copyrights, licenses, good will, organization costs,
advances or loans to, or receivables from directors, officers, employees or
affiliates, prepaid assets, amounts relating to covenants not to compete,
pension assets, deferred charges or treasury stock of any securities unless the
same are readily marketable in the United States of America or are entitled to
be used as a credit against federal income tax liabilities, shall not be
included in the calculation of (A) above, (ii) securities included as tangible
assets shall be valued at their current market price or costs, whichever is
lower and (iii) any write-up in book value of any assets shall not be taken into
account.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The ____% interest in the Class
R Certificates which shall be issued to and held by _________________________
throughout the term hereof unless another person shall accept an assignment of
either such interest and the designation of Tax Matters Person pursuant to
Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": Means, with respect to Sections 9.02 and 9.03
hereof, and on any date of determination thereof, an amount equal to the sum of
(w) the greater of (i) 100% of the aggregate outstanding principal balances of
the Home Equity Loans as of such date of determination less amounts remitted to
the Principal and Interest Account representing collections of principal on the
Home Equity Loans during the current Remittance Period, and (ii) the greater of
(A) the outstanding Class A Certificate Principal Balance and (B) the fair
market value of such Home Equity Loans (disregarding accrued interest), (x) one
month's interest on such amount computed at the Adjusted Pass-Through Rate, (y)
all Reimbursement Amounts and
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(z) the sum of the aggregate amount of any unreimbursed Delinquency Advances,
Servicing Advances, Compensating Interest and any Delinquency Advances which the
Servicer has theretofore failed to remit.
"Total Available Funds": The Fixed Rate Group Total Available Funds and
the Adjustable Rate Group Total Available Funds.
"Total Monthly Excess Cashflow": As defined in Section 7.03(b)(ii)
hereof.
"Total Monthly Excess Spread": The Fixed Rate Group Total Monthly Excess
Spread and the Adjustable Rate Group Total Monthly Excess Spread.
"Trust": Centex Home Equity Loan Trust A, the trust created under this
Agreement which shall be comprised of two sub-trusts; one for the Adjustable
Rate Group and any Trust assets allocable to such Adjustable Rate Group and the
other for the Fixed Rate Group and any Trust assets allocable to such Fixed Rate
Group.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": _________________________, the Corporate Trust Department of
which is located on the date of execution of this Agreement at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479, not in its individual capacity
but solely as Trustee under this Agreement, and any successor hereunder.
"Trustee Fee": The fee payable monthly to the Trustee on each Payment
Date in an amount equal to ____% per annum, on the sum of the outstanding
aggregate Loan Balances of the Home Equity Loans as of the first day of the
related Remittance Period plus the Pre-Funded Amount as of the first day of the
related Remittance Period.
"Trustee Reimbursable Expenses": Any amounts payable pursuant to Section
11.16(a)(v) and Section 11.16(g) and pursuant to the second sentence of Section
10.07.
"Underwriter": Donaldson, Lufkin & Jenrette.
"Unpaid Class A-6 Certificateholders' Interest Index Carryover": With
respect to any Payment Date, any unpaid Class A-6 Certificateholders' Interest
Index Carryover from prior Payment Dates plus any accrued interest thereon at
the percentage at which the Class A-6 Pass-Through Rate (calculated without
regard to clause (y) of the definition thereof) accrues.
"Weighted Average Pass-Through Rate": As to the Class A Certificates and
any Payment Date, the weighted average of the Class A-l Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate and the Class A-6
Pass-Through Rate, weighted by, respectively, the Class A-l Certificate
Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3
Certificate Principal Balance, the Class A-4 Certificate Principal Balance, the
Class A-5
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Certificate Principal Balance and the Class A-6 Certificate Principal
Balance as of such Payment Date prior to taking into account any distributions
to be made on such Payment Date.
Section 1.02 Use of Words and Phrases.
"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. Any opinion
delivered hereunder shall be addressed to the Rating Agencies, the Certificate
Insurer and the Trustee.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "Centex Home Equity Loan Trust A" and which shall contain two
subtrusts.
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
_________________________, Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479, or at such other address as the Trustee may designate by notice
to the Depositor, the
Seller, the Servicer, the Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of the REMIC Estate as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Seller and the Depositor hereby appoint 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 and the Certificate Insurer.
Section 2.05 Expenses of the Trust.
All expenses of the Trust, including (i) the fees and reimbursable
expenses of the Trustee in connection with the performance of its duties
hereunder, (including, but not limited to, any portion of the Trustee Fee and
Trustee Reimbursable Expenses not paid pursuant to Sections 7.03(b)(i)(A) and
7.03(b)(iii)(G), respectively, hereof) and (ii) to the extent not set forth
herein, any other expenses of the Trustee that have been reviewed and approved
by the Seller, which review shall not be required in connection with the
enforcement of a remedy by the Trustee resulting from a default under this
Agreement shall be paid directly by the Seller. Failure by the
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Seller to pay any such fees or other expenses shall not relieve the Trustee of
its obligations hereunder.
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 in the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the REMIC created hereunder
shall be evidenced by the interests having the following characteristics and
terms as follows, including for federal income tax purposes the months in which
the Final Scheduled Payment Dates occur:
<TABLE>
<CAPTION>
Initial Certificate Final Scheduled
Class Designation Principal Balance Payment Date
----------------- -------------------- -----------------
<S> <C> <C>
Class A-1 $ _________ March 25, 2014
Class A-2 $ _________ October 25, 2023
Class A-3 $ _________ August 25, 2026
Class A-4 $ _________ July 25, 2028
Class A-5 $ _________ July 25, 2028
Class A-6 $ _________ July 25, 2028
R (1)
</TABLE>
- ---------
(1) Class R does not have a Certificate Principal Balance
(b) The Depositor hereby designates the Class A-l, Class A-2, Class A-3,
Class A-4, Class A-5 Certificates and Class A-6 Certificates as "regular
interests," and the Class R Certificates as the single class of "residual
interests" in the REMIC created hereunder for purposes of the REMIC Provisions.
(c) The Startup Day is hereby designated as the "startup day" of the
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(d) The Owner of the Tax Matters Person Residual Interest in the REMIC
created hereunder is hereby designated as "tax matters person" as defined in the
REMIC Provisions with respect to the REMIC.
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(e) The Trust and the REMIC created hereunder shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(f) The Trustee shall cause the REMIC created hereunder to elect to be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to the
REMIC created hereunder.
(g) For all federal tax law purposes, amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the REMIC created hereunder.
(h) The Trustee shall provide to the Internal Revenue Service and to the
person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-l(b)(5)(ii), or any successor
regulation thereto with respect to the REMIC created hereunder. 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
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR, THE SERVICER AND THE SELLER; COVENANT OF SELLER TO
CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller and the Certificate Insurer 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 Charter, 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) Each of 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, 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 (x)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of equity
(whether considered in a proceeding or action in equity or at law) and (z) with
respect to rights of indemnity or contribution under this Agreement, the
Insurance Agreement and the Indemnification Agreement, to limitations of public
policy or applicable laws.
(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 could materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which could materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(e) No litigation, proceeding or investigation 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,
proceeding or investigation 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 the validity or
enforceability of the Home Equity Loans or the Depositor's 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.
(h) Neither the Trustee nor the Depositor has any obligation to register
the Trust as an investment company under the Investment Company Act of 1940, as
amended.
(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 Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the issuance 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.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
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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.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.01 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. As promptly as practicable, but in any event, within 60 days of its
discovery or its receipt of notice of breach, the Depositor shall cure such
breach in all material respects; provided, however, that if the Depositor 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 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly formed and validly existing under
the laws governing its creation and existence, 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 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 or their properties, to
carry out its or their business as presently conducted and as proposed to be
conducted and to enter into and discharge its or their obligations under this
Agreement and the other Operative Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other Operative
Document to which it is a party by the Servicer and its performance and
compliance with the terms hereof and thereof have been duly authorized by all
necessary action on the part of the Servicer and will not violate the Servicer's
Certificate of Incorporation or by-laws 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 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).
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(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 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, proceeding or investigation 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,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Document 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 the validity or the enforceability of the
Home Equity Loans or its performance hereunder and the other Operative Documents
to which the Servicer is a party.
(f) 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 Documents 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 not misleading.
(g) 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.
(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 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.
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(i) 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 home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
(l) There are no Sub-Servicers as of the Startup Day.
(m) The Servicer covenants that it will terminate any Sub-Servicer
within ninety (90) days after being directed by the Certificate Insurer to do
so.
(n) The Servicer represents and warrants that its computer and other
systems used in servicing the Home Equity Loans currently are capable of
operating in a manner so that on and after January 1, 2000 (i) the Servicer can
service the Home Equity Loans in accordance with the terms of this Agreement and
(ii) the Servicer can operate its business in the same manner as it is operating
on the date hereof.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event, 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 Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; provided, however, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Seller is a corporation duly formed and validly existing under
the laws governing its creation and existence, is in compliance with the laws of
each state in which any
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Property or the Seller is located or doing business and is in good standing in
each jurisdiction in which the nature of its business, or the properties owned
or leased by it make such qualification necessary. The Seller has all requisite
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 and the other Operative
Documents to which it is a party by the Seller and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary corporate action
on the part of the Seller and will not violate the Seller's Charter or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Seller is a party or by
which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) This Agreement and the other Operative Documents to which the Seller
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default could materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which could materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Seller has received service of process or, to the best of the
Seller's knowledge, threatened against the Seller which litigation, proceeding
or investigation might have consequences that would prohibit its entering into
this Agreement or any other Operative Documents to which it is a party or that
would materially and adversely affect the condition (financial or otherwise) or
operations of the Seller or its properties or might have consequences that would
materially and adversely affect the validity or enforceability of the Home
Equity Loans or the Seller's performance hereunder and under the other Operative
Documents to which the Seller is a party.
(f) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributed to the Seller
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Seller or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein with respect to the
Seller not misleading.
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(g) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate by the Trustee under this Agreement,
the Trust will have good title to such Home Equity Loan (including the related
Note) and such other items of the Trust Estate free and clear of any lien,
charge, mortgage, encumbrance or rights of others, except as set forth in
Section 3.04 (b) (ix) (other than liens which will be simultaneously released).
(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 Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(i) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage lending business.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(k) Neither the Trustee nor the Seller has any obligation to register
the Trust as an investment company under the Investment Company Act of 1940, as
amended.
(l) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(m) The Seller received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Home Equity Loans.
(n) The Seller did not sell any interest in any Home Equity Loan with
any intent to hinder, delay or defraud any of its creditors.
(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(p) The Seller is not in default under any agreement involving financial
obligations or on any outstanding obligation which would materially adversely
impact the financial condition or
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operations of the Seller or legal documents associated with the transaction
contemplated by this Agreement.
(q) To the best knowledge of the Seller, there has been no material
adverse change in any information submitted by the Seller in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing to
the Certificate Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity Loans
by the Seller pursuant to the Loan Sale Agreement is not subject to and will not
result in any tax, fee or governmental charge payable by the Seller, the
Depositor or the Trustee to any federal, state or local government ("Transfer
Taxes") other than Transfer Taxes which have or will be paid by the Seller as
due. The Seller shall pay, and otherwise indemnify and hold the Certificate
Insurer harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the Certificate Insurer shall have no
obligation to pay such Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Servicer, the Custodian, any
Sub-Servicer, any Owner, the Seller, the Certificate Insurer or the Trustee
(each, for purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.03 which materially
and adversely affects the interests of the Owners or the interests of the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties. The Seller hereby covenants and agrees that within
60 days of its discovery or its receipt of notice of breach, it shall cure such
breach in all material respects or, with respect to a breach of clause (g)
above, the Seller may (or may cause an affiliate of the Seller to) on or prior
to the second 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 (g) 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 outstanding principal balance of such Home Equity
Loan as of such Replacement Cut-Off Date, deliver an amount (a "Substitution
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 accrued and unpaid interest with respect to
such Home Equity Loan to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless the
Seller obtains for the Trustee and the Certificate Insurer at the
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Seller's expense 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 the REMIC created hereunder or otherwise
subject the Trust or the REMIC created hereunder to tax and would not jeopardize
the status of the REMIC created hereunder as a REMIC (a "REMIC Opinion")
addressed to the Trustee and the Certificate Insurer and acceptable to the
Certificate Insurer and the Trustee. The Seller shall also deliver an Officer's
Certificate to the Trustee and the Certificate Insurer concurrently with the
delivery of a Qualified Replacement Mortgage pursuant to Sections 3.03, 3.04 and
3.06(b) stating that such Home Equity Loan meets the requirements of the
definition of a Qualified Replacement Mortgage and that all other conditions to
the substitution thereof have been satisfied. 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 Section 3.03, 3.04 or
3.06(b), as the case may be) upon the earlier of (a) the occurrence of a default
or imminent default with respect to such Home Equity Loan and (b) receipt by the
Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to
the Home Equity Loans in Certain Situations.
(a) Upon the discovery by the Depositor, the Seller, the Servicer, the
Certificate Insurer, any Sub-Servicer, any Owner, the Custodian or the Trustee
that the representations and warranties set forth in clause (b) below were
untrue in any material respect, without regard to any limitation set forth
therein concerning the knowledge of the Seller as to the facts stated therein as
of the Startup Day (or in the case of the Subsequent Home Equity Loans, as of
the respective Subsequent Transfer Date or in the case of a Qualified
Replacement Mortgage, as of the respective replacement date) with the result
that the interests of the Owners or of the Certificate Insurer in the related
Home Equity Loan, are or may be, materially and adversely affected, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of the Seller's discovery, its receipt of notice of
breach from any one of the other parties or such time as a situation resulting
from an existing statement which is untrue materially and adversely affects the
interests of the Owners or of the Certificate Insurer, without regard to any
limitation set forth therein concerning the knowledge of the Seller as to the
facts stated therein, the Seller hereby covenants and warrants that it shall
promptly cure such breach in all material respects or subject to the last three
sentences of Section 3.03 it shall on or before the second Monthly Remittance
Date next succeeding such discovery, receipt of notice or such time (i)
substitute in lieu of each Home Equity Loan which has given rise to the
requirement for action by the Seller a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account; provided, however, that if the Seller can establish to the reasonable
satisfaction of the Certificate Insurer that it is diligently pursuing remedial
action, the period of time in which the Seller must substitute a Qualified
Replacement Mortgage or purchase such Home Equity Loan may be extended with the
written approval of the Certificate Insurer. It is understood and agreed that
the obligation of the Seller so to substitute or purchase any Home Equity Loan
as to which such a statement set forth below is untrue in any material respect
and has not been remedied shall constitute the sole remedy respecting a
discovery of any such statement which is untrue in any
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material respect in this Section 3.04 available to the Owners and the Trustee on
behalf of the Owners.
(b) The Seller hereby represents, warrants and covenants to the Trustee,
the Depositor, the Servicer, the Certificate Insurer and the Owners that as of
the Startup Day (with respect to the Initial Home Equity Loans) and as of the
respective Subsequent Transfer Date (with respect to the Subsequent Home Equity
Loans):
(i) The information with respect to each Initial Home Equity Loan
and Subsequent Home Equity Loan set forth in the related Schedule of
Home Equity Loans is true and correct as of the Cut-Off Date (or in the
case of the Subsequent Home Equity Loans, as of the related Subsequent
Transfer Date);
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Initial Home Equity Loan has been or will be delivered
to the Custodian on behalf of the Trustee on the Startup Day (or in the
case of the Subsequent Home Equity Loans, on the related Subsequent
Transfer Date) or as otherwise provided in Section 3.05. To the Seller's
best knowledge, no documentation contains any untrue statement of a
material fact or omits to state a fact necessary to make the statements
contained therein not misleading.
(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage and is a Mortgage;
(iv) Each Property is a fee simple estate in a single parcel of
real property improved by a single (one-to-four) family residential
dwelling (except for 211 and 102 Initial Home Equity Loans in the Fixed
Rate Group and the Adjustable Rate Group, respectively, in the amount of
$__________ and $____________, respectively, that are condominiums,
townhouses, manufactured housing, cooperative or PUDs), provided that no
more than ____% and ____%, respectively, of the Properties are secured
by manufactured homes, each of which is considered to be real property
under the applicable local law;
(v) As of the Cut-Off Date, Subsequent Cut-Off Date or
Replacement Cut-Off Date, as applicable no Home Equity Loan has a
combined Loan-to-Value Ratio in excess of _____%;
(vi) Each Home Equity Loan is being serviced by the Servicer in
accordance with the terms of this Agreement;
(vii) The Note related to each Initial Home Equity Loan in the
Fixed Rate Group bears a current Coupon Rate of at least _____% per
annum and the Note related to each Initial Home Equity Loan in the
Adjustable Rate Group bears a current Coupon Rate of at least ____%;
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(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal Monthly Payments
(or periodic rate adjustments in the case of the Home Equity Loans in
the Adjustable Rate Group), which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date, except
for 136 Initial Home Equity Loans in the Fixed Rate Group, in the amount
of $__________ representing ____% of the aggregate Loan Balance of the
Initial Home Equity Loans in the Fixed Rate Group as of the Cut-Off Date
which may provide for a "balloon" payment due at the end of the 15th
year and no Initial Home Equity Loan is a graduated payment loan;
(ix) As of the Startup Day (with respect to the Initial Home
Equity Loans) and any Subsequent Transfer Date (with respect to the
Subsequent Home Equity Loans), each Mortgage is a valid and enforceable
first or second lien of record (or is in the process of being recorded)
on the Property subject in the case of any Second Mortgage Loan only to
a Senior Lien on such Property and subject in all cases to the
exceptions to title set forth in the title insurance policy or
attorney's opinion of title, with respect to the related Home Equity
Loan, which exceptions are generally acceptable to banking institutions
in connection with their regular mortgage lending activities, and such
other exceptions to which similar properties are commonly subject and
which do not individually, or in the aggregate, materially and adversely
affect the benefits of the security intended to be provided by such
Mortgage;
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the Seller to the Depositor and by the Depositor to the
Trustee herein contemplated, the Seller and the Depositor, as the case
may be, held good and indefeasible title to, and was the sole owner of,
each Home Equity Loan (including the related Note) conveyed by the
Seller subject to no liens, charges, mortgages, encumbrances or rights
of others except as set forth in clause (ix) or other liens which will
be released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the
Trustee will hold good and indefeasible title to, and be the sole owner
of, each Home Equity Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in paragraph (ix)
or other liens which will be released simultaneously with such transfer
and assignment;
(xi) As of the Cut-Off Date, no Initial Home Equity Loan is more
than 30 days Delinquent;
(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 right of offset, claim,
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 nor has any such claim, defense, offset or
counterclaim been asserted;
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(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act (as amended by the Riegle Community Development and Regulatory
Improvement Act of 1994) and other consumer protection laws, usury,
equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) if a title
insurance policy is not available in the applicable state, an attorney's
opinion of title has been obtained but no title policy has been
obtained, 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-original principal amount 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) The improvements upon each Property are covered by a valid
and existing hazard insurance policy with a carrier generally acceptable
to the Servicer 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;
(xviii) 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 carrier
generally acceptable to the Servicer 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;
(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance with
their terms, except only as such
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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;
(xx) The Seller has caused and will cause to be performed any and
all acts required to be performed to preserve the rights and remedies of
the Trustee in any Insurance Policies applicable to any Home Equity
Loans delivered by the Seller including, without limitation, any
necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee
and mortgagee rights in favor of the Trustee;
(xxi) As of the Startup Day, no more than ___% of the aggregate
Loan Balance of the Home Equity Loans will be secured by Properties
located within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been recorded in
the appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from the
Seller (or, subject to Section 3.05 hereof, are in the process of being
recorded); each Mortgage and assignment of Mortgage is in recordable
form and is acceptable for recording under the laws of the jurisdiction
in which the property securing such Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, waived, 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 waiver, alteration
or modification is reflected on the related Schedule of Home Equity
Loans;
(xxiv) 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 and the Mortgagor is not entitled to any
refund of any amounts paid or due under the related Note or Mortgage;
(xxv) 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;
(xxvi) No Home Equity Loan has a shared appreciation feature, or
other contingent interest feature;
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(xxvii) 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;
(xxviii) 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;
(xxix) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date with respect to the Initial
Home Equity Loans (or the relevant Subsequent Cut-Off Date with respect
to the Subsequent Home Equity Loans) 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;
(xxx) 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, earth movement or other casualty;
(xxxi) 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;
(xxxii) 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;
(xxxiii) 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;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against
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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 other than any applicable Mortgagor redemption
rights 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;
(xxxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and neither the Servicer nor the
Seller has waived any default, breach, violation or event of
acceleration or advanced funds, directly or indirectly for the payment
of any amount required under any Home Equity Loan;
(xxxvi) 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;
(xxxvii) [Reserved]
(xxxviii) Each Home Equity Loan was underwritten in accordance
with the credit underwriting guidelines of the Seller as set forth in
the Seller's Policies and Procedures Manual, as in effect on the date
hereof and such Manual conforms in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xl) The Home Equity Loans were not selected for inclusion in the
Trust by the Seller on any basis intended to adversely affect the Trust
or the Certificate Insurer;
(xli) No more than ____% and ____% of the aggregate Loan Balance
of the Initial Home Equity Loans in the Fixed Rate Group and the
Adjustable Rate Group, respectively, are secured by Properties that are
non-owner occupied Properties (i.e., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazard 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,
and no violations of any local, state or federal environmental law, rule
or regulation exist with respect to any Property;
(xliii) The Seller (and the originator, if not the Seller) was
properly licensed or otherwise authorized, to the extent required by
applicable law, to originate or purchase
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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;
(xliv) 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 in determining the
qualification of the borrower for such Home Equity Loan; (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 Initial Home Equity Loans with related Properties subject to
ground leases does not exceed 1% of the Original Aggregate Loan Balance;
(xlv) As of the Startup Day, with respect to any Second Mortgage
Loan, the Seller has not received a notice of default of any Senior Lien
secured by any Property which has not been cured by a party other than
the Seller;
(xlvi) No Home Equity Loan is subject to a rate reduction
pursuant to a buydown program;
(xlvii) Reserved;
(xlviii)The Coupon Rate on each Home Equity Loan is calculated on
the basis of a year of 360 days with twelve 30-day months;
(xlix) Each Home Equity Loan was originated by the Seller or its
affiliate. As of the Startup Day, each Subsequent Home Equity Loan to be
transferred to the Trust during the Funding Period has been originated
or purchased and identified by the Seller;
(l) Neither the operation of any of the terms of each Note and
each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part, nor
subject it to any right of rescission, claim set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan in
the Adjustable Rate Group has been legal, proper and in accordance with
the terms of the related Note; and
(lii) No Home Equity Loan in the Adjustable Rate Group is subject
to negative amortization.
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(liii) As of the Cut-Off Date (or the Subsequent Cut-Off Date
with respect to the Subsequent Home Equity Loans), the FTC holder
regulation provided in 16 C.F.R. Part 433 applies to none of the Home
Equity Loans.
(liv) As of the Cut-Off Date with respect to the Initial Home
Equity Loans, the Replacement Cut-Off Date with respect to the Qualified
Replacement Mortgages or the Subsequent Cut-Off Date with respect to the
Subsequent Home Equity Loans, a portion of the Home Equity Loans are
"mortgages" as defined in 15 U.S.C. 1602(aa), and with respect to each
such Home Equity Loan, no Mortgagor has or will have a claim or defense
under such Home Equity Loan.
(lv) To the knowledge of the Seller, there does not exist any
circumstances or conditions with respect to the Mortgage, the Property,
the Mortgagor or the Mortgagor's credit standing that reasonably can be
expected to cause private institutional investors to regard the related
Home Equity Loan as an unacceptable investment, cause the Home Equity
Loan to become delinquent, or adversely affect the value or
marketability of the Home Equity Loan.
(lvi) The rights with respect to each Home Equity Loan are
assignable by the Seller without the consent of any Person other than
consents which will have been obtained on or before the Startup Day or
Subsequent Transfer Date, as applicable.
(lvii) The Seller has duly fulfilled all obligations to be
fulfilled on the lender's part under or in connection with the
origination, acquisition and assignment of the Home Equity Loans and the
related Mortgage and Note, and has done nothing to impair the rights of
the Trustee, the Certificate Insurer or the Owners in payments with
respect thereto.
(lviii) To the Seller's knowledge, the documents, instruments and
agreements submitted by each Mortgagor for loan underwriting were not
falsified and contain no untrue statement of a material fact and do not
omit to state a material fact required to be stated therein or necessary
to make the information and statements contained therein not misleading.
(lix) No Home Equity Loan matures later than ____1, 2028.
(lx) The first date on which the applicable Mortgagor must make a
payment on each Initial Home Equity Loan is due no later than ____ __,
199_, except with respect to 162 Initial Home Equity Loans, which
represent ___% of the Original Aggregate Loan Balance as of the Cut-Off
Date, that provide for a first payment in ____ 199_.
(lxi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for negative
amortization.
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(b) The Seller has not received, and is not aware of, a
notice of defaultof any Senior Lien which has not been cured.
(c) To the best of the knowledge of the Seller, no funds
provided to the Mortgagor from a Second Mortgage Loan were
concurrently used as a down payment for the Senior Lien.
(lxii) Each Subsequent Home Equity Loan conforms to the
conditions in Section 3.07(c) (including the conditions in Section
4.09(a) of the Insurance Agreement) with respect to the Home Equity
Loans in the Fixed Rate Group and in Section 3.07(d) (including the
conditions in Section 4.09(b) of the Insurance Agreement) with respect
to the Home Equity Loans in the Adjustable Rate Group, except for
conditions explicitly consented to in writing by the Certificate
Insurer.
(c) In the event that any such repurchase pursuant to this Section
results in a prohibited transaction tax as specified in the REMIC Opinion
delivered pursuant to Section 3.03, the Trustee shall immediately notify the
Seller in writing thereof and the Seller will, within 10 days of receiving
notice thereof from the Trustee, deposit the amount due from the Trust with the
Trustee for the payment thereof, including any interest and penalties, in
immediately available funds. In the event that any Qualified Replacement
Mortgage is delivered by the Seller to the Trust pursuant to Section 3.03,
Section 3.04 or Section 3.06 hereof, the Seller shall be obligated to take the
actions described in Section 3.04(a) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the Seller, the Servicer, the
Certificate Insurer, any Sub-Servicer, the Custodian or the Trustee that the
statements set forth in subsection (b) above are untrue in any material respect,
without regard to any limitation set forth therein concerning the knowledge of
the Seller as to facts stated therein, 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, or may
be, materially and adversely affected; provided, however, that for the purposes
of this subsection (c) the statements in subsection (b) above referring to items
"as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to
such items as of the date such Qualified Replacement Mortgage is conveyed to the
Trust. Notwithstanding the fact that a representation contained in subsection
(b) above may be limited to the Seller's knowledge, such limitation shall not
relieve the Seller of its repurchase obligation under this Section and Section
3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgage) to the Trustee or the Custodian, on
behalf of 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 Initial Home Equity Loans and Qualified
Replacement Mortgages.
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(a) On the Startup Day the Depositor, concurrently with the execution
and delivery hereof, transfers, assigns, sets over and otherwise conveys without
recourse, to the Trustee for the benefit of the Owners and the Certificate
Insurer, all of the Depositor's respective right, title and interest in and to
the Initial Home Equity Loans (other than payments of principal received and
interest due on the Home Equity Loans before the Cut-Off Date). The transfer by
the Seller and the Depositor of the Initial 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 Seller and the
Depositor. On the Startup Day, the Depositor will also deposit $__________ into
the Certificate Account, $__________ of which will be allocable to the Fixed
Rate Group and $__________ of which will be allocable to the Adjustable Rate
Group.
In the event that either such conveyance or a conveyance pursuant to
Section 3.07 and any Subsequent Transfer Agreement is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the State of Texas, a UCC-1 financing statement executed by the
Seller as debtor, naming the Depositor as secured party and the Trustee as
assignee and listing the Initial Home Equity Loans and the other property
described above as collateral and on or prior to the final Subsequent Transfer
Date the Seller will file in such offices a similar UCC-1 financing statement
listing the Subsequent Home Equity Loans so transferred as collateral. The
characterization of the Seller as a debtor and the Depositor as the secured
party and the Trustee as assignee 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 Seller's
entire right, title and interest in the Trust Estate. In connection with such
filing, the Seller agrees that it shall cause to be filed all necessary
continuation statements thereof and to take or cause to be taken such actions
and execute such documents as are necessary to perfect and protect the Trustee's
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 State of New York a UCC-1 financing statement executed by the
Depositor as debtor, naming the Trustee as secured party and listing the Initial
Home Equity Loans and the other property described above as collateral and on or
prior to the final Subsequent Transfer Date the Depositor will file in such
offices a similar UCC-1 financing statement listing the Subsequent Home Equity
Loans so transferred as collateral. The characterization of the Depositor as a
debtor and the Trustee as the 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 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
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necessary to perfect and protect the Trustee's, the Owners' and the Certificate
Insurer's interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Initial Home
Equity Loans, or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loan, the Seller agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Trustee, on the Startup Day with respect to each Initial Home Equity
Loan or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loans, (A) the original Notes endorsed in blank or to the
order of the Trustee ("Pay to the order of _________________________, as
Trustee for Centex Home Equity Loan Trust A, without recourse") and
signed by manual signature of the Seller, (B) (I) if the original title
insurance policy is not available, the original title insurance
commitment or a copy thereof certified as a true copy by the closing
agent or the Seller, and when available, the original title insurance
policy or a copy certified by the issuer of the title insurance policy
or (II) if title insurance is not available in the applicable state, the
attorney's opinion of title, (C) originals or copies of all intervening
assignments certified as true copies by the closing agent or the Seller,
showing a complete chain of title from origination to the Trustee, if
any, including warehousing assignments, if recorded, (D) originals of
all assumption and modification agreements, if any, (E) either: (1) the
original Mortgage, with evidence of recording thereon (if such original
Mortgage has been returned to the Seller from the applicable recording
office) or a copy of the Mortgage certified as a true copy by the
closing attorney or an Authorized Officer of the Seller, or (2) a copy
of the Mortgage certified by the public recording office in those
instances where the original recorded Mortgage has been lost and (F) the
original assignments of Mortgages (as described in clause (b)(ii)) in
recordable form and acceptable for recording in the state or other
jurisdiction where the Property is located.
(ii) cause, within 60 days following the Startup Day with respect
to the Initial Home Equity Loans or on each Subsequent Transfer Date
with respect to the Subsequent Home Equity Loans, assignments of the
Mortgages to "_________________________, as Trustee of Centex Home
Equity Loan Trust A under the Pooling and Servicing Agreement dated as
of ____ 1, 199_" to be submitted for recording in the appropriate
jurisdictions; provided, further, that the Seller shall not be required
to record an assignment of a Mortgage if the Seller furnishes to the
Trustee and the Certificate Insurer, on or before the Startup Day, with
respect to the Initial Home Equity Loans or on each Subsequent Transfer
Date with respect to the Subsequent Home Equity Loans, at the Seller'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 satisfactory to
the Trustee, the Certificate Insurer and the Rating Agencies); provided
further, however, notwithstanding the delivery of any legal opinions,
each assignment of Mortgage shall be recorded by the Trustee or the
Custodian on behalf of the Trustee upon the earliest to occur of: (i)
reasonable direction by the Certificate Insurer, (ii) the occurrence of
a Servicer Termination Event, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Seller or (iv) if the
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Seller is not the Servicer and with respect to any one assignment of
Mortgage, the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Mortgagor under the related Mortgage;
(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
(other than unrecorded warehouse assignments), to the Custodian, on
behalf of the Trustee, within 15 days of receipt thereof by the Seller
(but in any event, with respect to any Mortgage as to which original
recording information has been made available to the Seller, within one
year after the Startup Day with respect to the Initial Home Equity Loans
or on each Subsequent Transfer Date with respect to the Subsequent Home
Equity Loans); and
(iv) furnish to the Trustee, the Certificate Insurer and the
Rating Agencies at the Seller's expense, an Opinion of Counsel with
respect to the sale and perfection of the Home Equity Loans delivered to
the Trust in form and substance satisfactory to the Certificate Insurer.
In instances where the original recorded Mortgage cannot be delivered by
the Seller to the Custodian on behalf of the Trustee prior to or concurrently
with the execution and delivery of this Agreement due to a delay in connection
with recording, the Seller may in lieu of delivering such original recorded
Mortgage, deliver to the Custodian on behalf of the Trustee a copy thereof,
provided that the Seller certifies that the original Mortgage has been delivered
to a title insurance company for recordation after receipt of its policy of
title insurance or binder therefor. In all such instances, the Seller will
deliver or cause to be delivered the original recorded Mortgage to the Custodian
on behalf of the Trustee promptly upon receipt of the original recorded Mortgage
but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Trustee that it has made the
appropriate entries in its general accounting records, to indicate that such
Home Equity Loans have been transferred to the Custodian on behalf of Trustee
and constitute part of the Trust in accordance with the terms of the trust
created hereunder.
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 and Seller shall be deemed to
have satisfied its obligations hereunder upon delivery to the Custodian, on
behalf of 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 preceding paragraph, the Seller shall deliver to the
Custodian, on behalf of the Trustee a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by the Seller, which
list shall state the reason why the Seller has not yet submitted such Mortgage
assignments for recording. With respect to any Mortgage assignment disclosed on
such list as not yet
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submitted for recording for a reason other than a lack of original recording
information, the Custodian, on behalf of the Trustee, shall make an immediate
demand on the Seller to prepare such Mortgage assignments, and shall inform the
Certificate Insurer, in writing, of the Seller's failure to prepare such
Mortgage assignments. Thereafter, the Custodian, on behalf of the Trustee shall
cooperate in executing any documents prepared by the Certificate Insurer and
submitted to the Custodian, on behalf of the Trustee in connection with this
provision. Following the expiration of the 60-day period referred to in clause
(b)(ii) above, the Seller shall promptly prepare a Mortgage assignment for any
Mortgage for which original recording information is subsequently received by
the Seller, and shall promptly deliver a copy of such Mortgage assignment to the
Custodian, on behalf of the Trustee. The Seller agrees that it will follow its
normal servicing procedures and attempt to obtain the original recording
information necessary to complete a Mortgage assignment. In the event that the
Seller is unable to obtain such recording information with respect to any
Mortgage prior to the end of the 18th calendar month following the Startup Day
with respect to the Initial Home Equity Loans and the relevant Subsequent
Transfer Date with respect to Subsequent Home Equity Loans and has not provided
to the Custodian, on behalf of the Trustee a Mortgage assignment with evidence
of recording thereon relating to the assignment of such Mortgage to the Trustee,
the Custodian, on behalf of the Trustee shall notify the Seller of the Seller's
obligation to provide a completed assignment (with evidence of recording
thereon) on or before the end of the 20th calendar month following the Startup
Day with respect to the Initial Home Equity Loans and the relevant Subsequent
Transfer Date with respect to Subsequent Home Equity Loans. A copy of such
notice shall be sent by the Custodian, on behalf of 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 (xxii) of Section 3.04(b) hereof; provided, however, that if as of the
end of such 20th calendar month the Seller demonstrates to the satisfaction of
the Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment and, during each month thereafter until such completed
assignment is delivered to the Custodian, on behalf of the Trustee, the Seller
continues to demonstrate to the satisfaction of the Certificate Insurer that it
is exercising its best efforts to obtain such completed assignment, the related
Home Equity Loan will not be deemed to have breached such representation. The
requirement to deliver a completed assignment with evidence of recording thereon
will be deemed satisfied upon delivery of a copy of the completed assignment
certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Custodian, on behalf
of the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Initial Home Equity Loans which have been prepaid in
full on or after the Cut-Off Date and prior to the Startup Day, the Seller, 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 E.
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(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Trustee all right, title and interest of the Seller in
and to any Qualified Replacement Mortgage delivered to the Custodian, on behalf
of the Trustee on behalf of the Trust by the Seller pursuant to Section 3.03,
3.04 or 3.06 hereof and all its right, title and interest to principal and
interest due on such Qualified Replacement Mortgage on and after the applicable
Replacement Cut-Off Date; provided, however, that the Seller shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and or and retain all right, title and interest in and to payments of
principal and interest due on such released Home Equity Loan prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Custodian, on behalf of 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 Custodian, on behalf of the Trustee within 15 days of
receipt thereof by the Seller (but in any event within 120 days after the date
of conveyance of such Qualified Replacement Mortgage) and (iv) deliver the title
insurance policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title 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 Custodian, on behalf
of the Trustee shall deliver on the date of conveyance of such Qualified
Replacement Mortgage and on the order of the Seller (i) the original Note
relating thereto, endorsed without recourse or representation, in blank or to
the order of, to the Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording, or
is returned from the recorder's office unrecorded due to a defect therein, the
Seller shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
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Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; . Certification by Trustee
(a) The Trustee agrees to execute and deliver and to cause the Custodian
to execute and deliver on the Startup Day an acknowledgment of receipt of the
items delivered by the Seller or the Depositor in the forms attached as Exhibit
F-1 and Exhibit F-2 hereto, and declares through the Custodian that it will hold
such documents and any amendments, replacement or supplements thereto, as well
as any other assets included in the definition of Trust Estate and delivered to
the Custodian, on behalf of the Trustee, as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Owners and the
Certificate Insurer. The Trustee agrees, for the benefit of the Owners and the
Certificate Insurer, to cause the Custodian 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 Subsequent Home
Equity Loan or Qualified Replacement Mortgage, within 45 days after the
assignment thereof) and to deliver to the Depositor, the Seller, the Servicer
and the Certificate Insurer a certification in the form attached hereto as
Exhibit G (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
have been executed and are in its possession and that the Notes have been
endorsed as set forth in Section 3.05(b)(i) hereof, (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 Custodian, on behalf of 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
Custodian, on behalf of the Trustee shall promptly so notify the Depositor, the
Seller, the Owners and the Certificate Insurer. In performing any such review,
the Custodian, on behalf of the Trustee may conclusively rely on the Seller as
to the purported
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genuineness of any such document and any signature thereon. It is understood
that the scope of the review of the items delivered by the Seller pursuant to
Section 3.05(b)(i) is limited solely to confirming that the documents listed in
Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. The Seller agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File of which it is so notified by the Custodian, on behalf of the Trustee.
If, however, within 90 days after such notice to it respecting such defect the
Seller has not remedied the defect and the defect materially and adversely
affects the interest in the related Home Equity Loan of the Owners or the
Certificate Insurer, the Seller will (or will cause an affiliate of the Seller
to) on the next succeeding Monthly Remittance Date (i) substitute in lieu of
such Home Equity Loan a Qualified Replacement Mortgage and deliver the
Substitution Amount to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. In connection with
any proposed purchase or substitution of a Home Equity Loan, the Seller shall
cause at the Seller's expense to be delivered to the Trustee and to the
Certificate Insurer an Opinion of Counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Trust or would jeopardize the status
of the Trust as a REMIC, and the Seller shall only be required to take either
such action to the extent such action would not constitute a Prohibited
Transaction for the Trust or would not jeopardize the status of the Trust as a
REMIC. Any required purchase or substitution, if delayed by the absence of such
opinion, shall nonetheless occur upon the earlier of (i) the occurrence of a
default or imminent default with respect to the Home Equity Loan or (ii) the
delivery of such opinion.
(c) In addition to the foregoing, the Custodian, on behalf of 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 Custodian, on behalf of the Trustee and the Servicer shall
provide to the Certificate Insurer no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Home Equity Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b), (c) and (d) below (based on the Custodian's review of
such conditions) in consideration of the Trustee's delivery on the relevant
Subsequent Transfer Dates to or upon the order of the Seller of all or a portion
of the balance of funds in the Pre-Funding Account, the Seller shall indirectly
(through the Depositor) and the Depositor on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse, to the
Trustee, and the Trustee shall purchase on behalf of the Trust all of the
Seller's and Depositor's right, title and interest in and to any and all
benefits accruing to the Seller and the Depositor from the Subsequent Home
Equity Loans (other than any principal received and interest due prior to the
relevant Subsequent Cut-Off Date) which the Seller (through the Depositor) is
causing to be delivered to the Custodian, on behalf of the Trustee herewith (and
all substitutions therefor as provided by Section 3.03, 3.04 and 3.06), together
with the related Subsequent Home Equity
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Loan documents and the Seller's and Depositor's interest in any Property which
secures a Subsequent Home Equity Loan and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing and proceeds of all
the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, flood insurance, hazard insurance and title insurance policy
relating to the Subsequent 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). Notwithstanding anything to the contrary
herein, there shall be no more than three Subsequent Transfer Dates during the
Funding Period.
The transfer by the Seller (through the Depositor) and the Depositor of
the Subsequent Home Equity Loans set forth on the related Schedule of Home
Equity Loans to the Trustee shall be absolute and shall be intended by the
Owners and all parties hereto to be treated as a sale by the Seller and the
Depositor. Any Subsequent Home Equity Loan transferred shall be included in one
and only one of either the Fixed Rate Group or the Adjustable Rate Group. The
amount released from the Pre-Funding Account shall be one-hundred percent (100%)
of the aggregate principal balances of the Subsequent Home Equity Loans so
transferred. Upon the transfer by the Seller and the Depositor of the Subsequent
Home Equity Loans hereunder, such Subsequent Home Equity Loans (and all
principal received and interest due thereon on and subsequent to the Subsequent
Cut-Off Date) and all other rights and interests with respect to such Subsequent
Home Equity Loans transferred pursuant to a Subsequent Transfer Agreement shall
be deemed for all purposes hereunder to be part of the Trust Estate.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Home Equity Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee and the
Certificate Insurer with an Addition Notice and shall have provided any
information reasonably requested by any of the foregoing with respect to
the Subsequent Home Equity Loans;
(ii) the Seller shall have delivered to the Trustee (with a copy
to the Certificate Insurer) a duly executed written Subsequent Transfer
Agreement (including an acceptance by the Trustee) in substantially the
form of Exhibit D hereto, which shall indicate whether such Subsequent
Home Equity Loan is to be assigned to the Fixed Rate Group or the
Adjustable Rate Group and which shall include a Schedule of Home Equity
Loans, listing the Subsequent Home Equity Loans and any other exhibits
listed thereon;
(iii) the Seller shall have delivered to the Servicer for deposit
in the Principal and Interest Account all principal received and
interest due in respect of such Subsequent Home Equity Loans on and
after the related Subsequent Cut-Off Date;
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(iv) as of each Subsequent Transfer Date, neither the Seller nor
the Depositor was insolvent, nor will either of them be made insolvent
by such transfer, nor is either of them aware of any pending insolvency;
(v) the Funding Period with respect to the related Group shall
not have ended:
(vi) the Seller and the Depositor each shall have delivered to
the Trustee and the Certificate Insurer an Officer's Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (b) and paragraphs (c) and (d) below and in the related
Subsequent Transfer Agreement and the Certificate Insurer shall have
consented to such transfer; and
(vii) the Seller shall have delivered to the Trustee and the
Certificate Insurer Opinions of Counsel with respect to the transfer of
the Subsequent Home Equity Loans substantially in the form of the
Opinions of Counsel delivered to the Trustee and the Certificate Insurer
on the Startup Day with respect to the Initial Home Equity Loans
(bankruptcy, corporate and tax).
(c) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to the Fixed Rate Group on any Subsequent Transfer Date is
subject to the following requirements any of which may, at the Seller's request,
be waived or modified by the Certificate Insurer by a written waiver, (a copy of
which waiver shall be delivered to the Trustee, Standard & Poor's and Moody's):
(i) such Subsequent Home Equity Loan will be a fixed-rate Home Equity Loan; (ii)
such Subsequent Home Equity Loan will have a Coupon Rate of not less than ___%;
(iii) such Subsequent Home Equity Loan will not be 30 days or more contractually
Delinquent as of the Subsequent Cut-Off Date; (iv) the remaining term to
maturity of such Subsequent Home Equity Loan may not exceed 360 months; and (v)
the weighted average combined Loan-to-Value Ratio of such Subsequent Home Equity
Loans shall not exceed ____%; (vii) the weighted average Coupon Rate of such
Subsequent Home Equity Loans shall not be less than ____%; (viii) no more than
___% of such Subsequent Home Equity Loans shall be Second Mortgage Loans; and
(ix) no more than ___% of such Subsequent Home Equity Loans shall be balloon
loans. In addition, the Subsequent Home Equity Loans with respect to the Fixed
Rate Group and the final pool of Home Equity Loans in the Fixed Rate Group shall
conform to the requirements in the Insurance Agreement.
(d) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to the Adjustable Rate Group on any Subsequent Transfer Date
is subject to the following requirements any of which may, at the Seller's
request, be waived or modified by the Certificate Insurer by a written waiver (a
copy of which waiver shall be delivered to the Trustee, Standard & Poor's and
Moody's): (i) such Subsequent Home Equity Loan will be an adjustable-rate Home
Equity Loan; (ii) such Subsequent Home Equity Loan will have a minimum Coupon
Rate of not less than ___%; (iii) such Subsequent Home Equity Loan will be in a
first lien position; (iv) such Subsequent Home Equity Loan will not be 30 days
or more contractually Delinquent as of the Subsequent Cut-Off Date; (v) the
remaining term to maturity of such Subsequent Home Equity Loan may not exceed
360 months; (vi) such Subsequent Home Equity Loan will have a lifetime minimum
Coupon Rate of not less than ___%; (vii) such Subsequent
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Home Equity Loans will have an original Loan Balance of less than $____; (viii)
such Subsequent Home Equity Loans will have a weighted average Coupon Rate of at
least ____%; (ix) such Subsequent Home Equity Loans will have a weighted average
original Loan-to-Value Ratio of not more than ___%; (x) at least ____% of such
Subsequent Home Equity Loans shall be six-month adjustable rate loans; (xi) such
Subsequent Home Equity Loans will have a weighted gross average margin of no
less than ___%; and (xii) none of such Subsequent Home Equity Loans shall be
balloon loans. In addition, the Subsequent Home Equity Loans with respect to the
Adjustable Rate Group and the final pool of Home Equity Loans in the Adjustable
Rate Group shall conform to the requirements in the Insurance Agreement.
(e) In connection with each Subsequent Transfer Date and, if applicable,
on the Final Pre-Funding Payment Date, the Trustee shall determine: (i) the
amount and correct dispositions of the Fixed Rate Group Capitalized Interest
Requirement and the Adjustable Rate Group Capitalized Interest Requirement,
Pre-Funding Account Earnings and the Pre-Funded Amount and (ii) any other
necessary matters in connection with the administration of the Pre-Funding
Account and of the Capitalized Interest Account. In the event that any amounts
are released as a result of an error in calculation to the Owners or Depositor
from the Pre-Funding Account or from the Capitalized Interest Account, such
Owners or the Depositor shall immediately repay such amounts to the Trustee or
the Trustee shall have the right to withhold such amounts from future
distributions on such Certificates or the Depositor.
On the Final Pre-Funding Payment Date, the Certificate Insurer may
modify the related Specified Subordinated Amount as provided in Exhibits L and
M.
Section 3.08 Custodian.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, 3.07 and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian on the Trustee's behalf
pursuant to the Custodial Agreement; provided, however, the Trustee shall remain
primarily liable for such obligations. The fees and expenses of the Custodian
will be paid by the Servicer.
If, pursuant to Section 4.12 of the Custodial Agreement, the Custodian
shall request written instructions from the Trustee, the Trustee hereby agrees
to promptly provide such instructions.
Section 3.09 Cooperation Procedures. (a) The Seller shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Custodian, on
behalf of the Trustee, provide the Trustee with information set forth in the
Schedules of Home Equity Loans with respect to such Qualified Replacement
Mortgage.
(b) The Seller, the Depositor, the Servicer and the Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in
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providing any additional information required to be obtained by any of them in
connection with their respective duties hereunder.
(c) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and the
Trustee to comply with this Agreement. In performing its recordkeeping duties
the Servicer shall act in accordance with the servicing standards set forth in
this Agreement. The Servicer shall conduct, or cause to be conducted, periodic
audits of its accounts, records and computer systems as set forth in Section
8.16 and 8.17 hereof. The Servicer shall promptly report to the Trustee any
failure on its part to maintain its accounts, records and computer systems
herein provided and promptly take appropriate action to remedy any such failure.
(d) The Seller further confirms to the Trustee that it has caused the
portions of the electronic ledger relating to the Home Equity Loans to be
clearly and unambiguously marked to indicate that such Home Equity Loans have
been sold, transferred, assigned and conveyed through the Depositor to the
Trustee and constitute part of the Trust Estate in accordance with the terms of
the trust created hereunder and that the Seller will treat the transaction
contemplated by such sale, transfer, assignment and conveyance as a sale for
accounting purposes.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, 3.07 and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian pursuant to the Custodial
Agreement. The fees and expenses of the Custodian will be paid by the Seller.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Seller of an
executed Delivery Order in the form set forth as Exhibit H hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038-4982
(or at such other location acceptable to the Seller), the Seller will sell and
convey the Initial Home Equity Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will convey the
Initial Home Equity Loans and the money, instruments and other property related
thereto to the Trustee, and the Trustee will deliver (i) to the Underwriter (as
designee of the Depositor), the Class A Certificates with an aggregate
Percentage Interest in each Class equal to 100% registered in the name of Cede &
Co. or in such other names as the Underwriter shall direct, against payment to
the Depositor of the purchase price thereof by wire transfer of immediately
available funds to the Trustee as designee of the Depositor and (ii) to the
respective registered owners thereof (as designees of the Depositor), Class R
Certificates with a Percentage Interest equal to _______%, registered in the
name of the initial purchasers thereof and a Class R Certificate with a
Percentage Interest equal to _____%, registered in the name of the Tax Matters
Person (all such events shall be referred to herein as the "Closing").
Upon the Trustee's receipt of the entire net proceeds of the sale of the
Class A Certificates, the Trustee on behalf of the Depositor shall deposit an
amount equal to the Original Aggregate Pre-Funded Amount in the Pre-Funding
Account and the Original Capitalized Interest Deposit in the Capitalized
Interest Account contributed out of the proceeds of the sale of the Class A
Certificates and $________ to the Certificate Account, $__________ of which will
be allocable to the Fixed Rate Group and $_________ of which will be allocable
to the Adjustable Rate Group. The Trustee shall then remit the entire balance of
such net proceeds in accordance with instructions delivered by the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, 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 the terms of the related
Note and except for the rights of the Trustee on behalf of the Owners of the
Class A Certificates with respect to the Certificate Insurance Policies). The
Class A Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees, and
Premium Amounts), moneys in the Principal and Interest Account, except as
otherwise provided herein, moneys in the Pre-Funding Account and the Capitalized
Interest Account and moneys initially deposited into the Certificate Account in
respect of loans that will not accrue a full 30 days interest for the first
Payment Date, from earnings on moneys and the proceeds of property held as a
part of the Trust Estate and, upon the occurrence of certain events, from
Insured Payments. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Home Equity Loans, certain related Insured
Payments, pro rata in accordance with such Owner's Percentage Interest and
certain amounts payable from the Capitalized Interest Account and from the
Pre-Funding Account.
(b) Each Owner is required, and hereby agrees, to return to the Trustee,
any Certificate prior to the Trustee making 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.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates and the
Class A-6 Certificates and the Class R Certificates shall be in substantially
the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6 and C hereof,
respectively.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the manual
signature of one of the Trustee's Authorized Officers. In addition, each
Certificate shall be authenticated by the manual signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall, upon proper authentication by the
Trustee, bind the Trust,
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notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the execution and delivery of such Certificates or did not hold
such offices at the date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer or if there are no longer any Class A Certificates then outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, such Owners shall give the Trustee, the Certificate Insurer and
the Owners prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register. In connection with
any such appointment the reasonable fees of the Registrar shall be paid, as
expenses of the Trust, pursuant to Section 7.06 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 Trustee shall
execute, 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
outstanding 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 outstanding 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 Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
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(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 Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Class A-1, Class A-2, Class A-3, Class A-4, A-5
Certificates or Class A-6 Certificates shall be issued in denominations of less
than $_______ and integral multiples of $___ in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Seller, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
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Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Seller advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Seller or the Trustee is unable to locate a
qualified successor or (ii) the Seller at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Seller may determine that the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller and at the Seller's expense, or such
depository's agent or designee but, if the Seller does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names registered Owners of Class A Certificates
transferring Class A Certificates shall designate, in accordance with the
provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (provided, that with
respect to an Owner which is an institutional investor, a letter of indemnity
furnished by it shall be sufficient for this purpose), then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, the Seller shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or transferee
of the related Certificate 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.
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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.
Prior to due presentment for registration of transfer of any
Certificate, the Certificate Insurer, the Trustee and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
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
Class R 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 Class R 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 Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
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(b) No other sale or other transfer of record or beneficial ownership of
a Class R Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with said Securities Act and laws. In
the event such a transfer is to be made within three years from the Startup Day,
(i) in the case of transfers for which an investment letter in the form of
Exhibit J-1 is provided by the transferee to the Trustee and the Certificate
Insurer, the Trustee or the Depositor shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Depositor, the
Trustee 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 Securities Act and laws or is being made pursuant to said
Securities Act and laws, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee, the Trust Estate or the Certificate Insurer; and (ii) an
investment letter in the form of Exhibit J-1 or J-2, which investment letter
shall not be an expense of the Depositor, the Trustee, the Trust Estate or the
Certificate Insurer. The Owner of a Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Certificate
Insurer, the Depositor and the Seller against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No transfer of a Class R Certificate shall be made unless the
Trustee shall have received either: (i) a representation letter from the
transferee of such Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Certificate Insurer (which may be combined
with the investment letter required by subsection (b) above), 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 or (ii) in the event that any Class R Certificate is purchased by
a Plan, or by a person or entity acting on behalf of any Plan or using the
assets of any Plan to effect such transfer (including the assets of any Plan
held in an insurance company separate or general account), an Opinion of
Counsel, acceptable to and in form and substance satisfactory to the Trustee and
the Certificate Insurer, which Opinion of Counsel shall not be at the expense of
either the Trustee, the Certificate Insurer or the Trust, to the effect that the
purchase or holding of any Class R Certificates will not result in the assets of
the Trust being deemed to be "plan assets," will not cause the Trust to be
subject to the fiduciary requirements and prohibited transaction provisions of
ERISA and the Code, and will not subject the Trustee to any obligation or
liability in addition to those expressly undertaken under this Agreement.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to or on behalf of any Plan without the delivery to the Trustee
and the Certificate Insurer of an Opinion of Counsel as described above shall be
null and void and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor, the Seller, the Servicer or any of their respective Affiliates
(other than in the case of the Depositor, Donaldson, Lufkin & Jenrette
Securities Corporation).
(e) No sale or other transfer of any Class R Certificate shall be made
to the Seller.
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(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R Certificates may be transferred to CHEC Residual Corporation,
a Nevada corporation and wholly-owned subsidiary of the Seller, without regard
to Sections 5.08(a), (b), (c) or (d) above.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) by check or draft mailed on each Payment Date or (iii) if requested by any
Owner (other than the Depository) of (A) a Class A Certificate having an
original principal balance of not less than $____________ or (B) a Class R
Certificate having a Percentage Interest of not less than 10% in writing not
later than one Business Day prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment Date,
in each case to each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If the Depositor has appointed a Paying Agent pursuant to Section
11.15 hereof, the Trustee will, on the Business Day immediately preceding each
Payment Date, deposit with such Paying Agent 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 the 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.
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(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate 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 first to the Certificate
Insurer on account of any Reimbursement Amount and second to the Owners of the
Class R Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates and not to the Certificate Insurer 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 Certificate Insurer on account of any Reimbursement Amount or to the
Owners of the Class R Certificates. The Trustee shall, at the direction of the
Seller, also adopt and employ, at the expense of the Seller, 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 (with the consent of the Certificate Insurer) 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.
To the extent not covered by the indemnity or other security
contemplated by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any
costs or expenses associated with this section pursuant to Section
7.03(b)(iii)(G) hereof.
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(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer 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 the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer (unless a Certificate Insurer
Default under clause (a) of the definition thereof has occurred and is
continuing) or, if there are no longer any Class A Certificates then
outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates; provided, further, however, that if there is a dispute
with respect to payments under the Certificate Insurance Policies the Trustee's
first 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); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05 Negative Covenants.
The Trustee will not:
(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, on behalf of the Trust,
any indebtedness of any Person except pursuant to this Agreement;
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(iv) dissolve or liquidate the Trust 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 covenant or obligation with respect to the Trust or to
the Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien, charge, adverse claim,
security interest, mortgage or other encumbrance to be created on
or extend to or otherwise arise upon or burden the Trust Estate
or any part thereof or any interest therein or the proceeds
thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance 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 Seller and
the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or, if
there are no Class A Certificates then Outstanding, by a majority
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 Certificates are Outstanding or any
Reimbursement Amounts are owed to the Certificate Insurer, the
Certificate Insurer has consented in writing thereto (unless a
Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing); 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
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represented by the Class A Certificates or, if there are no Class
A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement.
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 to 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 shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
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Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class 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 (and which does not require Certificate Insurer consent
or direction pursuant to the terms of this Agreement); provided,
however, that the Trustee need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12 Indemnification by the Seller.
The Seller agrees to indemnify and hold the Trustee, the Depositor, 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 sustain in any way related to the failure of Seller to perform its duties
in compliance with the terms of this Agreement. The Seller shall immediately
notify the Trustee, the Depositor, the Certificate Insurer and each Owner if a
claim is made by a third party that the Servicer has failed to perform its
obligations to service and administer the Home Equity Loans in compliance with
the terms of this Agreement, and the Seller 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 Depositor, the
Servicer, the Seller, the Trustee, the Certificate Insurer and/or Owner in
respect of such claim. The Trustee shall, in accordance with instructions
received from the Seller, reimburse the Seller only from amounts otherwise
distributable on the Class R Certificates for all amounts advanced by it
pursuant to the preceding sentence, except when a final nonappealable
adjudication determines that the claim relates directly to the failure of the
Seller to perform its duties in compliance with the terms of this Agreement. The
provisions of this Section 6.12 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(d) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, a Pre-Funding Account and a Capitalized Interest Account each an
Eligible Account to be held by the Trustee in the name of the Trust on behalf of
the Owners of the Certificates and the Certificate Insurer. The Pre-Funding
Account and the Capitalized Interest Account are not assets of the REMIC Estate.
(b) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to it
in writing by the Servicer) with respect to the immediately following Payment
Date, the amounts that are expected to be on deposit in the Certificate Account
(exclusive of any deposits from the Pre-Funding Account and the Capitalized
Interest Account expected to be made) as of such date on such Payment Date with
respect to the Fixed Rate Group (disregarding the amounts of any Insured
Payments) and equal to the sum of (x) such amounts excluding the amount of any
Total Monthly Excess Cashflow from the Fixed Rate Group included in such amounts
plus (y) any amounts of related Total Monthly Excess Cashflow from either Group
to be applied on such Payment Date to the Fixed Rate Certificates plus (z) any
deposit to the Certificate Account relating to the Fixed Rate Group from the
Pre-Funding Account and the Capitalized Interest Account expected to be made
with respect to the Fixed Rate Group on such Payment Date. The sum of the
amounts described in clauses (x) and (z) of the preceding sentence with respect
to each Payment Date is the "Fixed Rate Group Available Funds" and the sum of
the amounts described in clauses (x), (y) and (z) of the preceding sentence
with respect to each Payment Date is the "Fixed Rate Group Total Available
Funds."
(c) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to it
in writing by the Servicer) with respect to the immediately following Payment
Date, the amounts that are expected to be on deposit in the Certificate Account
(exclusive of any deposits from the Pre-Funding Account and the Capitalized
Interest Account expected to be made) as of such date on such Payment Date with
respect to the Adjustable Rate Group (disregarding the amounts of any Insured
Payments) and
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equal to the sum of (x) such amounts excluding the amount of any Total
Monthly Excess Cashflow for the Adjustable Rate Group included in such
amounts plus (y) any amounts of related Total Monthly Excess Cashflow from
either Group to be applied on such Payment Date to the Class A-6 Certificates,
plus (z) any deposit to the Certificate Account relating to the Adjustable Rate
Group from the Pre-Funding Account and the Capitalized Interest Account expected
to be made. The sum of the amounts described in clauses (x) and (z) of the
preceding sentence with respect to each Payment Date is the "Adjustable Rate
Group Available Funds" and the sum of the amounts described in clauses (x), (y)
and (z) of the preceding sentence with respect to each Payment Date is the
"Adjustable Rate Group Total Available Funds."
Section 7.03 Flow of Funds.
(a)(i) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, any Insured Payments under the Fixed
Rate Group Certificate Insurance Policy, the proceeds of any liquidation
of the assets of the Trust insofar as such assets relate to the Fixed
Rate Group, all remittances made to the Trustee pursuant to Section
8.08(d)(ii) with respect to the Fixed Rate Group and the Fixed Rate
Group Monthly Remittance Amount remitted by the Servicer and amounts
transferred from the Pre-Funding Account applicable to the Fixed Rate
Group and the Fixed Rate Group Capitalized Interest Requirement.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, any Insured Payments under the
Adjustable Rate Group Certificate Insurance Policy, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to
the Adjustable Rate Group, all remittances made to the Trustee pursuant
to Section 8.08(d)(ii) with respect to the Adjustable Rate Group and the
Adjustable Rate Group Monthly Remittance Amount remitted by the Servicer
and amounts transferred from the Pre-Funding Account applicable to the
Adjustable Rate Group and the Adjustable Rate Group Capitalized Interest
Requirement.
(b) Subject to any superseding provisions of clause (c) below during the
continuance of a Certificate Insurer Default, with respect to funds on deposit
in the Certificate Account, on each Payment Date, the Trustee shall make the
following allocations (based solely on information provided by the Servicer in
writing), disbursements and transfers for each Home Equity Loan Group from
amounts deposited therein pursuant to subsection (a) in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) first, on each Payment Date from amounts then on deposit in the
Certificate Account, (A) the Trustee Fee shall be paid to the
Trustee and (B) provided that no Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and
is continuing, the Premium Amount for each Home Equity Loan Group
for such Payment Date shall be paid to the Certificate Insurer;
(ii) second, on each Payment Date, the Trustee shall allocate an
amount equal to the sum of (x) the Total Monthly Excess Spread
with respect to such Home Equity
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Loan Group and Payment Date plus (y) any Subordination Reduction
Amount with respect to such Home Equity Loan Group and Payment
Date (such sum being the "Total Monthly Excess Cashflow" with
respect to such Home Equity Loan Group and Payment Date) to the
applicable Home Equity Loan Group in the following order of
priority:
(A) first, such Total Monthly Excess Cashflow with respect to
each Group shall be allocated to the payment of the
related Class A Distribution Amount pursuant to clause
(b)(iii) below (excluding any related Subordination
Increase Amount) in an amount equal to the amount, if
any, by which (x) the related Class A Distribution Amount
(excluding any related Subordination Increase Amount)
exceeds (y) the Available Funds with respect to such
Group (net of the related Trustee Fee and the related
Premium Amount) and shall be paid as part of the Class A
Distribution Amount, first pursuant to clause (b)(iii)(A)
below, and then pursuant to clause (b)(iii)(B) or (C)
below (the amount of such difference being the "Fixed
Rate Group Available Funds Shortfall" with respect to the
Fixed Rate Group and the "Adjustable Rate Group Available
Funds Shortfall" with respect to the Adjustable Rate
Group);
(B) second, any portion of the Total Monthly Excess Cashflow
with respect to such Home Equity Loan Group remaining
after the application described in clause (b)(ii)(A)
above shall be allocated against any Available Funds
Shortfall with respect to the other Home Equity Loan
Group;
(C) third, provided that no Certificate Insurer Default as
defined in clause (a) of the definition thereof has
occurred and is continuing, any portion of the Total
Monthly Excess Cashflow with respect to such Home Equity
Loan Group remaining after the allocations described in
clauses (b)(ii)(A) and (B) above shall be paid to the
Certificate Insurer in respect of amounts owed on account
of any Reimbursement Amount with respect to the related
Home Equity Loan Group;
(D) fourth, provided that no Certificate Insurer Default as
defined in clause (a) of the definition thereof has
occurred and is continuing, any portion of the Total
Monthly Excess Cashflow with respect to such Home Equity
Loan Group remaining after the allocations described in
clauses (b)(ii)(A), (B) and (C) above shall be paid to
the Certificate Insurer in respect of any Reimbursement
Amount with respect to the other Home Equity Loan Group;
(E) fifth, any portion of the Total Monthly Excess Cashflow
with respect to such Home Equity Loan Group remaining
after the application described in clauses (b)(ii)(A),
(B), (C) and (D) above shall be used to reduce to zero,
through the payment to the Owners of the related Class A
Certificates of a Subordination Increase Amount included
in the related
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Principal Distribution Amount, which shall be paid
pursuant to clause (b)(iii)(B) or (C) below, any
Subordination Deficiency Amount with respect to the
related Home Equity Loan Group as of such Payment Date;
(F) sixth, if a Certificate Insurer Default, as defined in
clause (a) of the definition thereof has occurred and is
continuing, then any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(b)(ii)(A), (B), (C), (D) and (E) above shall be paid to
the Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount with respect to the
related Home Equity Loan Group;
(G) seventh, any portion of the Total Monthly Excess Cashflow
remaining after the application described in clauses
(b)(ii)(A), (B), (C), (D), (E) and (F) above shall be
used to reduce to zero, through the payment to the Owners
of the Class A Certificates related to the other Home
Equity Loan Group of a Subordination Increase Amount
included in the other Principal Distribution Amount
pursuant to clauses (b)(iii)(B) or (C) below, any
Subordination Deficiency Amount, with respect to such
other Home Equity Loan Group as of such Payment Date;
(H) eighth, if a Certificate Insurer Default, as defined in
clause (a) of the definition thereof, has occurred and is
continuing, then any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(b)(ii)(A), (B), (C), (D), (E), (F) and (G) above shall
be paid to the Certificate Insurer in respect of any
Reimbursement Amount with respect to the other Home
Equity Loan Group;
(I) ninth, any portion of Total Monthly Excess Cashflow with
respect to the Adjustable Rate Group remaining after
application of clauses (b)(ii)(A), (B), (C), (D), (E),
(F), (G) and (H) above shall be paid to the Owners of
Class A-6 Certificates pursuant to clause (b)(iii)(E)
below, to the extent of any Unpaid Class A-6
Certificateholders' Interest Index Carryovers from prior
Payment Dates;
(J) tenth, any Total Monthly Excess Cashflow remaining after
the application described in clauses (b)(ii)(A), (B),
(C), (D), (E), (F), (G), (H) and (I) above shall be paid
to the Servicer pursuant to clause (b)(iii)(F) below to
the extent of any unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and unreimbursed
Compensating Interest; and
(iii) third, following the making by the Trustee of all allocations,
transfers and disbursements described (b)(ii) above from amounts
(including any related Insured Payment) then on deposit in the
Certificate Account with respect to the related Home Equity Loan
Group (after giving effect to the allocations provided in
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clause (b)(ii) above from the other Home Equity Loan Group), the
Trustee shall distribute:
(A) to the Owners of each Class of related Class A
Certificates, the related Current Interest for each Class
(including the proceeds of any Insured Payments made by
the Certificate Insurer) on a pro rata basis based on
each such Class A Certificate's Current Interest without
priority among the Class A Certificates;
(B) the Fixed Rate Group Principal Distribution Amount shall
be distributed as follows: (I) to the Owners of the Class
A-5 Certificates an amount equal to the Class A-5 Lockout
Distribution Amount and (II) the remainder as follows:
(i) first, to the Owners of the Class A-1 Certificates
until the Class A-1 Certificate Principal Balance
is reduced to zero; (ii) second, to the Owners of
the Class A-2 Certificates until the Class A-2
Certificate Principal Balance is reduced to zero; (iii)
third, to the Owners of the Class A-3 Certificates
until the Class A-3 Certificate Principal Balance is
reduced to zero; (iv) fourth, to the Owners of the
Class A-4 Certificates until the Class A-4 Certificate
are reduced to zero; and (v) fifth, to the Owners of the
Class A-5 Certificates until the Class A-5 Certificate
Balance is reduced to zero (the "Class A-5 Termination
Date");
(C) the Adjustable Rate Group Principal Distribution Amount
shall be distributed to the Owners of the Class A-6
Certificates until the Class A-6 Certificate Principal
Balance is reduced to zero;
(D) to the Certificate Insurer the amounts described in
clauses (b)(ii)(C), (D), (F) and (H) above;
(E) to the Owners of the Class A-6 Certificates, the
aggregate amount of any Unpaid Class A-6
Certificateholders' Interest Index Carryover from prior
Payment Dates;
(F) to the Servicer the amounts set forth in clause
(b)(ii)(J) above;
(G) to the Trustee, any unreimbursed Trustee Reimbursable
Expenses, and to any successor Servicer, amounts owed
pursuant to Section 8.20; and
(iv) fourth, following the making by the Trustee of all allocations,
transfers and disbursements described above, the Trustee shall
distribute to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for such Payment
Date.
(c) on any Payment Date during the continuance of any Certificate
Insurer Default, if there is a Subordination Deficit with respect to the Fixed
Rate Group, then the Fixed Rate Group
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Principal Distribution Amount for such Payment Date shall be distributed pro
rata to the Owners of any related Outstanding Class A Certificates on such
Payment Date.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Payment Dates to the Owners of the related Class A
Certificates on account of principal pursuant to clause (b)(iii)(B) and (C)
shall not exceed the original Certificate Principal Balance of the related Class
A Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Payment Date, pursuant
to Section 12.02(b) hereof, such amounts will be transferred from the Policy
Payments Account to the Certificate Account and the Trustee shall distribute
such Insured Payments, or the proceeds thereof in accordance with Section
7.03(b), to the Owners of such Class A Certificates.
(f) The Trustee or Paying Agent shall (i) receive for each Owner of the
Class A Certificates any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set forth
in Section 7.03(b). Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of the related Certificate Insurance Policy shall not be
considered payment by the Trust, nor shall such payments discharge the
obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the Reimbursement Amount
pursuant to Section 7.03(b)(iii)(D) hereof. Nothing contained in this paragraph
shall be construed so as to impose duties or obligations on the Trustee that are
different from or in addition to those expressly set forth in this 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. In this regard, all
rights of the Owners of the Class R Certificates to receive distributions in
respect of the Class R Certificates shall be subject and subordinate to the
preferential rights of the holders of the Class A Certificates to receive
distributions thereon and the ownership interests of such Owners in such
distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Owners of the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, and the Owners of the Class R Certificate shall not
be required to refund any amount properly distributed on the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Trustee will deposit, on behalf of the
Owners of the Class A Certificates and the Certificate Insurer, (i) in the
Pre-Funding Account (A) the Original Fixed Rate Group Pre-Funded Amount from the
proceeds of the sale of the Fixed Rate Certificates and (B) the Original
Adjustable Rate Group Pre-Funded Amount from the proceeds of the sale of the
Class A-6 Certificates and (ii) in the Capitalized Interest Account , (A) the
Original Fixed Rate Group Capitalized Interest Deposit, from the sale of the
Fixed Rate Certificates and (B) the
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Original Adjustable Rate Group Capitalized Interest Deposit from the sale of the
Class A-6 Certificates.
(b) on any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Home Equity Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Seller upon satisfaction of the conditions set forth in Sections 3.05 and 3.07
hereof with respect to such transfer; in connection with such instructions, the
Depositor shall additionally inform the Trustee and the Certificate Insurer
whether such Subsequent Home Equity Loans are being transferred to the Fixed
Rate Group or the Adjustable Rate Group. In no event shall the Seller be
permitted to instruct the Trustee to release from the Pre-Funding Account to the
Certificate Account with respect to the aggregate Subsequent Home Equity Loans
to be transferred to the Fixed Rate Group an aggregate amount in excess of the
Original Fixed Rate Group Pre-Funded Amount or to release from the Pre-Funding
Account to the Certificate Account with respect to the aggregate Subsequent Home
Equity Loans to be transferred to the Adjustable Rate Group an aggregate amount
in excess of the Original Adjustable Rate Group Pre-Funded Amount.
(c) After giving effect to any reductions in the Pre-Funded Amount with
respect to a Group on or before the Monthly Remittance Date relating to the
Final Pre-Funding Payment Date, the Trustee shall withdraw from the Pre-Funding
Account the amount (exclusive of any related Pre-Funding Account Earnings still
on deposit therein) remaining in the Pre-Funding Account with respect to such
Group on such Monthly Remittance Date relating to the Final Pre-Funding Payment
Date and deposit such amount to the Certificate Account on such Monthly
Remittance Date.
(d) Reserved.
(e) On each Pre-Funding Payment Date, the Trustee shall transfer from
the Capitalized Interest Account to the Certificate Account, the Fixed Rate
Group Capitalized Interest Requirement and Adjustable Rate Group Capitalized
Interest Requirement for such Pre-Funding Payment Date.
(f) The Capitalized Interest Account shall be closed on the Final
Pre-Funding Payment Date after any transfers to the Certificate Account required
on such Payment Date. All amounts, if any, remaining in the Capitalized Interest
Account on such day after giving effect to all transfers pursuant to Section
7.04(e) shall be transferred to the Seller.
(g) On each Pre-Funding Payment Date, the Trustee shall transfer from
the Pre-Funding Account to the Certificate Account all Pre-Funding Account
Earnings for the related Remittance Period.
(h) The Pre-Funding Account and the Capitalized Interest Account shall
not be an asset of the REMIC Estate.
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(i) On the Startup Day, $_________ shall be deposited into the
Certificate Account, $________ of which will be allocable to the Fixed Rate
Group and $__________ of which will be allocable to the Adjustable Rate Group.
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 may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners and the Certificate Insurer 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. Amounts held in the Certificate Account shall be invested in Eligible
Investments, which Eligible Investments shall mature no later than the Business
Day preceding the immediately following Payment Date or, if such Eligible
Investments are an obligation of the Trustee or are money market funds for which
the Trustee or any affiliate is the manager or the adviser, such Eligible
Investments shall mature no later than the following 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) All income or other gain from investment in the Certificate Account
held by the Trustee shall be withdrawn and retained by the Trustee. Any
investment losses on amounts held in the Certificate Account shall be for the
account of the Trustee and promptly upon the realization of such loss shall be
contributed by the Trustee to the Certificate Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on the Seller to pay and the Seller
shall pay the amount of the expenses of the Trust referred to in Section 2.05
(other than payments of premiums to the Certificate Insurer) (including
Trustee's fees and expenses not covered by Sections 7.03(b)(i)(A) and
7.03(b)(iii)(G) respectively), and the Seller shall promptly pay such expenses
directly to the Persons to whom such amounts are due. With respect to the
Certificate Account the Trustee shall receive all income and other gains from
investments as described in Section 7.05(c).
(b) The Seller shall pay directly on the Startup Day the reasonable fees
and expenses of counsel to the Trustee.
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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, FHLMC
senior debt obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-l by
Standard & Poor's and P-l by Moody's; provided that any such certificates of
deposit must be secured at all times by collateral described in clause (a) or
(b) above, such collateral must be held by a third party and the Trustee must
have a perfected first priority security interest in such collateral;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$____________ which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in (a),
(c), or (e) 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-l or Aa2, respectively,
or better by Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a
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Federal Reserve Bank, (b) a bank which is a member of the FDIC and
which has combined capital, surplus and undivided profits of not less
than $________, or (c) a bank approved in writing for such purpose by
the Certificate Insurer, and the Trustee shall have received written
confirmation from such third party that it holds such securities, free
and clear of any lien, as agent for the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less and
the Trustee will value the collateral securities no less frequently than
weekly marked-to-market at current market price plus interest 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%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's;
(j) Any money market fund rated AAAm or AAAm-G by Standard & Poor's and
Aaa by Moody's which funds are registered under the Investment Company Act of
1940 and whose shares are registered under the Securities Act of 1933, including
any such fund that is managed by the Trustee or any affiliate of the Trustee or
for which the Trustee or any of its affiliates acts as an adviser; and
(k) Any other investment permitted by each of the Rating Agencies and
the Certificate Insurer;
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.
By 12:00 noon New York time, on each Payment Date (or such earlier
period as shall be agreed by the Seller 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 and upon
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which the Trustee may rely) the Seller, the Depositor, each Owner and the
Certificate Insurer, of the following information with respect to such Payment
Date (which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account as
of the related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate on the next Payment Date;
(3) The amount of any Subordination Increase Amount for each
Group;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1), (3)
and (4) above in respect of the distribution of the Class A Distribution
Amount on such Payment Date in accordance with Section 7.03 hereof;
(6) The Class A Certificate Principal Balance, the aggregate
amount of the principal of each Class of the Class A Certificates to be
paid on such Payment Date and the remaining Certificate Principal
Balance of each Class of Class A Certificates following any such
payment;
(7) The amount, if any, of any Realized Losses for each Group for
the related Remittance Period;
(8) The amount of any Subordination Deficit, any Subordination
Reduction Amount and the Specified Subordination Amount for each Group;
(9) For the Payment Dates during the Funding Period, (A) the
Pre-Funded Amount previously used to purchase Subsequent Home Equity
Loans, (B) the Pre-Funded Amount distributed as either a Fixed Rate
Group Principal Distribution Amount or an Adjustable Rate Group
Principal Distribution Amount, (C) the Fixed Rate Group Pre-Funding
Account Earnings and Adjustable Rate Group Pre-Funding Account Earnings
transferred to the Certificate Account, (D) the amounts transferred from
the Capitalized Interest Account to the Certificate Account and the
amount transferred to the Seller, if any and (E) the remaining
Pre-Funded Amount; and
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.
(a) On each Payment Date the Trustee shall transmit a report in writing
to each Owner, the Underwriter, the Depositor, the Certificate Insurer, Standard
& Poor's and Moody's:
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal amount of
$_______);
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(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in full or other Prepayments or other recoveries of
principal included therein with respect to the Fixed Rate Group and the
Adjustable Rate Group and any Pre-Funded Amounts distributed as a
prepayment (based on a Certificate in the original principal amount of
$________) and any related Subordination Increase Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$_______);
(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment Date was
less than the related Class A Distribution Amount on such Payment Date,
the related Carry Forward Amount and the allocation thereof to the
related Classes of Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Payment Date;
(vi) the principal amount of each Class of Class A Certificate
(based on a Certificate in the original principal amount of $_______)
which will be Outstanding and the aggregate Loan Balance of each Group
after giving effect to any payment of principal on such Payment Date;
(vii) the Subordinated Amount and Subordination Deficit for each
Group, if any, remaining after giving effect to all distributions and
transfers on such Payment Date;
(viii) based upon information furnished by the Servicer, 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;
(ix) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution with respect to each Group;
(x) the weighted average Coupon Rate of the Home Equity Loans in
each Group;
(xi) the amount of any Carry-Forward Amounts;
(xii) during the Funding Period, the Loan Balance as the
Subsequent Home Equity Loans added to the Trust during the related
Remittance Period; are
(xiii) such other information as the Certificate Insurer or any
Owner may reasonably request with respect to Delinquent Home Equity
Loans;
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(xiv) the weighted average gross margin of the Home Equity Loan
in the Adjustable Rate Group;
(xv) the largest home equity loan balance outstanding in each
Group;
(xvi) for Payment Dates during the Funding Period, the remaining
Pre-Funded Amount for each Group; and
(xvii) the Class A-6 Pass-Through Rate.
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 arc conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
each Owner, the Certificate Insurer, the Underwriter, Standard & Poor's and
Moody's, together with the information described in Subsection (a) preceding,
the following information with respect to each Home Equity Loan Group and for
both Groups in the aggregate 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 number and aggregate principal balances of Home Equity
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 immediately preceding the Payment Date, (d)
the numbers and aggregate Loan Balances of all Home Equity Loans as of
such Payment Date after giving effect to any payment of principal on the
last day of the Remittance Period immediately preceding the Payment Date
and (e) the percentage that each of the amounts represented by clauses
(a), (b) and (c) represent as a percentage of the respective amounts in
clause (d);
(ii) the status and the number and dollar amounts of all Home
Equity Loans in foreclosure proceedings as of the close of business on
the last Business Day of the calendar month immediately 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;
(iii) the number of Mortgagors and the Loan Balances of (a) the
related Mortgages involved in bankruptcy proceedings as of the close of
business on the last Business Day of the calendar month immediately
preceding such Payment Date and (b) Home Equity Loans that are "balloon"
loans;
(iv) the existence and status of any REO Properties, as of the
close of business of the last Business Day of the month immediately
preceding the Payment Date;
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(v) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month immediately
preceding the Payment Date;
(vi) cumulative Realized Losses, incurred on the Home Equity
Loans from the Startup Day to and including the Remittance Period
immediately preceding the Payment Date;
(vii) the amount of net Liquidation Proceeds realized on the Home
Equity Loans during the Remittance Period immediately preceding the
Payment Date;
(viii) the Annual Loss Percentage (Rolling Twelve Month) with
respect to such Payment date; and
(ix) the 90+ Delinquency Percentage (Rolling Three Month) with
respect to such payment Date.
(c) The Trustee shall, on behalf of the Trust, prepare the periodic
reports required to be filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission thereunder as described in the SEC Letter Agreement at the
times and in the manner described therein. Upon the request of the Trustee, each
of the Depositor, the Seller and the Servicer shall cooperate with the Trustee
in the preparation of any such report and shall provide to the Trustee in a
timely manner all such information or documentation as the Trustee may
reasonably request in connection with the performance of its duties and
obligations under this Section 7.09(c).
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller, the
Certificate Insurer and each Owner, with respect to the amount on deposit in the
Certificate Account (including the amount therein relating to each Group) and
the identity of the investments included therein, as the Depositor, the Seller,
any Owner or the Certificate Insurer may from time to time reasonably request.
Without limiting the generality of the foregoing, the Trustee shall, at the
reasonable request of the Depositor, the Seller, any Owner or the Certificate
Insurer transmit promptly to the Depositor, the Seller, any Owner and the
Certificate Insurer copies of all accountings of receipts in respect of the Home
Equity Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the terms of the respective Home Equity
Loans, and with prudent and reasonable care, using the degree of skill and
attention that the Servicer exercises with respect to comparable home equity
loans that it services for itself or others 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 but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction.
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 the rights and powers of the Servicer which have been
delegated to such Sub-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 is hereby authorized and empowered 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 Properly 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 home equity 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 8.13(a) and Section 8.14(a) shall each constitute a
revocable power of attorney 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 held by the Trustee hereunder paid in full or
foreclosed (or with respect to which payment in full has been escrowed).
Revocation of the power of attorney created by the final proviso of the
preceding sentence shall take effect upon (i) the receipt by the Servicer of
written notice thereof from the Trustee, (ii) a Servicer Termination Event or
(iii) the termination of the Trust. The Trustee shall execute any documentation
furnished to it by the Servicer for recordation by the Servicer in the
appropriate jurisdictions, as
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shall be necessary to effectuate the foregoing. Subject to Sections 8.13 and
8.14, the Trustee shall, if necessary, execute a power of attorney to the
Servicer or any Sub-Servicer and furnish them with any other documents as the
Servicer or such Sub-Servicer shall reasonably request to enable the Servicer
and such Sub-Servicer to carry out their respective servicing and administrative
duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the Trustee,
the details concerning the servicing of the Home Equity Loans on computer
generated tape, diskette or other machine readable format which is mutually
agreeable.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans [at least as rigorous as those described in
the FNMA Guide.] Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may, with the prior written consent of the Certificate
Insurer, enter into Sub-Servicing Agreements for any servicing and
administration of Home Equity Loans with any institution which is acceptable to
the Certificate Insurer and which, (x) is in compliance with the laws of each
state necessary to enable it to perform its obligations under such Sub-Servicing
Agreement, (y) has experience servicing home equity loans that are similar to
the Home Equity Loans and (z) has equity of not less than $________ (as
determined in accordance with generally accepted accounting principles). The
Servicer shall give notice to the Trustee, the Owners, the Certificate Insurer
and the Rating Agencies of the appointment of any Sub-Servicer (and shall
receive the confirmation of the Rating Agencies that such Sub-Servicer shall not
result in a
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withdrawal or downgrading by any Rating Agency of the rating or the shadow
rating of the Class A Certificates). 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 the Trustee
(if acting as successor Servicer) or any other successor Servicer shall have the
option to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns. The Servicer shall deliver to the Trustee and
the Certificate Insurer copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof promptly upon the Servicer's execution and
delivery of such instrument.
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 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 Depositor, 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 Depositor, 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 Depositor,
the Certificate Insurer and/or Owner in respect of such claim. The Trustee
shall, in accordance with instructions received from the Servicer, reimburse the
Servicer only from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence, except when a
final nonpayable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the Agreement.
The provisions of this Section
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8.05(b) 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 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 or another successor Servicer, 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 or another successor Servicer
without act or deed on part of the Trustee; provided, however, that the Trustee
(if acting as successor Servicer) or any other 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. The Principal and Interest Account shall be an Eligible Account. Each
Principal and Interest Account shall be identified on the records of the
Designated Depository Institution as follows: _________________________, as
Trustee on behalf of MBIA Insurance Corporation and the Owners of the Centex
Home Equity Loan Trust A Home Equity Loan Pass-Through Certificates. 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 immediately 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 selected by the Trustee. 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.
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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 amount 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 Trust for the benefit of the Owners. The Trust shall be
divided into two separate sub-trusts; one for the Adjustable Rate Group and any
Trust assets allocable to such Adjustable Rate Group and the other for the Fixed
Rate Group and any Trust assets allocable to such Fixed Rate Group. Any
investment earnings on funds held in the Principal and Interest Account shall be
for the account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Total Monthly Excess Spread included therein)
by the Servicer. Any investment losses on amounts 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 collected and interest due on the
Home Equity Loans (net of the Servicing Fee related to such Home Equity Loans)
on and after the Cut-Off Date, the related Subsequent Cut-Off Date and the
Replacement Cut-Off Date, as applicable, 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) 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, plus (II) accrued and unpaid interest on such Home Equity
Loan (net of the related Servicing Fee) and (III) any unreimbursed Realized
Losses, (ii) principal received and interest due on the Home Equity Loans prior
to the Cut-Off Date, the related Subsequent Cut-Off Date or the related
Replacement Cut-Off Date, as the case may be, (iii) reimbursements for
unreimbursed Delinquency Advances (but solely from amounts received on the
related Home Equity Loan) and (iv) 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 from the Principal and
Interest Account, with respect to each Home Equity Loan Group, only in the
following priority and for the following purposes:
(A) on each Monthly Remittance Date, to pay itself the related
Servicing Fees to the extent such Servicing Fees are not retained
by the Servicer;
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(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal and
Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for unrecovered
Delinquency Advances and unrecovered Servicing Advances (in each
case, solely from amounts recovered on the related Home Equity
Loan) and for any excess interest collected from a Mortgagor;
(E) Nonrecoverable Advances; and
(F) 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 Monthly Remittance Amount
allocable to a Remittance Period not later than the related Monthly Remittance
Date, and (b) on each Monthly Remittance Date, deliver to the Trustee and the
Certificate Insurer, a monthly servicing report, with respect to each Home
Equity Loan Group, containing (without limitation) the following information:
principal and interest collected in respect of the Home Equity Loans, scheduled
principal and interest that was due on the Home Equity Loans, relevant
information with respect to Liquidated Loans, if any, summary and detailed
delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans and any other information
requested by the Certificate Insurer (including, without limitation, a
liquidation report with respect to each Liquidated Loan). In addition, the
Servicer shall inform the Trustee and the Certificate Insurer on each Monthly
Remittance Date, with respect to each Home Equity Loan Group, of the amounts of
any Loan Purchase Prices or Substitution Amounts so remitted during the related
Remittance Period, and of the Loan Balance of the Home Equity Loan having the
largest Loan Balance as of such date.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee
to perform its reporting requirements under Section 7.09 and to make the
allocations and disbursements set forth in Sections 7.02 and 7.03.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Payment Date occurring during the month in
which such reimbursement is made (all or any portion of such amount to be
replaced on future Monthly Remittance Dates to the extent required for
distribution) any Delinquent payment of interest with respect to each Delinquent
Home Equity
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Loan, which payment was not received on or prior to the last day of the related
Remittance Period. Such amounts of the Servicer's own funds so deposited are
"Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds, from late
collections on the related Home Equity Loan or as provided in Section
7.03(b)(iii)(F).
Notwithstanding the foregoing, in the event that the Servicer determines
in its reasonable business judgment in accordance with the servicing standards
set out herein that any proposed Delinquency Advance would not be recoverable,
the Servicer shall not be required to make Delinquency Advances with respect to
such Home Equity Loan. To the extent that the Servicer previously has made
Delinquency Advances with respect to a Home Equity Loan that the Servicer
subsequently determines will be nonrecoverable, the Servicer shall be entitled
to reimbursement for such aggregate Nonrecoverable Advances from collections on
any Home Equity Loan on deposit in the Principal and Interest Account. The
Servicer shall give written notice of such determination as to why such amount
would not be recoverable to the Trustee and the Certificate Insurer; the Trustee
shall promptly furnish a copy of such notice to the Owners of the Class R
Certificates; provided, further, that the Servicer shall be entitled to recover
any unreimbursed Delinquency Advances from Liquidation Proceeds for the related
Home Equity Loan.
(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, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property, (iv) advances required by Section 8.13(a),
except to the extent that such amounts are determined by the Servicer in its
reasonable business judgment not to be recoverable and (v) expenses incurred
pursuant to Section 8.22. Such costs will constitute "Servicing Advances". The
Servicer may recover a Servicing Advance (x) from the Mortgagors to the extent
permitted by the Home Equity Loans or, if not theretofore 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(b)(iii)(F). The Servicer shall be entitled to
recover the Servicing Advances from the Liquidation Proceeds on the related Home
Equity Loan prior to the payment of the Liquidation Proceeds to any other party
to this Agreement. In no case may the Servicer recover Servicing Advances from
the principal and interest payments on any other Home Equity Loan except as
provided in Section 7.03(b)(iii)(F).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment in full of a Home Equity Loan or a Prepayment of at
least six times a Mortgagor's Monthly Payment occurs during any calendar month,
any shortfall between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full months interest at the Coupon Rate
that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next
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succeeding Monthly Remittance Date and shall be included in the Monthly
Remittance Amount to be made available to the Trustee on such Monthly Remittance
Date. The Servicer may recover any unreimbursed payments of Compensating
Interest as provided in Section 7.03(b)(iii)(F).
(b) Subject to the clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes Delinquent, in whole or in part, as to at least three
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 may not purchase any such Home Equity Loan
unless the Servicer has delivered to the Trustee and the Certificate Insurer at
the Servicer's expense, an Opinion of Counsel acceptable to the Certificate
Insurer and to the Trustee to the effect that such a purchase would not
constitute a Prohibited Transaction for the Trust or otherwise subject the Trust
to tax and would not jeopardize the status of the Trust Estate as a REMIC. Any
such Home Equity Loan so purchased shall be purchased by the Servicer on or
prior to 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) If a Home Equity Loan to be repurchased by the Servicer pursuant to
clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase Home Equity Loans without having first
notified the Certificate Insurer of such purchase. In all other cases, the
Servicer must notify the Certificate Insurer and the Trustee, in writing, of its
intent to purchase a Home Equity Loan and the Servicer may not purchase such
Home Equity Loan without the written consent of the Certificate Insurer.
(d) 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 Monthly Remittance Amount 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 carrier generally acceptable to the
Servicer 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, and shall be named as loss payee. The policies shall
require the insurer to provide the mortgagee with 30 days' notice prior to any
cancellation or as otherwise required by law. The Servicer may also maintain a
blanket hazard insurance policy or policies if the insurer or insurers of such
policies are rated investment grade by Moody's and Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if required
by federal law, at any time thereafter) relates to a Property in an area
identified in the Federal Register by the
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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 then current guidelines of the
Federal Insurance Administration with a carrier generally acceptable to the
Servicer 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 and the Certificate Insurer out of
the Servicer's own funds for any loss to the Trust or the Certificate Insurer
resulting from the Servicer's failure to advance premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
(c) Amounts collected by the Servicer under any Insurance Policies shall
be deposited into the Principal and Interest Account.
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,
provided at the expense of the Servicer, 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 home equity
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 material
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 or to the Custodian on
the Trustee's behalf the original copy of such assumption or substitution
agreement (indicating the File to which it relates) which copy shall be added by
the Trustee or by the Custodian on the Trustee's behalf 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, no
material term of the Home Equity Loan (including, without limitation, the
required monthly payment on the related Home Equity Loan, the stated maturity,
the outstanding principal
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amount or the Coupon Rate) shall 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; Workout of
Home Equity Loans.
(a) The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 35 months of its acquisition by the Trust, at
such price as the Servicer in good faith deems necessary to comply with this
covenant unless the Servicer obtains for the Certificate Insurer and the
Trustee, an Opinion of Counsel (the expense of which opinion shall be a
Servicing Advance) experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee, addressed to the Certificate Insurer, the
Trustee and the Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust or the REMIC Estate as defined in
Section 860F of the Code or cause the REMIC Estate to fail to qualify as a REMIC
under the REMIC Provisions at any time that any Certificates are Outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the REMIC
created hereunder 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
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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. If the Servicer has actual knowledge of any
environmental or hazardous waste risk with respect to the Property that the
Servicer is contemplating acquiring in foreclosure or deed in lieu of
foreclosure, the Servicer will cause an environmental inspection of the Property
in accordance with the servicing standards set forth in this Agreement. The
Servicer shall not take any such action with respect to any Property known by
the Servicer to contain such wastes or substances or to be within one mile of
the site of such wastes or substances, without the prior written consent of the
Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, 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" and the Servicer shall promptly submit a liquidation report to
the Certificate Insurer in form acceptable to the Certificate Insurer.
(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 Class A 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 has no intent to foreclose on any Mortgage based on the
delinquency characteristics as of the Startup Day; provided, that the foregoing
does not prevent the Servicer from initiating foreclosure proceedings on any
date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
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
Custodian, on behalf of the Trustee, a written request of the Servicer signed by
an Authorized Officer which states the purpose of the release of a File. Upon
receipt of such written request, the Custodian, on behalf of 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
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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 or to the Trustee. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Custodian, on behalf of 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 Custodian, on behalf of 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) The Servicer shall have the right (upon receiving the prior written
consent of the Certificate Insurer) to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the Loan-to-Value Ratio and debt-to-income ratio of such Note on the Cut-Off
Date, or Subsequent Cut-Off Date, as applicable and any increase in the
Loan-to-Value Ratio shall not exceed 5% 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.
(c) 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 release the related File to the Servicer, promptly
upon a written request of the Servicer signed by an Authorized Officer, which
states the purpose of the release of a File; provided, however, that no more
than 5% of the outstanding Home Equity Loans (by number) shall be released to
the Servicer at any time. Such receipt shall obligate the Servicer to return the
File to the Trustee when the need therefore by the Servicer no longer exists.
(d) In all cases where the Servicer needs the Trustee to sign any
document or to release a File within a particular period of time, the Servicer
shall notify an Authorized Officer of
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the Trustee by telephone of such need and the Trustee shall thereon use its best
efforts to comply with the Servicer's needs, but in any event will comply within
two Business Days of such request.
(e) No costs associated with the procedures described in this Section
8.14 shall be an expense of the Trust.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related 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)(i) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the
Certificate Insurer and the successor Servicer.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before July
31 of each year, commencing in 1999, 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.
The Servicer shall deliver to the Trustee, the Certificate Insurer and
the Rating Agencies, promptly after having obtained knowledge thereof but in no
event later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or the lapse
of time would become a Servicer Termination Event.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before July 31 of each year, commencing in 1999, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Seller, which in no event shall exceed $______ per annum), shall cause to be
delivered to the Trustee, the Certificate Insurer, the Depositor, and the Rating
Agencies a letter or letters of a firm of independent, nationally recognized
certified public accountants reasonably acceptable to the Certificate Insurer
stating
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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 and the Certificate Insurer
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.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Trustee and in addition shall provide a copy of
such computer tape to the Trustee, and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19 Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, 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 such
consent shall not be unreasonably withheld; provided, however, that any assignee
must meet the eligibility requirements set forth in Section 8.20(h) hereof for a
successor servicer.
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of
Servicer.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) may remove the Servicer upon the occurrence
of any of the following events (each a "Servicer Termination Event"):
(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 any state bankruptcy law or
similar laws 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
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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 payment or deposit required of
the Servicer under this Agreement) 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 or
in the other Operative Documents which materially and adversely
affects the interests of the Owners or the Certificate Insurer
which remains unremedied 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
or an Affiliate of the Servicer is the surviving entity of such
combination or (2) the surviving entity (A) is servicing at least
$_________ of home equity loans that are similar to the Home
Equity Loans, (B) has Tangible Net Worth of not less than
$_________ (as determined in accordance with generally acceptable
account principles), (C) is consented to by the Certificate
Insurer (such consent not to be unreasonably withheld) and (D)
agrees to assume the Servicer's obligations thereunder; or
(vi) The failure of the Servicer to satisfy the Servicer
Termination Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall continue to act as servicer under this Agreement until removed as set
forth in this Section 8.20 and a successor Servicer has assumed the servicing
obligations. After the occurrence of a Servicer Termination Event, the
Certificate Insurer or the Trustee (with the prior written consent of the
Certificate Insurer) may remove the Servicer by written notice to the Servicer.
Such termination shall be effective on the date specified in such notice,
provided that a successor Servicer or the
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Trustee has assumed the servicing obligations. Upon the effective date of
termination of the Servicer, the Trustee (or another successor Servicer
appointed by the Certificate Insurer) shall assume the servicing obligations
hereunder. The Certificate Insurer may appoint a successor Servicer other than
the Trustee. Until a successor Servicer has been appointed by the Certificate
Insurer, the Trustee shall be the successor Servicer in all respects without
further action, and all authority and power of the Servicer under this agreement
shall pass to and be vested in the Trustee on and after the effective date of
termination.
(c) [Reserved]
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon (i) 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 or (ii) written consent of the
Certificate Insurer and the Trustee. Any such determination under clause (i)
shall be evidenced by an Opinion of Counsel acceptable to the Trustee and the
Certificate Insurer at the expense of the Servicer to such effect which shall be
delivered to the Trustee and the Certificate Insurer.
(e) 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.
(f) 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.
(g) 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.
(h) Upon removal or resignation of the Servicer, the Trustee may (A)
unless the Certificate Insurer has appointed a successor Servicer other than the
Trustee, solicit bids for a successor servicer as described below and (B) until
such time as another successor Servicer is appointed by the Certificate Insurer,
shall assume the duties and obligations of the Servicer hereunder. The Trustee
agrees to act as Servicer during the solicitation process and shall assume all
duties and obligations of the Servicer. The Certificate Insurer may appoint a
successor Servicer other than the Trustee. If the Certificate Insurer fails to
appoint a successor Servicer, the Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer, appoint, or
petition a court of competent jurisdiction to appoint, any housing and home
finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by FNMA or FHLMC for first and second
home equity loans and having equity of not less than $_________ (or such lower
level as may be acceptable to the Certificate
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Insurer), as determined in accordance with generally accepted accounting
principles and acceptable to the Certificate Insurer as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. The compensation of any
successor Servicer (other than the Trustee in its capacity as successor
Servicer) so appointed shall be the amount agreed to between the successor
Servicer, the Certificate Insurer and the Trustee (up to a maximum of ____% per
annum on the outstanding principal balance of each Home Equity Loan), together
with the other servicing compensation in the form of assumption fees, late
payment charges or otherwise as provided in Sections 8.08 and 8.15; provided,
however, that if the Trustee becomes the successor Servicer it shall receive as
its compensation the same compensation paid to the Servicer immediately prior to
the Servicer's removal or resignation; provided, further, however, that the
predecessor Servicer agrees to pay to the Trustee or other successor Servicer at
such time that it becomes such successor Servicer a set-up fee of twenty-five
dollars ($_____) for each Home Equity Loan then included in the Trust Estate.
The amount payable in excess of twenty-five dollars ($_____) per Home Equity
Loan, if any, shall be payable to the successor Servicer and reimbursable
pursuant to Section 7.03(b)(iii)(G) hereof. The Trustee shall be obligated to
serve as successor Servicer whether or not the fee described in this section is
paid by the Servicer, but shall in any event be entitled to receive, and to
enforce payment of, such fee from the Servicer.
(i) In the event the Trustee elects to solicit 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 servicing compensation in accordance
with clause (h) above, 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 it will pay to obtain
servicing provided that the Certificate Insurer has given its prior written
consent. The Trustee shall deduct from any sum received by the Trustee from the
successor to the 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 successor Servicer
at the time of such sale, transfer and assignment to the Servicer's successor.
(j) 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
predecessor Servicer agrees to cooperate with the Trustee and any successor
Servicer in effecting the termination of the predecessor 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. Any amounts and documents which
are property of the
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Trust held by the predecessor Servicer shall be held in trust on behalf of the
Trustee until transferred to the successor Servicer or Trustee. 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 Servicer agrees to reimburse
the Trust, the Owners and the Certificate Insurer for the costs and expenses
associated with the transfer of servicing to the replacement Servicer, but
subject to a maximum reimbursement to all such parties in the amount of
twenty-five dollars ($____) for each Home Equity Loan then included in the Trust
Estate. The amount payable in excess of twenty-five dollars ($____) per Home
Equity Loan, if any, shall be payable to the successor Servicer and reimbursable
pursuant to Section 7.03(b)(iii)(G) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately (i) record all assignments of
Home Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all
Delinquency Advances and Compensating Interest payments and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans.
(l) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, to Moody's and to Standard & Poor's of the transfer of
the servicing to the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the
Owners, the Trustee, the Seller, Moody's and Standard & Poor's of the occurrence
of any event described in paragraphs (a) above of which the Trustee is aware.
(n) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.21(b) and
shall be entitled to the Servicing Fee and all of the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement.
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, any Owner of a Class R Certificate, 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
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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 (including the Trustee if it shall become the Servicer
hereunder) 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 FNMA Guide or
any successor provision thereof; provided, however, that in any event that the
fidelity bond or the errors and omissions coverage is no longer in effect, the
Servicer shall notify the Trustee and the Trustee shall promptly give such
notice to the Certificate Insurer and the Owners.
Section 8.22 Additional Servicing Responsibilities for Second Mortgage
Loans.
The Servicer shall file (or cause to be filed) a request for notice of
any action by a superior lienholder under a superior lien for the protection of
the Trustee's interest, where permitted by local law and whenever applicable
state law does not require that a junior lienholder be named as a party
defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has accelerated
or intends to accelerate the obligations under a First Mortgage Loan, or has
declared or intends to declare a default under the mortgage or the promissory
note secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust, whatever actions are necessary to protect the interests of the Owners and
the Certificate Insurer, and/or to preserve the security of the related Home
Equity Loan, subject to the application of the REMIC Provisions. The Servicer
shall advance the necessary funds to cure the default or reinstate the lien
securing a First Mortgage Loan, if such advance is in the best interests of the
Certificate Insurer and the Owners; provided, however, that no such additional
advance need be made if such advance would be nonrecoverable from Liquidation
Proceeds on the related Home Equity Loan. The Servicer shall thereafter take
such action as is necessary to recover the amount so advanced. Any expenses
incurred by the Servicer pursuant to this Section 8.22 shall be Servicing
Advances.
Section 8.23 The Adjustable Rate Group Home Equity Loans.
The Servicer shall enforce each Home Equity Loan in the Adjustable Rate
Group in accordance with its terms and shall timely calculate, record, report
and apply all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer shall timely notify the Mortgagor of any changes to the
Coupon Rate or the Mortgagor's monthly payment. If the Servicer fails to make
either a timely or accurate adjustment to the Coupon Rate or monthly payment or
to notify the Mortgagor of such adjustments, upon the Servicer's discovery of
such error and such continued failure, the Servicer shall pay from its own funds
any shortage. If the Servicer's continued failure after notice thereof to make a
scheduled change affects the Trust's rights to make future adjustments under the
terms of such Adjustable Rate Group Home Equity Loan, the Servicer shall
repurchase such Adjustable Rate Group Home Equity Loan in accordance with the
provisions hereof. Any amounts paid by the Servicer pursuant to this Section
shall not be an
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advance and shall not be reimbursable from the proceeds of any Adjustable Rate
Group Home Equity Loan.
Section 8.24 Merger, Conversion, Consolidation or Succession to Business
of Servicer. Any corporation into which the Servicer may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Servicer shall be a party or
any corporation succeeding to all or substantially all of the business of the
Servicer shall be the successor of the Servicer hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto provided that such corporation meets the qualifications set forth in
Section 8.20(h) and the resulting corporation has a Tangible Net Worth of at
least $_______.
Section 8.25 Notices of Material Events. The Servicer shall give prompt
notice to the Certificate Insurer, the Trustee, Moody's and Standard & Poor's of
the occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has knowledge
which results, or which with notice or the passage of time, or both, would
result in the occurrence of a default by the Seller, or the Servicer under any
Operative Document or would constitute a material breach of a representation,
warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against the Seller or the
Servicer to which the Servicer has knowledge in any federal, state or local
court or before any governmental body or agency or before any arbitration board
or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon any of the
Seller's or the Servicer's ability to perform its obligations under any
Operative Document;
(c) The commencement of any proceedings by or against the Seller or the
Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of any of the Seller's or the Servicer's business
that the Seller or the Servicer is to cease or desist, or to undertake any
practice, program, procedure or policy employed by the Seller or the Servicer in
the conduct of the business of any of them, and such cessation or undertaking
will materially and adversely affect the conduct of the Seller's or the
Servicer's business or its ability to perform under the Operative Documents or
materially and adversely affect the financial affairs of the Seller or the
Servicer.
Section 8.26 Indemnification by the Servicer. The Servicer 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
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compliance with the terms of this Agreement. A party against whom a claim is
brought shall immediately notify the other parties and the Rating Agencies 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) 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 Certificate Insurer, the Servicer, the Trustee and/or Owner in
respect of such claim.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policies of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement and payment in full of all amounts owed to the Certificate
Insurer upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate and (c) at any time if a
Qualified Liquidation of both Home Equity Loan Groups within the Trust is
effected as described in Section 9.02. To effect a termination of this Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall provide to the Trustee and the Certificate Insurer, at their expense, 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 Servicer either shall sell the Home
Equity Loans and the Trustee shall distribute the proceeds of the liquidation of
the Trust Estate, or the Servicer shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates to the
effect that each such liquidation constitutes 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 United Kingdom, 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 the Servicer.
(a) On any Monthly Remittance Date after the Clean-Up Call Date, the
Servicer may determine to purchase, in whole only, 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, the Servicer and such
Owners of the Class R Certificates, or (ii) in the absence of such an agreement,
at a price equal to the Termination Price. In connection with such purchase, the
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
(b) In the event that the Servicer purchases all Home Equity Loans and
each REO Property remaining in the Trust Estate pursuant to Section 9.02(a), the
Trust Estate shall be terminated in accordance with the following additional
requirements:
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(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of
the REMIC created hereunder pursuant to Treasury regulation Section
1.860F-1 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Estate to the Servicer for
cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate Insurer,
the Trustee shall distribute or credit, or cause to be distributed or
credited, to the Owners of the Class R Certificates all cash on hand in
the Trust Estate (other than cash retained to meet claims), and the
Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, the Servicer shall provide to
the Trustee and the Certificate Insurer an Opinion of Counsel at the expense of
the Servicer experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that such purchase and
liquidation constitutes a Qualified Liquidation of the REMIC Estate.
(e) If the Servicer does not exercise its option pursuant to this
Section 9.02 with respect to the Trust Estate, then the Certificate Insurer may
purchase the Trust Estate pursuant to this Section 9.02.
(f) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Servicer or the Certificate Insurer, as
the case may be, or otherwise upon their order, in a manner similar to that
described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that the REMIC created hereunder does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation, as contemplated
by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Home
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Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise in respect of any Home Equity Loan then remaining
in the Trust Estate at a price equal to the Termination Price.
Upon receipt of such direction from the Certificate Insurer, the Trustee
shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. If, during
the Purchase Option Period, the Owners of the Class R Certificates have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust Estate, each in accordance with the
plan of complete liquidation, such that, if so directed, the liquidation of the
Trust Estate, the distribution of the proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 60th day, or
such later day as the Certificate Insurer or the Owners of the Class A
Certificates with the consent of the Certificate Insurer shall permit or direct
in writing, after the expiration of the Purchase Option Period and (ii) in the
event that the Certificate Insurer has given the Trustee notice of the
Certificate Insurer's determination to purchase the Trust Estate described in
clause (a)(ii) preceding 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 in respect of
any Home Equity Loan then remaining in the Trust Estate. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. 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
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Interest of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt by the Certificate Insurer of such
opinion.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; 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.
Section 9.05 Netting of Amounts.
If any Person paying the Termination Price would receive a portion of
the amount to be paid, such Person may net any such amount against the
Termination Price otherwise payable.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions or any other resolutions,
statements, reports, documents, orders or other instruments 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 on their face
they conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
Certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Certificate Insurer, the Seller or the Depositor
hereunder. If any such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Trustee shall notify the
Certificate Insurer of such instrument in the event that the Trustee, after so
requesting does not receive a satisfactorily corrected instrument.
Notwithstanding the foregoing, if a Servicer Termination Event of which a
responsible officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(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 (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), 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;
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(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;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith
in accordance with the direction of the Certificate
Insurer or of the Owners of a majority in Percentage
Interest of the Certificates of the affected Class or
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;
(iv) 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 shall
have actual knowledge thereof. In the absence of receipt
of such notice, the Trustee may conclusively assume that
there is no default; and
(v) Subject to the other provisions of this Agreement and
without limiting the generality of this Section l0.01,
the Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement
or continuation statement evidencing a security interest,
or to see to the maintenance of any such recording or
filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance
or (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed
or levied against, any part of the Trust Estate from
funds available in the Certificate Account.
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(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) The Trustee hereby undertakes to provide the Seller with notice of
any correspondence relating to any Property.
(i) The Trustee hereby agrees to disclose the Premium Amount to any
Person upon request.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
hereto on any Payment Date any amounts available for distribution that
it has received 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
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(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Seller, the Certificate Insurer, or by the Owners of at
least 25% of the aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates then Outstanding, or, if there
are no Class A Certificates then Outstanding, by such Percentage
Interests represented by the Class R Certificates, a written notice
specifying such failure or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or
take corporate action for the purpose of any of the foregoing.
The Depositor shall give to the Certificate Insurer, Moody's and
Standard & Poor's notice of the occurrence of any such event of which the
Depositor is aware.
(b) If any event described an Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Class R Certificates, may, whether or not the Trustee resigns pursuant to
Section l0.09(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 l0.09 hereof.
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Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request
and may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Depositor, the Seller, the
Certificate Insurer, or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(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 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, unless requested in writing to do so by the Owners; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition to taking any such action;
(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 custodian;
(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 and within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
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(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 make various
calculations which are relevant to the performance of the Trustee's duties under
the 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 or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), 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 the execution and authentication of the Certificates, shall
be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness (other than with respect to such execution
and authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, or any Home Equity Loan or
document related thereto other than as to validity and sufficiency of its
authentication of the Certificates. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor, the Seller or the Servicer in respect of the Home Equity Loans
or deposited into or withdrawn from the Principal and Interest Account or the
Certificate Account by the Depositor, the Servicer or the Seller, and shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or otherwise to perfect or maintain the perfection of
any security interest or lien or to prepare or file any tax returns or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledged
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.
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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 Depositor 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 and income or other gain
actually received by the Trustee on Eligible Investments.
Section 10.07 Compensation and Reimbursement.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 6.12, Section 7.03(b)(i)(A),
7.03(b)(iii)(G), Section 7.06 and Section 10.13 hereof. Except as otherwise
provided in this Agreement, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust and held harmless against
any loss, liability, or "unanticipated out-of-pocket" expense incurred or paid
to third parties (which expenses shall not include salaries paid to employees,
or allocable overhead, of the Trustee) in connection with or any claim or legal
action or any pending or threatened claim or legal action arising out of or in
connection with the acceptance or administration of its trusts hereunder or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. All such amounts described in the preceding sentence shall be payable
as provided in Section 7.03(b)(iii)(G). It is understood by the parties hereto
that a "claim" as used in this paragraph includes any claim for indemnification
made by the Custodian under the applicable provisions of the Custodial
Agreement. The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Seller and held harmless against any loss,
liability or reasonable expenses incurred by the Trustee in performing its
duties as Tax Matters Person for the REMIC created under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of its duties as Tax Matters Person
for the REMIC created hereunder. The provisions of this Section 10.07 shall
survive the termination of this Agreement.
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
$_________ subject to supervision or examination by the United States of
America, or any state, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's and A2 by Moody's. If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the
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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.
A copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor Trustee or Trustees acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor Trustee or
Trustees. If no successor Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor Trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor Trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A Certificates with the prior written consent of the Certificate
Insurer, or, if there are no Class A Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R Certificates,
may at any time remove the Trustee and appoint a successor Trustee acceptable to
the Certificate Insurer by delivering to the Trustee to be removed, to the
successor Trustee so appointed, to the Depositor, to the Servicer and to the
Certificate Insurer, copies of the record of the act taken by the Owners, as
provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
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(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust to the Certificate Insurer
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, the
Certificate Insurer 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 and to the Certificate Insurer. 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.
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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 pan 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 (a) preceding, the Trustee shall
timely file all reports prepared by the Seller and required to be filed by the
Trust, including other reports that must be filed with the Owners, such as the
Internal Revenue Service's Form 1066 and Schedule Q. The Trustee shall, upon
request of the Seller, collect any forms or reports from the Owners determined
by the Seller to be required under applicable federal, state and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the Trustee
any information necessary to enable the Trustee to meet its obligations under
subsections (a), (b) and (c) above.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Seller, the Servicer or any
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Owner for any action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Trustee, its directors,
officers, employees or agents or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or willful misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Subject to the foregoing
sentence, the Trustee shall not be liable for losses on investments of amounts
in the Certificate Account (except for any losses on obligations on which the
bank serving as Trustee is the obligor). In addition, the Depositor, the Seller
and Servicer covenant and agree to indemnify the Trustee and the Servicer (if
the Servicer is also the Trustee) 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 Seller shall pay all amounts not
otherwise paid or reimbursed pursuant to Sections 2.05, 6.12 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 and the Certificate Insurer, 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 Owner 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
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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, and 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 and the Certificate Insurer.
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.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion
of the Files as agent for the Trustee, by entering into a Custodial Agreement
acceptable to the Certificate Insurer. Subject to this Article X, the Trustee
agrees to comply with the terms of the Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates and the Certificate Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, the Seller, the Certificate Insurer
or the Owners, as the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any Opinion of Counsel may be based, insofar as it
relates to factual matter upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor,
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the Seller or the Servicer, stating that the information with respect to such
factual matters is in the possession of the Depositor, the Seller or the
Servicer, unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
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Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Certificate Insurer, the Depositor, the Seller shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at its Corporate Trust Office as set forth in Section
2.02 hereof.
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 resigned 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.
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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 (with the exception of any Monthly Remittance Date) 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. In any case where the date of any Monthly Remittance
Date or any Monthly Reporting Date shall not be a Business Day, then payment or
mailing need not be made on such date, but must be made on the preceding
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
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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, Seller and Servicer hereby irrevocably
appoints and designates the Trustee as its true and lawful attorney and duly
authorized agent for acceptance of service of legal process with respect to any
action, suit or proceeding set forth in paragraph (b) hereof. Each of the Seller
and Servicer agrees that service of such process upon the Trustee shall
constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Servicer or the Certificate Insurer or
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
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permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicer, may at any
time and from time to time, with the prior written approval of the Certificate
Insurer but without the giving of notice to or the receipt of the consent of the
Owners, amend this Agreement, and the Trustee shall consent to the amendment for
the purposes of (i) if accompanied by an approving Opinion of Counsel which
shall not be at the expense of the Trustee experienced in federal income tax
matters, removing the restriction against the transfer of a Class R Certificate
to a Disqualified Organization (as such term is defined in the Code), (ii)
complying with the requirements of the Code including any amendments necessary
to maintain REMIC status of the REMIC Estate (other than the Pre-Funding Account
and the Capitalized Interest Account), (iii) curing any ambiguity, (iv)
correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or (v) for any other
purpose, provided that in the case of clause (v), 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 such Owner
shall have consented thereto in writing or 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
Certificates without regard to the related Certificate Insurance Policy.
Notwithstanding anything to the contrary, no such amendment shall (a) change in
any manner the amount of, or delay the timing of, payments which are required to
be distributed to any Owner without the consent of the Owner of such
Certificate, (b) change the percentages of Percentage interest which are
required to consent to any such amendments, without the consent of the Owners of
all Certificates of the Class or Classes affected then outstanding or (c) which
affects in any manner the terms or provisions of the related Certificate
Insurance Policy.
(b) The Certificate Insurer and the Rating Agencies shall be provided by
the Seller with copies of any amendments to this Agreement, together with copies
of any opinions or other documents or instruments executed in connection
therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause the
REMIC created hereunder to fail to qualify as a REMIC at any time that any of
the Certificates are outstanding.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Seller may, subject to
the eligibility requirements for the Trustee set forth in Section 10.08 hereof,
including, without limitation, the prior written consent of the Certificate
Insurer, appoint one or more other Paying Agents or successor Paying Agents.
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Each Paying Agent, immediately upon such appointments shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Owners
entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the REMIC Estate shall constitute,
and that the affairs of the REMIC Estate shall be conducted so as to qualify it
as a REMIC in accordance with the REMIC Provisions. In furtherance of such
intention, _________________________ or such other person designated pursuant to
Section 11.18 hereof shall act as agent for the Trust and as Tax Matters Person
for the Trust and that in such capacity it shall: (i) prepare or cause to be
prepared and filed, at its own expense, in a timely manner, annual tax returns
and any other tax return required to be filed by the REMIC created hereunder
using a calendar year as the taxable year for such REMIC; (ii) in the related
first such tax return, make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions, on behalf of the REMIC created hereunder,
for it to be treated as a REMIC; (iii) at the Tax Matters Person's expense,
prepare and forward, or cause to be prepared and forwarded, to the Owners all
information, reports or tax returns required with respect to the REMIC created
hereunder, including Schedule Q to Form 1066, as, when and in the form required
to be provided to the Owners, and to the Internal
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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; provided
that the tax return filed on Schedule Q to Form 1066 shall be prepared and
forwarded to the Owners of the Class R Certificates no later than 50 days after
the end of the period to which such tax return was due; (iv) not take any action
or omit to take any action that would cause the termination of the REMIC status
of the REMIC created hereunder, except as provided under this Agreement; (v)
represent, the Trust or the REMIC created hereunder 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 created hereunder, 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 created hereunder, and otherwise act on
behalf of the Trust or the REMIC created hereunder in relation to any tax matter
involving the Trust or the REMIC created hereunder (the legal expenses and costs
of any such action described in this subsection (v) and any liability resulting
therefrom shall constitute expenses of the Trust and the Trustee shall be
entitled to reimbursement therefor as provided in Section 7.03(b)(iii)(G) unless
such legal expenses and costs are incurred by reason of the Trustee's willful
misfeasance, bad faith or negligence); (vi) comply with all statutory or
regulatory requirements with regard to its conduct of activities pursuant to the
foregoing clauses of this Section 11.16, including, without limitation,
providing all notices and other information to the Internal Revenue Service and
Owners of Class R Certificates required of a "tax matters person" pursuant to
subtitle F of the Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax imposed (A) on
transferor 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 the Trustee or such other designated Tax Matters
Person pursuant to this Section 11.16 shall survive the termination or discharge
of this Agreement.
(b) The Seller, the Depositor, the Trustee and the Servicer covenant and
agree for the benefit of the Owners and the Certificate Insurer (i) to take no
action which would result in the termination of REMIC status for the REMIC
created hereunder, (ii) not to engage in any "prohibited transaction", as such
term is defined in Section 860F(a)(2) of the Code, (iii) not to engage in any
other action which may result in the imposition on the Trust of any other taxes
under the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent the Seller is aware of any such proposed action by the
Servicer.
(c) The REMIC created hereunder 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).
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(e) None of the Depositor, the Seller or the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an Opinion of Counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that such transaction does not result in a tax imposed on the Trustee or
cause a termination of REMIC status for the REMIC created hereunder; provided,
however, that such transaction is otherwise permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited transactions" of
the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee if such tax arises out of or results from the
willful misfeasance, bad faith or negligence in performance by the Trustee of
any of its obligations under Article X, (ii) to the Servicer if such tax arises
out of or results from a breach by the Servicer of any of its obligations under
Article VIII or otherwise.
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 at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or the REMIC created hereunder or cause a termination of REMIC status
for the REMIC created hereunder, (i) sell any assets in the Trust Estate, (ii)
accept any contribution of assets after the Startup Day (other than Subsequent
Home Equity Loans), (iii) allow the Servicer to foreclose upon any Home Equity
Loan if such foreclosure would result in a tax on the Trust or the REMIC created
hereunder or cause termination of the REMIC status for the REMIC created
hereunder or (iv) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
separate non-interest bearing account, the net income from any such Prohibited
Transactions of the REMIC created hereunder and use such income, to the extent
necessary, to pay such tax; provided that, to the extent that any such income is
paid to the Internal Revenue Service, the Trustee shall retain an equal amount
from future amounts otherwise distributable to the Owners of Class R
Certificates and shall distribute such retained amounts to the Owners of Class A
Certificates to the extent they are fully reimbursed and then to the Owners of
the Class R Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
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such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the REMIC created hereunder
for all purposes of the Code and such Tax Matters Person will perform, or cause
to be performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for the REMIC created hereunder shall be the Trustee as long
as it owns a Class R Certificate. If the Trustee does not own a Class R
Certificate, the Tax Matters Person may be any other entity that owns a Class R
Certificate and accepts a designation hereunder as Tax Matters person by
delivering an affidavit in the form of Exhibit I.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder, including but
not limited to consent rights, shall be suspended and shall run to the benefit
of the Owners during any period in which there exists a Certificate Insurer
Default; provided, that the right of the Certificate Insurer to receive the
Premium Amount shall not be suspended if such Certificate Insurer Default was a
default other than a default under clause (a) of the definition thereof. If a
Certificate Insurer Default shall cease to exist, the rights of the Certificate
Issuer shall be immediately restored. At such time as the Class A Certificates
are no longer Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, the Seller, the Servicer, 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: _________________________
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
with a copy to the following:
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-------------------------
Corporation Trust Services
11000 Broken Land Parkway
Columbia, Maryland 21044
Attention: Centex Home Equity Loan Trust A
Tel: (410) 884-2000
Fax: (410) 884-2360
The Depositor: CHEC Asset Receivable Corporation
277 Park Avenue
New York, NY 10172
Attention: Michael S. McMahon
Tel: (212) 892-3000
Fax: (212) 892-3163
with a copy to the General Counsel's office on
the 23rd floor at the same address
The Seller: Centex Credit Corporation d/b/a Centex Home
Equity Corporation
2728 North Harwood
Dallas, TX 75201
Attention: Anthony H. Barone
Telecopy No.: (214) 981-5990
Confirmation: (214) 981-5220
The Servicer: Centex Credit Corporation d/b/a Centex Home
Equity Corporation
2728 North Harwood
Dallas, TX 75201
Attention: Anthony H. Barone
Telecopy No.: (214) 981-5990
Confirmation: (214) 981-5220
The Certificate
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio
Management-Structured Finance
(Centex A)
Tel: (914) 765-3111
Fax: (914) 765-3919
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The Underwriters
Moody's: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
Standard & Poor's: Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
Section 11.23 Rule 144A Information. For so long as any of the Class R
Certificates are "restricted securities" within the meaning of Rule 144A under
the Securities Act, the Servicer (or if the Trustee is then acting as Servicer,
the Seller) agrees to provide to any Owner of the Class R Certificate and to any
prospective purchaser of Class R Certificates designated by such an Owner, upon
the request of such Owner or prospective purchaser, the information specified
below which is intended to satisfy the condition set forth in Rule 144A(d)(4)
under the Securities Act; provided that this Section 11.23 shall require, as to
the Trustee or the Servicer, only that the Servicer (or if the Trustee is then
acting as Servicer, the Seller) provide publicly available information regarding
it or the Trustee in response to any such request; and provided further that the
Servicer (or if the Trustee is then acting as Servicer, the Seller) shall be
obligated to provide only such basic, material information concerning the
structure of the Class R Certificates and distributions thereon, the nature,
performance and servicing of the Home Equity Loans supporting the Certificates,
and any credit enhancement mechanism, if any, associated with the Certificates.
Any recipient of information provided pursuant to this Section 11.23 shall agree
that such information shall not be disclosed or used for any purpose other than
the evaluation of the Class R Certificates by the prospective purchaser. The
Trustee shall have no responsibility for the sufficiency under Rule 144A of any
information so provided by the Servicer to any Owner or prospective purchaser of
Class R Certificates.
END OF ARTICLE XI
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ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the
Certificate Insurer.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Servicer
shall not terminate any Sub-Servicing Agreements without cause without the prior
consent of the Certificate Insurer.
Section 12.02 Claims Upon the Policy; Policy Payments Account.
(a) In the event that an Insured Payment becomes due pursuant to
the terms of a Certificate Insurance Policy, the Trustee shall submit a Notice
(in the form attached to such Certificate Insurance Policy) in accordance with
the terms of such Certificate Insurance Policy.
(b) The Trustee shall establish and maintain a separate special
purpose trust account for the benefit of the Owners of the Class A Certificates
and the Certificate Insurer referred to herein as the "Policy Payments Account"
over which the Trust shall have exclusive control and sole right of withdrawal.
The Policy Payments Account shall be an Eligible Account. The Trustee shall
deposit any amount paid under the Certificate Insurance Policies in the Policy
Payments Account and distribute such amount only for purposes of payment to the
Owners of the related Class A Certificates of the Insured Payments for which a
claim was made and such amount may not be applied to satisfy any costs, expenses
or liabilities of the Servicer, the Seller, the Depositor, the Custodian, the
Trustee or the Trust. Amounts paid under the related Certificate Insurance
Policy shall be transferred to the Certificate Account in accordance with the
next succeeding paragraph and disbursed by the Trustee to Owners of the related
Class A Certificates in accordance with Section 7.03. It shall not be necessary
for such payments to be made by checks or wire transfers separate from the
checks or wire transfers used to pay the Insured Payments with other funds
available to make such payment. However, the amount of any payment of principal
of or interest on the related Class A Certificates to be paid from funds
transferred from the Policy Payments Account shall be noted as provided in
paragraph (c) below in the Register and in the statement to be furnished to
Owners of the Class A Certificates pursuant to Section 7.08. Funds held in the
Policy Payments Account shall not be invested by the Trustee.
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On any Payment Date with respect to which a claim has been made under
the related Certificate Insurance Policy, the amount of funds received by the
Trustee as a result of any claim under the related Certificate Insurance Policy,
to the extent required to make the Insured Payment on such Payment Date shall be
withdrawn from the Policy Payments Account and deposited in the Certificate
Account and applied by the Trustee, together with the other funds to be
withdrawn from the Certificate Account, directly to the payment in full of the
Insured Payment due on the related Class of Class A Certificates. Funds received
by the Trustee as a result of any claim under either Certificate Insurance
Policy shall be deposited by the Trustee in the Policy Payments Account and used
solely for payment to the Owners of the Class A Certificates and may not be
applied to satisfy any costs, expenses or liabilities of the Servicer, the
Seller, the Depositor, the Custodian, the Trustee or the Trust. Any funds
remaining in the Policy Payments Account on the first Business Day following a
Payment Date shall be remitted to the Certificate Insurer, pursuant to the
instructions of the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Certificate from
moneys received under the Certificate Insurance Policies. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent (as defined in the Certificate Insurance Policies) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim, including without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Servicer, the Trustee and Owner
of Class A Certificate in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.
Section 12.03 Effect of Payments by the Certificate Insurer;
Subrogation.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with moneys received pursuant to the terms of the Certificate Insurance
Policies 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
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agrees, that without the need for any further action on the part of the
Certificate Insurer, the Depositor, the Servicer, the Trustee or the Registrar
(a) to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on any Class A Certificates
to the Owners of such Certificates, the Certificate Insurer will be fully
subrogated to the rights of such Holders to receive such principal and interest
from the Trust and (b) the Certificate Insurer shall be paid such principal and
interest but only from the sources and in the manner provided herein for the
payment of such principal and interest.
The Trustee, the Seller, the Depositor and the Servicer shall cooperate
in all respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth therein.
Section 12.04 Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Owners
shall also be sent to the Certificate Insurer.
Section 12.05 Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of
Owners.
By accepting its Certificate, each Owner of a Class A Certificate agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer shall
have the right to exercise all rights of the Owners of the Class A Certificates
as specified under this Agreement without any further consent of the Owners of
the Class A Certificates.
END OF ARTICLE XII
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IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed their respective officers
thereunto duly authorized, all as of the day and year first above written.
CHEC ASSET RECEIVABLE CORPORATION
as Depositor
By:
------------------------------
Title:
------------------------------
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Seller
By:
------------------------------
Title:
------------------------------
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Servicer
By:
------------------------------
Title:
------------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------
Title:
------------------------------
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ____ day of _____, 199_, before me personally came ___________,
to me known that he is a _____________________ of CHEC Asset Receivable
Corporation, a Delaware corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-----------------------------------
Notary Public
1
<PAGE>
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ____ day of ______, 199_, before me personally came ___________.
to me known that he is ___________ of Centex Credit Corporation d/b/a
Centex Home Equity 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
----------------------------------
Notary Public
2
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the _____ day of _____, 199_, before me personally came ____________.
to me known that he/she is a Trust Officer of _________________________
described in and that executed the above instrument as Trustee; and that he/she
signed his/her name thereto by order of the Board of Directors of said national
banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
--------------------------------
Notary Public
3
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SCHEDULE I-A
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-A-1
<PAGE>
<PAGE>
SCHEDULE I-B
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-B-1
<PAGE>
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(____% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
<TABLE>
<S> <C> <C>
NO: A-1-1
--------
CUSIP
$
- ------------------------------ ---- -------------------
Original Class A-1 Certificate Date Final Scheduled
Principal Balance Payment Date
</TABLE>
CEDE & CO.
-----------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate Group
(other than any principal
A-1-2
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received and interest due thereon prior to ____1, 199_) listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-1
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to ____ __, 199_ (the first Payment Date) be less than the
Original Class A Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-1-3
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CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO ______ __, 199_ (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of ____1, 199_ (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Asset Receivable Corporation, in its capacity as
Depositor (the "Depositor") and _________________________, in its capacity as
the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-2 (the "Class A-2 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 and the Class A-6 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing ____ __, 199_, the Owners of the Class A-1 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $__________ (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-l Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-1 Certificates. The Percentage Interest of each
Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Class A-l
Certificate Principal Balance on the Startup Day.
A-1-4
<PAGE>
<PAGE>
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans and amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement) and payments received by the Trustee pursuant to the related
Certificate Insurance Policy, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-1-5
<PAGE>
<PAGE>
Owners of such Class A-l Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-l Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-1 Certificates and shall receive all
future distributions of the Class A-l Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer 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 or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in
A-1-6
<PAGE>
<PAGE>
the Register upon surrender of this Certificate for registration of transfer at
the office designated as the location of the Register duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of the like Class, tenor and
a like Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates
in minimum denominations of $_________ original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-7
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
, as Trustee
-------------------------
By:
--------------------------------
Title:
------------------------------
Trustee Authentication
, as Trustee
- ----------------------
By:
----------------------------
Title:
----------------------------
A-1-8
<PAGE>
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(____% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
<TABLE>
<S> <C> <C>
NO: A-2-1
---------------
CUSIP
$ ,199
- -------------------------------- --------- ---------------
Original Class A-2 Certificate Date Final Scheduled
Principal Balance Payment Date
</TABLE>
CEDE & CO.
-----------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate Group
(other than any principal
A-2-1
<PAGE>
<PAGE>
received and interest due thereon prior to ____1, 199_) listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-2
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-2 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to _____ __, 199_ (the first Payment Date) be less than the
Original Class A Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-2-2
<PAGE>
<PAGE>
CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO ________ __, 199_ (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class A-2 (the "Class A-2 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of ____1, 199_ (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Asset Receivable Corporation, in its capacity as
Depositor (the "Depositor") and _________________________, in its capacity as
the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-3
(the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 and the Class A-6 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing ______ __, 199_, the Owners of the Class A-2 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-2 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $________ (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-2 Certificates. The Percentage Interest of each
Class A-2 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2 Certificate on the Startup Day by the aggregate Class A-2
Certificate Principal Balance on the Startup Day.
A-2-3
<PAGE>
<PAGE>
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans and amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement) and payments received by the Trustee pursuant to the related
Certificate Insurance Policy all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of
A-2-4
<PAGE>
<PAGE>
such Owners of Class A-2 Certificates with respect to such Insured Payment,
shall be deemed to the extent of the payments so made to be a registered Owner
of such Class A-2 Certificates and shall receive all future distributions of the
Class A-2 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer 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 or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, 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 Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated
A-2-5
<PAGE>
<PAGE>
as the location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $_________ original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to he duly
executed on behalf of the Trust.
________________________, as Trustee
By:
--------------------------------
Title:
-----------------------------
Trustee Authentication
_________________________, as Trustee
By:
----------------------------------
Title:
------------------------------
A-2-7
<PAGE>
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(____% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
<TABLE>
<S> <C> <C>
NO: A-3-1
----------------
CUSIP
, 199
- ------------------------------ --------- ---------------
Original Class A-3 Certificate Date Final Scheduled
Principal Balance Payment Date
</TABLE>
CEDE & CO.
-----------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate Group
(other than any principal
A-3-1
<PAGE>
<PAGE>
received and interest due thereon prior to ______ 1, 199_) listed in Schedule
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-3
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-3 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to_____ __, 199_ (the first Payment Date) be less than the
original Class A Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-3-2
<PAGE>
<PAGE>
CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO_____ __, 199_ (THE FIRST PAYMENT DATE)
BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class A-2 (the "Class A-2 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of ____ __, 199_ (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Asset Receivable Corporation, in its capacity as
Depositor (the "Depositor") and _________________________, in its capacity as
the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2
(the "Class A-2 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates and the Class A-6 Certificates
shall be together referred to as the "Class A Certificates" and the Class A
Certificates and the Class R Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing ____ __, 199_, the Owners of the Class A-3 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-3 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $________ (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-3 Certificates. The Percentage Interest of each
Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3 Certificate on the Startup Day by the aggregate Class A-3
Certificate Principal Balance on the Startup Day.
A-3-3
<PAGE>
<PAGE>
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans and amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement) and payments received by the Trustee pursuant to the related
Certificate Insurance Policy all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-3-4
<PAGE>
<PAGE>
Owners of such Class A-3 Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-3 Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-3 Certificates and shall receive all
future distributions of the Class A-3 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer 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 or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, 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 Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in
A-3-5
<PAGE>
<PAGE>
the Register upon surrender of this Certificate for registration of transfer at
the office designated as the location of the Register duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of the like Class, tenor and
a like Percentage interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates
in minimum denominations of $_________ original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to he duly
executed on behalf of the Trust.
A-3-6
<PAGE>
<PAGE>
_________________________, as Trustee
By:
---------------------------------
Title:
------------------------------
Trustee Authentication
_________________________, as Trustee
By:
---------------------------------
Title:
------------------------------
A-3-7
<PAGE>
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(____% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
<TABLE>
<S> <C>
NO: A-4-1
---------------
CUSIP
, 199
- ------------------------------ ---------- ---------------
Original Class A-4 Certificate Date Final Scheduled
Principal Balance Payment Date
</TABLE>
CEDE & CO.
----------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate Group
(other than any principal
A-4-1
<PAGE>
<PAGE>
received and interest due thereon prior to _______ 1, 199_) listed in Schedule
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest due thereon prior to the related Subsequent
Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer Agreement which
the Seller will cause to be delivered to the Depositor and the Depositor will
cause to be delivered to the Trustee (and all substitutions therefor as provided
by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Home Equity Loan documents and the Depositor's interest in any
Property, and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts allocable to the Fixed Rate
Group as may be held by the Trustee in the Certificate Account, the Pre-Funding
Account and the Capitalized Interest Account together with investment earnings
on such amounts and such amounts as may be held in the name of the Trustee in
the Principal and Interest Account, if any, exclusive of investment earnings
thereon (except as otherwise provided in the Pooling and Servicing Agreement),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer), (c) the Depositor's
rights, but none of its obligations, under the Loan Sale Agreement (except with
respect to Sections 4.03 and 4.04) and (d) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (d) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-4
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-4 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to ______ __, 199_ (the first Payment Date) be less than the
Original Class A Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO _____ __, 199_ (THE FIRST
A-4-2
<PAGE>
<PAGE>
PAYMENT DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class A-4 (the "Class A-4 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of ______ 1, 199_ (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Asset Receivable Corporation, in its capacity as
Depositor (the "Depositor") and _________________________, in its capacity as
the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2
(the "Class A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates and the Class A-6 Certificates
shall be together referred to as the "Class A Certificates" and the Class A
Certificates and the Class R Certificates are together referred to are together
referred to herein as the "Certificates." Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing _____ __, 199_, the Owners of the Class A-4 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-4 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $________ (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-4 Certificates. The Percentage Interest of each
Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4 Certificate on the Startup Day by the aggregate Class A-4
Certificate Principal Balance on the Startup Day.
A-4-3
<PAGE>
<PAGE>
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans and amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement) and payments received by the Trustee pursuant to the related
Certificate Insurance Policy all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-4-4
<PAGE>
<PAGE>
Owners of such Class A-4 Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-4 Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-4 Certificates and shall receive all
future distributions of the Class A-4 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer 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 or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, 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 Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in
A-4-5
<PAGE>
<PAGE>
the Register upon surrender of this Certificate for registration of transfer at
the office designated as the location of the Register duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of the like Class, tenor and
a like Percentage interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates
in minimum denominations of $________ original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
_________________________, as Trustee
By:
--------------------------------
Title:
-----------------------------
Trustee Authentication
_________________________, as Trustee
By:
---------------------------------
Title:
-------------------------------
A-4-7
<PAGE>
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(____% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
<TABLE>
<S> <C> <C>
NO: A-5-1
---------------
CUSIP
, 199
- ------------------------------ -------- ---------------
Original Class A-3 Certificate Date Final Scheduled
Principal Balance Payment Date
</TABLE>
CEDE & CO.
-----------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate Group
(other than any principal
A-5-1
<PAGE>
<PAGE>
received and interest due thereon prior to ____ 1, 199_) listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-5
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-5 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to _____ __, 199_ (the first Payment Date) be less than the
original Class A Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-5-2
<PAGE>
<PAGE>
CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO ______ __, 199_ (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class A-5 (the "Class A-5 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of ____ 1, 199_ (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Asset Receivable Corporation, in its capacity as
Depositor (the "Depositor") and _________________________, in its capacity as
the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2
(the "Class A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates and the Class A-6 Certificates shall be together referred to as the
"Class A Certificates" and the Class A Certificates and the Class R Certificates
are together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing _____ __, 199_, the Owners of the Class A-5 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-5 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $_________ (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-5 Certificates. The Percentage Interest of each
Class A-5 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-5 Certificate on the Startup Day by the aggregate Class A-5
Certificate Principal Balance on the Startup Day.
A-5-3
<PAGE>
<PAGE>
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans and amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement) and payments received by the Trustee pursuant to the related
Certificate Insurance Policy all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-5-4
<PAGE>
<PAGE>
Owners of such Class A-5 Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-5 Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-5 Certificates and shall receive all
future distributions of the Class A-5 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer 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 or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, 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 Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in
A-5-5
<PAGE>
<PAGE>
the Register upon surrender of this Certificate for registration of transfer at
the office designated as the location of the Register duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of the like Class, tenor and
a like Percentage interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates
in minimum denominations of $_________ original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to he duly
executed on behalf of the Trust.
A-5-6
<PAGE>
<PAGE>
_________________________, as Trustee
By:
---------------------------------
Title:
------------------------------
Trustee Authentication
_________________________, as Trustee
By:
----------------------------------
Title:
------------------------------
A-5-7
<PAGE>
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(VARIABLE PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Adjustable Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Adjustable Rate
Group Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust A") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
<TABLE>
<S> <C> <C>
NO: A-6-1
---------------
CUSIP
, 199
- ------------------------------ ----------- ---------------
Original Class A-6 Certificate Date Final Scheduled
Principal Balance Payment Date
</TABLE>
CEDE & CO.
----------------
Registered Owner
A-6-1
<PAGE>
<PAGE>
The registered Owner now above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Adjustable Rate
Group (other than any principal received and interest due thereon prior to ____
1, 199_) listed in Schedule I-B to the Pooling and Servicing Agreement which the
Seller is causing to be delivered to the Depositor and the Depositor is causing
to be delivered to the Trustee and the Subsequent Home Equity Loans in the
Adjustable Rate Group (other than any principal received and interest due
thereon prior to the related Subsequent Cut-Off Date) listed in Schedule I-B to
any Subsequent Transfer Agreement which the Seller will cause to be delivered to
the Depositor and the Depositor will cause to be delivered to the Trustee (and
all substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity Loan
documents and the Depositor's interest in any Property, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts allocable to the Adjustable Rate Group as may be held by the
Trustee in the Certificate Account, the Pre-Funding Account and the Capitalized
Interest Account together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the Principal and Interest
Account, if any, exclusive of investment earnings thereon (except as otherwise
provided in the Pooling and Servicing Agreement), whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicer), (c) the Depositor's rights, but none of its obligations,
under the Loan Sale Agreement (except with respect to Sections 4.03 and 4.04)
and (d) proceeds of all the foregoing (including, but not by way of limitation,
all proceeds of any mortgage insurance, flood insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the Certificates
as specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-6
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to ________ __, 199_ (the first Payment Date) be less than
the Original Class A Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
A-6-2
<PAGE>
<PAGE>
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO ____ __, 199_ (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class A-6 (the "Class A-6 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of _____ 1, 199_ (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), CHEC Asset Receivable Corporation, in its capacity as
Depositor (the "Depositor") and _________________________, in its capacity as
the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2
(the "Class A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates and the Class A-6 Certificates shall be together referred to as the
"Class A Certificates" and the Class A Certificates and the Class R Certificates
are together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing _____ __, 199_, the Owners of the Class A-6 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-6 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $_________ (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
A-6-3
<PAGE>
<PAGE>
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-6 Certificates. The Percentage Interest of each
Class A-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-6 Certificate on the Startup Day by the aggregate Class A-6
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the related
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the related
Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans and amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling and Servicing
Agreement) and payments received by the Trustee pursuant to the related
Certificate Insurance Policy all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee,
A-6-4
<PAGE>
<PAGE>
or for any other remedy under the Pooling and Servicing Agreement except in
compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-6 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-6 Certificates and shall receive all future distributions of the Class
A-6 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer 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 or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, 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 Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC
A-6-5
<PAGE>
<PAGE>
under the Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates
in minimum denominations of $_________ original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-6 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A-6-6
<PAGE>
<PAGE>
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-7
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
_________________________, as Trustee
By:
----------------------------------
Title:
------------------------------
Trustee Authentication
_________________________, as Trustee
By:
----------------------------------
Title:
-------------------------------
A-6-8
<PAGE>
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(E)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE
CLASS R CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF
THE FORM OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND
AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A
C-1
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<PAGE>
DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR GENERALLY WILL
BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE AMOUNT OF
EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS CERTIFICATE OWNED THROUGH
SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST
MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING
SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED INVESTMENT
COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS,
TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE
APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
C-2
<PAGE>
<PAGE>
CENTEX HOME EQUITY LOAN TRUST A
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(RESIDUAL INTEREST)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Originated or Purchased
and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC Asset
Receivable Corporation or Centex Credit Corporation d/b/a Centex Home Equity
Corporation This Certificate represents a fractional ownership interest in the
Trust Estate as defined below.)
NO: R- , 199
--- ----------
Date
Percentage Interest _____%
CHEC Residual Corporation
-------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to ______ 1, 199_ whether or not
received) listed in Schedule I-A and Schedule I-B to the Pooling and Servicing
Agreement which the Seller is causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee and the Subsequent Home
Equity Loans (other than any principal and interest payments due thereon on or
prior to the related Subsequent Cut-Off Date whether or not received) listed in
Schedule I-A and Schedule I-B to any Subsequent Transfer Agreement which the
Seller will cause to be delivered to the Depositor and the Depositor will cause
to be delivered to the Trustee (and all substitutions therefor as provided by
Section 3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Home Equity Loan documents and the Seller's interest in any
Property which secured a Home Equity Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Certificate Account, the
Pre-Funding Account and the Capitalized Interest Account together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided in the Pooling and
Servicing Agreement), whether in the form of cash, instruments, securities or
other properties (including any Eligible Investments held by the Servicer) and
(c) 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,
C-3
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<PAGE>
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Certificates as specified in the
Pooling and Servicing Agreement ((a) - (c) above shall be collectively referred
to herein as the "Trust Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust A, Home Equity Loan Pass-Through
Certificates, Class R (the "Class R Certificates") and issued under and subject
to the terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of ____ 1, 199_ (the "Pooling and Servicing Agreement") by
and among Centex Credit Corporation d/b/a Centex Home Equity Corporation, in its
capacity as the Seller (the "Seller") and as the Servicer (the "Servicer"), CHEC
Asset Receivable Corporation, in its capacity as Depositor, (the "Depositor")
and _________________________, a New York banking corporation, in its capacity
as the Trustee (the "Trustee"), to which Pooling and Servicing Agreement the
Owner of this Certificate by virtue of acceptance hereof assents and by which
such Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust A Home Equity Loan
Pass-Through Certificates, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5
and Class A-6 (collectively, the "Class A Certificates"). The Class A
Certificates and the Class R Certificates are together referred to are together
referred to herein as the "Certificates." Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing _____ __, 199_, each owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into
C-4
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<PAGE>
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Home Equity Loans.
No appointment of any Sub-Servicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Asset Receivable Corporation or Centex Credit Corporation d/b/a Centex
Home Equity Corporation or any of their affiliates. This Certificate is limited
in right of payment to certain collections and recoveries relating to the Home
Equity Loans, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing 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 or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, 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
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
C-5
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<PAGE>
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Owners of the Class R Certificates do
not do so. In addition, under certain circumstances relating to the
qualification of the REMIC as a REMIC under the Code, the Home Equity Loans may
be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
C-6
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<PAGE>
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
C-7
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
_________________________, as Trustee
By:
--------------------------------
Title:
------------------------------
Trustee Authentication
_________________________, as Trustee
By:
----------------------------------
Title:
-------------------------------
C-8
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<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
CHEC Asset Receivable Corporation (the "Depositor"), as Depositor,
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller"),
as Seller, and _________________________ (the "Trustee"), as trustee, pursuant
to the Pooling and Servicing Agreement dated as of ____ 1, 199_ among the
Depositor, the Seller, as Seller and Servicer, and the Trustee (the "Pooling and
Servicing Agreement"), hereby confirm their understanding with respect to the
sale by the Seller and the purchase by the Depositor and the sale by the
Depositor and the purchase by the Trustee on behalf of the Trust of those Home
Equity Loans (the "Subsequent Home Equity Loans") listed on the attached
Schedule of Home Equity Loans.
Conveyance of Subsequent Home Equity Loans. The Seller does hereby
irrevocably transfer, assign, setover and otherwise convey to the Depositor and
the Depositor does hereby irrevocably transfer, assign, set over and otherwise
convey to the Trustee, without recourse (except as otherwise explicitly provided
for herein) all right, title and interest in and to any and all benefits
accruing from each Subsequent Home Equity Loan (other than any principal
received and interest due thereon prior to the later of (x) the date of
origination of such Subsequent Home Equity Loan and (y) ____ 1, 199_ the
"Subsequent Cut-Off Date") which are delivered to the Custodian on behalf of the
Trustee herewith (and all substitutions therefor as provided by Sections 3.03,
3.04 and 3.06 of the Pooling and Servicing Agreement), together with the related
Subsequent Home Equity Loan documents and the interest in any Property which
secured a Subsequent Home Equity Loan, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; and proceeds of all
the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, flood insurance, hazard insurance and title insurance policy
relating to the Subsequent 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). The Seller and the Depositor shall deliver
the original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Pooling and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Sections 3.05
and 3.07 of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller and the Depositor.
Additional terms of the sale, if any, are attached hereto as Attachment
A.
The Seller and the Depositor hereby affirm the representations and
warranties set forth in the Pooling and Servicing Agreement that relate to the
Seller, the Depositor and the Subsequent Home Equity Loans as of the date
hereof. The Seller and the Depositor hereby deliver notice and
D-1
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<PAGE>
confirms that each of the conditions set forth in Sections 3.07(b), 3.07(c) and
3.07(d) to the Pooling and Servicing Agreement are satisfied as of the date
hereof.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
The Seller acknowledges and agrees that the Depositor intends to assign
the Depositor's rights hereunder to the Trustee pursuant to the Pooling and
Servicing Agreement. The Seller hereby consents to such assignment and agrees
that the Trustee, as ultimate assignee, may enforce the rights of the Depositor
hereunder directly against the Seller for the benefit of the Owners and the
Certificate Insurer and that the Certificate Insurer may enforce such rights
directly.
This Subsequent Transfer Agreement shall be construed in accordance with
the laws of the State of New York and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws, without
giving effect to principles of conflicts of law.
This Subsequent Transfer Agreement may be signed in counterparts, each
of which shall be an original but all of which, taken together, shall constitute
one and the same instrument.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement.
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
CHEC ASSET RECEIVABLE CORPORATION
as Depositor
By:
-----------------------------
Name:
Title:
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION
as Seller
By:
------------------------------
Name:
Title:
D-2
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<PAGE>
_________________________, as Trustee for
Centex Home Equity Loan Trust A
By:
------------------------------------
Name:
Title:
Dated: ________________ (the "Subsequent Transfer Date")
D-3
<PAGE>
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, ______________________ of Centex Credit
Corporation d/b/a Centex Home Equity Corporation ("Centex"), hereby certify that
between the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement
dated as of ____ 1, 199_ among CHEC Asset Receivable Corporation, as Depositor,
Centex as Seller and Servicer, and _________________________, as Trustee) and
the "Startup Day," the following schedule of "Home Equity Loans" (each as
defined in the Pooling and Servicing Agreement) have been prepaid in full.
Account Original Current Date
Number Name Amount Balance Paid Off
------- ---- -------- ------- --------
Dated: ____ __, 199_
By:
------------------------------------
Title:
---------------------------------
E-1
<PAGE>
<PAGE>
EXHIBIT F-1
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
_________________________, in its capacity as Trustee (the "Trustee")
under that certain Pooling and Servicing Agreement dated as of ____ 1, 199_ (
the "Pooling and Servicing Agreement") among CHEC Asset Receivable Corporation,
as Depositor, Centex Credit Corporation d/b/a Centex Home Equity Corporation, a
Nevada corporation, as seller and servicer ("Centex"), and
_________________________, as Trustee (the "Trustee"), hereby acknowledges
receipt of an aggregate cash amount of approximately $_________ into the
Pre-Funding Account and an aggregate cash amount of approximately $_________
into the Capitalized Interest Account pursuant to Section 7.04 of the Pooling
and Servicing Agreement.
_________________________, as Trustee
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
Dated: , 199
-------- -
F-1-1
<PAGE>
<PAGE>
EXHIBIT F-2
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
The First Chicago National Processing Corporation, in its capacity as
custodian (the "Custodian") under the Custodial Agreement dated as of ____ 1,
199_ among the Custodian and _________________________, in its capacity as
Trustee (the "Trustee") under that certain Pooling and Servicing Agreement dated
as of ____ 1, 199_ ("the Pooling and Servicing Agreement") among CHEC Asset
Receivable Corporation, as Depositor, Centex Credit Corporation d/b/a Centex
Home Equity Corporation, a Nevada corporation, as seller and servicer
("Centex"), and _________________________, as Trustee (the "Trustee"), hereby
acknowledges receipt (subject to review as required by Section 3.06(a) of the
Pooling and Servicing Agreement) of the items delivered to it by Centex with
respect to the Initial Home Equity Loans pursuant to Section 3.05(b)(i) of the
Pooling and Servicing Agreement.
The Schedule of Initial Home Equity Loans is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
THE FIRST CHICAGO NATIONAL
PROCESSING CORPORATION,
as Custodian
By:
------------------------------
Name:
----------------------------
Title:
----------------------------
Dated: ______, 199_
F-2-1
<PAGE>
<PAGE>
EXHIBIT G
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of First Chicago
National Processing Corporation, in its capacity as Custodian (the "Custodian")
under the Custodial Agreement dated ____ 1, 199_ between the Custodian and
_________________________, acting in its capacity as trustee (the "Trustee") of
a certain pool of mortgage loans (the "Pool") heretofore conveyed in trust to
the Trustee, pursuant to that certain Pooling and Servicing Agreement dated as
of ____ 1, 199_ (the "Pooling and Servicing Agreement") among CHEC Asset
Receivable Corporation, as Depositor, Centex Credit Corporation d/b/a Centex
Home Equity Corporation, as Seller (the "Seller") and Servicer, and
_________________________, as Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Home Equity Loans, and the
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Custodian
By:
-------------------------------
Title:
---------------------------
Dated: ______, 199_
G-1
<PAGE>
<PAGE>
EXHIBIT H
FORM OF DELIVERY ORDER
DELIVERY ORDER
_________________________, as Trustee
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of ____ 1, 199_ (the "Pooling and Servicing Agreement") among CHEC Asset
Receivable Corporation, as Depositor ("DMAC"), Centex Credit Corporation d/b/a
Centex Home Equity Corporation, a Nevada corporation, as Seller and Servicer,
and _________________________, as Trustee (the "Trustee"), DMAC HEREBY CERTIFIES
that all conditions precedent to the issuance of the Centex Home Equity Loan
Trust A Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6 and Class R (the "Certificates"), HAVE BEEN
SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said
Certificates, and to RELEASE said Certificates to the owners thereof, or
otherwise upon their order. Instructions regarding the registration of the
Certificates are attached hereto.
Very truly yours,
CHEC ASSET RECEIVABLE
CORPORATION
By:
-------------------------------
Title:
----------------------------
Dated: ____ __, 199_
H-1
<PAGE>
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"),
a [savings institution] [corporation] duly organized and existing under the laws
of [the State of _________] [the United States], on behalf of which he makes
this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
I-1
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ___ day of __________, ____.
[NAME OF INVESTOR]
By:
-----------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
- ----------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] of the Investor, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this __ day of ____________, ____.
- -----------------
NOTARY PUBLIC
COUNTY OF
---------------------
STATE OF
----------------------
My commission expires the _ day of _______________, ____.
I-2
<PAGE>
<PAGE>
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
_________________________, as Trustee
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust A
Home Equity Loan Pass-Through Certificates
("Certificates")
Gentlemen:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ___________________ ("Seller"), [PURCHASER]
(the "Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for](1) the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and
will not be registered under the Act and may not be resold or transferred unless
they are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of ____ 1, 199_ (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
5. [The Purchaser is not an "employee benefit plan," within the meaning
of Section 3(3) of the Employment Retirement Income Security Act of 1974, as
amended ("ERISA") that is subject to the provisions of Title I of ERISA or a
"plan" described in Section 4975(e)(1) of the
- -----------------------------------
(1) Not required if the Purchaser is a broker/dealer.
J-1-1
<PAGE>
<PAGE>
Internal Revenue Code of 1986] OR [The source of funds to be used by the
Purchaser to purchase the Certificates is a general account and either (i) no
part of such assets constitutes assets of an "employee benefit plan," within the
meaning of Section 3(3) of the Employment Retirement Income Security Act of
1974, as amended ("ERISA") that is subject to the provisions of Title I of ERISA
or a "plan" described in Section 4975(e)(1) of the Internal Revenue Code of
1986, or (ii) to the extent that such assets constitute assets of an "employee
benefits plan" within the meaning of Section 3(3) of ERISA, or a "plan" within
the meaning of Section 4975(e)(1) of the Code, it acknowledges that in the
discharge of its duty as a plan fiduciary in connection with the purchase of the
Certificates it has concluded that such purchase will not constitute a violation
of Section 404(a) of ERISA];
6. If the Purchaser sells any of the Certificates at its option, it will
(i) obtain from any investor that purchases any Certificate from it a letter
substantially in the form of Exhibit J-1 or J-2 to the Pooling and Servicing
Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an Opinion of Counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate
Register, its address, including telecopier number and telephone number, is as
follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate
the provisions of the first sentence of Section 5.08(d) of the Pooling and
Servicing Agreement.
J-1-2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed
by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
J-1-3
<PAGE>
<PAGE>
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
- ---------------------------------
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust A
Home Equity Loan Pass-Through Certificates,
Class __-______ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ______________________ ("Seller") hereby
certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated
as of ______ 1, 199_ (the "Pooling and Servicing Agreement") pursuant to which
the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an Opinion of Counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
J-2-1
<PAGE>
<PAGE>
6. We are acquiring the Certificates for our own account and the source
of funds to be used by us to purchase the Certificates is a general account and
either (i) no part of such assets constitutes assets of an "employee benefit
plan," within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the provisions of
Title I of ERISA or a "plan" described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, or (ii) to the extent that such assets constitute assets
of an "employee benefits plan" within the meaning of Section 3(3) of ERISA, or a
"plan" within the meaning of Section 4975(e)(1) of the Code, we acknowledge that
in the discharge of our duty as a plan fiduciary in connection with the purchase
of the Certificates we have concluded that such purchase will not constitute a
violation of Section 404(a) of ERISA;
7. We certify that for purposes of the Certificate Register, our
address, including telecopier number and telephone number, is as follows:
-----------------------------------------
-----------------------------------------
-----------------------------------------
telecopier:
------------------------------
telephone:
------------------------------
8. If we sell any of the Certificates, will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and this
paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of
the first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
J-2-2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
J-2-3
<PAGE>
<PAGE>
EXHIBIT K TO THE POOLING AND SERVICING AGREEMENT
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
<TABLE>
<CAPTION>
Loan Number Borrower Name Original Loan Amount Exception
- ----------- ------------- -------------------- ---------
<S> <C> <C> <C>
</TABLE>
K-1
<PAGE>
<PAGE>
EXHIBIT L
DEFINITION OF ADJUSTABLE RATE GROUP SPECIFIED SUBORDINATED AMOUNT
(AND RELATED DEFINITIONS)
"Adjustable Rate Group Delinquency Amount" means the product of (i) the
Adjustable Rate Group Delinquency Percentage and (ii) the sum of (x) the
aggregate Loan Balance of the Home Equity Loans in the Adjustable Rate Group and
(y) the current Pre-Funded Amount with respect to the Adjustable Rate Group.
"Adjustable Rate Group Delinquency Percentage" means with respect to any
date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods the numerator of each of which is equal to (x) the sum of (without
duplication) (i) the aggregate Loan Balance of the Home Equity Loans in the
Adjustable Rate Group which are 90-Day Delinquent Loans, (ii) the aggregate Loan
Balance of Home Equity Loans in the Adjustable Rate Group in foreclosure and
(iii) the aggregate outstanding principal balance of Home Equity Loans in the
Adjustable Rate Group relating to REO Properties as of the end of such
Remittance Period and the denominator of which is (y) the aggregate Loan Balance
of the Home Equity Loans in the Adjustable Rate Group as of the end of such
Remittance Period.
"Adjustable Rate Group Initial Specified Subordinated Amount" means the
Adjustable Rate Group Target Percentage times the Original Adjustable Rate Group
Pool Balance.
"Adjustable Rate Group Specified Subordinated Amount" means:
(a) for any Payment Date occurring during the period commencing on the
Startup Day and ending on the later of (A) the date upon which principal in the
amount equal to one half of the Original Adjustable Rate Group Pool Balance has
been received by the Owners of the Class A-6 Certificates and (B) the thirtieth
Payment Date following the Startup Day, the greater of: (i) the Adjustable Rate
Group Initial Specified Subordinated Amount, and (ii) 85% of the Adjustable Rate
Group Delinquency Amount.
(b) for any Payment Date occurring after the end of the period in clause
(a) above, the greatest of (i)(x) two times the Adjustable Rate Group Target
Percentage times (y) the sum of the aggregate Loan Balance of the Home Equity
Loans in the Adjustable Rate Group and the current Pre-Funded Amount with
respect to the Adjustable Rate Group, (ii) 85% of the Adjustable Rate Group
Delinquency Amount (iii) ____% of the Original Adjustable Rate Group Pool
Balance, and (iv) the aggregate principal balance of the three Home Equity Loans
with the largest outstanding principal balances in the Adjustable Rate Group.
Provided, however, for any Payment Date occurring after the end of the
period specified in clause (a) above, if the Adjustable Rate Group Delinquency
Percentage exceeds ____%, the
<PAGE>
<PAGE>
Adjustable Rate Group Specified Subordinated Amount shall be no less than the
Adjustable Rate Group Specified Subordinated Amount as of the previous Payment
Date.
Notwithstanding the above, on or before the final Pre-Funding Payment
Date, the Certificate Insurer may modify the definition of Adjustable Rate Group
Specified Subordinated Amount, including the definitions contained therein, if
(x) the Subsequent Home Equity Loans, individually or in the aggregate, do not
conform to the conditions specified in the Insurance Agreement or the Agreement
or (y) the risk to the Certificate Insurer under the Certificate Insurance
Policies has changed as reasonably determined by the Certificate Insurer;
provided, however, if the Owners of the Class R Certificates object in good
faith to the Certificate Insurer's determination in (y), any such modification
shall not be made if the Rating Agencies confirm that the risk to the
Certificate Insurer in insuring the Class A Certificates will be maintained at
the level assigned on the Startup Day. Further, the Certificate Insurer may, in
its sole discretion, modify this definition of Adjustable Rate Group Specified
Subordinated Amount for the purpose of reducing or eliminating, in whole or in
part, the definition hereof. The Trustee and the Rating Agencies shall be
notified in writing of such modification prior to the related Payment Date and
such modification shall not result in a downgrading of the then-current ratings
of the Class A Certificates, without regard to the Certificate Insurance
Policies.
"Adjustable Rate Group Target Percentage" means ___%.
"Original Adjustable Rate Group Pool Balance" means the aggregate Loan
Balance of the Home Equity Loans in the Adjustable Rate Group as of the Startup
Day plus the Original Adjustable Rate Group Pre-Funded Amount.
<PAGE>
<PAGE>
EXHIBIT M
DEFINITION OF FIXED RATE GROUP SPECIFIED SUBORDINATED AMOUNT
(AND RELATED DEFINITIONS)
"Fixed Rate Group Delinquency Amount" means the product of (i) the Fixed
Rate Group Delinquency Percentage and (ii)the sum of (x) the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group and (y) the current
Pre-Funded Amount with respect to the Fixed Rate Group.
"Fixed Rate Group Delinquency Percentage" means with respect to any date
of determination, the average of the percentage equivalents of the fractions
determined for each of the three immediately preceding Remittance Periods the
numerator of each of which is equal to (x) the sum (without duplication) of (i)
the aggregate Loan Balance of the Home Equity Loans in the Fixed Rate Group
which are 90-Day Delinquent Loans, (ii) the aggregate Loan Balance of the Home
Equity Loans in the Fixed Rate Group in foreclosure plus (iii) the aggregate
outstanding principal balance of Home Equity Loans in the Fixed Rate Group
relating to REO Properties as of the end of such Remittance Period and the
denominator of which is (y) the aggregate Loan Balance of all Home Equity Loans
in the Fixed Rate Group as of the end of such Remittance Period.
"Fixed Rate Group Initial Specified Subordinated Amount" means the Fixed
Rate Group Target Percentage times the Original Fixed Rate Group Pool Balance.
"Fixed Rate Group Specified Subordinated Amount" means:
(a) for any Payment Date occurring during the period commencing on the
Startup Day and ending on the later of (A) the date upon which principal in the
amount equal to one half of the Original Fixed Rate Group Pool Balance has been
received by the Owners of the Fixed Rate Certificates and (B) the thirtieth
Payment Date following the Startup Day, the greater of: (i) the Fixed Rate Group
Initial Specified Subordinated Amount, and (ii) 50% of the Fixed Rate Group
Delinquency Amount.
(b) for any Payment Date occurring after the end of the period in clause
(a) above, the greatest of (i)(x) two times the Fixed Rate Group Target
Percentage times (y) the sum of the aggregate Loan Balance of the Home Equity
Loans in the Fixed Rate Group and the current Pre-Funded Amount with respect to
the Fixed Rate Group, (ii) 50% of the Fixed Rate Group Delinquency Amount (iii)
____% of the Original Fixed Rate Group Pool Balance, and (iv) the aggregate
principal balance of the three Home Equity Loans with the largest outstanding
principal balances in the Fixed Rate Group.
Provided, however, for any Payment Date occurring after the end of the
period specified in clause (a) above, if the Fixed Rate Group Delinquency
Percentage exceeds ___%, the Fixed Rate Group Specified Subordinated Amount
shall be no less than the Fixed Rate Group Specified Subordinated Amount as of
the previous Payment Date.
Notwithstanding the above, on or before the final Pre-Funding Payment
Date, the Certificate Insurer may modify the definition of Fixed Rate Group
Specified Subordinated
<PAGE>
<PAGE>
Amount, including the definitions contained therein if (x) the Subsequent Home
Equity Loans, individually or in the aggregate, do not conform to the conditions
specified in the Insurance Agreement or in the Agreement, or (y) the risk to the
Certificate Insurer under the Certificate Insurance Policies has changed as
reasonably determined by the Certificate Insurer; provided, however, if the
Owners of the Class R Certificates object in good faith to the Certificate
Insurer's determination in (y), any such modification shall not be made if the
Rating Agencies confirm that the risk to the Certificate Insurer in insuring the
Class A Certificates will be maintained at the level assigned on the Startup
Day. Further, the Certificate Insurer may, in its sole discretion, modify the
definition of Fixed Rate Group Specified Subordinated Amount for the purpose of
reducing or eliminating, in whole or in part, the definition hereof. The Trustee
and the Rating Agencies shall be notified in writing of such modification prior
to the related Payment Date and such modification shall not result in a
downgrading of the then-current ratings of the Class A Certificates, without
regard to the Certificate Insurance Policies.
"Fixed Rate Group Target Percentage" means ____%.
"Original Fixed Rate Group Pool Balance" means the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group as of the Startup Day
plus the Original Fixed Rate Group Pre-Funded Amount.
<PAGE>
<PAGE>
Exhibit 4.3
CENTEX HOME EQUITY
LOAN TRUST A
-----------------------------
LIST CLASS(ES) OF NOTES
FORM OF INDENTURE
Dated as of _____________, 199
----------------------------
------------------
Trustee
<PAGE>
<PAGE>
CROSS REFERENCE TABLE 1
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310 (a) (1).................................................................... 6.11
(a) (2) ................................................................... 6.11
(a) (3) ................................................................... 6.10
(a) (4).................................................................... N.A.(2)
(a) (5).................................................................... 6.11
(b)........................................................................ 6.8; 6.11
(c)........................................................................ N.A.
311 (a) ....................................................................... 6.12
(b)........................................................................ 6.12
(c)........................................................................ N.A.
312 (a) ....................................................................... 7.1
(b)........................................................................ 7.2
(c)........................................................................ 7.2
(d) ....................................................................... 7.4
313 (a) ....................................................................... 7.4
(b) (1).................................................................... 7.4
(b) (2)....................................................................11.5
(c)........................................................................ 7.4
(d)........................................................................ 7.3
314 (a) .......................................................................11.15
(b) .......................................................................11.1
(c) (1)....................................................................11.1
(c) (2)....................................................................11.1
(c) (3) ...................................................................11.1
(d) .......................................................................11.1
(e)........................................................................11.1
(f) .......................................................................11.1
315 (a) ....................................................................... 6.1
(b) ....................................................................... 6.5; 11.5
(c) ....................................................................... 6.1
(d)........................................................................ 6.1
(e)........................................................................ 5.13
316 (a) (last sentence)........................................................ 2.7
(a) (1) (A)................................................................ 5.11
(a) (1) (B)................................................................ 5.12
(a) (2).................................................................... N.A.
(b)........................................................................ 5.7
(c)........................................................................ N.A.
317 (a) (1) ................................................................... 5.3
(a) (2).................................................................... 5.3
(b)........................................................................ 3.3
318 (a)........................................................................11.7
</TABLE>
(1) Note: This Cross Reference Table shall not, for any purpose, be deemed
to be part of this Indenture.
(2) N.A. means Not Applicable.
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions...........................................................1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.....................8
SECTION 1.3 Rules of Construction.................................................8
ARTICLE II
THE NOTES
SECTION 2.1 Form..................................................................9
SECTION 2.2 Execution, Authentication and Delivery................................9
SECTION 2.3 Temporary Notes......................................................10
SECTION 2.4 Registration; Registration of Transfer and Exchange..................10
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes...........................11
SECTION 2.6 Persons Deemed Owner.................................................12
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest................12
SECTION 2.8 Cancellation.........................................................13
SECTION 2.9. Release of Collateral................................................14
SECTION 2.10. Book-Entry Notes.....................................................14
SECTION 2.11. Notices to Clearing Agency...........................................15
SECTION 2.12. Definitive Notes.....................................................15
ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest....................................15
SECTION 3.2 Maintenance of Office or Agency......................................15
SECTION 3.3 Money for Payments To Be Held in Trust...............................16
SECTION 3.4 Existence............................................................17
SECTION 3.5 Protection of Trust Estate...........................................18
SECTION 3.6 Opinions as to Trust Estate..........................................18
SECTION 3.7 Performance of Obligations; Servicing of Loans.......................19
SECTION 3.8 Negative Covenants...................................................21
SECTION 3.9 Annual Statement as to Compliance....................................21
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms..................22
SECTION 3.11 Successor or Transferee..............................................23
SECTION 3.12 No Other Business....................................................24
SECTION 3.13 No Borrowing.........................................................24
SECTION 3.14 Servicer's Obligations...............................................24
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities....................24
SECTION 3.16 Capital Expenditures.................................................24
SECTION 3.17 Reserved.............................................................24
SECTION 3.18 Restricted Payments..................................................24
SECTION 3.19 Notice of Events of Default..........................................24
SECTION 3.20 Further Instruments and Acts.........................................25
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture..............................25
SECTION 4.2 Application of Trust Money...........................................26
SECTION 4.3 Repayment of Moneys Held by Paying Agent.............................26
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default....................................................26
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment...................27
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee..............................................................28
SECTION 5.4 Remedies; Priorities.................................................30
SECTION 5.5 Optional Preservation of the Loans...................................31
SECTION 5.6 Limitation of Suits..................................................32
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest.........................................................32
SECTION 5.8 Restoration of Rights and Remedies...................................32
SECTION 5.9 Rights and Remedies Cumulative.......................................33
SECTION 5.10 Delay or Omission Not a Waiver.......................................33
SECTION 5.11 Control by Noteholders...............................................33
SECTION 5.12 Waiver of Past Defaults..............................................34
SECTION 5.13 Undertaking for Costs................................................34
SECTION 5.14 Waiver of Stay or Extension Laws.....................................34
SECTION 5.15 Action on Notes......................................................35
SECTION 5.16 Performance and Enforcement of Certain Obligations...................35
ARTICLE VI
THE TRUSTEE
SECTION 6.1 Duties of Trustee....................................................35
SECTION 6.2 Rights of Trustee....................................................36
SECTION 6.3 Individual Rights of Trustee.........................................37
SECTION 6.4 Trustee's Disclaimer.................................................37
SECTION 6.5 Notice of Defaults...................................................37
SECTION 6.6 Reports by Trustee to Holders........................................37
SECTION 6.7 Compensation and Indemnity...........................................38
</TABLE>
(ii)
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.8 Replacement of Trustee...............................................38
SECTION 6.9 Successor Trustee by Merger..........................................39
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee........................39
SECTION 6.11 Eligibility; Disqualification........................................41
SECTION 6.12 Preferential Collection of Claims Against Issuer.....................41
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of Noteholders.........41
SECTION 7.2 Preservation of Information; Communications to Noteholders...........41
SECTION 7.3 Reports by Issuer....................................................41
SECTION 7.4 Reports by Trustee...................................................41
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money..................................................42
SECTION 8.2 Trust Accounts.......................................................42
SECTION 8.3 General Provisions Regarding Accounts................................43
SECTION 8.4 Release of Trust Estate..............................................43
SECTION 8.5 Opinion of Counsel...................................................44
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders...............44
SECTION 9.2 Supplemental Indentures with Consent of Noteholders..................45
SECTION 9.3 Execution of Supplemental Indentures.................................47
SECTION 9.4 Effect of Supplemental Indenture.....................................47
SECTION 9.5 Conformity With Trust Indenture Act..................................48
SECTION 9.6 Reference in Notes to Supplemental Indentures........................48
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption...........................................................48
SECTION 10.2 Form of Redemption Notice............................................48
SECTION 10.3 Notes Payable on Redemption Date.....................................49
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc............................49
SECTION 11.2 Form of Documents Delivered to Trustee...............................51
SECTION 11.3 Acts of Noteholders..................................................52
</TABLE>
(iii)
<PAGE>
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<TABLE>
<S> <C> <C>
SECTION 11.4 Notices, etc. to Trustee, Issuer and Rating Agencies.................52
SECTION 11.5 Notices to Noteholders; Waiver.......................................53
SECTION 11.6 Alternate Payment and Notice Provisions..............................54
SECTION 11.7 Conflict with Trust Indenture Act....................................54
SECTION 11.8 Effect of Headings and Table of Contents.............................54
SECTION 11.9 Successors and Assigns...............................................54
SECTION 11.10 Separability.........................................................54
SECTION 11.11 Benefits of Indenture................................................54
SECTION 11.12 Legal Holidays.......................................................54
SECTION 11.13 GOVERNING LAW........................................................54
SECTION 11.14 Counterparts.........................................................55
SECTION 11.15 Recording of Indenture...............................................55
SECTION 11.16 Trust Obligation.....................................................55
SECTION 11.17 No Petition..........................................................55
SECTION 11.18 Inspection...........................................................55
</TABLE>
Exhibit A Schedule of Loans
Exhibit B Form of Sale and Servicing Agreement
Exhibit C Form of Note Depository Agreement
Exhibit D Form of Note
(iv)
<PAGE>
<PAGE>
INDENTURE dated as of , 199 , between Centex Home Equity
Loan Trust A, a Delaware business trust (the "Issuer"), and ____________,
a ___________, as trustee and not in its individual capacity (the "Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's List Class(es) of
Notes:
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, as Trustee
for the benefit of the Holders of the Notes, all of the Issuer's right, title
and interest in and to (a) the Home Equity Loans, and all moneys due or received
thereon, on or after the Cut-Off Date; (b) the security interests in the
Mortgaged Properties granted by Obligors pursuant to the Home Equity Loans and
any other interest of the Issuer in the Mortgaged Properties; (c) any proceeds
with respect to the Home Equity Loans from claims on any insurance policies
covering Mortgaged Properties or Obligors; (d) all funds on deposit from time to
time in the Trust Accounts , including the Reserve Account Initial Deposit, and
in all investments and proceeds thereof (including all income thereon); (e) the
Sale and Servicing Agreement; and (f) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction except as set
forth herein, and to secure compliance with the provisions of this Indenture,
all as provided in this Indenture.
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Holders of the Notes may be adequately and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"Act" has the meaning specified in Section 11.3(a).
<PAGE>
<PAGE>
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.
"Authorized Officer" means, with respect to the Issuer and the Servicer,
any officer of the Owner Trustee or the Servicer, as applicable, who is
authorized to act for the Owner Trustee or the Servicer, as applicable, in
matters relating to the Issuer and who is identified on the list of Authorized
Officers delivered by each of the Owner Trustee and the Servicer to the Trustee
on the Closing Date (as such list may be modified or supplemented from time to
time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Depository Agreements and other documents
and certificates delivered in connection therewith.
"Book Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in The City of New York or , are
authorized or obligated by law, regulation or executive order to remain closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
List Class(es) of Notes and their Respective Interest Rates.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
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<PAGE>
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Agreement is located at
_________________________, Attention: or at such other address as the Trustee
may designate from time to time by notice to the Noteholders, the Servicer and
the Issuer, or the principal corporate trust office of any successor Trustee
(the address of which the successor Trustee will notify the Noteholders and the
Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture" means this Indenture as amended and supplemented from time
to time.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
3
<PAGE>
<PAGE>
"Independent Certificate" means a certificate or opinion to be delivered
to the Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1, made by an Independent
appraiser or other expert appointed by an Issuer Order and approved by the
Trustee in the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
"Interest Rate" means, with respect to the Define the Interest Rate for
each class of Notes.
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
List Class(es) of Notes.
"Note Depository Agreement" means the agreement among the Issuer, the
Trustee, the Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated , 199 , substantially in the form of Exhibit C.
"Note Owner" means, with respect to a Book-Entry Note, the person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA Section 314,
and delivered to the Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Trustee, and which
opinion or opinions shall be addressed to the Trustee as Trustee, shall comply
with any applicable requirements of Section 11.1, and shall be in form and
substance satisfactory to the Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
4
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<PAGE>
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such
Notes (provided, however, that if such Notes are to be
redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor, satisfactory
to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such
Notes are held by a bona fide purchaser; provided that in
determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder
or under any Basic Document, Notes owned by the Issuer, any
other obligor upon the Notes, the Seller or any Affiliate of
any of the foregoing Persons shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver,
only Notes that a Responsible Officer of the Trustee either
actually knows to be so owned or has received written notice
thereof shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that
the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing
Persons. "Outstanding Amount" means the aggregate principal
amount of all Notes, or class of Notes, as applicable,
Outstanding at the date of determination.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
5
<PAGE>
<PAGE>
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the fourteenth day of the calendar month in which
such Distribution Date or Redemption Date occurs.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.1(a) or (b) as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount of
the then outstanding Class A-Notes plus accrued and unpaid interest thereon to
but excluding the Redemption Date, or (b) in the case of a payment made to
Noteholders pursuant to Section 10.1(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (a)
above.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of _______ __, 199_, among the Issuer, the Seller and the Servicer,
substantially in the form of Exhibit B as the same may be amended or
supplemented from time to time.
"Schedule of Home Equity Loans" means the listing of the Home Equity
Loans set forth in Exhibit A (which Exhibit may be in the form of microfiche).
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.7(e).
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
6
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<PAGE>
"Trustee" means , a , not in its individual capacity but
as trustee under this Indenture, or any successor trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(a) Except as otherwise specified herein, the following terms
have the respective meanings set forth in the Sale and Servicing Agreement as in
effect on the Closing Date for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms:
SECTION OF SALE AND TERM SERVICING AGREEMENT
<TABLE>
<S> <C>
Annual Percentage Rate or APR....................................................Section 1.1
Certificateholders ..............................................................Section 1.1
Closing Date.....................................................................Section 1.1
Collection Account...............................................................Section 1.1
Collection Period ...............................................................Section 1.1
Contract ........................................................................Section 1.1
Depository Agreements ...........................................................Section 1.1
Distribution Date ...............................................................Section 1.1
Eligible Deposit Account ........................................................Section 1.1
Eligible Investments.............................................................Section 1.1
Final Scheduled Distribution Date................................................Section 1.1
Final Scheduled Maturity Date....................................................Section 1.1
Home Equity Loans................................................................Section 1.1
Mortgaged Property...............................................................Section 1.1
Note Distribution Account........................................................Section 1.1
Noteholders' Distributable Amount................................................Section 1.1
Noteholders' Percentage..........................................................Section 1.1
Obligor..........................................................................Section 1.1
Original Pool Balance............................................................Section 1.1
Owner Trustee....................................................................Section 1.1
Person...........................................................................Section 1.1
Pool Balance.....................................................................Section 1.1
Purchased Home Equity Loans......................................................Section 1.1
Rating Agency....................................................................Section 1.1
Rating Agency Condition..........................................................Section 1.1
Reserve Account..................................................................Section 1.1
Seller...........................................................................Section 1.1
Servicer.........................................................................Section 1.1
Servicer Default.................................................................Section 1.1
Specified Reserve Account Balance................................................Section 1.1
Total Distribution Amount........................................................Section 1.1
Trust Accounts...................................................................Section 1.1
Trust Agreement..................................................................Section 1.1
</TABLE>
7
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<PAGE>
(b) Capitalized terms used herein and not otherwise defined
herein or in the Sale and Servicing Agreement have the meanings assigned to them
in the Trust Agreement.
. SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture securities" means the Notes.
"Indenture security holder" means a Noteholder.
"Indenture to be qualified" means this Indenture.
"Indenture trustee" or "institutional trustee" means the Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
8
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<PAGE>
ARTICLE II
The Notes
SECTION 2.1 Form. List Class(es) of Notes in each case together with
the Trustee's certificate of authentication, shall be in substantially the form
set forth in Exhibit D, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit D is part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon Issuer Order authenticate and deliver Class A-_
Notes for original issue in an aggregate principal amount of $_________, Class
A-_ Notes for original issue in the aggregate principal amount of $ , Class
A--Notes for original issue in the aggregate principal amount of $________,
Class A-_ Notes for original issue in the aggregate principal amount of
$________, and Class A-_ Notes for original issue in the aggregate principal
amount of $______. The aggregate principal amount of List Class(es) of Notes
outstanding at any time may not exceed such amounts except as provided in
Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $25,000 and
in integral multiples of $1,000 in excess thereof (except for one Note of each
class which may be issued in a denomination other than an integral multiple of
$1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
9
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<PAGE>
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.4 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute and
upon its request the Trustee shall authenticate and the Noteholder shall obtain
from the Trustee, in the name of the designated transferee or transferees, one
or more new Notes, in any authorized denominations, of the same class and a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for
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exchange, if the requirements of Section 8-401(1) of the UCC are met the Issuer
shall execute and upon its request the Trustee shall authenticate and the
Noteholder shall obtain from the Trustee, the Notes which the Noteholder making
the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Trustee may
require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnity as may be required
by it to hold the Issuer and the Trustee harmless, then, in the absence of
notice to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the UCC are met, the Issuer shall execute and upon its request the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to
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whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of such Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other reasonable expenses (including the fees and expenses of the Trustee)
connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest. (a)
The Notes shall accrue interest as provided in the forms of the List Class(es)
of Notes, set forth in Exhibit D, and such interest shall be payable on each
Distribution Date as specified therein. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Distribution Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid, to such
Person's address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.12, with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made
by wire transfer in immediately available funds to the account designated by
such nominee and except for the final installment of principal payable with
respect to such Note on a Distribution Date or on the Final Scheduled
Distribution Date (and except for the Redemption Price for any Note called for
redemption pursuant to Section 10.1(a)) which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.3.
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(b) The principal of each Note shall be payable in installments
on each Distribution Date as provided in the forms of the List Class(es) of
Notes, set forth in Exhibit D. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable, if not previously paid,
on the date on which an Event of Default shall have occurred and be continuing,
if the Trustee or the Holders of the Notes representing not less than a majority
of the Outstanding Amount of the Notes have declared the Notes to be immediately
due and payable in the manner provided in Section 5.2. All principal payments on
each class of Notes shall be made pro rata to the Noteholders of such class
entitled thereto. The Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the
Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.2.
(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate in any lawful
manner. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and, at least 15 days
before any such special record date, the Issuer shall mail to each Noteholder
and the Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it; provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, the Trustee
shall release property from the lien of this Indenture only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
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SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to as agent for The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Note Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the
Notes and the giving of instructions or directions
hereunder) as the sole Holder of the Notes, and shall have
no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions
of this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those
established by law and agreements between such Note Owners
and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants
and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants;
and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of
Notes evidencing a specified percentage of the Outstanding
Amount of the Notes, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to
the Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
ommunication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
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SECTION 2.12 Definitive Notes. If (i) the Servicer Advises the Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and the Servicer is
unable to locate a qualified successor, (ii) the Servicer at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default, Note
Owners representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Trustee through the Clearing Agency
in writing that the continuation of a book entry system through the Clearing
Agency is no longer in the best interests of the Note Owners, then the Clearing
Agency shall notify all Note Owners and the Trustee of the occurrence of any
such event and of the availability of Definitive Notes to Note Owners requesting
the same. Upon surrender to the Trustee of the typewritten Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes, the Trustee shall recognize the Holders of the Definitive
Notes as Note-holders.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, subject
to Section 8.2(c), the Issuer will cause to be distributed all amounts on
deposit in the Note Distribution Account on a Distribution Date deposited
therein pursuant to the Sale and Servicing Agreement for the benefit of the
Class A--Notes to Class A--Noteholders-List for all Classes. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Issuer
to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account
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pursuant to Section 8.2(c) shall be made on behalf of the Issuer by the Trustee
or by another Paying Agent, and no amounts so withdrawn from the Collection
Account and the Note Distribution Account for payments of Notes shall be paid
over to the Issuer except as provided in this Section.
On or before each Distribution Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Note Distribution Account an
aggregate sum sufficient to pay the amounts then becoming due under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto and
(unless the Paying Agent is the Trustee) shall promptly notify the Trustee of
its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;
(ii) give the Trustee notice of any default by the Issuer of
which it has actual knowledge (or any other obligor upon
the Notes) in the making of any payment required to be
made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes
of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in
connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any 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 a
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
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Subject to applicable laws with respect to the escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the 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 repayment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.4 Existence . Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer will from time to
time prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
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(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee and the Noteholders in such Trust
Estate against the claims of all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Trustee an Opinion of Counsel either stating that,
in the opinion of such counsel, such action has been taken with respect to the
recording and filing of this Indenture, any indentures supplemental hereto, and
any other requisite documents, and with respect to the execution and filing of
any financing statements and continuation statements, as are necessary to
perfect and make effective the lien and security interest of this Indenture and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(b) Within ____ days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Cut-Off Date, the Issuer shall furnish to the Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until January 30 in the following calendar
year.
SECTION 3.7 Performance of Obligations; Servicing of Loans. (a) The
Issuer will not take any action and will use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
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(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee or the Holders of at least a majority
of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee and the Rating Agencies thereof in accordance with Section 11.4, and
shall specify in such notice the action, if any, the Issuer is taking in respect
of such default. If a Servicer Default shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Loans, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 8.1 of the
Sale and Servicing Agreement, the Issuer shall appoint a successor Servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee. In the event that a
Successor Servicer has not been appointed and accepted its appointment at the
time when the Servicer ceases to act as Servicer, the Trustee without further
action shall automatically be appointed the Successor Servicer. The Trustee may
resign as the Servicer by giving written notice of such resignation to the
Issuer and in such event will be released from such duties and obligations, such
release not to be effective until the date a new Servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any such
notice to the Issuer, the Issuer shall obtain a new Servicer as the Successor
Servicer under the Sale and Servicing Agreement. Any Successor Servicer other
than the Trustee shall (i) be an established financial institution having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of Contracts and (ii) enter into a servicing agreement with the Issuer
having substantially the same provisions as the provisions of the Sale and
Servicing Agreement applicable to the Servicer. If within 30 days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new Servicer, the Trustee may appoint, or may petition a court of
competent jurisdiction to appoint, a Successor Servicer. In connection with any
such appointment, the Trustee may make such arrangements for the compensation of
such successor as it and such successor shall agree, subject to the limitations
set forth below and in the Sale and Servicing Agreement, and in accordance with
Section 8.2 of the Sale and Servicing Agreement, the Issuer shall enter into an
agreement with such successor for the servicing of the Home Equity Loans (such
agreement to be in form and substance satisfactory to the Trustee). If the
Trustee shall succeed to the Servicer's duties as Servicer of the Home Equity
Loans as provided herein, it shall do so in its individual capacity and not in
its capacity as Trustee and, accordingly, the provisions of Article VI hereof
shall be inapplicable to the Trustee in its duties as the successor
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to the Servicer and the servicing of the Loans. In case the Trustee shall become
successor to the Servicer under the Sale and Servicing Agreement, the Trustee
shall be entitled to appoint as Servicer any one of its Affiliates, or delegate
any of its responsibilities as Servicer to agents, subject to the terms of the
Sale and Servicing Agreement, provided that such appointment or delegation shall
not affect or alter in any way the liability of the Trustee as a successor for
the performance of the duties and obligations of the Servicer in accordance with
the terms hereof.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the Trustee.
As soon as a Successor Servicer (other than the Trustee) is appointed, the
Issuer shall notify the Trustee of such appointment, specifying in such notice
the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Trustee under this Indenture or the rights of the Trustee
hereunder, the Issuer agrees that, unless such action is specifically permitted
hereunder or under the Basic Documents, it will not, without the prior written
consent of the Trustee or the Holders of at least a majority in Outstanding
Amount of the Notes, amend, modify, waive, supplement, terminate or surrender,
or agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral or the Basic Documents, or waive
timely performance or observance by the Servicer or the Seller under the Sale
and Servicing Agreement; provided, however, that no such amendment shall (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, distributions that are required to be made for the benefit of the
Noteholders, or (ii) reduce the aforesaid percentage of the Notes which are
required to consent to any such amendment, without the consent of the Holders of
all the Outstanding Notes. If any such amendment, modification, supplement or
waiver shall be so consented to by the Trustee or such Holders, the Issuer
agrees, promptly following a request by the Trustee to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as the Trustee may deem necessary or appropriate in
the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer,
including those included in the Trust Estate, unless
directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes
(other than amounts properly withheld from such payments
under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be
amended, hypothecated,
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subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge,
excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be
created on or extend to or other-wise arise upon or burden
the Trust Estate or any part thereof or any interest therein
or the proceeds thereof (other than tax liens, mechanics'
liens and other liens that arise by operation of law, in
each case on a Loan and arising solely as a result of an
action or omission of the related Obligor) or (C) permit the
lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Trust
Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver
to the Trustee, within ___ days after the end of each fiscal year of the Issuer
(commencing with the fiscal year 199 ), and otherwise in compliance with the
requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as to
the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under
such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if
there has been a default in the compliance of any such
condition or covenant, specifying each such default known to
such Authorized Officer and the nature and status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or
any state and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual
payment of the principal of and interest on all Notes and
the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing;
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(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the
effect that such transaction will not have any material
adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture
comply with this Article III and that all conditions
precedent herein provided for relating to such transaction
have been complied with (including any filing required by
the Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or
transfer of which is hereby restricted shall (A) be a United
States citizen or a Person organized and existing under the
laws of the United States of America or any state, (B)
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance
or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or
observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title
and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D)
unless otherwise provided in such supplemental indenture,
expressly agree to indemnify, defend and hold harmless the
Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture
that such Person (or if a group of persons, then one
specified Person) shall prepare (or cause to be prepared)
and make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing;
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(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee) to the
effect that such transaction will not have any material
adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture
comply with this Article III and that all conditions
precedent herein provided for relating to such transaction
have been complied with (including any filing required by
the Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10 (b), will be released from every covenant
and agreement of this Indenture to be observed or performed on the part of the
Issuer with respect to the Notes immediately upon the delivery of written notice
to the Trustee stating that is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the Home
Equity Loans in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.8 of the Sale and
Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire
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(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any
other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 Reserved
SECTION 3.18 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or Trust Agreement. The Issuer will not, directly
or indirectly, make payments to or distributions from the Collection Account
except in accordance with this Indenture and the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to give the
Trustee and the Rating Agencies prompt written notice of each Event of Default
hereunder and each default on the part of the Servicer or the Seller of its
obligations under the Sale and Servicing Agreement.
SECTION 3.20 Further Instruments and Acts. Upon request of the Trustee,
the Issuer will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.2) and (vi) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them, and the Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when (A)
either (1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been
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replaced or paid as provided in Section 2.5 and (ii) Notes for whose payment
money has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.3) have been delivered to the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for cancellation (i) have
become due and payable, (ii) will become due and payable at the Final Scheduled
Distribution Date within one year, or (iii) are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Issuer, and the Issuer, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee cash or direct
obligations of or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness on
such Notes not theretofore delivered to the Trustee for cancellation when due to
the Final Scheduled Distribution Date or Redemption Date (if Notes shall have
been called for redemption pursuant to Section 10.1(a)), as the case may be; (B)
the Issuer has paid or caused to be paid all other sums payable hereunder by the
Issuer; and (C) the Issuer has delivered to the Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Trustee)
an Independent Certificate from a firm of certified public accountants, each
meeting the applicable requirements of Section 11.1(a) and each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment,
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decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) a default for thirty days or more in the payment of any
principal of or interest on any Note; or
(ii) default in the observance or performance of any covenant or
agreement of the Issuer or the Trust Fund made in this
Indenture (other than a covenant or agreement, a default in
the observance or performance of which is elsewhere in this
Section specifically dealt with), which continues for a
period of 60 days after notice after thereof shall have been
given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of
at least 25% of the Outstanding Amount of the Notes, a
written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied
and stating that such notice is a "Notice of Default"
hereunder; or
(iii) any representation or warranty of the Issuer or the Trust
Fund made in this Indenture or in any certificate or other
writing delivered pursuant hereto or in connection herewith
proving to have been incorrect in any material respect as of
the time when the same shall have been made, and such breach
is not cured within 60 days after notice thereof after there
shall have been given, by registered or certified mail, to
the Issuer by the Trustee or to the Issuer and the Trustee
by the Holders of at least 25% of the Outstanding Amount of
the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of
Default" hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case
under any applicable Federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or
for any substantial part of the Trust Estate, or ordering
the winding-up or liquidation of the Issuer's affairs, and
such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by
the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or
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for any substantial part of the Trust Estate, or the making
by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of action by
the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (iii), its status and what action the Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Trustee or the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes may declare the principal or if any Note is a
Zero Coupon Security, such portion of the principal amount as specified in the
Note to be immediately due and payable, by a notice in writing to the Issuer
(and to the Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of Notes representing a majority of the Outstanding Amount of the Notes, by
written notice to the Issuer and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes if
the Event of Default giving rise to such acceleration had not occurred;
and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebstdness and Suits for Enforcement by
Trustee. (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii)
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default is made in the payment of the principal of or any installment of the
principal of any Note when the same becomes due and payable, the Issuer will,
upon demand of the Trustee, pay to it, for the benefit of the Holders of the
Notes, the whole amount then due and payable on such Notes for principal and
interest, with interest upon the overdue principal, and, to the extent payment
at such rate of interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Notes and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a proceeding for the collection of the sums so due and unpaid, and
may prosecute such proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor upon such Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may, as
more particularly provided in Section 5.4, in its discretion, proceed to protect
and enforce its rights and the rights of the Noteholders, by such appropriate
proceedings as the Trustee shall deem most effective to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to
the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and
all advances made, by the Trustee and each
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predecessor Trustee, except as a result of negligence, bad
faith or willful misconduct) and of the Noteholders allowed
in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a
trustee, a standby trustee or person performing similar
functions in any such proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the
Noteholders and of the Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims
of the Trustee or the Holders of Notes allowed in any
judicial proceedings relative to the Issuer, its creditors
and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other proceedings
relative thereto, and any such action or proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(g) In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing, the Trustee may do one or more of the following
(subject to Section 5.5):
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(i) institute proceedings in its own name and as trustee of an
express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any
other obligor upon such Notes moneys adjudged due;
(ii) institute proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to
the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce
the rights and remedies of the Trustee and the Holders of
the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales
called and conducted in any manner permitted by law;
provided, however, that the Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.1(i), unless (A) the Holders of 100% of the Outstanding
Amount of the Notes consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in full
all amounts then due and unpaid upon such Notes for principal and interest or
(C) the Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
and the Trustee obtains the consent of Holders of 66-2/3% of the Outstanding
Amount of the Notes. In determining such sufficiency or insufficiency with
respect to clause (B) and (C), the Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
(b) If the Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property (and other amounts including
amounts held on deposit in the Reserve Account) held as Collateral for the
benefit of the Noteholders in the following order:
FIRST: to the Trustee for amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
interest;
THIRD: to Noteholders for amounts due and unpaid on the Notes
for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
principal; and
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FOURTH: to the Issuer for distribution to the
Certificateholders.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Issuer shall mail to each Noteholder and the Trustee a notice that states
the record date, the payment date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Loans. If the Notes have been
declared to be due and payable under Section 5.2 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Trustee may, but need not, elect to maintain possession of the Trust Estate.
It is the desire of the parties hereto and the Noteholders that there be at all
times sufficient funds for the payment of principal of and interest on the
Notes, and the Trustee shall take such desire into account when determining
whether or not to maintain possession of the Trust Estate. In determining
whether to maintain possession of the Trust Estate, the Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Trustee to
institute such proceeding in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with
such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute
such proceedings; and
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the
Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
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In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date)
and to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Trustee or any
Noteholder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
the Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
with respect to the Notes or exercising any trust or power conferred on the
Trustee; provided that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
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(ii) subject to the express terms of Section 5.4, any direction
to the Trustee to sell or liquidate the Trust Estate shall
be by the Holders of Notes representing not less than 100%
of the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Trustee elects to retain the Trust
Estate pursuant to such Section, then any direction to the
trustee by Holders of Notes representing less than 100% of
the Outstanding Amount of the Notes to sell or liquidate
the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of
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principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture (or, in the case of redemption,
on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 5.15 Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so and
at the Servicer's expense, the Issuer agrees to take all such
lawful action as the Trustee may request to compel or secure
the performance and observance by the Seller and the Servicer, as
applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement in accordance with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement to the extent and in the manner directed by the Trustee, including the
transmission of notices of default on the part of the Seller or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Seller or the Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Trustee
may, and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of 66-2/3% of the
Outstanding Amount of the Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Seller or the Servicer under or
in connection with the Sale and Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller or the Servicer of each of their obligations to the Issuer thereunder and
to give any consent, request, notice, direction, approval, extension or waiver
under the Sale and Servicing Agreement, and any right of the Issuer to take such
action shall be suspended.
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ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee. (a) If an Event of Default has occurred and
is continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; however,
the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.11.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law or the terms of this Indenture or the
Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that
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repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2 Rights of Trustee. (a) The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, or
any other such agent, attorney, custodian or nominee appointed with due care by
it hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
SECTION 6.3 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Issuer or its Affiliates with the same rights it would have if it
were not Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 6.11 and 6.12.
SECTION 6.4 Trustee's Disclaimer. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture or
the Notes, it shall not be accountable for the Issuer's use of the proceeds from
the Notes, and it shall not be responsible for any statement of the Issuer in
the Indenture or in any document issued in connection with the sale of the Notes
or in the Notes other than the Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is either actually known or written notice of the existence thereof has
been delivered to a Responsible Officer of the Trustee, the Trustee shall mail
to each Noteholder notice of the
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Default within 90 days after such knowledge or notice occurs. Except in the case
of a Default in payment of principal of or interest on any Note (including
payments pursuant to the mandatory redemption provisions of such Note), the
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
SECTION 6.6 Reports by Trustee to Holders. The Trustee shall deliver to
each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. The Issuer shall or shall cause the
Servicer to pay to the Trustee from time to time compensation for its services
in accordance with a separate agreement between the Servicer and the Trustee.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall or shall cause the Servicer to
reimburse the Trustee for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Issuer shall or shall cause the Servicer to indemnify the Trustee
and its officers, directors, employees and agents against any and all loss,
liability or expense (including attorneys' fees and expenses) incurred by it in
connection with the acceptance or the administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Issuer and the
Servicer promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Issuer and the Servicer shall not relieve the Issuer of
its obligations hereunder or the Servicer of its obligations under Article X of
the Sale and Servicing Agreement. The Issuer shall or shall cause the Servicer
to defend the claim and the Trustee may have separate counsel and the Issuer
shall or shall cause the Servicer to pay the fees and expenses of such counsel.
Neither the Issuer nor the Servicer need reimburse any expense or indemnify
against any loss, liability or expense incurred by the Trustee through the
Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this Section
shall survive the discharge of this Indenture subject to a satisfaction of the
Rating Agency Condition. When the Trustee incurs expenses after the occurrence
of a Default specified in Section 5.1(iv) or (v) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable Federal or state bankruptcy,
insolvency or similar law.
SECTION 6.8 Replacement of Trustee. The Trustee may resign at any time by
so notifying the Issuer. The Holders of a majority in Outstanding Amount of the
Notes may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Issuer shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11; or
(ii) the Trustee is adjudged a bankrupt or insolvent.
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If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuer shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture subject to satisfaction of the Rating Agency Condition. The successor
Trustee shall mail a notice of its succession to Noteholders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 6.8 and payment of all fees and expenses owed to the outgoing Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Issuer's and the Servicer's obligations under Section 6.7 shall continue for
the benefit of the retiring Trustee.
SECTION 6.9 Successor Tustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee. The Trustee shall provide the Rating Agencies prior
written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
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SECTION 6.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the 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 the
Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or
any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder,
including acts or omissions of predecessor or successor
trustees; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) 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 Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
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(d) 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 invest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of BBB- or better by the Rating Agencies. The Trustee shall comply with
TIA Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of Noteholders.
The Issuer will furnish or cause to be furnished to the Trustee (a) not more
than five days after the earlier of (i) each Record Date and (ii) three months
after the last Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Record Date, (b)
at such other times as the Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and content as
of a date not more than 10 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the Note Registrar, no such
list shall be required to be furnished.
SECTION 7.2 Preservation of Information; Communications to Noteholders. (a)
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of the Holders contained in the most recent list
furnished to the Trustee as provided in Section 7.1 and the names and addresses
of Holders received by the Trustee in its capacity as Note Registrar. The
Trustee may destroy any list furnished to it as provided in such Section 7.1
upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
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(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
. SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the
Issuer is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies
of such portions of any of the foregoing as the
Commission may from time to time by rules and
regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in
accordance with rules and regulations prescribed
from time to time by the Commission such additional
information, documents and reports with respect to
compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from
time to time by such rules and regulations; and
(iii) supply to the Trustee (and the Trustee shall
transmit by mail to all Noteholders described in
TIA Section 313(c)) such summaries of any
information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.3(a) as may be required by
rules and regulations prescribed from time to time
by the Commission.
(d) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
SECTION 7.4 Reports by Trustee. If required by TIA Section 313(a), within
60 days after each , beginning with , 199 , the Trustee
shall mail to each Noteholder as required by TIA Section 313(c) a
brief report dated as of such date that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. The Issuer shall notify the Trustee if and when the
Notes are listed on any stock exchange.
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ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Trustee pursuant to this Indenture. The Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this
Indenture, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Trust Estate,
the Trustee may take such action as may be appropriate to enforce such payment
or performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
SECTION 8.2 Trust Accounts. (a) On or prior to the Closing Date, the Issuer
shall cause the Servicer to establish and maintain, in the name of the Trustee,
for the benefit of the Noteholders and the Certificateholders, the Trust
Accounts as provided in Section 5.1 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution
Amount with respect to the preceding Collection Period will be deposited in the
Collection Account as provided in Section 5.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, the Noteholders' Distributable
Amount with respect to the preceding Collection Period will be transferred from
the Collection Account and/or the Reserve Account to the Note Distribution
Account as provided in Sections 5.5 and 5.6 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the Trustee
shall distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
(i) accrued and unpaid interest on the Notes; provided
that if there are not sufficient funds in the Note
Distribution Account to pay the entire amount of
accrued and unpaid interest then due on the Notes,
the amount in the Note Distribution Account shall
be applied to the payment of such interest on the
Notes pro rata on the basis of the total such
interest due on the Notes;
(ii) to the Holders of the Class A-1 Notes until the
Outstanding Amount of the Class A-1 Notes is
reduced to zero;
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List, as appropriate .
SECTION 8.3 General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by the Trustee upon Issuer Order, subject to the
provisions of Section 5.1(b) of the Sale and Servicing Agreement. All income or
other gain from investments of moneys deposited in the Trust Accounts shall be
deposited (or caused to be deposited) by the Trustee in the Collection Account,
and any loss resulting from such investments shall be charged to such account.
The Issuer will not direct the Trustee to make any investment of any funds or to
sell any investment held in any of the Trust Accounts unless the security
interest Granted and perfected in such account will continue to be perfected in
such investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Issuer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
(b) Reserved
(c) Subject to Section 6.1(c), the Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trustee by TIME
(or such other time as may be agreed by the Issuer and Trustee) on any Business
Day; or (ii) a Default or Event of Default shall have occurred and be continuing
with respect to the Notes but the Notes shall not have been declared due and
payable pursuant to Section 5.2, or, if such Notes shall have been declared due
and payable following an Event of Default, amounts collected or receivable from
the Trust Estate are being applied in accordance with Section 5.5 as if there
had not been such a declaration; then the Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments.
SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of its fees
and expenses pursuant to Section 6.7, the Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Trustee as
provided in this Article VIII shall be bound to ascertain the Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any moneys.
(b) The Trustee shall, at such time as there are no Notes
outstanding and all sums due the Trustee pursuant to Section 6.7 have been paid,
release any remaining portion of
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the Trust Estate that secured the Notes from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds then on
deposit in the Trust Accounts. The Trustee shall release property from the lien
of this Indenture pursuant to this Section 8.4(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. The Trustee shall receive at least seven
days' notice when requested by the Issuer to take any action pursuant to Section
8.4(a), accompanied by copies of any instruments involved, and the Trustee shall
also require as a condition to such action, an Opinion of Counsel, in form and
substance satisfactory to the Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for the
Notes or the rights of the Noteholders in contravention of the provisions of
this Indenture; provided, however, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Trustee in connection with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Trustee, the Issuer and the
Trustee, when authorized by an Issuer Order, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this
Indenture, or better to assure, convey and confirm
unto the Trustee any property subject or required
to be subjected to the lien of this Indenture, or
to subject to the lien of this Indenture additional
property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to
the Issuer, and the assumption by any such
successor of the covenants of the Issuer herein and
in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to
surrender any right or power herein conferred upon
the Issuer;
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(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture
which may be inconsistent with any other provision
herein or in any supplemental indenture or to make
any other provisions with respect to matters or
questions arising under this Indenture or in any
supplemental indenture; provided that such action
shall not adversely affect the interests of the
Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with
respect to the Notes and to add to or change any of
the provisions of this Indenture as shall be
necessary to facilitate the administration of the
trusts hereunder by more than one trustee, pursuant
to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary
to effect the qualification of this Indenture under
the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by
the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies by the Issuer, as evidenced to the Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The Issuer
and the Trustee, when authorized by an Issuer Order, also may, with prior notice
to the Rating Agencies and with the consent of the Holders of not less than a
majority of the outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that
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no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the Redemption Price
with respect thereto, change the provision of this Indenture
relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note
or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application
of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for
any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in
this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 5.4;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic
Documents cannot be modified or waived without the consent
of the Holder of each Outstanding Note affected thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any
payment of interest or principal due on any Note on any
Distribution Date (including the calculation of any of the
individual components of such calculation) or to affect the
rights of the Holders of Notes to the
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benefit of any provisions for the mandatory redemption of
the Notes contained herein; or
(viii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any
part of the Trust Estate or, except as otherwise permitted
or contemplated herein or in the Basic Documents, terminate
the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the
security provided by the lien of this Indenture.
The Trustee may determine whether or not any Notes would be affected by
any supplemental indenture and any such determination shall be conclusive upon
the Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Trustee shall not be liable for any such determination
made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Trustee, the Issuer and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
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SECTION 9.5 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. (a) The Class A-Notes are subject to
redemption in whole, but not in part, at the direction of the Seller pursuant to
Section 9.1(a) of the Sale and Servicing Agreement, on any Distribution Date on
which the Seller exercises its option to purchase the Trust Estate pursuant to
said Section 9.1(a), for a purchase price equal to the Redemption Price;
provided, however, that the Issuer has available funds sufficient to pay the
Redemption Price. The Servicer or the Issuer shall furnish the Rating Agencies
notice of such redemption. If the Class A-Notes are to be redeemed pursuant to
this Section 10.1(a), the Servicer or the Issuer shall furnish notice of such
election to the Trustee not later than days prior to the Redemption Date and the
Issuer shall deposit with the Trustee in the Note Distribution Account the
Redemption Price of the Class A-Notes to be redeemed whereupon all such Class
A-Notes shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 10.2 to each Holder of the Class A-Notes.
(b) In the event that the assets of the Trust are sold
pursuant to Section 9.2 of the Trust Agreement, all amounts on
deposit in the Note Distribution Account shall be paid to the
Noteholders up to the Outstanding Amount of the Notes and all
accrued and unpaid interest thereon. If amounts are to be paid to
Noteholders pursuant to this Section 10.1(b), the Servicer or the
Issuer shall, to the extent practicable, furnish notice of such
event to the Trustee not later than days prior to the Redemption
Date whereupon all such amounts shall be payable on the
Redemption Date.
SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption under
Section 10.1(a) shall be given by the Trustee by facsimile or by first-class
mail, postage prepaid, transmitted or mailed prior to the applicable Redemption
Date to each Holder of Class A-Notes, as of the close of business on the Record
Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
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All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments
shall be made only upon presentation and surrender
of such Class A-Notes and the place where such
Class A-Notes are to be surrendered for payment of
the Redemption Price (which shall be the office or
agency of the Issuer to be maintained as provided
in Section 3.2); and
(iv) that interest on the Class A-Notes shall cease to
accrue on the Redemption Date.
Notice of redemption of the Class A-Notes shall be given by the Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Class A-Note shall not
impair or affect the validity of the redemption of any other Class A-Note.
(b) Prior notice of redemption under Sections 10.1(b) is not
required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Class A-Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
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Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate
or opinion has read or has caused to be read such
covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the
statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination
or investigation as is necessary to enable such
signatory to express an informed opinion as to
whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether, in the opinion of each
such signatory such condition or covenant has been
complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Trustee that is to be made the
basis for the release of any property or securities subject to
the lien of this Indenture, the Issuer shall, in addition to any
obligation imposed in Section 11.1(a) or elsewhere in this
Indenture, furnish to the Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within __ days of such deposit)
to the Issuer of the Collateral or other property or securities
to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in
clause (i) above, the Issuer shall also deliver to the Trustee an
Independent Certificate as to the same matters, if the fair value
to the Issuer of the securities to be so deposited and of all
other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of
the Issuer, as set forth in the certificates delivered pursuant
to clause (i) above and this clause (ii), is % or more of the
Outstanding Amount of the Notes, but such a certificate need not
be furnished with respect to any securities so deposited, if the
fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than $ or less than percent
of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any
Purchased Home Equity Loans or Liquidated Loans, whenever any
property or securities are to be released from the lien of this
Indenture, the Issuer shall also furnish to the Trustee
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an Officer's Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value (within
__ days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the
proposed release will not impair the security under this
Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in
clause (iii) above, the Issuer shall also furnish to the Trustee
an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property
other than Purchased Home Equity Loans and Defaulted Loans, or
securities released from the lien of this Indenture since the
commencement of the then current calendar year, as set forth in
the certificates required by clause (iii) above and this clause
(iv), equals % or more of the Outstanding Amount of the Notes,
but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than
$___________ or less than percent of the then Outstanding Amount
of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of
this Section, the Issuer may (A) collect, liquidate, sell or
otherwise dispose of Home Equity Loans as and to the extent
permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent permitted
or required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to 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 Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, the Seller or the Issuer, stating that the information with respect to
such factual matters is in the possession of the Servicer, the Seller or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified
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mail, return receipt requested and shall be deemed to have been duly given upon
receipt to the Trustee at its Corporate Trust Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Issuer addressed to:
_______________, in care of Attention: ________________or at any other address
previously furnished in writing to the Trustee by Issuer. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004 and (ii) in
the case of S&P, at the following address: Standard & Poor's Ratings Group, 26
Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner here
in provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
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SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices, provided that such methods are reasonable and consented to by the
Trustee (which consent shall not be unreasonably withheld). The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other person with an Ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
54
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RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Seller, Servicer,
the Owner Trustee or the Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Seller, the Servicer, the Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Seller, the Servicer, the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Seller, the Servicer, the Owner Trustee or the Trustee or of any successor or
assign of the Seller, the Servicer, the Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Trustee and the Owner Trustee have no such obligations
in their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Seller or the Trust, or
join in any institution against the Seller or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by Independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence
55
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all such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Trustee may reasonably determine that such
disclosure is consistent with its Obligations hereunder.
THIS SPACE LEFT INTENTIONALLY BLANK
56
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CENTEX HOME EQUITY LOAN TRUST 199_-_
By:__________________________
____________, not in its
individual capacity but solely as
Owner Trustee,
By:__________________________
Name:
Title:
_________, not in its
individual capacity but solely as
Trustee,
By:__________________________
Name:
Title:
57
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Form of Note
EXHIBIT D
REGISTERED
$--------------
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CLASS A % ASSET BACKED NOTES
_______________, a business trust organized and existing under the laws
of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of DOLLARS payable on each Distribution Date in an amount equal to
the result obtained by multiplying (i) a fraction the numerator of which is
$__________ INSERT INITIAL PRINCIPAL AMOUNT OF NOTE and the denominator of which
is $_______________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-Notes pursuant to
Section 3.1 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the Distribution Date
(the "Class A-Final Scheduled Distribution Date"). The Issuer will pay interest
on this Note at the rate per annum shown above on each Distribution Date until
the principal of this Note is paid or made available for payment, on the
principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date). Interest on this Note will accrue for each Distribution Date
from the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from
, 199 . Interest will be
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computed on the basis of the actual number of days elapsed in a ___ day
year. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
By -----------------------------
----------,
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
-----------------------------
Name:
Title:
Date:
2
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:________
_________, not in its
individual capacity but solely as
Trustee,
by________
Authorized Signatory
3
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REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-_ __% Asset Backed Notes (herein called the "Class
A-Notes"), all issued under an Indenture dated as of _______, 199_ (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and _______________ , as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
List Class(es) of Notes (together, the "Notes") are and will be equally
and ratably secured by the collateral pledged as security therefor as provided
in the Indenture.
Principal of the Class A-Notes will be payable on each Distribution Date
in an amount described on the face hereof. "Distribution Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing , 199 .
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the Class A-Final Scheduled Distribution Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an Event of Default shall
have occurred and be continuing and the Trustee or the Holders of the Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-Notes
shall be made pro rata to the Class A-Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected
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to be available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Distribution Date by
notice mailed prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-Interest Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Seller, the Servicer, the Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Seller, the
Servicer, the Owner Trustee or the Trustee or of any successor or assign of the
Seller, the Servicer, the Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Trustee and the Owner Trustee have no such obligations in
their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Seller, or the Issuer or join in any
2
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institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one of more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
3
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Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither in its individual
capacity, in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Owner Trustee for the sole purposes of binding the
interests of the Owner Trustee in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that except as expressly provided in the
Indenture or the Basic Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
4
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto (name and address of assignee) the within Note and all rights thereunder,
and hereby irrevocably constitutes and appoints _________________, attorney, to
transfer said Note on the books kept for registration thereof, with full power
of substitution in the premises.
Dated:
Signature Guaranteed:
NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
5
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Exhibit 4.4
===============================================================================
CENTEX HOME EQUITY LOAN
TRUST A
FORM OF TRUST AGREEMENT
between
CHEC ASSET RECEIVABLE CORPORATION, as Depositor,
and
-------------------------------,
as Owner Trustee
Dated as of __________, 199_
===============================================================================
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Table of Contents
<TABLE>
<S> <C> <C>
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized Terms....................................1
SECTION 1.2. Other Definitional Provisions........................3
ARTICLE II
ORGANIZATION
SECTION 2.1. Name.................................................4
SECTION 2.2. Office...............................................4
SECTION 2.3. Purposes and Powers..................................4
SECTION 2.4. Appointment of Owner Trustee.........................5
SECTION 2.5. Initial Capital Contribution of Trust Estate.........5
SECTION 2.6. Declaration of Trust.................................5
SECTION 2.7. Liability of the Certificateholders..................6
SECTION 2.8. Title to Trust Property..............................6
SECTION 2.9. Situs of Trust.......................................6
SECTION 2.10. Representations and Warranties of the Seller.........6
SECTION 2.12. Federal Income Tax Allocations.......................7
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership....................................7
SECTION 3.2. The Trust Certificates...............................7
SECTION 3.3. Authentication of Trust Certificates.................8
SECTION 3.4. Registration of Transfer and Exchange of Trust
Certificates........................................ 8
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust
Certificates.........................................9
SECTION 3.6. Persons Deemed Certificateholders....................9
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses............................................9
SECTION 3.8. Maintenance of Office or Agency.....................10
SECTION 3.9. Appointment of Paying Agent.........................10
SECTION 3.10. Reserved............................................10
SECTION 3.11. Reserved............................................10
SECTION 3.12. Reserved............................................10
SECTION 3.13. Reserved............................................11
SECTION 3.14. Book-Entry Trust Certificates.......................11
SECTION 3.15. Notices to Clearing Agency..........................11
SECTION 3.16. Definitive Trust Certificates.......................12
</TABLE>
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Owners with Respect to Certain
Matters.............................................12
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters.............................................13
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy..........................................13
SECTION 4.4. Restrictions on Certificateholders' Power...........13
SECTION 4.5. Majority Control....................................13
ARTICLE V
APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account...14
SECTION 5.2. Application of Funds in Certificate Distribution
Account.............................................14
SECTION 5.3. Reserved............................................15
SECTION 5.4. Method of Payment...................................15
SECTION 5.5. No Segregation of Monies; No Interest...............15
SECTION 5.6. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others..........................................15
SECTION 5.7. Signature on Returns; Tax Matters Partner...........16
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority...................................16
SECTION 6.2. General Duties......................................16
SECTION 6.3. Action upon Instruction.............................17
SECTION 6.4. No Duties Except as Specified in this Agreement or
in Instructions.....................................18
SECTION 6.5. No Action Except under Specified Documents or
Instructions........................................18
SECTION 6.6. Restrictions........................................18
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties.....................18
SECTION 7.2. Furnishing of Documents.............................19
SECTION 7.3. Representations and Warranties......................19
SECTION 7.4. Reliance; Advice of Counsel.........................20
SECTION 7.5. Not Acting in Individual Capacity...................21
SECTION 7.6. Owner Trustee Not Liable for Trust Certificates
or Home Equity Loans................................21
SECTION 7.7. Owner Trustee May Own Trust Certificates and Notes..21
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses...................21
SECTION 8.2. Indemnification.....................................22
SECTION 8.3. Payments to the Owner Trustee.......................22
</TABLE>
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. Termination of Trust Agreement......................22
SECTION 9.2. Reserved............................................23
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee..........24
SECTION 10.2. Resignation or Removal of Owner Trustee.............24
SECTION 10.3. Successor Owner Trustee.............................25
SECTION 10.4. Merger or Consolidation of Owner Trustee............25
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.......25
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments..........................27
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders..................................28
SECTION 11.3. Limitations on Rights of Others.....................28
SECTION 11.4. Notices.............................................28
SECTION 11.5. Severability........................................28
SECTION 11.6. Separate Counterparts...............................29
SECTION 11.7. Successors and Assigns..............................29
SECTION 11.8. Reserved............................................29
SECTION 11.9. No Petition.........................................29
SECTION 11.10. No Recourse.........................................29
SECTION 11.11. Headings............................................29
SECTION 11.12. GOVERNING LAW.......................................29
SECTION 11.13. Trust Certificate Transfer Restrictions.............30
SECTION 11.14. Master Servicer.....................................32
</TABLE>
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EXHIBITS
Exhibit A - Form of Trust Certificate
Exhibit B - Form of Certificate of Trust
Exhibit C - Form of Certificate Depository Agreement
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TRUST AGREEMENT dated as of ____________, 199_ between CHEC Asset
Receivable Corp., a Nevada corporation, as Depositor, and _______________, a
____________, as Owner Trustee.
ARTICLE I
Definitions
SECTION 1.1. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Basic Documents" shall mean the Sale and Servicing Agreement, the
Indenture, the Certificate Depository Agreement, the Note Depository Agreement
and the other documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.13.
["Book Entry Trust Certificates" means a beneficial interest in the Trust
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.14.]
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code 'SS' 3801 et seq., as the same may be amended from time to
time.
"Certificate" means a certificate evidencing the beneficial interest of a
Certificateholder in the Trust, substantially in the form of Exhibit A attached
hereto.
["Certificate Depository Agreement" shall mean the agreement among the
Trust, the Owner Trustee, the Master Servicer and The Depository Trust Company,
as the initial Clearing Agency, dated as of the Closing Date, relating to the
Trust Certificates, substantially in the form attached hereto as Exhibit C, as
the same may be amended and supplemented from time to time.]
"Certificate Distribution Account" shall have the meaning assigned to such
term in Section 5.1. "Certificate of Trust" shall mean the Certificate of Trust
in the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a)
of the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned and the registrar appointed pursuant to Section 3.4.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
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["Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.]
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at
_______________; or at such other address as the Owner Trustee may designate by
notice to the Certificateholders and the Seller, or the principal corporate
trust office of any successor Owner Trustee (the address of which the successor
owner trustee will notify the Certificateholders and the Seller).
["Definitive Trust Certificates" shall mean either or both (as the context
requires) of (i) Trust Certificates issued in certificated, fully registered
form as provided in Section 3.14 and (ii) Trust Certificates issued in
certificated, fully registered form as provided in Section 3.16.]
"Delaware Trustee" shall have the meaning assigned to such term in Section
10.1.
"ERISA" shall have the meaning assigned to such term in Section 11.13.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name a Trust
Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Note Depository Agreement" shall mean the agreement among the Trust, the
Master Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Notes, as the same may be
amended or supplemented from time to time.
"Owner" shall mean each Person who is the beneficial owner of a Book Entry
Certificate as reflected in the records of the Clearing Agency or if a Clearing
Agency Participant is not the Owner, then as reflected in records of a Person
maintaining an account with such Clearing Agency (directly or indirectly, in
accordance with the rules of such Clearing Agency).
"Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Sale and Servicing Agreement, all funds on deposit from time to time in
the Trust Accounts and the Certificate Distribution Account and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement. "Owner
Trustee" shall mean ____________, a ___________, not in its individual capacity
but solely as owner trustee under this Agreement, and any successor Owner
Trustee hereunder.
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"Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to Section 3.9 and shall initially be the Owner Trustee.
"Record Date" shall mean, with respect to any Distribution Date, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
among the Trust, CHEC Asset Receivable Corporation, as Depositor, Centex Credit
Corporation d/b/a Centex Home Equity Corporation, as Seller and Servicer, dated
as of _____________, 199_ , as the same may be amended and supplemented from
time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a Certificate.
SECTION 1.2. Other Definitional Provisions .
(a) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Sale and Servicing Agreement or, if not
defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined
in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such
certificate or other document, as applicable. To the extent that the
definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular
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provision of this Agreement; Section and Exhibit references contained in
this Agreement are references to Sections and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein.
ARTICLE II
Organization
SECTION 2.1. Name. The Trust created hereby shall be known as Centex Home
Equity Loan Trust A," in which name the Owner Trustee may conduct the business
of the Trust, make and execute contracts and other instruments on behalf of
the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders and the
Seller.
SECTION 2.3. Purposes and Powers. The purpose of the Trust is, and the
Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement, and to sell the Notes and the
Trust Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, and to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Seller pursuant to the
Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and distribute
to the Certificateholders pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Estate released from the Lien of, and
remitted to the Trust pursuant to, the Indenture;
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(iv) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(v) to engage in those activities, including entering into agreements,
that are necessary, suitable or convenient to accomplish the foregoing or
are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to the
Certificateholders and the Noteholders. The Trust is hereby authorized to
engage in the foregoing activities. The Trust shall not engage in any
activity other than in connection with the foregoing or other than as
required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. The Seller
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $_________. The Owner Trustee hereby acknowledges
receipt in trust from the Seller, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account. The Seller shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
federal income tax purposes, the Trust shall be treated as a partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and to the
extent not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee and the Delaware
Trustee shall file the Certificate of Trust with the Secretary of State of
Delaware.
SECTION 2.7. Liability of the Certificateholders. No Certificateholder
shall have any personal liability for any liability or obligation of the Trust.
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SECTION 2.8. Title to Trust Property. Legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 2.9. Situs of Trust. The Trust will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
_____________. Payments will be received by the Trust only in Delaware or , and
payments will be made by the Trust only from Delaware or ____________. The only
office of the Trust will be at the Corporate Trust Office in ________________.
SECTION 2.10. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Owner Trustee that:
(a) The Seller is duly organized and validly existing as a Nevada
corporation with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted.
(b) The Seller is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require such qualifications.
(c) The Seller has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Seller has full
power and authority to sell and assign the property to be sold and assigned
to and deposited with the Trust and the Seller has duly authorized such
sale and assignment and deposit to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement has
been duly authorized by the Seller by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the articles of
association or by-laws of the Seller, or any material indenture, agreement
or other instrument to which the Seller is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of the Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
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(e) To the Seller's best knowledge, there are no proceedings or
investigations pending or threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties: (A) asserting the
invalidity of the Trust Agreement, (B) seeking to prevent the consummation
of any of the transactions contemplated by the Trust Agreement or (C)
seeking any determination or ruling that might materially and adversely
affect the performance by the Seller of its obligations under, or the
validity or enforceability of, the Trust Agreement.
SECTION 2.12. Federal Income Tax Allocations. Net income of the Trust for
any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership of principal amount of Trust Certificates on
such date, an amount of net income up to the sum of (i) the Certificateholders'
Monthly Interest Distributable Amount for such month, (ii) interest on the
excess, if any, of the Certificateholders' Interest Distributable Amount for the
preceding Distribution Date over the amount in respect of interest at the
Certificate Rate that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date, to the extent permitted by law, at
the Certificate Rate from such preceding Distribution Date through the current
Distribution Date, and (iii) the portion of the market discount on the Home
Equity Loans accrued during such month that is allocable to the excess of the
initial aggregate principal amount of the Trust Certificates over their initial
aggregate issue price.
Net losses, then net losses shall be allocated among the Certificateholders
as of the first Record Date following the end of such month in proportion to
their ownership of principal amount of Trust Certificates on such Record Date
until the principal balance of the Trust Certificates is reduced to zero.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by the
contribution by the Seller pursuant to Section 2.5 and until the issuance of the
Trust Certificates, the Seller shall be the sole beneficiary of the Trust.
SECTION 3.2. The Trust Certificates. The Trust Certificates shall be
issued in denominations of $25,000 and integral multiples of $11,000 in excess
thereof; provided, that one Trust Certificate may be issued in a denomination
other than an integral multiple of $25,000. The Trust Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee. Trust Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Trust Certificates
or did not hold such
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offices at the date of authentication and delivery of such Trust Certificates. A
transferee of a Trust Certificate shall become a Certificateholder, and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder, upon due registration of such Trust Certificate in such transferee's
name pursuant to Section 3.4.
SECTION 3.3. Authentication of Trust Certificates. Concurrently with the
initial sale of the Home Equity Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Seller, signed by its chairman of the board, its president
or any vice president, without further corporate action by the Seller, in
authorized denominations. No Trust Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Trust Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Owner Trustee
or _____________, as the Owner Trustee's authentication agent, by manual
signature; such authentication shall constitute conclusive evidence that such
Trust Certificate shall have been duly authenticated and delivered hereunder.
All Trust Certificates shall be dated the date of their authentication.
SECTION 3.4. Registration of Transfer and Exchange of Trust Certificates.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Trust Certificates and of transfers and
exchanges of Trust Certificates as herein provided. The Owner Trustee shall be
the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause ____________, ____________as
its authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like class and aggregate face amount dated the
date of authentication by the Owner Trustee or any authenticating agent. At the
option of a Holder, Trust Certificates may be exchanged for other Trust
Certificates of the same class in authorized denominations of a like aggregate
amount upon surrender of the Trust Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.8.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Trust Certificate
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surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust Certificates. If
(a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Trust Certificate shall have been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee, ______________ or _________, as the Owner
Trustee's authenticating agent, shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Trust Certificate, a
new Trust Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Certificate under this Section, the Owner Trustee
or the Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Trust Certificate issued pursuant to this Section shall
constitute conclusive evidence of an ownership interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Trust
Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every person by virtue of
becoming a Certificateholder or Owner in accordance with this Agreement shall be
deemed to be bound by the terms of this Agreement. Prior to due presentation of
a Trust Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Trust Certificate
shall be registered in the Certificate Register as the Owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.2
and for all other purposes whatsoever, and neither the Owner Trustee nor the
Certificate Registrar shall be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Seller and the Representative, within --days after receipt by the Owner
Trustee of a request therefor from the Master Servicer, the Seller or the
Representative in writing, a list, in such form as the Master Servicer, the
Seller or the Representative may reasonably require, of the names and addresses
of the Certificateholders as of the most recent Record Date. If three or more
Holders of Trust Certificates or one or more Holders of Trust Certificates
evidencing not less than 25% of the Certificate Balance apply in writing to the
Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Trust Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during
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normal business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Trust Certificate, shall be deemed to have agreed not to
hold either the Seller or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Owner Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates ____________, as its
principal corporate trust office for such purposes. The Owner Trustee shall give
prompt written notice to the Seller and to the Certificateholders of any change
in the location of the Certificate Register or any such office or agency.
SECTION 3.9. Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be the Owner
Trustee, and any co-paying agent chosen by the Owner Trustee, and acceptable to
the Master Servicer. The Paying Agent shall be permitted to resign upon 30 days'
written notice to the Owner Trustee and the Master Servicer. In the event that
the Owner Trustee shall no longer be the Paying Agent, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent, for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 3.10. Reserved.
SECTION 3.11. Reserved.
SECTION 3.12. Reserved.
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SECTION 3.13. Reserved.
[SECTION 3.14. Book-Entry Trust Certificates. The Trust Certificates, upon
original issuance, will be issued in the form of a typewritten Trust Certificate
or Trust Certificates representing Book-Entry Trust Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by or on
behalf of the Trust. Such Book-Entry Trust Certificate or Trust Certificates
shall initially be registered on the Certificate Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no beneficial owner (other
than the Seller) will receive a definitive Trust Certificate representing such
beneficial owner's interest in such Trust Certificate, except as provided in
Section 3.16. Unless and until Definitive Trust Certificates have been issued to
beneficial owners pursuant to Section 3.16:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Certificate Registrar and the Owner Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Agreement
relating to the Book-Entry Trust Certificates (including the payment of
principal of and interest on the Book-Entry Trust Certificates and the
giving of instructions or directions to Owners of Book-Entry Trust
Certificates) as the sole Holder of Book-Entry Trust Certificates and shall
have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section
shall control;
(iv) the rights of the Owners of the Book-Entry Trust Certificates
shall be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive Trust
Certificates are issued pursuant to Section 3.16, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest
on the Book-Entry Trust Certificates to such Clearing Agency Participants;
and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Trust Certificates
evidencing a specified percentage of the Certificate Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Book-Entry Trust Certificates
and has delivered such instructions to the Owner Trustee.]
[SECTION 3.15. Notices to Clearing Agency. Whenever a notice or other
communication to the Owners is required under this Agreement, unless and until
Definitive Trust Certificates shall have been issued to Owners pursuant to
Section 3.16, the Owner Trustee shall
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give all such notices and communications specified herein to be given to Owners
to the Clearing Agency, and shall have no obligations to the Owners.]
[SECTION 3.16. Definitive Trust Certificates. If (i) the Master Servicer
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Trust Certificates, and the Master Servicer is unable to locate a qualified
successor, (ii) the Master Servicer at its option advises the Owner Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency or (iii) after the occurrence of an Event of Default, Owners of
Certificates representing beneficial interests aggregating at least a majority
of the Certificate Balance advise the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interest of the Owners of Trust Certificates, then the Clearing Agency
shall notify all Owners and the Owner Trustee of the occurrence of any such
event and of the availability of the Definitive Trust Certificates to Owners
requesting the same. Upon surrender to the Owner Trustee of the typewritten
Trust Certificate or Trust Certificates representing the Book Entry Trust
Certificates by the Clearing Agency, accompanied by registration instructions,
the Owner Trustee shall execute and authenticate the Definitive Trust
Certificates in accordance with the instructions of the Clearing Agency. Neither
the Certificate Registrar nor the Owner Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Trust Certificates, the Owner Trustee shall recognize the Holders of the
Definitive Trust Certificates as Certificateholders. The Definitive Trust
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Owner Trustee, as evidenced
by its execution thereof.]
ARTICLE IV
Actions by Owner Trustee
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters. With
respect to the following matters, the Owner Trustee shall not take action unless
at least ___ days before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified the Owner Trustee in writing prior to
the ___th day after such notice is given that such Certificateholders have
withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust
except claims or lawsuits brought in connection with the collection of the
Home Equity Loans and the compromise of any material action, claim or
lawsuit brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection of the Home Equity Loans);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business
Trust Statute);
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(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the
Certificateholders;
(e) the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement
any provision in a manner that would not materially adversely affect the
interests of the Certificateholders; or
(f) the appointment pursuant to the Indenture of a successor Trustee
or the consent to the assignment by the Note Registrar, Paying Agent or
Trustee or Certificate Registrar of its obligations under the Indenture or
this Agreement, as applicable. The Owner Trustee shall notify the
Certificateholders in writing of any appointment of a successor Note
Registrar, Paying Agent or Certificate Registrar within five Business Days
thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the direction of the
Certificateholders, to (a) remove the Master Servicer under the Sale and
Servicing Agreement pursuant to Section 8.1 thereof or (b) except as expressly
provided in the Basic Documents, sell the Home Equity Loans after the
termination of the Indenture. The Owner Trustee shall take the actions referred
to in the preceding sentence only upon written instructions signed by the
Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 nor shall the Owner Trustee be
obligated to follow any such direction, if given.
SECTION 4.5. Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the Holders of Trust Certificates evidencing not less than a majority
of the Certificate Balance. Except as expressly provided herein, any written
notice of the Certificateholders delivered pursuant to this Agreement shall be
effective if signed by Holders of Certificates evidencing not less than a
majority of the Certificate Balance at the time of the delivery of such notice.
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ARTICLE V
Application of Trust Funds: Certain Duties
SECTION 5.1. Establishment of Certificate Distribution Account. The Owner
Trustee, for the benefit of the Certificateholders, shall establish and maintain
in the name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders. Except as
otherwise provided herein, the Certificate Distribution Account shall be under
the sole dominion and control of the Owner Trustee for the benefit of the
Certificateholders. The Certificate Distribution Account shall not be held in
the State of Texas.
SECTION 5.2. Application of Funds in Certificate Distribution Account.
(a) On each Distribution Date, the Owner Trustee will, based on the
information contained in the Master Servicer's Certificate delivered on the
related Determination Date pursuant to Section 4.9 of the Sale and
Servicing Agreement, distribute to Certificateholders, to the extent of the
funds available, amounts deposited in the Certificate Distribution Account
pursuant to Section 5.5 of the Sale and Servicing Agreement on such
Distribution Date in the following order of priority:
(i) first, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Interest Distributable Amount;
and
(ii) second, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Principal Distributable
Amount.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Master
Servicer pursuant to Section 5.8 of the Sale and Servicing Agreement on
such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. The Owner Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the
Owner 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). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to
the appropriate taxing authority. If there is a possibility that
withholding tax is payable with respect to a distribution (such as a
distribution to a non-US Certificateholder), the Owner Trustee may in it
sole discretion withhold such amounts in accordance with this clause (c).
In the event that an Owner wishes to apply for a refund of any such
withholding tax, the Owner
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Trustee shall reasonably cooperate with such Certificateholder in making
such claim so long as such Certificateholder agrees to reimburse the Owner
Trustee for any out-of-pocket expenses incurred.
SECTION 5.3. Reserved.
SECTION 5.4. Method of Payment. Subject to Section 9.1(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Trust Certificates in the aggregate evidence a denomination of
not less than $____________ or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register; provided, however, that, unless Definitive Certificates have been
issued pursuant to Section 3.16, with respect to Trust Certificates registered
on the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), distributions will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Notwithstanding the foregoing, the final distribution in respect of any Trust
Certificate (whether on the Final Scheduled Distribution Date or otherwise) will
be payable only upon presentation and surrender of such Trust Certificate at the
office or agency maintained for that purpose by the Owner Trustee pursuant to
Section 3.8.
SECTION 5.5. No Segregation of Monies; No Interest. Subject to Sections
5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
SECTION 5.6. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the Seller shall
(a) maintain (or cause to be maintained) the books of the Trust on a calendar
year basis on the accrual method of accounting, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificateholder to prepare its Federal and state
income tax returns, (c) file or cause to be filed such tax returns relating to
the Trust (including a partnership information return, Form 1065), and direct
the Owner Trustee to make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a partnership for
Federal income tax purposes and (d) collect or cause to be collected any
withholding tax as described in and in accordance with Section 5.2(c) with
respect to income or distributions to Certificateholders. The Owner Trustee
shall make all elections pursuant to this Section as directed by the Seller. The
Owner Trustee shall sign all tax information returns filed pursuant to this
Section 5.6 and any other returns as may be required by law, and in doing so
shall rely entirely upon, and shall have no liability for information provided
by, or calculations provided by, the Seller. The Owner Trustee shall elect
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under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Home Equity Loans. The Owner Trustee
shall not make the election provided under Section 754 of the Code.
SECTION 5.7. Signature on Returns; Tax Matters Partner.
(a) Notwithstanding the provisions of Section 5.6, the Owner Trustee
shall sign on behalf of the Trust the tax returns of the Trust, unless
applicable law requires a Certificateholder or an Owner to sign such
documents, in which case such documents shall be signed by the Seller as
"tax matters partner."
(b) The Seller shall be the "tax matters partner" of the Trust
pursuant to the Code.
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Seller shall approve as
evidenced conclusively by the Owner Trustee's execution thereof, and on behalf
of the Trust, to direct the Trustee to authenticate and deliver List Class(es)
of Notes and Aggregate Principal Amount(s). In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. The Owner Trustee is
further authorized from time to time to take such action as the Master Servicer
recommends with respect to the Basic Documents.
SECTION 6.2. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Sale and Servicing Agreement and to
administer the Trust in the interest of the Owners, subject to the Basic
Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Master Servicer has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Master Servicer to carry out its obligations
under the Sale and Servicing Agreement.
SECTION 6.3. Action upon Instruction.
(a) Subject to Article IV, the Certificateholders may, by written
instruction, direct the Owner Trustee in the management of the Trust. Such
direction may be
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exercised at any time by written instruction of the Certificateholders
pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or
any Basic Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in
accordance with any written instruction of the Certificateholders received,
the Owner Trustee shall not be liable on account of such action to any
Person. If the Owner Trustee shall not have received appropriate
instruction within ten days of such notice (or within such shorter period
of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or
refrain from taking such action, not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such
action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any
such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to
the Certificateholders requesting instruction and, to the extent that the
Owner Trustee acts or refrains from acting in good faith in accordance with
any such instruction received, the Owner Trustee shall not be liable, on
account of such action or inaction, to any Person. If the Owner Trustee
shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or the Basic Documents, as it
shall deem to be in the best interests of the Certificateholders, and shall
have no liability to any Person for such action or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the
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terms of this Agreement or in any document or written instruction received by
the Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any Basic Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any Liens on any part of the Owner Trust Estate
that result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of the Trust set forth in Section 2.3 or
(b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of
the Master Servicer or any Certificateholder;
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(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or
under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by the Seller or for the form, character, genuineness, sufficiency,
value or validity of any of the Owner Trust Estate or for or in respect of
the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty or obligation
to any Noteholder or to any Certificateholder, other than as expressly
provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Trustee or the Master Servicer under any of the Basic
Documents or otherwise and the Owner Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement or
the Basic Documents that are required to be performed by the Trustee under
the Indenture or the Master Servicer under the Sale and Servicing
Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Certificateholders, unless such Certificateholders
have offered to the Owner Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the
Owner Trustee therein or thereby. The right of the Owner Trustee to perform
any discretionary act enumerated in this Agreement or in any Basic Document
shall not be construed as a duty, and the Owner Trustee shall not be
answerable for other than its negligence, bad faith or willful misconduct
in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Seller, for the benefit of the
Certificateholders, that:
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(a) It is a duly organized and validly existing in good standing under
the laws of the _______________ and having an office within the State of
New York. It has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene
any federal, Delaware, New York or ____________ state law, governmental
rule or regulation governing the banking or trust powers of the Owner
Trustee or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which any of
its properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper
party or parties. The Owner Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to
any fact or matter the method of the determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president
or by the treasurer, secretary or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them,
and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been
selected by the Owner Trustee with reasonable care, and (ii) may consult
with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such
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counsel, accountants or other such persons and not contrary to this
Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created acts solely as Owner Trustee
hereunder and not in its individual capacity and all Persons having any claim
against the Owner Trustee by reason of the transactions contemplated by this
Agreement or any Basic Document shall look only to the Owner Trust Estate for
payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Trust Certificates or Home
Equity Loans. The recitals contained herein and in the Trust Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Seller and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the Notes,
or of any Home Equity Loan or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Home Equity Loan, or the perfection and
priority of any security interest created by any Home Equity Loan in any
Mortgaged Property or the maintenance of any such perfection and priority, or
for or with respect to the sufficiency of the Owner Trust Estate or its ability
to generate the payments to be distributed to Certificateholders under this
Agreement or the Noteholders under the Indenture, including, without limitation:
the existence, condition and ownership of any Mortgaged Property; the existence
and enforceability of any insurance thereon; the existence and contents of any
Home Equity Loan on any computer or other record thereof; the validity of the
assignment of any Home Equity Loan to the Trust or of any intervening
assignment; the completeness of any Home Equity Loan; the performance or
enforcement of any Home Equity Loan; the compliance by the Seller or the Master
Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Trustee or the Master Servicer or any subMaster Servicer taken
in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Trust Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Trust Certificates or Notes and may deal with the Seller, the Trustee and the
Master Servicer in banking transactions with the same rights as it would have if
it were not Owner Trustee.
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Seller and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Seller
for its other reasonable expenses hereunder, including the reasonable
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compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.2. Indemnification. The Seller shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Seller shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Seller, which approval shall not be unreasonably
withheld.
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect, upon the final distribution
by the Owner Trustee of all moneys or other property or proceeds of the
Owner Trust Estate in accordance with the terms of the Indenture, the Sale
and Servicing Agreement and Article V. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder or Owner, shall
not (x) operate to terminate this Agreement or the Trust, nor (y) entitle
such Certificateholder's or Owner's legal representatives or heirs to claim
an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of
the parties hereto.
(b) Except as provided in clause (a), neither the Seller nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
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(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their
Trust Certificates to the Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner Trustee by
letter to Certificateholders mailed within five Business Days of receipt of
notice of such termination from the Master Servicer given pursuant to
Section 9.1(c) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the Trust
Certificates shall be made upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Trust Certificates at the
office of the Paying Agent therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar (if other than the Owner Trustee)
and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.2.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the Trust Certificates shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Trust Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable
escheat laws, by the Owner Trustee to the Seller.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Seller.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.2. Reserved.
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ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation authorized to exercise corporate
trust powers; and having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or state authorities. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2. In addition, at all
times the Owner Trustee or a co-trustee shall be a person that satisfies the
requirements of Section 3807(a) of the Business Trust Statute (the "Delaware
Trustee").
SECTION 10.2. Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Master Servicer. Upon receiving such notice
of resignation, the Master Servicer shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Master Servicer may remove the Owner Trustee. If the
Master Servicer shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Master Servicer shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Master Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
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SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Master Servicer and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Master Servicer and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Master Servicer shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Trustee, the Noteholders and the
Rating Agencies. If the Master Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Master Servicer.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5. Appointment of Co-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 Owner Trust Estate or any Mortgaged Property may at the time be located,
the Master Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or separate trustee or separate trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Owner Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do,
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the Owner Trustee alone shall have the power to make such appointment. Pursuant
to the Co Trustee Agreement, dated as of ______________, 199_, between and , the
Owner Trustee shall appoint as a co trustee hereunder for the purpose of his
acting as Delaware Trustee and such agreement is hereby incorporated herein by
reference. If the Delaware Trustee shall die, become incapable of acting, resign
or be removed, unless the Owner Trustee is qualified to act as Delaware Trustee,
a successor co-trustee shall promptly be appointed in the manner specified in
this Section 10.5 to act as Delaware Trustee. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Master Servicer and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Master Servicer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate
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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 Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE XI
Miscellaneous
SECTION 11.1. Supplements and Amendments. This Agreement may be amended by
the Seller and the Owner Trustee, with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity or defect, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller and the
Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and, to the extent affected thereby, the consent
of the Holders of Certificates evidencing not less than a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Home Equity Loans or distributions that shall be required to be made
for the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the Certificate
Balance required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes and Holders of all outstanding
Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
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Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title or interest of the Certificateholders to and in their ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.7, the
provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Seller, the Certificateholders, the Master Servicer and, to the extent
expressly provided herein, the Trustee and the Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.4. Notices.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given upon
receipt personally delivered, delivered by overnight courier or mailed
certified mail, return receipt requested and shall be deemed to have been
duly given upon receipt, if to the Owner Trustee, addressed to
_____________; if to the Seller, addressed to CHEC Asset Receivable
Corporation, ___________________________, Attention: ____________; as to
each party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. Any notice
so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Seller,
the Owner Trustee and its successors and each Certificateholder and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a Certificateholder
shall bind the successors and assigns of such Certificateholder.
SECTION 11.8. Reserved.
SECTION 11.9. No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenants and
agrees that they will not at any time institute against the Seller, or join in
any institution against the Seller of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Trust Certificates, the Notes, this Agreement or
any of the Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Seller, the Master Servicer, the Owner Trustee, the
Trustee or any Affiliate thereof and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated in this
Agreement, the Trust Certificates or the Basic Documents.
SECTION 11.11. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. Trust Certificate Transfer Restrictions. The Trust
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title 1 of ERISA, (ii) a plan described in Section 4975(e) (1) of the Code, or
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(iii) any entity whose underlying assets include plan assets by reason of a
plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
SECTION 11.14. Master Servicer. The Master Servicer is authorized to
execute on behalf of the Trust all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust to
prepare, file or deliver pursuant to the Basic Documents. Upon written request,
the Owner Trustee shall execute and deliver to the Master Servicer a power of
attorney appointing the Master Servicer the Trust's agent and attorney-in-fact
to execute all such documents, reports, filings, instruments, certificates and
opinions.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized as of the
day and year first above written.
By:____________________________
Name:
Title:
CHEC ASSET RECEIVABLE CORPORATION,
Depositor
By:____________________________
Name:
Title:
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<PAGE>
EXHIBIT A
NUMBER $___________
R-___________ CUSIP NO. _______
SEE REVERSE FOR CERTAIN DEFINITIONS UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL
OF THIS TRUST CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS SET FORTH IN THE
TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS TRUST
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CENTEX HOME EQUITY LOAN TRUST A _% ASSET BACKED CERTIFICATE evidencing a
beneficial ownership interest in certain distributions of the Trust, as defined
below, the property of which includes a pool of closed-end and/or revolving home
equity loans or certain balances thereof and home improvement sales contracts
and installment loan agreements sold to the Trust by CHEC Asset Receivable
Corporation (This Trust Certificate does not represent an interest in or
obligation of CHEC Asset Receivable Corporation or any of its Affiliates, except
to the extent described below.) THIS CERTIFIES THAT is the registered owner of
_____________ DOLLARS nonassessable, fully paid, beneficial ownership interest
in certain distributions of Centex Home Equity Loan Trust A (the "Trust") formed
by CHEC Asset Receivable Corporation, a Nevada corporation (the "Seller"). The
Trust Certificates have a Certificate Rate of __________% per annum.
A-1
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OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
as Owner Trustee or as Owner Trustee
By
Authenticating Agent
by by
The Trust was created pursuant to a Trust Agreement dated as of , 199_ (the
"Trust Agreement"), between the Seller and ________________, as owner trustee
(the "Owner Trustee"), a summary of certain of the pertinent provisions of which
is set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Trust Certificates designated as
"___% Asset Backed Certificates" (herein called the "Trust Certificates"). Also
issued under the Indenture dated as of ____________, 199_, between the Trust and
____________, as trustee, are classes of Notes designated as List Classes of
Notes . This Trust Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Trust Certificate by virtue of the acceptance hereof assents and
by which such holder is bound. The property of the Trust includes closed-end
and/or revolving home equity loans or certain balances thereof and home
improvement sales contracts and installment loan agreements (the "Home Equity
Loans"), all monies received on the Home Equity Loans on or after ___________,
199_, security interests in the properties financed thereby, certain bank
accounts and the proceeds thereof, proceeds from claims on certain insurance
policies and certain other rights under the Trust Agreement and the Sale and
Servicing Agreement.
Under the Trust Agreement, there will be distributed on the __th day of each
month or, if such __th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing in ______________, 199_, to the Person in whose
name this Trust Certificate is registered at the close of business on the 14th
day of such month (the "Record Date") such Certificateholder's fractional
undivided interest in the amount to be distributed to Certificateholders on such
Distribution Date; provided, however, that principal will be distributed to the
Certificateholders on (to the extent of funds remaining after the Class A--Notes
have been paid in full) and after the date on which the Class A--Notes have been
paid in full. The holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
A-2
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It is the intent of the Seller, Master Servicer, and Certificateholders that,
for purposes of Federal income taxes, the Trust will be treated as a partnership
and the Certificateholders will be treated as partners in that partnership. The
Certificateholders by acceptance of a Trust Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Trust Certificates for
such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Trust Certificate, covenants and
agrees that such Certificateholder will not at any time institute against the
Seller, or join in any institution against the Seller of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in the Trust
Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Trust Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Trust Certificate will be made after due notice by
the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office or agency
maintained for the purpose by the Owner Trustee in the Borough of Manhattan, The
City of New York.
Reference is hereby made to the further provisions of this Trust Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by an
authorized officer of the Owner Trustee, by manual signature, this Trust
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-3
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Trust Certificate to be duly executed.
CENTEX HOME EQUITY LOAN TRUST A
By: ____________________________
as Owner Trustee
Dated: ___________________
By: ___________________
A-4
<PAGE>
<PAGE>
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an interest in, the
Seller, the Master Servicer, the Owner Trustee or any Affiliates of any of them
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated herein or in the Trust Agreement, the
Indenture or the Basic Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections with respect to the Home Equity Loans (and
certain other amounts), all as more specifically set forth herein and in the
Sale and Servicing Agreement. The Trust Certificates are limited in right of
payment to certain collections and recoveries respecting the Home Equity Loans,
all as more specifically set forth in the Sale and Servicing Agreement. A copy
of each of the Sale and Servicing Agreement and the Trust Agreement may be
examined during normal business hours at the principal office of the Seller, and
at such other places, if any, designated by the Seller, by any Certificateholder
upon written request.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Trust Agreement at any
time by the Seller and the Owner Trustee with the consent of the holders of the
Notes and the Trust Certificates evidencing not less than a majority of the
outstanding Notes and the Certificate Balance. Any such consent by the holder of
this Trust Certificate shall be conclusive and binding on such holder and on all
future holders of this Trust Certificate and of any Trust Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Trust Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations therein
set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Trust Certificates in authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
The initial Certificate Registrar appointed under the Trust Agreement is
____________, ______________, ______________.
The Trust Certificates are issuable only as registered Trust Certificates
without coupons in denominations of $25,000 or integral multiples of $1,000 in
excess thereof; except as otherwise provided in the Trust Agreement. As provided
in the Trust Agreement and subject to certain limitations therein set forth,
Trust Certificates are exchangeable for new Trust Certificates in authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of
A-5
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<PAGE>
transfer or exchange, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee
or the Certificate Registrar may treat the person in whose name this Trust
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part of
the Trust. The Seller of the Home Equity Loans may at its option purchase the
corpus of the Trust at a price specified in the Sale and Servicing Agreement,
and such purchase of the Home Equity Loans and other property of the Trust will
effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Collection Period as of which the Pool Balance is % or less of the
Original Pool Balance.
The Trust Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title 1
of ERISA, (b) a plan described in Section 4975(e) (l) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Trust Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
A-6
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Trust Certificate on the books of the Trust
Certificate Registrar, with full power of substitution in the premises.
Dated: ____________________
* *
Signature Guaranteed:
- --------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-7
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<PAGE>
EXHIBIT B
FORM OF
CERTIFICATE OF TRUST OF
CENTEX HOME EQUITY LOAN
TRUST A
THIS Certificate of Trust of CHEC Home Equity Loan Trust A (the "Trust"), dated
as of ______________, 199 , is being duly executed and filed by _______________,
a ___________, and _______________, a ____________, as trustees, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, 'SS' 3801 et
seq.).
1. Name. The name of the business trust formed hereby is CENTEX HOME EQUITY
LOAN TRUST A.
2. Delaware Trustee. The name and business address of the trustee of the Trust
resident in the State of Delaware is _______________.
3. This Certificate of Trust will be effective _______________, 199_.
B-1
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<PAGE>
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, have
executed this Certificate of Trust as of the date first above written.
______________________, not in its individual capacity but solely as owner
trustee of the Trust.
By: ______________________
Name: ______________________
Title: ______________________
not in his individual capacity but solely as trustee of the Trust
B-2
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<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
CHEC ASSET RECEIVABLE CORPORATION,
as Depositor,
and
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION,
as Seller and Servicer,
and
CENTEX HOME EQUITY LOAN TRUST A,
as Issuer
-----------------------
FORM OF SALE AND SERVICING AGREEMENT
Dated as of ________________
----------------------
Home Equity Loan Asset-Backed Certificates
Series 199_-_
---------------------------------------------------
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions...................................................................1
SECTION 1.2. Other Definitional Provisions................................................18
SECTION 1.3. Interest Calculations........................................................19
ARTICLE II
CONVEYANCE OF HOME EQUITY LOANS
SECTION 2.1. Conveyance of Home Equity Loans..............................................19
SECTION 2.2. Acceptance by Trustee........................................................22
SECTION 2.3. Reserved.....................................................................22
SECTION 2.4. Representations and Warranties of the Originators Regarding the Home
Equity Loans.................................................................22
SECTION 2.5. Substitution of Home Equity Loans............................................30
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
SECTION 3.1. Duties of Servicer...........................................................31
SECTION 3.2. Collection and Allocation of Home Equity Loan Payments.......................32
SECTION 3.3. Withdrawals from each Collection Account.....................................33
SECTION 3.4. Reserved.....................................................................34
SECTION 3.5. Reserved.....................................................................34
SECTION 3.6. Reserved.....................................................................34
SECTION 3.7. Management and Realization Upon Defaulted Home Equity Loans..................34
SECTION 3.8. Trustee to Cooperate.........................................................34
SECTION 3.9. Servicing Fee................................................................35
SECTION 3.10. Servicer's Certificate.......................................................35
SECTION 3.11 Annual Statement as to Compliance; Notice of Default.........................36
SECTION 3.12. Annual Independent Certified Public Accountants' Report......................36
SECTION 3.13. Access to Certain Documentation and Information Regarding Home Equity Loans..37
SECTION 3.14. Servicer Expenses............................................................37
SECTION 3.15. Advances by the Servicer.....................................................37
SECTION 3.16. Optional Purchase of Defaulted Home Equity Loans.............................38
SECTION 3.17. Superior Liens...............................................................38
SECTION 3.18. Reserved.....................................................................38
SECTION 3.19. Appointment of Subservicer...................................................38
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1. Establishment of Trust Accounts..............................................39
SECTION 4.2. Reserved.....................................................................41
SECTION 4.3. Application of Collections...................................................41
SECTION 4.4. Additional Deposits..........................................................41
SECTION 4.5. Distributions................................................................42
SECTION 4.6. Reserve Account..............................................................43
SECTION 4.7. Reserved.....................................................................43
SECTION 4.8 Statements to Certificateholders and Noteholders.............................43
SECTION 4.9. Net Deposits.................................................................44
ARTICLE V
THE SELLER, THE REPRESENTATIVE AND THE ORIGINATORS
SECTION 5.1. Representations of Seller....................................................44
SECTION 5.2. Corporate Existence..........................................................45
SECTION 5.3 Liability of Seller; Indemnities.............................................46
SECTION 5.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller......47
SECTION 5.5. Limitation on Liability of Seller and Others.................................47
SECTION 5.6. Seller May Own Certificates or Notes.........................................48
SECTION 5.6. Representations and Warranties Regarding the Representative and the
Originators..................................................................48
ARTICLE VI
THE SERVICER
SECTION 6.1. Representations of Servicer..................................................53
SECTION 6.2. Indemnities of Servicer......................................................55
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations of,
Servicer.....................................................................56
SECTION 6.4. Limitation on Liability of Servicer and Others...............................56
SECTION 6.5. Centex Credit Corporation d/b/a Centex Home Equity Corporation Not To
Resign as Servicer...........................................................57
ARTICLE VII
DEFAULT
SECTION 7.1. Servicer Default.............................................................57
SECTION 7.2. Appointment of Successor.....................................................59
SECTION 7.3. Payment of Servicing Fee.....................................................59
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SECTION 7.4. Notification to Noteholders and Certificateholders...........................59
SECTION 7.5. Waiver of Past Defaults......................................................60
ARTICLE VIII
TERMINATION
SECTION 8.1. Optional Purchase of All Home Equity Loans...................................60
ARTICLE IX
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 9.1. Administrative Duties........................................................61
SECTION 9.2. Records......................................................................63
SECTION 9.3. Additional Information To Be Furnished to the Issuer.........................63
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment....................................................................63
SECTION 10.2. Protection of Title to Trust.................................................64
SECTION 10.3. Notices......................................................................66
SECTION 10.4. Assignment...................................................................66
SECTION 10.5. Limitations on Rights of Others..............................................66
SECTION 10.6. Severability.................................................................67
SECTION 10.7. Separate Counterparts........................................................67
SECTION 10.8. Headings.....................................................................67
SECTION 10.9. Governing Law................................................................67
SECTION 10.10. Assignment to Trustee........................................................67
SECTION 10.11. Nonpetition Covenant.........................................................67
SECTION 10.12. Limitation of Liability of Owner Trustee and Trustee.........................68
SECTION 10.13. Independence of the Servicer.................................................68
SECTION 10.14. No Joint Venture.............................................................68
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SALE AND SERVICING AGREEMENT dated as of _________________, 199 , among
Centex Home Equity Loan Trust A, a Delaware business trust (the "Issuer"), CHEC
Asset Receivable Corporation, as Depositor (the "Depositor") and Centex Credit
Corporation d/b/a Centex Home Equity Corporation, as Seller and Servicer (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of mortgage loans from
the Depositor who in turn desires to purchase such mortgage loans from the
Seller; and
WHEREAS, the Servicer is willing to service such mortgage loans.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"Accrual Period" means as to any Simple Interest Loan and Monthly Payment,
the period commencing from and after the date through which interest was last
paid up to but excluding the date of receipt of such Monthly Payment. As to any
Actuarial Loan and Monthly Payment, the period from and including a Due Date for
such Actuarial Loan to but excluding the succeeding Due Date.
"Actuarial Loan" means a Home Equity Loan for which the relative
application of each Monthly Payment to interest and principal is based on the
period between Due Dates and not on the timing of receipt of such Monthly
Payment.
"Aggregate Net Losses" means with respect to a Due Period, the aggregate
principal balance of all Home Equity Loans newly designated during such Due
Period as Liquidated Home Equity Loans minus Liquidation Proceeds collected
during such Due Period with respect to all Liquidated Home Equity Loans.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
"ARM" means a Home Equity Loan which is serviced as an Actuarial Loan and
the Mortgage Rate of which is subject to adjustment on each Change Date by
reference to the Index, subject to rounding and the Periodic Cap, the applicable
Lifetime Cap and the applicable Lifetime Floor.
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"Assignment of Mortgage" means, with respect to any Mortgage, an
assignment, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the sale of the Mortgage to the Issuer, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Home Equity Loans secured by
Mortgaged Properties located in the same jurisdiction.
"Available Principal" means with respect to any Distribution Date, the sum
of the following amounts without duplication: (a) that portion of all
collections on the Home Equity Loans allocable to principal in respect of the
preceding Due Period; (b) Liquidation Proceeds attributable to the principal
amount of Home Equity Loans which became Liquidated Home Equity Loans during the
preceding Due Period in accordance with the Servicer's customary servicing
procedures; and (c) to the extent attributable to principal, the Purchase Price
of each Home Equity Loan repurchased by the Seller or purchased by the Servicer
during the preceding Due Period; provided, however, that in calculating the
Available Principal, all payments and proceeds (including Liquidation Proceeds)
of any Home Equity Loans repurchased by the Seller or purchased by the Servicer
the Purchase Price of which has been included in the Available Principal in a
prior Due Period shall be excluded.
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Indenture, the Depository Agreements and other documents and certificates
delivered in connection therewith.
"Business Day" means any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in New York City or the city in which the
corporate trust office of the Trustee under this Agreement is located are
authorized or obligated by law or executive order to close.
"Certificate" means a Trust Certificate (as defined in the Trust
Agreement).
"Certificate Balance" equals, initially, $_______________ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term in
the Trust Agreement.
"Certificate Rate" means __% per annum.
"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Interest Distributable
Amount and the Certificateholders' Principal Distributable Amount.
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"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest at the Certificate Rate that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by law,
at the Certificate Rate from and including such preceding Distribution Date to
but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, 30 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date to
but excluding such Distribution Date) at the Certificate Rate on the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments of principal to the Certificateholders on or prior to such
Distribution Date (or, in the case of the first Distribution Date, the
Certificate Balance on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, with respect to any Distribution Date on or
after the Distribution Date on which the outstanding principal balance of the
Class A Notes is reduced to zero, 100% of the Principal Distribution Amount
(less any amount required on the first such Distribution Date to reduce the
outstanding principal balance of the Class A Notes to zero, which shall be
deposited into the Note Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Certificateholders' Principal Distributable
Amount shall not exceed the Certificate Balance. In addition, on the Certificate
Final Scheduled Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) any payments of principal due
and remaining unpaid on each Home Equity Loan in the Trust as of _________,
______ or (b) the portion of the amount that is
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necessary (after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer, the Noteholders and the Certificateholders on such Distribution Date,
(i) the outstanding principal balance of the Notes is zero and (ii) the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance, Certificateholders' Principal Distributable Amount shall include an
amount equal to such Certificate Balance.
"Change Date" means the date on which the Mortgage Rate of each ARM is
subject to adjustment, which date is the Due Date set forth in the related
Mortgage Note and every twelfth Due Date thereafter.
"Charge-off Rate" means, with respect to a Due Period, the Aggregate Net
Losses with respect to the Home Equity Loans expressed, on an annualized basis,
as a percentage of the average of (x) the Pool Balance on the last day of the
immediately preceding Due Period and (y) the Pool Balance on the last day in
such Due Period.
"Civil Relief Act" means the Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Closing Date" means _________, 199__.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 3.2(c).
"Cutoff Date" means __________, 199__.
"Cutoff Date Principal Balance" means with respect to any Home Equity Loan,
the unpaid principal balance thereof as of the Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute Home
Equity Loan pursuant to Section 2.2 or 2.4).
"Debt Service Reduction" means with respect to any Home Equity Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Home Equity Loan.
"Defective Home Equity Loan" means any Home Equity Loan subject to
repurchase or substitution pursuant to Section 2.2 or 2.4.
"Delinquency Percentage" means, with respect to a Due Period, the ratio of
(a) the outstanding principal balance of all outstanding Home Equity Loans 60
days or more delinquent (which amount shall include Home Equity Loans in respect
of Mortgaged Properties that have been repossessed but not yet sold or otherwise
liquidated) as of the last day of such Due Period, determined in accordance with
the Servicer's normal practices, divided by (b) the outstanding principal
balance of all Home Equity Loans on the last day of such Due Period.
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"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9.105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its nominee or custodian
by physical delivery to the Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Trustee or its nominee or custodian or endorsed
in blank, and, with respect to a certificated security (as defined in Section
8-102 of the UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such certificated
security by the Trustee or its nominee or custodian, or (ii) by delivery thereof
to a "clearing corporation" (as defined in Section 8-102(3) of the UCC) and the
making by such clearing corporation of appropriate entries on its books reducing
the appropriate securities account of the transferor and increasing the
appropriate securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase by
the Trustee or its nominee or custodian of such securities and the making by
such financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee or its nominee or custodian
(all of the foregoing, "Physical Property"), and, in any event, any such
Physical Property in registered form shall be in the name of the Trustee or its
nominee or custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership of any
such Trust Account Property to the Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the interpretation
thereof;
(b) with respect to any securities issued by the U.S. Treasury, FHLMC
or by FNMA that is a book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Trustee or its nominee or custodian and
indicating that such custodian holds such Trust Account Property solely as agent
for the Trustee or its nominee or custodian; and such
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additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Trust Account Property to the
Trustee or its nominee or custodian, consistent with changes in applicable law
or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee or
custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Trustee or its nominee or custodian.
"Depository Agreements" mean the Certificate Depository Agreement and the
Note Depository Agreement.
"Determination Date" means, with respect to any Distribution Date, the
fourth Business Day prior to each Distribution Date.
"Distribution Date" means, with respect to each Due Period, the ______ day
of the following month, or if such day is not a Business Day, the immediately
following Business Day, commencing on _______________, 199___.
"Due Period" means a calendar month, except with respect to the first Due
Period, which shall be the period from the Cutoff Date to ______________, 199__.
Any amount stated "as of the close of business on the last day of a Due Period"
shall give effect to the following calculations as determined as of the end of
the day on such last day: (1) all applications of collections and (2) all
distributions to be made on the immediately following Distribution Date.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution (other than the Seller or any affiliate
of the Seller) organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic branch of
a foreign bank), having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of such depository
institution have a credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade.
"Eligible Institution" means a depository institution (other than the
Seller or any affiliate of the Seller) organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), which (i) has (A) either a long-term
senior unsecured debt rating of AAA or a short-term senior unsecured debt or
certificate of deposit rating of A-l+ or better by Standard & Poor's and (B)(1)
a long-term senior unsecured debt rating of Al or better and (2) a short-term
senior unsecured debt rating of Pl or better by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to
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the Rating Agencies and (ii) whose deposits are insured by the Federal Deposit
Insurance Corporation. If so qualified, the Owner Trustee or the Trustee may be
considered an Eligible Institution.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution (including the Seller or any Affiliate of the Seller) or
trust company incorporated under the laws of the United States of America or any
state thereof or the District of Columbia (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or state banking or
depository institution authorities (including depository receipts issued by any
such institution or trust company as custodian with respect to any obligation
referred to in clause (a) above or portion of such obligation for the benefit of
the holders of such depository receipts); provided, however, that at the time of
the investment or contractual commitment to invest therein (which shall be
deemed to be made again each time funds are reinvested following each
Distribution Date), the commercial paper or other short-term senior unsecured
debt obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust company)
of such depository institution or trust company shall have a credit rating from
Standard & Poor's of A-1+ and from Moody's of P1;
(c) commercial paper (including commercial paper of the Seller or any
Affiliate of the Seller) having, at the time of the investment or contractual
commitment to invest therein, a rating from Standard & Poor's of A-1+ and from
Moody's of P1;
(d) investments in money market funds (including funds for which the
Seller, the Trustee or the Owner Trustee or any of their respective Affiliates
is investment manager or advisor) having a rating from Standard & Poor's of
AAA-m or AAAm-G and from Moody's of Aaa;
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
referred to in clause (b) above; and
(g) any other investment which would not cause either Rating Agency to
downgrade or withdraw its then current rating of any class of Notes or the
Certificates.
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"Eligible Substitute Home Equity Loan" means a Home Equity Loan substituted
by the Seller for a Defective Home Equity Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance not in excess of and not
more than ___% less than the Principal Balance of the Defective Home Equity
Loan; (ii) have a current Mortgage Rate not less than the Mortgage Rate of the
Defective Home Equity Loan and not more than ___% in excess of the Mortgage Rate
of such Defective Home Equity Loan; (iii) have a Mortgage of the same or higher
level of lien priority as the Mortgage relating to the Defective Home Equity
Loan at the time such Mortgage was transferred to the Trust; (iv) have a
remaining term to maturity not more than six months earlier and not later than
the remaining term to maturity of the Defective Home Equity Loan; (v) comply
with each representation and warranty set forth in Section 2.4 (deemed to be
made as of the date of substitution); and (vi) have an original Loan-to-Value
Ratio not greater than that of the Defective Home Equity Loan; (vii) be an ARM
if the Defective Home Equity Loan was an ARM; and (viii) if an ARM, use the same
Index, have the same Periodic Cap, have a Lifetime Cap and a Gross Margin no
less than, those of the Defective Home Equity Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Scheduled Distribution Date" means with respect to List Classe(s) of
Notes and their Respective Final Scheduled Distribution Dates.
"Final Scheduled Maturity Date" means ______________, _________.
"First Lien" means, with respect to any Home Equity Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
"Fitch" means Fitch Investors Service, L.P., or its successors.
"FNMA" means Federal National Mortgage Association or any successor
thereto.
"Foreclosure Profits" means, with respect to a Liquidated Home Equity Loan,
the amount, if any, by which (i) the aggregate of the related Net Liquidation
Proceeds exceeds (ii) the related Principal Balance (plus accrued and unpaid
interest thereon at the applicable Mortgage Rate from the date interest was last
paid through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Home Equity Loan immediately prior to the final recovery of its
Liquidation Proceeds.
"Gross Margin" means, with respect to each ARM, the number of basis points
set forth in the related Mortgage Note which is added to the Index to determine
the Mortgage Rate on the related Change Date, subject to rounding and the
Periodic Cap and the applicable Lifetime Cap and the applicable Lifetime Floor.
"Home Equity Loan" means a mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.1 or Section 2.4 and held as a part of the Trust,
as identified in the Home Equity Loan Schedule.
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"Home Equity Loan Schedule" means with respect to any date, the schedule of
Home Equity Loans included in the Trust on such date. The initial schedule of
Home Equity Loans as of the Cutoff Date is the schedule set forth herein as
Exhibit A, which schedule sets forth as to each Home Equity Loan (i) the Cut-Off
Date Principal Balance, (ii) the account number, (iii) the original principal
amount, (iv) the Loan-to-Value Ratio as of the date of the origination of the
related Home Equity Loan, (v) the Due Date, (vi) the current Mortgage Rate,
(vii) the first date on which a Monthly Payment is due under the Mortgage Note,
(viii) the original stated maturity date of the Mortgage Note, (ix) the
remaining number of months to maturity as of the Cutoff Date, (x) the State in
which the related Mortgaged Property is situated, (xi) the type of property,
(xii) the lien status, (xiii) a code indicating whether the Home Equity Loan is
an ARM, and (xiv) for each ARM, the Gross Margin and the Mortgage Rate at
origination.
"Indenture" means the Indenture dated as of ________________, 199_, between
the Issuer and the Trustee, as the same may be amended and supplemented from
time to time.
"Index" means the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year, as made available by the Federal
Reserve Board and most recently available as of the date __________ days before
each Change Date.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy covering a Home Equity Loan, or amounts required to be paid by
the Servicer pursuant to Section 3.5, net of any component thereof (i) covering
any expenses incurred by or on behalf of the Servicer in connection with
obtaining such proceeds, (ii) that is applied to the restoration or repair of
the related Mortgaged Property, (iii) released to the Mortgagor in accordance
with the Servicer's normal servicing procedures or (iv) required to be paid to
any holder of a mortgage senior to such Home Equity Loan.
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"Interest Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts without duplication: (a) that portion of
all collections on the Home Equity Loans allocable to interest in respect of the
preceding Due Period; (b) Liquidation Proceeds attributable to interest on the
Home Equity Loans which became Liquidated Home Equity Loans during the preceding
Due Period in accordance with the Servicer's customary servicing procedures; (c)
the Purchase Price of each Home Equity Loan that became a Purchased Home Equity
Loan during the preceding Due Period to the extent attributable to accrued
interest on such Home Equity Loan; (d) Recoveries for such Due Period and (e)
Investment Earnings for such Distribution Date; provided, however, that in
calculating the Interest Distribution Amount, all payments and proceeds
(including Liquidation Proceeds) of any Purchased Home Equity Loans the Purchase
Price of which has been included in the Interest Distribution Amount in a prior
Due Period shall be excluded.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts and the Certificate Distribution Account to be
deposited into the Collection Account on such Distribution Date pursuant to
Section 4.1(b).
"Issuer" means Centex Home Equity Loan Trust A.
"Lien" means a security interest, lien, charge, pledge or encumbrance of
any kind, other than tax liens, mechanics' liens and any liens which attach to
the respective Home Equity Loan by operation of law as a result of any act or
omission by the related Mortgagor.
"Lifetime Cap" means the provision in the Mortgage Note for each ARM which
limits the maximum Mortgage Rate over the life of such ARM to __ basis points
greater than the Mortgage Rate on the date of origination of such ARM.
"Lifetime Floor" means the provision in the Mortgage Note for each ARM
which limits the minimum Mortgage Rate over the life of such ARM to the Mortgage
Rate on the date of origination of such ARM.
"Liquidated Home Equity Loan" means, as to any Distribution Date, any Home
Equity Loan with respect to which the Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related Due
Period that all Liquidation Proceeds which it expects to recover with respect to
the liquidation of the Home Equity Loan or disposition of the related REO
Property have been recovered.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds)
received in connection with the liquidation of any Home Equity Loan or related
REO Property, whether through trustee's sale, foreclosure sale or otherwise.
"Loan-to-Value Ratio" means the fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Home Equity
Loan and the denominator of which is the Original Value of the related Mortgaged
Property.
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"Monthly Advance" means an advance made by the Servicer pursuant to Section
3.15 hereof.
"Monthly Payment" means the scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Home Equity Loan.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Mortgage" means 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 Home Equity Loan.
"Mortgage File" means the mortgage documents listed in Section 2.1(b)
pertaining to a particular Home Equity Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Note" means the originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under the related Home
Equity Loan.
"Mortgaged Property" means the land and improvements securing the
indebtedness of a Mortgagor under the related Home Equity Loan.
"Mortgagor" means the obligor or obligors on a Mortgage Note.
"Net Liquidation Proceeds" means, with respect to any Liquidated Home
Equity Loan, Liquidation Proceeds net of unreimbursed Servicing Fees,
unreimbursed Servicing Advances and Monthly Advances with respect thereto.
"Net Rate" means, with respect to any Home Equity Loan as to any day, the
Mortgage Rate less the related Servicing Fee Rate.
"Nonrecoverable Advances" means, with respect to any Home Equity Loan, (i)
any Monthly Advance previously made and not reimbursed pursuant to Section
3.2(c) or 3.3(ii), or (ii) a Servicing Advance or Monthly Advance proposed to be
made in respect of a Home Equity Loan or REO Property which, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed
advance, would not be ultimately recoverable pursuant to Sections 3.2(c) or
3.3(ii).
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 4.1.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
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"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Noteholders' Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the respective Interest Rate borne by
each class of Notes from such preceding Distribution Date through the current
Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, the product of (i)(A) in the case of the Class A-Notes,
the product of the Interest Rate for such class and a fraction, the numerator of
which is the number of days elapsed from and including the prior Distribution
Date (or, in the case of the first Distribution Date, from and including the
Closing Date) to but excluding such Distribution Date and the denominator of
which is ___________ and (B) in the case of each other class of Notes, of the
Interest Rate for such class (or, in the case of the first Distribution Date,
the Interest Rate for such class multiplied by a fraction, the numerator of
which is the number of days elapsed from and including the Closing Date to but
excluding such Distribution Date and the denominator of which is ____________)
and (ii) the outstanding principal balance of the Notes of such class on the
immediately preceding Distribution Date, after giving effect to all
distributions of principal to Noteholders of such class on such Distribution
Date (or, in the case of the first Distribution Date, on the Closing Date).
"Noteholders' Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time at which List
Class(es) of Notes have been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholder's Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date; provided, however,
that the Noteholders' Principal Distributable Amount shall not exceed the
outstanding principal balance of the Notes. In addition, on the Final Scheduled
Distribution Date of each class of Notes, the principal required to be deposited
in the Note Distribution Account will include the amount necessary (after giving
effect to the other amounts
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to be deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the Outstanding Amount of such class of Notes
to zero.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, the president, the vice chairman of the board, any executive vice
president, any senior vice president or any vice president and (b) a cashier,
assistant cashier, secretary or assistant secretary of the Seller or the
Servicer, as appropriate, provided that no one person may sign in a capacity
fulfilling both clause (a) and clause (b). "Opinion of Counsel" means one or
more written opinions of counsel who may be an employee of or counsel to the
Seller or the Servicer, which counsel shall be acceptable to the Trustee, the
Owner Trustee or the Rating Agencies, as applicable. "Original Pool Balance"
means the Pool Balance as of the Cutoff Date which is $_____________.
"Original Value" means the value of the Mortgaged Property at the time of
origination of the related Home Equity Loan, such value being the lower of the
value of such property set forth in an appraisal acceptable to the originator of
the Home Equity Loan or the sales price of such property at the time of
origination or, in the case of a refinancing, the value of such property set
forth in an appraisal acceptable to the originator.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, its successors in interest or any successor
Owner Trustee under the Trust Agreement.
"Payahead" on a Actuarial Home Equity Loan means the amount, as of the
close of business on the last day of a Due Period, computed in accordance with
Section 4.3 with respect to such Home Equity Loan.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 4.1(d)(ii).
"Payahead Balance" on a Actuarial Home Equity Loan means the sum, as of the
close of business on the last day of a Due Period, of all Payaheads made by or
on behalf of the Mortgagor with respect to such Actuarial Home Equity Loan, as
reduced by applications of previous Payaheads with respect to such Actuarial
Home Equity Loan, pursuant to Sections 4.3 and 4.4.
"Periodic Cap" means the provision in the Mortgage Note for each ARM which
limits increases or decreases in the Mortgage Rate on each Change Date to basis
points.
"Person" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
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"Physical Property" has the meaning assigned to such term in the definition
of "Delivery" above.
"Pool Balance" as of the close of business on the last day of a Due Period
means the aggregate Principal Balance of the Home Equity Loans (excluding
Purchased Home Equity Loans and Liquidated Home Equity Loans).
"Primary Mortgage Insurance Policy" means the certificate of primary
mortgage insurance relating to a particular Home Equity Loan, or any replacement
policy therefor.
"Principal Balance" means as to any Home Equity Loan other than a
Liquidated Home Equity Loan and any day, the related Cut-Off Date Principal
Balance (or unpaid principal balance as of the date of substitution), minus all
collections credited against the Principal Balance of any such Home Equity Loan.
For purposes of this definition, a Liquidated Home Equity Loan shall be deemed
to have a Principal Balance equal to the Principal Balance of the related Home
Equity Loan immediately prior to the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter.
"Principal Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts, without duplication, in respect of the
preceding Due Period: (a) that portion of all collections on Home Equity Loans
(including, with respect to Actuarial Loans, amounts withdrawn from the Payahead
Account but excluding amounts deposited into the Payahead Account) allocable to
principal, (b) Liquidation Proceeds attributable to the principal amount of Home
Equity Loans which became Liquidated Home Equity Loans during such Due Period in
accordance with the Servicer's customary servicing procedures, plus the amount
of Realized Losses with respect to such Liquidated Home Equity Loans, (c) to the
extent attributable to principal, the Purchase Price of each Home Equity Loan
that became a Purchased Home Equity Loan during such Due Period and (d) on the
Final Scheduled Distribution Date for the Certificates, any amounts advanced by
the Servicer on such Final Scheduled Distribution Date with respect to principal
on the Home Equity Loans; provided, however, that in calculating the Principal
Distribution Amount the following will be excluded: (i) amounts received on
Actuarial Home Equity Loans to the extent that the Servicer has previously made
an unreimbursed Precomputed Advance of principal, (ii) Liquidation Proceeds with
respect to a particular Actuarial Home Equity Loan to the extent of any
unreimbursed Precomputed Advances of principal, (iii) all payments and proceeds
(including Liquidation Proceeds) of any Purchased Home Equity Loans the Purchase
Price of which has been included in the Principal Distribution Amount in a prior
Due Period and (iv) Recoveries.
"Purchase Price" means as to any Defective Home Equity Loan repurchased on
any date pursuant to Sections 2.2 or 2.4, an amount equal to the sum of (i) the
unpaid Principal Balance thereof, (ii) the greater of (a) all unpaid accrued
interest thereon and (b) days' interest thereon, computed at the applicable
Mortgage Rate and (iii) any unreimbursed Servicing Advances with respect to such
Home Equity Loan; provided, however, that if at the time of repurchase the
Seller or an Affiliate is the Servicer, the amount described in clause (ii)
shall be computed at the Net Rate.
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"Purchased Home Equity Loan" means a Home Equity Loan purchased as of the
close of business on the last day of a Due Period by the Servicer pursuant to
Section 3.16 or repurchased by the Seller, an Originator or the Representative
pursuant to Section 2.2.
"Rating Agency" means ______, _________, ______ and/or any other rating
agency requested by the Seller or an affiliate thereof to rate the Notes and/or
the Certificates. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Seller, notice of
which designation shall be given to the Trustee, the Owner Trustee and the
Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee or the Trustee in writing that such action will, in and of itself,
result in a reduction or withdrawal of the then current rating of any class of
Notes, or the Certificates.
"Realized Losses" means the excess of the Principal Balance of any
Liquidated Home Equity Loan over Liquidation Proceeds to the extent allocable to
principal.
"Recoveries" means, with respect to any Liquidated Home Equity Loan, monies
collected in respect thereof, from whatever source, during any Due Period
following the Due Period in which such Home Equity Loan became a Liquidated Home
Equity Loan, net of the sum of any amounts expended by the Servicer for the
account of the Mortgagor and any amounts required by law to be remitted to the
Mortgagor.
"REO Property" means a Mortgaged Property that is acquired by the Servicer
on behalf of the Trustee in foreclosure or by deed-in-lieu of foreclosure.
"Released Mortgaged Property Proceeds" means, as to any Home Equity Loan,
proceeds received by the Servicer in connection with (a) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(b) any release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise, which are not
released to the Mortgagor in accordance with applicable law, mortgage servicing
standards the Servicer would use in servicing mortgage loans for its own account
and this Agreement.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 4.1.
"Reserve Account Initial Deposit" means, with respect to the Closing Date,
$___________________.
"Reserve Account Transfer Amount" means an amount equal to the lesser of
(i) the amount of cash or other immediately available funds on deposit in the
Reserve Account on such
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Distribution Date (before giving effect to any withdrawals therefrom relating to
such Distribution Date) or (ii) the amount, if any, by which (x) the sum of the
Total Servicing Fee, the Noteholders' Interest Distributable Amount, the
Certificateholders' Interest Distributable Amount, the Noteholders' Principal
Distributable Amount and the: _________________ Certificateholders' Principal
Distributable Amount for such Distribution Date exceeds (y) the sum of the
Interest Distribution Amount and the Available Principal for such Distribution
Date.
"Seller" means CHEC Asset Receivable Corporation, as the seller of the Home
Equity Loans, and each successor to CHEC Asset Receivable Corporation(in the
same capacity) to the extent permitted hereunder.
"Servicer" means Centex Credit Corporation d/b/a Centex Home Equity
Corporation, the Servicer of the Home Equity Loans, and each successor to Centex
Credit Corporation d/b/a Centex Home Equity Corporation, (in the same capacity)
pursuant to Section 6.3 or 7.2.
"Servicer Default" means an event specified in Section 7.1.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 3.10, substantially in the form of Exhibit D.
"Servicing Advances" means all reasonable and customary "out of pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Sections 3.4, 3.7 or 3.19 and (v) in connection with the
liquidation of a Home Equity Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17.
"Servicing Compensation" means the Servicing Fee, the Supplemental
Servicing Fee and any other amounts to which the Servicer is entitled pursuant
to Section 3.9.
"Servicing Fee" has the meaning specified in Section 3.9.
"Servicing Fee Rate" means __% per annum.
"Simple Interest Loan" means any Home Equity Loan as to which, pursuant to
the Mortgage Note related thereto, interest is calculated on the basis of the
outstanding principal balance of the Home Equity Loan multiplied by the
applicable Mortgage Rate and further multiplied by a fraction, of which the
numerator is the number of days in the period elapsed since the date to which
interest was paid and the denominator is the number of days in the annual period
for which interest accrues on such Home Equity Loan, and the Monthly Payment
received is applied first to interest accrued to the date of payment and the
balance is applied to reduce the unpaid principal balance.
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"Specified Reserve Account Balance" means, with respect to (i) any
Distribution Date prior to the Distribution Date on which the Outstanding Amount
of the Class A 1 Notes has been paid in full, $______________ and (ii) any
Distribution Date on or after the Distribution Date on which the Outstanding
Amount of the Class A Notes has been paid in full the greater of (a) ______% of
the sum of the aggregate outstanding principal amount of each class of Notes
plus the outstanding Certificate Balance on such Distribution Date (after giving
effect to all payments on the Notes and distributions with respect to the
Certificates to be made on such Distribution Date); or (b) ______% of the sum of
the aggregate initial principal of the Notes plus the initial Certificate
Balance except that, if on any Distribution Date (x) the average of the Charge
off Rates for the three preceding Due Periods exceeds ____% or (y) the average
of the Delinquency Percentages for the three preceding Due Periods exceeds
_____%, then the Specified Reserve Account Balance shall be an amount equal to
________% of the sum of the aggregate outstanding principal amount of each class
of Notes and the aggregate outstanding Certificate Balance on such Distribution
Date (after giving effect to all payments on the Notes and distributions with
respect to the Certificates to be made on such Distribution Date).
"Standard & Poor's" means Standard & Poor's Ratings Group, or its
successor.
"Supplemental Servicing Fee" means the fee payable to the Servicer for
certain services rendered during the respective Due Period, determined pursuant
to and defined in Section 3.9.
"Total Servicing Fee" means with respect to each Distribution Date the
Servicing Fee for the related Due Period and all accrued and unpaid Servicing
Fees for prior Due Periods.
"Total Distribution Amount" means, for each Distribution Date, the sum of
(i) the Interest Distribution Amount (ii) the Available Principal and (iii) the
Reserve Account Transfer Amount, in each case in respect of such Distribution
Date; provided, however, that if on the Class A-1 Final Scheduled Distribution
Date, the Total Distribution Amount (as defined above) would be insufficient to
pay the Total Servicing Fee, Noteholders' Interest Distributable Amount,
Certificateholders' Interest Distributable Amount and the Noteholders' Principal
Distributable Amount for such Distribution Date, then the Total Distribution
Amount for such Distribution Date will include, in addition to the Total
Distribution Amount (as defined above), an amount, up to the amount necessary to
pay any such items, of the Interest Distribution Amount and the Available
Principal on deposit (or, if the conditions specified in Section 3.2(c) have
been satisfied, that would have been required to have been deposited but for the
satisfaction of such conditions) in the Collection Account on the Determination
Date relating to such Class A-1 Final Scheduled Distribution Date which would
have constituted the Interest Distribution Amount or Available Principal, as the
case may be, for the Due Period relating to the succeeding Distribution Date and
the Interest Distribution Amount and Available Principal, as the case may be,
for such succeeding Distribution Date will be reduced accordingly.
"Transfer Date" means, with respect to any Distribution Date, the Business
Day preceding such Distribution Date.
"Trust" means the Issuer.
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"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 4.1.
"Trust Agreement" means the Trust Agreement dated as of _________, _______,
between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Officer" means, (i) in the case of the Trustee, any Officer within
the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and (ii)
in the case of the Owner Trustee, any officer in the corporate trust office of
the Owner Trustee with direct responsibility for the administration of this
Agreement or any of the Basic Documents on behalf of the Owner Trustee.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
SECTION 1.2. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture, or, if not defined therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
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(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.3 Interest Calculations. All calculations of interest hereunder
that are made in respect of the Principal Balance of a Simple Interest Loan
shall be made on the basis of the actual number of days in an Accrual Period and
a year assumed to consist of 365 days. All calculations of interest in respect
of the Principal Balance of an Actuarial Loan or in respect of the Notes or the
Certificates shall be made on the basis of a 360-day year consisting of twelve
30-day months. The calculation of the Servicing Fee shall be made on the basis
of the actual number of days in an Accrual Period and a year assumed to consist
of 365 days.
ARTICLE II
Conveyance of Home Equity Loans
SECTION 2.1 Conveyance of Home Equity Loans. (a) In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of the
net proceeds from the sale of the Notes and the Certificates and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Originators, concurrently with the execution and
delivery of this Agreement, hereby transfer, assign, set over and otherwise
convey to the Seller and the Seller does hereby transfer, assign, set over and
otherwise convey to the Issuer, without recourse (subject to the obligations
herein): (A) all right, title and interest of the Seller in and to the Home
Equity Loans, and all moneys received thereon, on or after the Cutoff Date; (B)
all right, title and interest of the Seller in the security interests in the
Mortgaged Properties granted by Mortgagors pursuant to the Home Equity Loans and
any other interest of the Seller in the Mortgaged Properties; (C) the interest
of the Seller in any proceeds with respect to the Home Equity Loans from claims
on any physical damage, theft, credit life or disability insurance policies
covering Mortgaged Properties or Mortgagors; (D) all right, title and interest
in all funds on deposit from time to time in the Certificate Distribution
Account, in the Trust Accounts, including the Reserve Account Initial Deposit,
and in all investments and proceeds thereof (including all income thereon); and
(E) the proceeds of any and all of the foregoing. In connection with such
transfer, assignment and conveyance by the Originators to the Seller and by the
Seller to the Trust, the Seller shall deliver to, and deposit with the Trustee,
on or before the Closing Date, the following documents or instruments with
respect to each Home Equity Loan (the "Related Documents"):
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the originator
of the Home Equity Loan to
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the Person so endorsing the Home Equity Loan to the Trustee, endorsed by
such Person "Pay to the order of ______________________ without recourse"
and signed, by facsimile or manual signature, in the name of the Person
delivering the Mortgage Note by a Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power of attorney,
if any, with evidence of recording thereon, (2) a copy of the Mortgage and
related power of attorney, if any, certified as a true copy of the original
Mortgage or power of attorney by a Responsible Officer by facsimile or
manual signature or by the closing attorney or by an officer of the title
insurer or agent of the title insurer that issued the related title
insurance policy, in each case, if the original has been transmitted for
recording until such time as the original is returned by the public
recording office or (3) a copy of the original recorded Mortgage and
related power of attorney, if any, certified by the public recording
office;
(iii) The original Assignment of Mortgage in recordable form, from the
Person delivering such Assignment to [Name of Trustee];
(iv) The original lender's policy of title insurance or a true copy
thereof or, if such original lender's title insurance policy has been lost,
a copy thereof certified by the appropriate title insurer to be true and
complete or, if such lender's title insurance policy has not been issued as
of the Closing Date, a marked up commitment (binder) to issue such policy;
(v) All intervening assignments, if any, showing a complete chain of
assignments from the originator to the Person delivering such assignment,
including any recorded warehousing assignments, with evidence of recording
thereon, or a copy thereof certified by a Responsible Officer by facsimile
or manual signature, or by the closing attorney or by an officer of the
title insurer or agent of the title insurer that issued the related title
insurance policy, as a true copy of the original of such intervening
assignments if the original has been transmitted for recording until such
time as the original is returned by the public recording office or a copy
of the original recorded intervening assignments certified by the public
recording office;
(vi) Originals of all assumption, written assurance, substitution and
modification agreements, if any; and
(vii) in the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Cooperative Shares, together with a stock power in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
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(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statement with evidence of recording
thereon which have been filed in all places required to perfect the
applicable Originator's interest in the Cooperative Shares and the
Proprietary Lease; and
(g) Executed UCC-3 financing statements or other appropriate UCC
financing statements required by state law, evidencing a complete and
unbroken line from the mortgagee to the Trustee with evidence of recording
thereon (or in a form suitable for recordation).
(h) The Trustee agrees, for the benefit of the Noteholders and the
Certificateholders, within 90 days after execution and delivery of this
Agreement, to review the Mortgage Files to ascertain that all required documents
set forth in paragraphs (i) - (v) of Section 2.1(a) have been executed and
received, and that the Mortgage Notes have been endorsed as set forth in Section
2.1(a), and that such documents relate to the Home Equity Loans identified on
the Home Equity Loan Schedule and in so doing the Trustee may rely on the
purported due execution and genuineness of any signature thereon. If within such
90-day period the Trustee finds any document constituting a part of a Mortgage
File not to have been executed or received or to be unrelated to the Home Equity
Loans identified in said Home Equity Loan Schedule or, if in the course of its
review, the Trustee determines that such Mortgage File is otherwise defective in
any material respect, the Trustee shall promptly upon the conclusion of its
review notify the Seller, and the Seller shall have a period of 90 days after
such notice within which to correct or cure any such defect.
(i) The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in Section 2.1(b). Without limiting the effect
of the preceding sentence, in reviewing any Mortgage File pursuant to such
subsection, the Trustee shall have no responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if applicable, to determine if the
Trustee is the assignee or endorsee), whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction, or whether a
blanket assignment is permitted in any applicable jurisdiction, 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, but shall not be required to determine whether any Person executing
any document is authorized to do so or whether any signature thereon is genuine.
SECTION 2.2 Acceptance by Trustee. The Trustee hereby acknowledges, subject
to the review and period for delivery provided for in Section 2.1, its receipt
of the Mortgage Files, and declares that the Trustee holds and will hold such
documents and all amounts received by it thereunder and hereunder in trust, upon
the terms herein set forth, for the use and benefit of all present and future
Noteholders and Certificateholders. If the Seller is given notice under Section
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2.1(c) above and if the Seller does not correct or cure such omission or defect
within the 90-day period specified in Section 2.1(c) above, the Seller shall
substitute one or more Eligible Substitute Home Equity Loans therefor as
provided in Section 2.5 hereof or purchase such Home Equity Loan from the
Trustee on the Determination Date in the month following the month in which such
90-day period expired at the Purchase Price of such Home Equity Loan. The
Purchase Price for the purchased Home Equity Loan shall be deposited in the
Collection Account no later than the applicable Determination Date or the
Business Day preceding the expiration of such 90-day period, as the case may be,
and, upon receipt by the Trustee of written notification of such deposit signed
by an officer of the Seller, the Trustee shall release to the Seller the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest in the Seller or its designee any Home Equity Loan released pursuant
hereto. It is understood and agreed that the obligation of the Seller to cure,
substitute for or purchase any Home Equity Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
against the Seller respecting such defect or omission available to the Issuer,
the Owner Trustee, the Trustee, the Noteholders or the Certificateholders. The
Servicer, promptly following the transfer of (i) a Defective Home Equity Loan
from or (ii) an Eligible Substitute Home Equity Loan to the Trust pursuant to
this Section and Section 2.5, as the case may be, shall amend the Home Equity
Loan Schedule and make appropriate entries in its general account records to
reflect such transfer and the addition of any Eligible Substitute Home Equity
Loan, if applicable.
SECTION 2.3. Reserved
SECTION 2.4. Representations and Warranties of the Originators Regarding
the Home Equity Loans. (a) Each Originator with respect to each Home Equity Loan
it has conveyed hereunder represents and warrants to the Trustee on behalf of
the Certificateholders as follows as of the Closing Date:
(i) The information set forth on the Home Equity Loan Schedule
relating to the Home Equity Loans is complete, true and correct as of the
Cut-Off Date;
(ii) The Mortgage Notes and the Mortgages have not been assigned or
pledged by the applicable Originator to any Person, and immediately prior
to the transfer and assignment of the Home Equity Loans by the Originators
to the Seller herein contemplated, the applicable Originator had good and
marketable title thereto, and was the sole owner and holder of the Home
Equity Loans free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests
of any nature (collectively, a "Lien"), other than any such Lien released
simultaneously with the sale contemplated herein, and had full right and
authority, subject to no interest or participation of, or agreement with,
any other party, to sell and assign the same pursuant to this Agreement,
and immediately upon the transfer and assignment of the Home Equity Loans
by the Originators to the Seller and by the Seller to the Trustee on behalf
of the Certificateholders as contemplated herein, the Trustee will be the
sole beneficial owner of, each Home Equity Loan free and clear of any lien,
claim, participation interest, mortgage, security interest, pledge, charge
or other encumbrance or other interest of any nature;
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(iii) Each Mortgage is a valid and existing lien on the property
therein described, and each Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet due
and payable, (ii) in the case of a Mortgaged Property that is a condominium
or an individual unit in a planned unit development, liens for common
charges permitted by statute, (iii) in the case of a Home Equity Loan
secured by a second lien on the related Mortgaged Property, the related
First Lien and (iv) easements, mineral rights and covenants, conditions and
restrictions of record. Any security agreement, chattel mortgage or
equivalent document related to the Mortgage and delivered to the Trustee
establishes in the applicable Originator a valid and subsisting lien on the
property described therein, and such Originator has full right to sell and
assign the same hereunder;
(iv) The terms of each Mortgage Note and 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 interests
of the Certificateholders and the Certificate Insurer, and which has been
delivered to the Trustee. The substance of any such alteration or
modification is reflected on the Home Equity Loan Schedule;
(v) 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 [carve-out for sale of one of multiple
parcels];
(vi) Except with respect to delinquencies described in clause (xiii)
hereof, to the best of the Originator's knowledge, no Mortgagor is in
default in complying with the terms of its Mortgage Note or Mortgage, and
no Originator has waived any default, breach, violation or event of
acceleration except that an Originator may have accepted late payments, and
all taxes, governmental assessments, insurance premiums or water, sewer and
municipal charges which previously became due and owing have been paid. No
Originator has advanced funds or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage, except
for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is more recent, to the day
which precedes by one month the Due Date of the first installment of
principal and interest;
(vii) To the best of the Originator's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of
any Mortgaged Property, nor is such a proceeding currently occurring, and
such property is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or otherwise, so as to affect adversely the value
of the Mortgaged Property as security for the Home Equity Loan or the use
for which the premises were intended;
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(viii) To the best of the Originator's knowledge, there are no
mechanics' or similar liens or claims which have been filed for work, labor
or material (and no rights are outstanding that under law could give rise
to such lien) affecting any Mortgaged Property which are, or may be, liens
prior or equal to, or coordinate with, the lien of the Mortgage except
those that are stated in the title insurance policy and for which related
losses are affirmatively insured against by such policy;
(ix) To the best of the Originator's knowledge, all of the
improvements that were included for the purpose of determining the
Appraised Value of each Mortgaged Property lie wholly within the boundaries
and building restriction lines of such property, and no improvements on
adjoining properties encroach upon the Mortgaged Property except those that
are stated in the title insurance policy and for which related losses are
affirmatively insured against by such policy;
(x) To the best of the Originator's knowledge, there do not exist any
circumstances or conditions with respect to any Home Equity Loan, any
Mortgaged Property, any Mortgagor or any Mortgagor's credit standing that
can be reasonably expected to adversely affect the value or marketability
of the Home Equity Loan;
(xi) To the best of the Originator's knowledge, no improvement located
on or being part of any Mortgaged 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 the Mortgaged Property and, with respect to the use and
occupancy of the same, including, but not limited to, certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities and the Mortgaged Property is lawfully
occupied under applicable law;
(xii) To the best of the Originator's knowledge, all parties that have
had any interest in any Home Equity Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any and all
licensing requirements of the United States and of the laws of the state
wherein the Mortgaged Property is located that are applicable to such
parties and (2)(A) organized under the laws of such state or (B) qualified
to do business in such state or exempt from such qualification in a manner
so as not to affect adversely the enforceability of such Home Equity Loan
or (C) federal savings and loan associations or national banks having
principal offices in such state or (D) not doing business in such state;
(xiii) With respect to the Home Equity Loans, as of the Cut-Off Date,
(i) all payments required to be made on each Initial Home Equity Loan under
the terms of the related Mortgage Note have been made [except for ___% of
the Home Equity Loans (by Cut-Off Date Pool Principal Balance) are up to 60
days Delinquent and (ii) no payment required to be made on any Home Equity
Loan has been more than 60 days Delinquent more than once during the twelve
month period immediately preceding the Cut-Off Date];
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(xiv) Each of the documents and instruments included in a Mortgage
File is duly executed and in due and proper form and each such document or
instrument is in a form generally acceptable to prudent institutional
mortgage lenders that regularly originate or purchase Home Equity Loans;
(xv) The Mortgage Notes and the related Mortgages are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). All parties
to the Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage, and each Mortgage Note and Mortgage have
been duly and properly executed by such parties. The Mortgagor is a natural
person who is a party to the Mortgage Note and the Mortgage in an
individual capacity, and not in the capacity of a trustee or otherwise;
(xvi) Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity
or disclosure laws, applicable to the origination and servicing of the Home
Equity Loans or otherwise applicable to the Home Equity Loans have been
complied with, and the Representative has and shall maintain, or shall
cause the applicable Originator to maintain, in its possession, available
for the Trustee's inspection, and shall deliver to the Trustee upon demand,
evidence of compliance with all such requirements;
(xvii) The proceeds of the Home Equity Loans have been fully
disbursed, there is no requirement for future advances thereunder and 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, closing or
recording the Home Equity Loan have been paid;
(xviii) [Except for _____ Home Equity Loans with an aggregate original
principal balance of $__________ for which an attorney's opinion of title
has been obtained,] each Home Equity Loan with an original principal
balance greater than $10,000 is covered by an ALTA mortgage title insurance
policy or such other form of policy acceptable to FNMA or FHLMC, issued by
and constituting the valid and binding obligation of a title insurer
approved by the applicable Originator and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the
applicable Originator, its successors and assigns, as to the first priority
lien of the Mortgage in the case of a Home Equity Loan secured by a First
Lien on the related Mortgaged Property and the second priority lien of the
Mortgage in the case of a Home Equity Loan secured by a second lien on the
related Mortgaged Property, in the original principal amount of the Home
Equity Loan. The applicable Originator is the sole named insured of such
mortgage title insurance policy. The assignment to the Trustees, as
assignee of the Seller, of the Originator's interest in such mortgage title
insurance
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policy does not require the consent of or notification to the insurer or
the same has been obtained, and such mortgage title insurance policy is in
full force and effect and will be in full force and effect and inure to the
benefit of the Trustee, as assignee of the Seller, upon the consummation of
the transactions contemplated by this Agreement. No claims have been made
under such mortgage title insurance policy and no prior holder of the
related Mortgage, including the applicable Originator, has done, by act or
omission, anything that would impair the coverage of such mortgage title
insurance policy;
(xix) The Mortgage obligates the Mortgagor thereunder to maintain all
hazard insurance at the Mortgagor's cost and expense;
(xx) No Home Equity Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will
the operation of any of the terms of any Mortgage Note or the related
Mortgage, or the exercise of any right thereunder in accordance with the
terms thereof, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(xxi) Each Home Equity Loan was originated or purchased and
reunderwritten by an Originator. No more than __% of the Home Equity Loans,
measured by outstanding principal balances as of the Cut-Off Date, were
originated by independent originators and acquired by an Originator;
(xxii) Except with respect to any Balloon Loan, each Home Equity Loan
is payable in substantially equal monthly installments of principal and
interest which would be sufficient, in the absence of late payments, to
fully amortize such loan within the term thereof, beginning no later than
60 days after disbursement of the proceeds of the Home Equity Loan. Each
Home Equity Loan bears a fixed interest rate for the term of the Home
Equity Loan. Each Balloon Loan has an original term of not less than [five
(5)] years and provides for level monthly payments based on a thirty (30)
year amortization schedule and a final Monthly Payment substantially
greater than the preceding Monthly Payments;
(xxiii) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the Home Equity Loan in the
event the related Mortgaged Property is sold without the prior consent of
the holder thereunder;
(xxiv) No Home Equity Loan is a loan for which the disbursements are
made as construction proceeds;
(xxv) Reserved;
(xxvi) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (ii) otherwise by judicial or nonjudicial
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foreclosure. There is no homestead or other exemption available to the
Mortgagor that would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage;
(xxvii) 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 Trustee or the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor, which fees
and expenses shall constitute Servicing Advances;
(xxviii) Each Mortgaged Property is located in the state identified in
the Home Equity Loan Schedule and consists of at least one parcel of real
property with a one family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit or townhome,
provided, however, that no residence or dwelling is a mobile home or a
manufactured dwelling. [No Mortgaged Properties are held under a ground
lease];
(xxix) The Home Equity Loans were underwritten in accordance with the
Originators' underwriting guidelines described in the Prospectus Supplement
under the heading "THE HOME EQUITY LOAN PROGRAM--Underwriting Standards;"
(xxx) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no other charges or payments due
an Originator have been capitalized under any Mortgage or the related
Mortgage Note;
(xxxi) No Home Equity Loan was originated under a buy-down plan;
(xxxii) Other than as provided by this Agreement, there is no
obligation on the part of an Originator or any other party to make payments
in addition to those made by the Mortgagors;
(xxxiii) With respect to each Home Equity Loan, the Trustee is in
possession of a complete Mortgage File, and there are no custodial
agreements in effect adversely affecting the right or ability of the
applicable Person to make the document deliveries required hereby;
(xxxiv) No Home Equity Loan was selected for inclusion under this
Agreement on any basis which was intended to have a material adverse effect
on the Certificateholders or the Certificate Insurer;
(xxxv) No Home Equity Loan has a shared appreciation or other
contingent interest feature;
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(xxxvi) With respect to each Home Equity Loan secured by a second lien
on the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is higher than __%, either the
related First Lien does not provide for a balloon payment or, if the
related First Lien does provide for a balloon payment, the maturity date of
the second lien is prior to the maturity date of the First Lien;
(b) the related First Lien does not provide for negative amortization;
and
(c) either no consent for the Home Equity Loan secured by a second
lien on the related Mortgaged Property is required by the holder of the
related First Lien or such consent has been obtained and is contained in
the Mortgage File.
(xxxvii) Each Home Equity Loan conforms, and all the Home Equity Loans
in the aggregate conform, in all material respects to the description
thereof set forth in the Prospectus Supplement;
(xxxviii)A full appraisal on forms approved by the Originator was
performed in connection with the origination of each Home Equity Loan. Each
appraisal meets guidelines that would be generally acceptable to prudent
mortgage lenders that regularly originate or purchase Home Equity Loans
comparable to the Home Equity Loans for sale to prudent investors in the
secondary market that invest in Home Equity Loans such as the Home Equity
Loans;
(xxxix) To the best knowledge of the Representative and the applicable
Originator, no Mortgaged Property was, as of the related Cut-Off Date,
located within a one-mile radius of any site listed in the National
Priorities List as defined under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or on any similar state
list of hazardous waste sites which are known to contain any hazardous
substance or hazardous waste;
(xl) None of the Home Equity Loans are subject to a bankruptcy
proceeding;
(xli) No more than __% of the aggregate Principal Balance of all the
Home Equity Loans as of Cut-Off Date relates to Home Equity Loans
originated or purchased under the Originators' limited documentation
program for self-employed borrowers;
(xlii) The range of points financed or "net funded" on Home Equity
Loans originated after ________________ is 0% to __%;
(xliii) Each Home Equity Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
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(xliv) With respect to any Home Equity Loan that is not a Cooperative
Loan, each Mortgage is a valid and enforceable first or second lien on the
Mortgaged Property subject only to (a) the lien of non-delinquent current
real property taxes and assessments, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, such exceptions appearing of
record being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection with the
origination of the related Home Equity Loan, (c) other matters to which
like properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage and
(d) the related First Lien, if any;
(xlv) Each Cooperative Loan is secured by a valid, subsisting and
enforceable perfected first or second lien and security interest in the
related Mortgaged Property, subject only to (i) the rights of the
Cooperative Corporation to collect Maintenance and assessments from the
Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
Cooperative Property and of real property taxes, water and sewer charges,
rents and assessments on the Cooperative Property not yet due and payable,
(iii) the related First Lien, if any and (iv) other matters to which like
Cooperative Units are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Security
Agreement or the use, enjoyment, value or marketability of the Cooperative
Unit. Each original UCC financing statement, continuation statement or
other governmental filing or recordation necessary to create or preserve
the perfection and priority of the first or second, as applicable, priority
lien and security interest in the Cooperative Shares and Proprietary Lease
has been timely and properly made. Any security agreement, chattel mortgage
or equivalent document related to the Cooperative Loan and delivered to the
applicable Originator or any designee of the applicable Originator
establishes in such Person a valid and subsisting perfected first or
second, as applicable, lien on and security interest in the property
described therein, and such Person has full right to sell and assign the
same;
(xlvi) Each Cooperative Corporation qualifies as a "cooperative
housing corporation" as defined in Section 216 of the Code; and
(xlvii) Each Mortgaged Property is free of substantial damage and is
in reasonably good repair.
(b) It is understood and agreed that the representations and warranties set
forth in Section 2.4(a) shall survive the sale, transfer and assignment of the
Home Equity Loans to the Issuer and the pledge thereof to the Trustee pursuant
to the Indenture. Upon discovery by the Seller, the Servicer, the
Representative, an Originator or the Owner Trustee of a breach of any of the
foregoing representations and warranties, without regard to any limitation set
forth therein concerning the knowledge of the Originators as to the facts stated
therein, which materially and adversely affects the interests of the Noteholders
or the Certificateholders in the related Home Equity Loan, the party discovering
such breach shall give prompt written notice to the other parties and the
Trustee. Within 60 days of its discovery or its receipt of notice of breach, the
Representative shall use all reasonable efforts to cure, or cause the applicable
Originator to cure,
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such breach in all material respects or shall purchase or cause the applicable
Originator to purchase from the Trust or substitute or cause the applicable
Originator to substitute an Eligible Substitute Home Equity Loan as provided in
Section 2.5 for such Home Equity Loan. Any such purchase by the Representative
or an Originator shall be at the Purchase Price, and in each case shall be
accomplished in the manner set forth in Section 2.2. It is understood and agreed
that the obligation of the Representative to cure, substitute for or purchase or
to cause the applicable Originator to cure, substitute or purchase any Home
Equity Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedies against the Representative and the applicable
Originator, or another affiliate of the Representative respecting such breach
available to the Issuer, the Owner Trustee, the Trustee, the Noteholders or
Certificateholders. Neither the Owner Trustee nor the Trustee shall have a duty
to conduct any affirmative investigation as to the occurrence of any conditions
requiring the repurchase of any Home Equity Loan pursuant to this Section.
SECTION 2.5. Substitution of Home Equity Loans.(a) On a Determination Date
within two years following the Closing Date and which is on or before the date
on which the Seller would otherwise be required to repurchase a Home Equity Loan
under Section 2.2 or 2.4, the Seller may deliver to the Trustee one or more
Eligible Substitute Home Equity Loans in substitution for any one or more of the
Defective Home Equity Loans which the Seller would otherwise be required to
repurchase pursuant to Sections 2.2 or 2.4.
(b) The Seller shall notify the Issuer, the Owner Trustee, the Servicer,
the Representative, the applicable Originator and the Trustee in writing not
less than five Business Days before the related Determination Date which is on
or before the date on which the Representative would otherwise be required to
repurchase or cause the repurchase of such Home Equity Loan pursuant to Section
2.2 or 2.4 of its intention to effect a substitution under this Section. On such
Determination Date (the "Substitution Date"), the Representative shall deliver
or cause the applicable Originator to deliver to the Issuer (1) the Eligible
Substitute Home Equity Loans to be substituted for the Original Home Equity
Loans, (2) a list of the Original Home Equity Loans to be substituted for by
such Eligible Substitute Home Equity Loans, (3) an Officers' Certificate (A)
stating that no failure by the Servicer described in Section 7.1 shall have
occurred and be continuing, (B) stating that all conditions precedent to such
substitution specified in subsection (a) have been satisfied and attaching as an
exhibit a supplemental Home Equity Loan schedule (the "Supplemental Home Equity
Loan Schedule") setting forth the same type of information as appears on the
Home Equity Loan Schedule and representing as to the accuracy thereof and (C)
confirming that the representations and warranties contained in Section 2.4 are
true and correct in all material respects with respect to the Substitute Home
Equity Loans on and as of such Determination Date, provided that remedies for
the inaccuracy of such representations are limited as set forth in Sections 2.2,
2.4 and this Section 2.5 and (4) a certificate stating that cash in the amount
of the related Substitution Adjustment, if any, has been deposited to the
Collection Account. Upon receipt of the foregoing, the Issuer shall release such
Original Home Equity Loans to the Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Section 2.5(a) and (b) above and the grant of such Eligible Substitute Home
Equity Loans to the Trustee pursuant to
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Section 2.5(a) above, Exhibit A to this Agreement shall be deemed to be
amended to exclude all Home Equity Loans being replaced by such Eligible
Substitute Home Equity Loans and to include the information set forth on the
Supplemental Home Equity Loan Schedule with respect to such Eligible Substitute
Home Equity Loans, and all references in this Agreement to Home Equity Loans
shall include such Eligible Substitute Home Equity Loans and be deemed to be
made on or after the related Substitution Date, as the case may be, as to such
Eligible Substitute Home Equity Loans.
ARTICLE III
Administration and Servicing of Home Equity Loans
SECTION 3.1 Duties of Servicer. (a) The Servicer, as agent for the Issuer
(to the extent provided herein) shall supervise, or take such actions as are
necessary to ensure, the servicing and administration of the Home Equity Loans
and any REO Property in accordance with this Agreement and the customary and
usual standards of an institution prudently servicing mortgage loans for its own
account and shall have full authority to do anything it reasonably deems
appropriate in connection with such servicing and administration. The Servicer
shall maintain servicing standards equivalent to those required for approval by
FNMA or FHLMC. The Servicer may perform its responsibilities relating to
servicing through other agents or independent contractors, but shall not thereby
be released from any of its responsibilities as hereinafter set forth. The
authority of the Servicer, in its capacity as servicer, shall include the power
to (i) supervise the filing and collection of insurance claims and take or cause
to be taken such actions on behalf of the insured person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (ii)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Home Equity Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and any other matter pertaining to a delinquent
Home Equity Loan. The authority of the Servicer shall include, in addition, the
power to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfers of any related Mortgaged
Property and assumptions of the related Mortgage Notes and Security Instruments
(but only in the manner provided in this Agreement) and (iii) collect any
Insurance Proceeds and Liquidation Proceeds. Without limiting the generality of
the foregoing, the Servicer is authorized and empowered to execute and deliver,
on behalf of itself, the Issuer, the Owner Trustee, the Trustee, the
Certificateholders and the Noteholders or any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Home Equity Loans or to
the Mortgaged Properties securing such Home Equity Loans.
(b) Notwithstanding the provisions of Subsection 3.1(a), the Servicer shall
not take any action inconsistent with the interest of the Noteholders or the
Certificateholders in the Home Equity Loans or with the rights and interests of
the Owner Trustee, the Trustee, the Noteholders or the Certificateholders under
this Agreement.
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(c) The Owner Trustee shall furnish the Servicer with any powers of
attorney and other documents in form as provided to it necessary or appropriate
(as certified to the Owner Trustee by the Servicer) to enable the Servicer to
service and administer the related Home Equity Loans and REO Property.
SECTION 3.2. Collection and Allocation of Home Equity Loan Payments. (a)
The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Home Equity Loans as and when the same
shall become due and shall follow such collection procedures as it follows with
respect to all mortgage loans in its servicing portfolio comparable to the Home
Equity Loans that it services for itself or others.
(b) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Home Equity Loan or consent to the postponement
of strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Noteholders and the Certificateholders; provided, however, that the Servicer may
not permit any modification with respect to any Home Equity Loan that would
change the Mortgage Rate, defer or forgive the payment of any principal or
interest (unless in connection with the liquidation of the related Home Equity
Loan) or extend the Final Scheduled Maturity Date on the Home Equity Loan. No
costs incurred by the Servicer in respect of Servicing Advances shall for the
purposes of distributions to Noteholders or Certificateholders be added to the
amount owing under the related Home Equity Loan.
(c) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Trustee an
Eligible Deposit Account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Noteholders and the Certificateholders. The Collection Account shall
initially be established with the Trustee. The Servicer shall on the Closing
Date deposit into the Collection Account any amounts representing payments on
and any collections in respect of the Home Equity Loans in received on or after
the Cutoff Date and prior to the Closing Date, and thereafter shall use its best
efforts to deposit within one Business Day, and shall in any event deposit
within two Business Days following receipt thereof the following payments and
collections received or made by it (without duplication) with respect to the
Home Equity Loans: (i) all payments received on and after the Cutoff Date on
account of principal on the Home Equity Loans and all full or partial
prepayments collected after the Cutoff Date; (ii) all payments received on and
after the Cutoff Date on account of interest on the Home Equity Loans; (iii) all
Net Liquidation Proceeds net of Foreclosure Profits; (iv) all Insurance
Proceeds; (v) all Released Mortgaged Property Proceeds; (vi) any amounts payable
in connection with the repurchase of any Home Equity Loan and the amount of any
Substitution Adjustment pursuant to Sections 2.2, 2.4, 2.6 and 3.16; and (vii)
any amount required to be deposited in the Collection Account pursuant to
Sections 3.5, 3.7, 3.15, 3.16 or 8.1; provided, however, that (x) with respect
to each Due Period, the Servicer shall be permitted to retain from payments in
respect of interest on the Home Equity Loans, the Servicing Fee for such Due
Period and (y) the Servicer shall be permitted to retain late collections,
including Liquidation Proceeds, Released Mortgaged Property Proceeds and
Insurance Proceeds, to the extent of any unpaid Servicing Fees, unreimbursed
Monthly Advance
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and/or Servicing Advance with respect to the related Home Equity Loan. The
foregoing requirements respecting deposits to the Collection Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing Foreclosure Profits, fees (including annual fees), late charges or
penalties payable by Mortgagors, or amounts received by the Servicer for the
accounts of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items.
SECTION 3.3. Withdrawals from each Collection Account. The Trustee shall
withdraw or cause to be withdrawn funds from the Collection Account for the
following purposes with respect to the Home Equity Loans: (i) the deposits and
distributions required by Section 4.5(d); (ii) to the extent not retained by the
Servicer as provided in Section 3.2(c), to reimburse the Servicer for any
accrued unpaid Servicing Fees and for unreimbursed Monthly Advances and
Servicing Advances. The Servicer's right to reimbursement for unpaid Servicing
Fees and unreimbursed Servicing Advances shall be limited to late collections on
the related Home Equity Loan, including Liquidation Proceeds, Released Mortgaged
Property Proceeds, Insurance Proceeds and such other amounts as may be collected
by the Servicer from the related Mortgagor or otherwise relating to the Home
Equity Loan in respect of which such reimbursed amounts are owed. If a Monthly
Advance was made net of the Servicing Fee as permitted by Section 3.15 hereof,
no additional Servicing Fee for the related Mortgage loan and Due Period shall
be payable. The Servicer's right to reimbursement from such Collection Account
for unreimbursed Monthly Advances shall be limited to late collections of
interest on any Home Equity Loan and to Liquidation Proceeds and Insurance
Proceeds on related Home Equity Loans; (iii) to withdraw any amount received
from a Mortgagor that is recoverable and sought to be recovered 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; (iv) (a) to make investments in Eligible Investments and (b) to
pay to the Servicer, interest earned in respect of Eligible Investments or on
funds deposited in the Collection Account; (v) to withdraw any funds deposited
in such Collection Account that were not required to be deposited therein (such
as Servicing Compensation) or were deposited therein in error and to pay such
funds to the appropriate Person; (vi) to pay the Servicer Servicing Compensation
pursuant to Section 3.9 hereof to the extent not retained or paid pursuant to
Section 3.2(c); (vii) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.7; and (viii) to clear and
terminate such Collection Account upon the termination of this Agreement and to
pay any amounts remaining therein in accordance with Section 8.1(b).
SECTION 3.4. Reserved.
SECTION 3.5. Reserved.
SECTION 3.6. Reserved.
SECTION 3.7 Management and Realization Upon Defaulted Home Equity Loans. On
behalf of the Issuer, the Servicer shall manage, conserve, protect and operate
each REO Property for the Noteholders and the Certificateholders solely for the
purpose of its prudent and prompt
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disposition and sale. The Servicer shall, either itself or through an agent
selected by the Servicer, manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interests of the Noteholders
and the Certificateholders. The Servicer shall cause to be deposited, no later
than five Business Days after the receipt thereof, in the Collection Account,
all revenues received with respect to the related REO Property and shall retain,
or cause the Trustee to withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property and the fees of any
managing agent acting on behalf of the Servicer. The disposition of REO Property
shall be carried out by the Servicer for cash at such price, and upon such terms
and conditions, as the Servicer deems to be in the best interests of the
Noteholders and the Certificateholders and, as soon as practicable thereafter,
the expenses of such sale shall be paid. The cash proceeds of sale of the REO
Property shall be promptly deposited in the Collection Account, net of
Foreclosure Profits and of any related unreimbursed Servicing Advances, accrued
and unpaid Servicing Fees and unreimbursed Monthly Advances payable to the
Servicer in accordance with Section 3.3, for distribution to the Noteholders and
the Certificateholders in accordance with Section 4.5 hereof. The Servicer shall
foreclose upon or otherwise comparably convert to ownership Mortgaged Properties
securing such of the Home Equity Loans as come into and continue in default when
no satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.2 subject to the provisions contained in the last
paragraph of this Section 3.7. In the event that title to any Mortgaged Property
is acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Owner Trustee, or to its nominee on
behalf of the Noteholders and the Certificateholders.
SECTION 3.8. Trustee to Cooperate. Upon payment in full of any Home Equity
Loan, the Servicer is authorized to execute, pursuant to the authorization
contained in Section 3.1, if the related Assignment of Mortgage has been
recorded as required hereunder, an instrument of satisfaction regarding the
related Mortgage, which instrument of satisfaction shall be recorded by the
Servicer if required by applicable law and be delivered to the Person entitled
thereto. It is understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or transfer shall be reimbursed from
amounts deposited in the Collection Account. If the Trustee is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Home Equity Loan, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a Request for Release, in the form
annexed hereto as Exhibit E, signed by a Servicing Officer, release the related
Mortgage File to the Servicer, and the Trustee shall execute such documents, in
the forms provided by the Servicer, as shall be necessary to the prosecution of
any such proceedings or the taking of other servicing actions. Such Request for
Release shall obligate the Servicer to return the Mortgage 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 a certificate of a
Servicing Officer similar to that hereinabove specified, the Request for Release
shall be released by the Trustee to the Servicer. In order to facilitate the
foreclosure of the Mortgage securing any Home Equity Loan that is in default
following recordation of the related Assignment of Mortgage in accordance with
the provisions
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hereof, the Trustee shall, if so requested in writing by the Servicer, execute
an appropriate assignment in the form provided to the Trustee by the Servicer to
assign such Home Equity Loan for the purpose of collection to the Servicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only), and, upon such assignment, such assignee for
collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Home Equity Loan and deposit or credit the
Net Liquidation Proceeds, exclusive of Foreclosure Profits, received with
respect thereto in the Collection Account. In the event that all delinquent
payments due under any such Home Equity Loan are paid by the Mortgagor and any
other defaults are cured then the assignee for collection shall promptly
reassign such Home Equity Loan to the Trustee and return it to the place where
the related Mortgage File was being maintained.
SECTION 3.9 Servicing Fee. The servicing fee for a Distribution Date shall
equal the product of (a) one-twelfth, (b) the Servicing Fee Rate and (c) the
Pool Balance as of the first day of the preceding Due Period (the "Servicing
Fee"). The Servicer shall also be entitled to all late payment charges and other
administrative fees or similar charges, including without limitation,
Foreclosure Profits, allowed by applicable law with respect to Home Equity
Loans, collected (from whatever source) on the Home Equity Loans (the
"Supplemental Servicing Fee"). The Servicer also shall be entitled to and may
retain from Collections the Servicing Fee, as provided herein. The Servicer, in
its discretion at its election, may defer receipt of all or any portion of the
Servicing Fee or Supplemental Servicing Fee for any Due Period to and until a
later Due Period for any reason, including in order to avoid a shortfall in any
payments due on any Notes or Certificates. Any such deferred amount shall be
payable to (or may be retained from subsequent collections by) the Servicer on
demand.
SECTION 3.10. Servicer's Certificate. On each Determination Date, the
Servicer shall deliver to the Owner Trustee, the Trustee and the Seller, with a
copy to the Rating Agencies, a Servicer's Certificate containing all information
necessary to make the distributions pursuant to Sections 4.5 and 4.6 for the Due
Period preceding the date of such Servicer's Certificate. Home Equity Loans to
be purchased by the Servicer or to be repurchased by the Seller shall be
identified by the Servicer by account number with respect to such Home Equity
Loan (as specified in Exhibit A).
SECTION 3.11. Annual Statement as to Compliance; Notice of Default. (a) The
Servicer shall deliver to the Owner Trustee and the Trustee, on or before of
each year beginning , 199__, an Officers' Certificate, dated as of December 31
of the preceding year, stating that (i) a review of the activities of the
Servicer during the preceding twelve-month period (or, in the case of the first
such report, during the period from the Closing Date to December 31, 199__) and
of its 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
throughout such year or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof. The Trustee shall send a copy of such certificate and
the report referred to in Section 3.10 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 3.10 may be obtained by any
Certificateholder by a request in writing to the Owner
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Trustee addressed to the Corporate Trust Office (as defined in the Trust
Agreement) or by any Noteholder by a request in writing to the Trustee addressed
to the Corporate Trust Office. Upon the telephone request of the Owner Trustee,
the Trustee will promptly furnish the Owner Trustee a list of Noteholders as of
the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee and the
Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default under Section 7.1(a) or (b).
SECTION 3.12. Annual Independent Certified Public Accountants' Report. The
Servicer shall cause a firm of independent certified public accountants, which
may also render other services to the Servicer or the Seller, to deliver to the
Seller, the Owner Trustee and the Trustee on or before of each year beginning ,
199__, an letter addressed to the Servicer, the Seller, the Owner Trustee and
the Trustee and each Rating Agency, to the effect that such firm has with
respect to the Servicer's overall servicing operations examined such operations
in accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers during the preceding calendar year (or, in the case of the
first such report, during the period from the Closing Date to December 31,
199__), and stating such firm's conclusions relating thereto. Such report will
also indicate that the firm is independent of the Servicer within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
SECTION 3.13. Access to Certain Documentation and Information Regarding
Home Equity Loans. The Servicer shall provide to the Certificateholders and
Noteholders access to the Mortgage Files in such cases where the
Certificateholders or Noteholders shall be required by applicable statutes or
regulations to review such documentation as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section 3.13 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access to information as provided in
this Section 3.13 as a result of such obligation shall not constitute a breach
of this Section 3.13.
SECTION 3.14. Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the Servicer
and expenses incurred in connection with distributions and reports to
Certificateholders and Noteholders.
SECTION 3.15. Advances by the Servicer. (a) Not later than the close of
business on the second Business Day preceding each Distribution Date, the
Servicer shall remit to the Trustee for deposit in the Collection Account an
amount, to be distributed on the related Distribution Date pursuant to Section
4.5(d), equal to the sum of (a) the interest accrued on each Home Equity Loan at
the Mortgage Rate (or at such lower rate as may be in effect for such Home
Equity Loan pursuant to application of the Civil Relief Act and/or any Debt
Service Reduction) through the
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related Due Date, but not received as of the close of business on the
Determination Date for such Distribution Date (net of the Servicing Fee) and (b)
with respect to each REO Property which was acquired during or prior to the
related Due Period and as to which a final disposition did not occur during the
related Due Period, an amount equal to the excess, if any, of interest on the
Principal Balance of such REO Property at the Net Rate for the most recently
ended Due Period prior to the related Determination Date for the related Home
Equity Loan over the net income from the REO Property transferred to the
Collection Account for such Distribution Date pursuant to Section 3.4; such sum
being defined herein as the "Monthly Advance." The Servicer may fund all or a
portion of the Monthly Advance with respect to the Home Equity Loans by
instructing the Trustee on such Determination Date to use funds deposited in the
Collection Account which are not part of the Total Distribution Amount for the
related Distribution Date; provided that if such funds are so used the Servicer
shall replace such funds on or before any subsequent Determination Date on which
such funds are required to be part of the Total Distribution Amount.
(b) Notwithstanding anything herein to the contrary, no Servicing Advance
or Monthly Advance shall be required to be made hereunder if the Servicer
determines that such Servicing Advance or Monthly Advance would, if made,
constitute a Nonrecoverable Advance.
SECTION 3.16. Optional Purchase of Defaulted Home Equity Loans. The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Seller, the Owner Trustee and the Trustee) to purchase for
its own account from the Issuer any Home Equity Loan which is 90 days or more
delinquent in the manner and at the price specified in Section 2.2. The Purchase
Price for any Home Equity Loan purchased hereunder shall be deposited in the
Collection Account and the Trustee, upon receipt of such deposit, shall release
or cause to be released to the Servicer or its designee the related Mortgage
File and shall execute and deliver such instruments of transfer or assignment
prepared by the purchaser of such Home Equity Loan, in each case without
recourse, as shall be necessary to vest in the purchaser of such Home Equity
Loan any Home Equity Loan released pursuant hereto and the purchaser of such
Home Equity Loan shall succeed to all the Issuer's right, title and interest in
and to such Home Equity Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Home Equity Loan shall thereupon own such Home Equity Loan,
and all security and documents, free of any further obligation to the Owner
Trustee, the Trustee, the Noteholders or the Certificateholders with respect
thereto.
SECTION 3.17. Superior Liens. If required in order to receive notice, the
Servicer shall file (or cause to be filed) of record a request for notice of any
action by a superior lienholder under a First Lien for the protection of the
Issuer's interest, where permitted by local law and whenever applicable state
law does not require that a junior lienholder be named as a party defendant in
foreclosure proceedings in order to foreclose such junior lienholder's equity of
redemption.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by the First Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an
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election to have the Mortgaged Property sold or foreclosed, the Servicer shall
take, on behalf of the Trust, actions in accordance with the Servicer's policies
and procedures to protect the interests of the Noteholders and the
Certificateholders, and/or to preserve the security of the related Home Equity
Loan. The Servicer shall advance the necessary funds to cure the default or
reinstate the superior lien, if the Servicer reasonably believes such advance is
in the best interests of the Noteholders and the Certificateholders. The
Servicer shall not make such an advance except to the extent that it determines
in its reasonable good faith judgment that the advance would be recoverable from
Liquidation Proceeds on the related Home Equity Loan. The Servicer shall
thereafter take such action as is necessary to recover the amount so advanced.
Any expenses incurred by the Servicer pursuant to this Section 3.16 shall
constitute Servicing Advances.
SECTION 3.18. Reserved
SECTION 3.19. Appointment of Subservicer. The Servicer hereby appoints each
Originator to initially act as subservicer with respect to the Home Equity Loans
sold by such Originator to the Seller. The Originators, as subservicers shall
service the Home Equity Loans in accordance with the terms of this Agreement.
The Servicer may at any time appoint any other entity to serve as a subservicer
to perform all or any portion of its obligations as Servicer hereunder;
provided, however, that the Rating Agency Condition shall have been satisfied in
connection therewith. In connection with the appointment of any subservicer, the
Servicer shall remain obligated and be liable to the Issuer, the Owner Trustee,
the Trustee, the Certificateholders and the Noteholders for the servicing and
administering of the Home Equity Loans in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the Home
Equity Loans. The fees and expenses of each subservicer shall be as agreed
between the Servicer and the subservicer from time to time and none of the
Issuer, the Owner Trustee, the Trustee, the Certificateholders or the
Noteholders shall have any responsibility therefor.
ARTICLE IV
Distributions; Reserve Account; Statements to Certificateholders and Noteholders
SECTION 4.1. Establishment of Trust Accounts. (a) (i) The Servicer, for the
benefit of the Noteholders, shall establish and maintain in the name of the
Trustee an Eligible Deposit Account (the "Note Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders. The Note Distribution Account shall initially be
established with the Trustee.
(ii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Trustee an
Eligible Deposit Account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders. The Reserve Account shall be maintained
with the Trustee as long as the Trustee is an Eligible Institution.
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(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively, the "Trust Accounts") and the
Certificate Distribution Account shall be invested by the Trustee with respect
to Trust Accounts and by the Owner Trustee with respect to the Certificate
Distribution Account (or any custodian with respect to funds on deposit in any
such account) in Eligible Investments selected in writing by the Servicer
(pursuant to standing instructions or otherwise); provided, however, it is
understood and agreed that neither the Trustee nor the Owner Trustee shall be
liable for any loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by or on behalf of the Trustee or the
Owner Trustee, as applicable, for the benefit of the Noteholders and the
Certificateholders, the Noteholders or the Certificateholders, as applicable;
provided that on each Distribution Date all interest and other investment income
(net of losses and investment expenses) on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Interest Distribution Amount. Other than as permitted by the
Rating Agencies, funds on deposit in the Collection Account, the Note
Distribution Account, the Certificate Distribution Account and the Reserve
Account shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Transfer Date preceding
the following Distribution Date. Funds deposited in a Trust Account or the
Certificate Distribution Account on a Transfer Date which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not required
to be invested overnight.
(c) (i)The Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Trust Accounts and in all proceeds thereof
(including all income thereon) and all such funds, investments, proceeds and
income shall be part of the Owner Trust Estate. Except as otherwise provided
herein, the Trust Accounts shall be under the sole dominion and control of the
Trustee for the benefit of the Noteholders and the Certificateholders, or the
Noteholders, as the case may be. If, at any time, any of the Trust Accounts or
the Certificate Distribution Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) or the Owner Trustee, as applicable,
shall within 10 Business Days (or such longer period as to which each Rating
Agency may consent) establish a new Trust Account or a new Certificate
Distribution Account, as applicable, as an Eligible Deposit Account and shall
transfer any cash and/or any investments to such new Trust Account or a new
Certificate Distribution Account, as applicable. In connection with the
foregoing, the Servicer agrees that, in the event that any of the Trust Accounts
are not accounts with the Trustee, the Servicer shall notify the Trustee in
writing promptly upon any of such Trust Accounts ceasing to be an Eligible
Deposit Account.
(ii) With respect to the Trust Account Property, the Trustee, and with
respect to the Certificate Distribution Account, the Owner Trustee, agrees, by
its respective acceptance hereof, that: (A) any Trust Account Property or any
property in the Certificate Distribution Account that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts subject to the
penultimate sentence of Section 4.1(c)(i); and, except as otherwise provided
herein, each such Eligible Deposit Account shall be subject to the exclusive
custody and control of the Trustee with respect to the Trust Accounts and the
Owner Trustee with respect
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to the Certificate Distribution Account, and the Trustee or the Owner Trustee,
as applicable, shall have sole signature authority with respect thereto; (B) any
Trust Account Property that constitutes Physical Property shall be delivered to
the Trustee in accordance with paragraph (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the Trustee or a
financial intermediary (as such term is defined in Section 8-313(4) of the UCC)
acting solely for the Trustee; (C) any Trust Account Property that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph (b) of
the definition of "Delivery" and shall be maintained by the Trustee, pending
maturity or disposition, through continued book-entry registration of such Trust
Account Property as described in such paragraph; and (D) any Trust Account
Property that is an "uncertificated security" under Article 8 of the UCC and
that is not governed by clause (C) above shall be delivered to the Trustee in
accordance with paragraph (c) of the definition of "Delivery" and shall be
maintained by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the Trustee or by the
Owner Trustee with the consent of the Trustee, to instruct the Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of permitting
the Servicer or the Owner Trustee to carry out its respective duties hereunder
or permitting the Trustee to carry out its duties under the Indenture.
(d) (i) The Servicer shall establish and maintain with the Trustee an
Eligible Deposit Account (the "Payahead Account"). The Payahead Account shall
not be property of the Issuer.
(ii) The Servicer shall on or prior to each Distribution Date (and prior to
deposits to the Note Distribution Account or the Certificate Distribution
Account) transfer from the Collection Account to the Payahead Account all
Payaheads as described in Section 4.3 received by the Servicer during the Due
Period. Notwithstanding the foregoing, for so long as the Servicer is permitted
to make monthly remittances to the Collection Account pursuant to Section
3.2(c), Payaheads need not be remitted to and deposited in the Payahead Account
but instead may be remitted to and held by the Servicer. So long as such
condition is met, the Servicer shall not be required to segregate or otherwise
hold separate any Payaheads remitted to the Servicer as aforesaid but shall be
required to remit Payaheads to the Collection Account in accordance with the
first sentence of the third paragraph of Section 4.5(a).
SECTION 4.2. Reserved
SECTION 4.3. Application of Collections. (a) All collections for the Due
Period shall be applied by the Servicer as follows: With respect to each Home
Equity Loan (other than a Purchased Home Equity Loan), payments by or on behalf
of the Mortgagor shall be applied, in the case of Actuarial Home Equity Loans,
to the Scheduled Payment and, in the case of Simple Interest Home Equity Loans,
to interest and principal in accordance with the Simple Interest Method. With
respect to Actuarial Home Equity Loans, any remaining excess shall be added to
the Payahead Balance, and shall be applied to prepay the Actuarial Home Equity
Loan, but only
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if the sum of such excess and the previous Payahead Balance shall be sufficient
to prepay the Home Equity Loan in full. Otherwise, any such remaining excess
payments shall constitute a Payahead and shall increase the Payahead Balance.
(b) All Liquidation Proceeds shall be applied to the related Home Equity
Loan in accordance with the Servicer's customary servicing procedures.
SECTION 4.4. Additional Deposits. The Servicer and the Seller shall deposit
or cause to be deposited in the Collection Account the aggregate Purchase Price
with respect to Purchased Home Equity Loans and the Seller shall deposit therein
all amounts to be paid under Section 8.1. The Servicer will deposit the
aggregate Purchase Price with respect to Purchased Home Equity Loans within two
Business Days after such obligations become due, unless the Servicer shall not
be required to make deposits within two Business Days of receipt pursuant to
Section 3.2(c) (in which case such deposit will be made by the related Transfer
Date). All such other deposits shall be made on the Transfer Date following the
end of the related Due Period. Notwithstanding the foregoing, for so long as (i)
the Servicer is Centex Credit Corporation d/b/a Centex Home Equity Corporation,
(ii) no Event of Default shall have occurred and be continuing, (iii) if the
Servicer does not have a short term debt rating or deposit rating as applicable,
of at least A-1 from Standard & Poor's and P-1 from Moody's, a guaranty, letter
of credit, surety bond or other similar instrument is issued covering the
amounts described in the definition of Available Funds, which is acceptable to
the Rating Agencies and issued by an entity, which has a short-term debt or
deposit rating, as applicable, of at least A-1 from Standard & Poor's and P-1
from Moody's; and (iv) the Rating Agency Condition shall have been satisfied
(and any conditions or limitations imposed by the Rating Agencies in connection
therewith are complied with), the Servicer shall remit such collections to the
Collection Account on or before the second Business Day preceding the related
Distribution Date. The Rating Agency Condition with respect to this Section 3.2
and the Closing Date shall be deemed to be satisfied upon the issuance to the
Seller of the rating letters on the Closing Date.
SECTION 4.5. Distributions. (a) On each Distribution Date, the Trustee
shall cause to be transferred from the Payahead Account, or from the Servicer in
the event the provisions of Section 4.1(d)(ii) are applicable, to the Collection
Account, in immediately available funds, the aggregate previous Payaheads to be
applied to Scheduled Payments on Actuarial Home Equity Loans for the related Due
Period or prepayments for the related Due Period, pursuant to Sections 4.3 and
4.4, in the amounts set forth in the Servicer's Certificate for such
Distribution Date. A single, net transfer may be made.
(b) On each Determination Date, the Servicer shall calculate all amounts
required to determine the amounts to be deposited from the Reserve Account into
the Collection Account and from the Collection Account into the Note
Distribution Account and the Certificate Distribution Account.
(c) On or before each Distribution Date, the Servicer shall instruct the
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.10) to
withdraw from the Reserve Account and deposit
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in the Collection Account and the Trustee shall so withdraw and deposit the
Reserve Account Transfer Amount for such Distribution Date.
(d) Subject to the last paragraph of this Section 4.5(c), on each
Distribution Date, the Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.10) to make, and the Trustee shall
make, the following deposits and distributions from the Collection Account for
deposit in the applicable Account by TIME , to the extent of the Total
Distribution Amount, in the following order of priority: (i) to the Servicer,
from the Total Distribution Amount, the Total Servicing Fee; (ii) to the Note
Distribution Account, from the Total Distribution Amount remaining after the
application of clause (i), the Noteholders' Interest Distributable Amount; (iii)
to the Owner Trustee for deposit in the Certificate Distribution Account, from
the Total Distribution Amount remaining after the application of clause (i) and
clause (ii), the Certificateholders' Interest Distributable Amount; (iv) to the
Note Distribution Account, from the Total Distribution Amount remaining after
the application of clauses (i) through (iii), the Noteholders' Principal
Distributable Amount; and (v) to the Owner Trustee for deposit in the
Certificate Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) through (iv), the Certificateholders'
Principal Distributable Amount; provided, however, that following the occurrence
of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iv) or 5.1(v) of
the Indenture, an acceleration of the Notes pursuant to Section 5.2 of the
Indenture, amounts on deposit in the Collection Account will be deposited in the
Note Distribution Account to the extent necessary to pay accrued and unpaid
interest on the Notes and then, to the extent funds are available therefore,
principal on the Notes until the principal balance of each class of Notes has
been reduced to zero, before any amounts are deposited in the Certificate
Distribution Account. Following the payment in full of the Notes, amounts on
deposit in the Collection Account will be deposited in the Certificate
Distribution Account to the extent necessary to pay accrued and unpaid interest
on the Certificates and then, to the extent funds are available therefore,
principal on the Certificates until the principal balance thereof has been
reduced to zero. In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to this Section
4.5(c) on the related Transfer Date.
SECTION 4.6. Reserve Account. (a) On the Closing Date, the Seller shall
deposit the Reserve Account Initial Deposit into the Reserve Account.
(b) If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to any withdrawals therefrom on such Distribution
Date) is greater than the Specified Reserve Account Balance for such
Distribution Date, the Servicer shall instruct the Trustee to distribute, and
the Trustee shall distribute, the amount of the excess to the Seller. Amounts
properly distributed to the Seller pursuant to Section 4.6(b) shall be deemed
released from the Trust and the security interest therein granted to the Trustee
and the Seller shall in no event thereafter be required to refund any such
distributed amounts.
SECTION 4.7. Reserved
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SECTION 4.8. Statements to Certificateholders and Noteholders. On each
Determination Date, the Servicer shall provide to the Trustee (with a copy to
the Rating Agencies) for the Trustee to forward to each Noteholder of record, to
each Paying Agent, if any, and to the Owner Trustee for the Owner Trustee to
forward to each Certificateholder of record, a statement substantially in the
form of Exhibit B and Exhibit C, respectively, setting forth at least the
following information as to the Notes and the Certificates to the extent
applicable: (i) the amount of such distribution allocable to principal of each
class of Notes and to the Certificate Balance of the Certificates; (ii) the
amount of such distribution allocable to interest on or with respect to each
class of Notes and to the Certificates; (iii) the aggregate outstanding
principal balance of each class of the Notes and the Certificate Balance after
giving effect to payments allocated to principal reported under (i) above; (iv)
the amount of the Total Servicing Fee paid to the Servicer with respect to the
related Due Period; (v) The amount of the Monthly Advances payment to be made on
the Determination Date; (vi) the amount of the aggregate Realized Losses, if
any, for such Due Period; (vii) the Reserve Account Transfer Amount, if any, for
such Distribution Date, the average of the Charge-off Rates and the Delinquency
Percentages for the three preceding Due Periods, the Specified Reserve Account
Balance for such Distribution Date, the amount distributed to the Seller from
the Reserve Account on such Distribution Date, and the balance of the Reserve
Account (if any) on such Distribution Date, after giving effect to changes
therein on such Distribution Date; (viii) the Noteholders' Interest Carryover
Shortfall, the Certificateholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, and the Certificateholders'
Principal Carryover Shortfall; (ix) the amounts which are reimbursable to the
Servicer for Reimbursable Amounts and Nonrecoverable Advances; (x) the amount of
Servicing Advances for the preceding Due Period; and (xi) the aggregate Purchase
Price paid by the Seller or the Servicer with respect to the related Due Period.
Each amount set forth pursuant to paragraph (i), (ii), (vi) or (xi) above shall
be expressed as a dollar amount per $1,000 of the initial principal balance of
the Notes (or class thereof) or the initial Certificate Balance, as applicable.
SECTION 4.9. Net Deposits. As an administrative convenience, unless the
Servicer is required to remit collections within two Business Days of receipt
thereof, the Servicer will be permitted to make the deposit of collections on
the Home Equity Loans and Purchase Prices for or with respect to the Due Period
net of distributions to be made to the Servicer with respect to the Due Period.
The Servicer, however, will account to the Owner Trustee, the Trustee, the
Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
ARTICLE V
The Seller, the Representative and the Originators
SECTION 5.1. Representations of Seller. The Seller represents and warrants
to the Issuer as follows:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and
existence and is in good standing
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as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such
qualification necessary. The Seller has all requisite corporate power
and authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to
enter into and discharge its obligations under this Agreement;
(ii) This Agreement constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforcement may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(iii) Immediately prior to the sale and assignment by the Seller
to the Trustee of each Home Equity Loan, the Seller was the sole
beneficial owner of each Home Equity Loan (insofar as such title was
conveyed to it by the applicable Originator) subject to no prior lien,
claim, participation interest, mortgage, security interest, pledge,
charge or other encumbrance or other interest of any nature;
(iv) As of the Closing Date, the Seller has transferred all
right, title and interest in the Home Equity Loans to the Trustee; and
(v) The Seller has not transferred the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud any of its
creditors.
SECTION 5.2. Corporate Existence. (a) During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall observe the
applicable legal requirements for the recognition of the Seller as a legal
entity separate and apart from its Affiliates, including as follows: (i) the
Seller shall maintain corporate records and books of account separate from those
of its Affiliates; (ii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of its Affiliates;
(iii) the Seller shall hold such appropriate meetings of its Board of Directors
as are necessary to authorize all the Seller's corporate actions required by law
to be authorized by the Board of Directors, shall keep minutes of such meetings
and of meetings of its stockholder(s) and observe all other customary corporate
formalities (and any successor Seller not a corporation shall observe similar
procedures in accordance with its governing documents and applicable law); (iv)
the Seller shall at all times hold itself out to the public under the Seller's
own name as a legal entity separate and distinct
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from its Affiliates; and (v) all transactions and dealings between the Seller
and its Affiliates will be conducted on an arm's-length basis.
SECTION 5.3 Liability of Seller; Indemnities. The Seller shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Trustee and their respective officers, directors,
employees and agents from and against any taxes that may at any time be asserted
against any such Person with respect to the transactions contemplated in this
Agreement and any of the Basic Documents (except any income taxes arising out of
fees paid to the Owner Trustee or the Trustee and except any taxes to which the
Owner Trustee or the Trustee may otherwise be subject to), including any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes (but, in the case of the Issuer, not including any taxes asserted
with respect to, and as of the date of, the sale of the Home Equity Loans to the
Owner Trustee on behalf of the Issuer or the issuance and original sale of the
Certificates and the Notes, or asserted with respect to ownership of the Home
Equity Loans or Federal or other income taxes arising out of distributions on
the Certificates and the Notes) and costs and expenses in defending against the
same or in connection with any application relating to the Notes or Certificates
under any state securities laws.
(b) The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trustee, the Certificateholders and the Noteholders and the
officers, directors, employees and agents of the Issuer, the Owner Trustee and
the Trustee from and against any and all costs, expenses, losses, claims,
damages and liabilities to the extent arising out of, or imposed upon such
Person through (i) the Seller's willful misfeasance, bad faith or negligence in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of Federal or state securities laws in
connection with the offering and sale of the Notes and the Certificates or in
connection with any application relating to the Notes or Certificates under any
state securities laws.
(c) The Seller shall be liable as primary obligor for, and shall indemnify,
defend and hold harmless the Owner Trustee and its officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred in connection with,
this Agreement or any of the Basic Documents, the Owner Trust Estate, the
acceptance or performance of the trusts and duties set forth herein and in the
Trust Agreement or the action or the inaction of the Owner Trustee hereunder and
under the Trust Agreement, except to the extent that such cost, expense, loss,
claim, damage or liability: (i) shall be due to the willful misfeasance, bad
faith or negligence of the Owner Trustee, (ii) shall arise from any breach by
the Owner Trustee of its covenants under this Agreement or any of the Basic
Documents; or (iii) shall arise from the breach by the Owner Trustee of any of
its representations or warranties set forth in Section 7.3 of the Trust
Agreement. Such liability shall survive the termination of the Trust. In the
event of any claim, action or proceeding for which
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indemnity will be sought pursuant to this paragraph, the Owner Trustee's choice
of legal counsel shall be subject to the approval of the Seller, which approval
shall not be unreasonably withheld.
(d) The Seller shall pay any and all taxes levied or assessed upon all or
any part of the Trust Estate (other than those taxes expressly excluded from the
Seller's responsibilities pursuant to the parentheticals in paragraph (a)
above). Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 5.4 Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, shall be the successor to the Seller without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that the Seller hereby covenants that it will
not consummate any of the foregoing transactions except upon satisfaction of the
following: (i) the surviving Seller if other than CHEC Asset Receivable
Corporation, executes an agreement of assumption to perform every obligation of
the Seller under this Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.4 or 5.1
shall have been breached, (iii) the Seller shall have delivered to the Owner
Trustee and the Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) the surviving Seller shall have a consolidated
net worth at least equal to that of the predecessor Seller, (v) such transaction
will not result in a material adverse federal or state tax consequence to the
Issuer, the Noteholders or the Certificateholders and (vi) unless CHEC Asset
Receivable Corporation, is the surviving entity, the Seller shall have delivered
to the Owner Trustee and the Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Owner Trustee and
Trustee, respectively, in the Home Equity Loans and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests.
SECTION 5.5. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document (provided that such reliance shall not limit in any way
the Seller's obligations under Section 2.4(b)). The Seller shall not be under
any obligation to appear in, prosecute or defend any legal action that shall not
be incidental
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to its obligations under this Agreement, and that in its opinion may involve it
in any expense or liability.
SECTION 5.6. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document.
SECTION 5.7. Representations and Warranties Regarding the Representative
and the Originators. (a) The Representative represents and warrants that, as of
the Closing Date:
(i) The Representative is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary to enable it to
perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business, or the property owned
or leased by it make such a qualification necessary. The Representative
has, and had at all relevant times, full corporate power to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement by the
Representative and the performance by the Representative and compliance
with the terms of this Agreement will not violate the Representative's
articles of incorporation or by-laws 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 or acceleration of, any
material contract, agreement or other instrument to which the
Representative is a party or which may be applicable to the
Representative or any of its assets;
(iii) The Representative has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement to be consummated by it, has duly authorized the execution,
delivery and performance of this Agreement, and has duly executed and
delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a
valid, legal and binding obligation of the Representative enforceable
against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law);
(iv) The Representative is not in violation of, and the
execution and delivery of this Agreement by the Representative and the
performance by the Representative and compliance with the terms of this
Agreement will not constitute a violation with respect to, any order or
decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation
would materially and adversely
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affect the condition (financial or otherwise) or operations of the
Representative or any of its properties or materially and adversely
affect the performance of any of its duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Representative pending or, to the knowledge of
the Representative, threatened, before any court, administrative agency
or other tribunal (A) that, if determined adversely, would prohibit its
entering into this Agreement, (B) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or (C) that,
if determined adversely, would prohibit or materially and adversely
affect the performance by the Representative of any of its obligations
under, or the validity or enforceability of, this Agreement;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Representative of, or compliance by the
Representative with, this Agreement, or for the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders, if any, that have been obtained
prior to the Closing Date;
(vii) No Officer's Certificate, statement, report or other
document prepared by the Representative and furnished or to be
furnished by it pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;
(viii) The transactions contemplated by this Agreement are in
the ordinary course of business of the Representative;
(ix) The statements contained in the Registration Statement
which describe the Representative or matters or activities for which
the Representative is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to the
Representative 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 Representative and does not omit to
state a material fact necessary to make the statements contained
therein with respect to the Representative not misleading. The
Representative is not aware that the Registration Statement contains
any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained therein not misleading.
There is no fact peculiar to the Representative or the Home Equity
Loans and known to the Representative that materially adversely affects
or in the future may (so far as the Representative can now reasonably
foresee) materially adversely affect the Representative or the Home
Equity Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement;
(x) Each Originator received fair consideration and reasonably
equivalent value in exchange for the sale of the interest in the Home
Equity Loans;
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(xi) No Originator sold any interest in any Home Equity Loan,
evidenced by the Certificates, as provided in the Agreement, with any
intent to hinder, delay or defraud any of its respective creditors; and
(xii) The Originators are solvent and the Originators will not
be rendered insolvent as a result of the sale of the Home Equity Loans
to the Seller or the sale of the Certificates.
(b) Each Originator represents and warrants that, as of the
Closing Date:
(i) Such Originator is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and is licensed by and in compliance with the laws of
each state in which any Mortgaged Property relating to a Home Equity
Loan originated by it and/or to be serviced by it to the extent
necessary to enable it to perform its obligations under this Agreement
and the subservicing agreement to which it is a party and is in good
standing in each jurisdiction in which the nature of its business, or
the property owned or leased by it make such qualification necessary.
Such Originator has, and had at all relevant times, full corporate
power to originate the Home Equity Loans originated by it, to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement and the
subservicing agreement to which it is a party;
(ii) The execution and delivery of this Agreement and the
subservicing agreement to which it is a party by such Originator and
the performance by such Originator of and compliance with the terms of
this Agreement and the subservicing agreement to which it is a party
will not violate such Originator's articles of incorporation or by-laws
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 or acceleration of, any material contract, agreement or other
instrument to which such Originator is a party or which may be
applicable to the such Originator or any of its assets;
(iii) Such Originator has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement and the subservicing agreement to which it is a party to be
consummated by it, has duly authorized the execution, delivery and
performance of this Agreement and the subservicing agreement to which
it is a party, and has duly executed and delivered this Agreement and
the subservicing agreement to which it is a party. Each of this
Agreement and the subservicing agreement to which it is a party,
assuming due authorization, execution and delivery by the other parties
hereto and thereto, constitutes a valid, legal and binding obligation
of such Originator, enforceable against it in accordance with the terms
hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
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(iv) Such Originator is not in violation of, and the execution
and delivery of this Agreement and the subservicing agreement to which
it is a party by such Originator and the performance by such Originator
and compliance with the terms of this Agreement and the subservicing
agreement to which it is a party will not constitute a violation with
respect to, any order or decree of any court or any order or regulation
of any federal, state, municipal or governmental agency having
jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of such Originator or
any of its properties or materially and adversely affect the
performance of any of its duties hereunder or thereunder;
(v) There are no actions or proceedings against, or
investigations of, such Originator pending or, to the knowledge of such
Originator, threatened, before any court, administrative agency or
other tribunal (A) that, if determined adversely, would prohibit its
entering into this Agreement or the subservicing agreement to which it
is a party, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the subservicing
agreement to which it is a party or (C) that, if determined adversely,
would prohibit or materially and adversely affect the performance such
Originator of any of its obligations under, or the validity or
enforceability of, this Agreement or the subservicing agreement to
which it is a party;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by such Originator of, or compliance by such Originator
with, this Agreement or the subservicing agreement to which it is a
party, or for the consummation of the transactions contemplated by this
Agreement or the subservicing agreement to which it is a party, except
for such consents, approvals, authorizations and orders, if any, that
have been obtained prior to the Closing Date;
(vii) No Officer's Certificate, statement, report or other
document prepared by such Originator and furnished or to be furnished
by it pursuant to this Agreement or the subservicing agreement to which
it is a party or in connection with the transactions contemplated
hereby or thereby contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(viii) The statements contained in the Registration Statement
which describe such Originator or matters or activities for which such
Originator is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to such
Originator 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 such Originator or the Home Equity Loans
and does not omit to state a material fact necessary to make the
statements contained therein with respect to such Originator or the
Home Equity Loans not misleading. Such Originator is not aware that the
Registration Statement contains any untrue statement of a material fact
or omits to state any material fact necessary to make
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the statements contained therein not misleading. There is no fact
peculiar to such Originator or the Home Equity Loans and known to such
Originator that materially and adversely affects or in the future may
(so far as such Originator can now reasonably foresee) materially and
adversely affect such Originator or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has
not been set forth in the Registration Statement;
(ix) Upon the receipt of each Mortgage File by the Trustee,
the Trustee will have good and marketable title on behalf of the Trust
to each Home Equity Loan and such other items comprising the corpus of
the Trust free and clear of any lien (other than liens which will be
simultaneously released);
(x) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by such Originator pursuant to this Agreement
are not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction;
(xi) The origination and collection practices used by such
Originator with respect to each Mortgage Note and Mortgage relating to
the Home Equity Loans have been, in all material respects, legal, and
in accordance with the Originator's policies and procedures in effect
at the time;
(xii) Each Home Equity Loan was randomly selected from among
the existing Home Equity Loans in the respective Originator's portfolio
at the date hereof;
(xiii) Such Originator received fair consideration and
reasonably equivalent value in exchange for the sale of its interest in
the Home Equity Loans evidenced by the Certificates;
(xiv) Such Originator did not sell any interest in any Home
Equity Loan evidenced by the Certificates with any intent to hinder,
delay or defraud any of its respective creditors; and
(xv) Such Originator is solvent, and such Originator will not
be rendered insolvent as a result of the sale of the Home Equity Loans
to the Seller or the sale of the Certificates.
The representations and warranties set forth in this Section 2.04 shall survive
the sale and assignment of the Home Equity Loans to the Issuer. Upon discovery
of a breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders or the Noteholders, the Person
discovering such breach shall give prompt written notice to the other parties.
Within 60 days of its discovery or its receipt of notice of such breach, or,
with the prior written consent of a Responsible Officer of the Trustee, such
longer period specified in such consent, the Representative or the applicable
Originator shall cure such breach in all material respects.
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ARTICLE VI
The Servicer
SECTION 6.1. Representations of Servicer. The Servicer represents and
warrants to the Issuer as follows:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is in compliance with the laws of each state in which any Mortgaged
Property is located and is in good standing 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, and had at all
relevant times, full corporate power, to own its property, to carry on
its business as presently conducted and to enter into and perform its
obligations under this Agreement and each subservicing agreement.
(ii) The execution and delivery of this Agreement and each
subservicing agreement by the Servicer and the performance by the
Servicer of and compliance with the terms of this Agreement and each
subservicing agreement will not violate the Servicer's articles of
incorporation or by-laws 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 or acceleration of, any material
contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;
(iii) The Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement and
each subservicing agreement to be consummated by it, has duly
authorized the execution, delivery and performance of this Agreement
and each subservicing agreement, and has duly executed and delivered
this Agreement and each subservicing agreement. This Agreement and each
subservicing agreement, assuming due authorization, execution and
delivery by the other parties hereto and thereto, constitutes a valid,
legal and binding obligation of the Servicer, enforceable against it in
accordance with the terms hereof and thereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law);
(iv) The Servicer is not in violation of, and the execution
and delivery of this Agreement and each subservicing agreement by the
Servicer and the performance by the Servicer and compliance with the
terms of this Agreement and each subservicing agreement will not
constitute a violation with respect to, any order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction, which violation would
materially and adversely affect the condition (financial or otherwise)
or operations of the Servicer or any of its properties or materially
and adversely affect the performance of any of its duties hereunder or
thereunder;
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(v) There are no actions or proceedings against, or
investigations of, the Servicer pending or, to the knowledge of the
Servicer, threatened, before any court, administrative agency or other
tribunal (A) that, if determined adversely, would prohibit its entering
into this Agreement or any subservicing agreement, (B) seeking to
prevent the consummation of any of the transactions contemplated by
this Agreement or any subservicing agreement or (C) that, if determined
adversely, would prohibit or materially and adversely affect the
performance by the Servicer of any of its obligations under, or the
validity or enforceability of, this Agreement or any subservicing
agreement;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
this Agreement and each subservicing agreement, or for the consummation
of the transactions contemplated by this Agreement and each
subservicing agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(vii) 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 non-conforming mortgage
servicing business;
(viii) No Officer's Certificate, statement, report or other
document prepared by the Servicer and furnished or to be furnished by
it pursuant to this Agreement or any subservicing agreement or in
connection with the transactions contemplated hereby or thereby
contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading;
(ix) The Servicer believes that the Servicing Fee Rate
provides a reasonable level of base compensation to the Servicer for
master servicing the Home Equity Loans on the terms set forth herein;
(x) The transactions contemplated by this Agreement and each
subservicing Agreement are in the ordinary course of business of the
Servicer; and
(xi) 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 Registration Statement,
this Agreement and all documents referred to therein or delivered in
connection therewith, or which are attributable 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 and does not omit to state a material fact
necessary to make the statements contained therein with respect to the
Servicer not misleading. The Servicer is not aware that the
Registration Statement contains any untrue statement of a material fact
or omits to state any material fact necessary to make the statements
contained therein not misleading. There is no fact peculiar to the
Servicer or the Home Equity Loans and known to the Servicer that
materially adversely affects or in the future may (so far as the
Servicer can now reasonably foresee) materially adversely affect
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the Servicer or the Home Equity Loans or the ownership interests
therein represented by the Certificates that has not been set forth in
the Registration Statement; and
(xii) The Servicer has caused or hereby agrees to 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 the Home Equity Loans, 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.
The representations and warranties set forth in this Section 6.1 shall survive
the sale and assignment of the Home Equity Loans to the Issuer. Upon discovery
of a breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders or the Noteholders, the Person
discovering such breach shall give prompt written notice to the other parties.
Within 60 days of its discovery or its receipt of notice of such breach, or,
with the prior written consent of a Responsible Officer of the Trustee, such
longer period specified in such consent, the Servicer shall cure such breach in
all material respects.
SECTION 6.2. Indemnities of Servicer. (a) The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement. The Servicer shall indemnify,
defend and hold harmless the Issuer, the Owner Trustee, the Trustee, the
Representative, the Seller, the Certificateholders and the Noteholders and any
of the officers, directors, employees and agents of the Issuer, the Owner
Trustee, the Trustee or the Seller from any and all costs, expenses, losses,
claims, damages and liabilities (including reasonable attorneys' fees and
expenses) to the extent arising out of, or imposed upon any such Person through,
the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its obligations and duties under this Agreement or in the
performance of the obligations and duties of any subservicer under any
subservicing agreement or by reason of the reckless disregard of its obligations
and duties under this Agreement or by reason of the reckless disregard of the
obligations of any subservicer under any subservicing agreement, where the final
determination that any such cost, expense, loss, claim, damage or liability
arose out of, or was imposed upon any such Person through, any such negligence,
willful misfeasance, bad faith or recklessness on the part of the Servicer or
any subservicer, is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Servicer. Notwithstanding the foregoing, if the
Servicer is rendered unable, in whole or in part, by virtue of an act of God,
act of war, fires, earthquake or other natural disasters, to satisfy its
obligations under this Agreement, the Servicer shall not be deemed to have
breached any such obligation upon the sending of written notice of such event to
the other parties hereto, for so long as the Servicer remains unable to perform
such obligation as a result of such event. This provision shall not be construed
to limit the Servicer's or any other party's rights, obligations, liabilities,
claims or defenses which arise as a matter of law or pursuant to any other
provision of this Agreement. The Servicer shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee, the Trustee, the Seller, the
Certificateholders and the Noteholders or any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee, the Trustee or the Seller
from any and all costs, expenses, losses, claims, damages and liabilities
(including reasonable attorneys' fees and expenses) to the extent arising out of
or imposed upon any such Person as a result of any compensation payable to any
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subservicer (including any fees payable in connection with the termination of
the servicing activities of such subservicer with respect to any Home Equity
Loan) whether pursuant to the terms of any subservicing agreement or otherwise.
SECTION 6.3 Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party or (c) which may succeed to the properties and assets
of the Servicer, substantially as a whole, shall be the successor to the
Servicer without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that the Servicer
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Servicer if other
than Centex Credit Corporation d/b/a Centex Home Equity Corporation, executes an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 6.1 shall have been breached
and no Servicer Default, and no event that, after notice or lapse of time, or
both, would become a Servicer Default shall have occurred and be continuing,
(iii) the Servicer shall have delivered to the Owner Trustee and the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Servicer shall have a consolidated net worth at
least equal to that of the predecessor Servicer, and (v) such transaction will
not result in a material adverse Federal or state tax consequence to the Issuer,
the Noteholders or the Certificateholders.
SECTION 6.4 Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of its directors, officers, employees or agents shall be under
any liability to the Issuer, the Noteholders or the Certificateholders, except
as provided under this Agreement, for any action taken or for refraining from
the taking of any action by the Servicer or any subservicer pursuant to this
Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer or any subservicer and
any of their respective directors, officers, employees or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement
Except as provided in this Agreement the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Home Equity Loans in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer, may (but shall not be required
to) undertake any reasonable action that it may deem necessary or desirable in
respect of the Basic Documents to protect the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
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SECTION 6.5. Centex Credit Corporation d/b/a Centex Home Equity Corporation
Not To Resign as Servicer. Subject to the provisions of Section 6.3, Centex
Credit Corporation d/b/a Centex Home Equity Corporation, hereby agrees not to
resign from the obligations and duties hereby imposed on it as Servicer under
this Agreement except upon determination that the performance of its duties
hereunder shall no longer be permissible under applicable law or if such
resignation is required by regulatory authorities. Notice of any such
determination permitting the resignation of Centex Credit Corporation d/b/a
Centex Home Equity Corporation, as Servicer shall be communicated to the Owner
Trustee and the Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Owner Trustee and the Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the earlier of the Trustee or a Successor Servicer having
assumed the responsibilities and obligations of the resigning Servicer in
accordance with Section 7.2 or the date upon which any regulatory authority
requires such resignation.
ARTICLE VII
Default
SECTION 7.1 Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Trustee for
deposit in any of the Trust Accounts or the Certificate Distribution
Account any required payment or to direct the Trustee to make any
required distributions therefrom (other than a Monthly Advance required
to be made from its own funds) that shall continue unremedied for a
period of five Business Days after written notice of such failure is
received by the Servicer from the Owner Trustee or the Trustee or after
discovery of such failure by an Authorized Officer of the Servicer; or
(b) failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or
failure on the part of the Servicer duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer
set forth in this Agreement or any other Basic Document, which failure
shall (i) materially and adversely affect the rights of either the
Certificateholders or Noteholders and (ii) continue unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given (A)
to the Servicer by the Owner Trustee or the Trustee or (B) to the
Servicer and to the Owner Trustee and the Trustee by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the
Notes or Holders of Certificates evidencing not less than 25% of the
outstanding Certificate Balance, as applicable (or for such longer
period, not in excess of 120 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy
within 120 days and the Servicer delivers an Officers' Certificate to
the Owner Trustee and the Trustee to such effect and to the effect that
the
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Servicer has commenced or will promptly commence, and will diligently
pursue, all reasonable efforts to remedy such default); or
(c) any failure of the Servicer to pay any Monthly Advance
required to be made from its own funds pursuant to Section 3.15 that
continues unremedied for a period of one Business Day; or
(d) an Insolvency Event occurs with respect to the Servicer or
any successor; then, and in each and every case, so long as the
Servicer Default shall not have been remedied, either the Trustee, or
the Holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes, by notice then given in writing to the Servicer
and the Owner Trustee (and to the Trustee if given by the Noteholders)
may terminate all the rights and obligations (other than the
obligations set forth in Section 6.2) of the Servicer under this
Agreement.
On or after the receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to the
Notes, the Certificates or the Home Equity Loans or otherwise, shall, without
further action, pass to and be vested in the Trustee or such successor Servicer
as may be appointed under Section 7.2; and, without limitation, the Trustee and
the Owner Trustee are hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Home Equity
Loans and related documents, or otherwise. The predecessor Servicer shall
cooperate with the successor Servicer, the Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received by it with
respect to a Home Equity Loan. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Owner Trustee
shall give notice thereof to the Rating Agencies.
SECTION 7.2 Appointment of Successor. (a) Upon the Servicer's receipt of
notice of termination, pursuant to Section 7.1 or the Servicer's resignation in
accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the earlier of (x) the date 45
days from the delivery to the Owner Trustee and the Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
termination
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hereunder, the Trustee shall appoint a successor Servicer, and the successor
Servicer shall accept its appointment by a written assumption in form acceptable
to the Owner Trustee and the Trustee. In the event that a successor Servicer has
not been appointed at the time when the predecessor Servicer has ceased to act
as Servicer in accordance with this Section, the Trustee without further action
shall automatically be appointed the successor Servicer and the Trustee shall be
entitled to the Servicing Fee. Notwithstanding the above, the Trustee shall, if
it shall be unwilling or unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution, having a net
worth of not less than $50,000,000 and whose regular business shall include the
servicing of Home Equity Loans and REO Property, as the successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Trustee acting
as successor servicer) shall be the successor in all respects to the predecessor
Servicer and shall be subject to all the responsibilities, duties and
liabilities arising thereafter relating thereto placed on the predecessor
Servicer and shall be entitled to the Servicing Fee and all the rights granted
to the predecessor Servicer by the terms and provisions of this Agreement. No
successor Servicer shall be liable for any acts or omissions of any predecessor
Servicer.
(c) The Servicer may not resign unless it is prohibited from serving as
such by law or by requirement of any regulatory authority.
SECTION 7.3 Payment of Servicing Fee. If the Servicer shall change, the
predecessor Servicer shall be entitled to receive any accrued and unpaid
Servicing Fees through the date of the successor Servicer's acceptance hereunder
in accordance with Section 3.9.
SECTION 7.4 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders and the Trustee shall give prompt written notice thereof to
Noteholders subject to the Rating Agency Condition.
SECTION 7.5 Waiver of Past Defaults. The Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes (or the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance, as applicable, in the case of
any default which does not adversely affect the Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, waive in writing any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement. Upon any such
waiver of a past default, such default shall cease to exist, and any Servicer
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE VIII
Termination
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SECTION 8.1 Optional Purchase of All Home Equity Loans. (a) On the last day
of any Due Period immediately preceding a Determination Date as of which the
then outstanding Pool Balance is __% or less of the Original Pool Balance, the
Seller shall have the option to purchase the Owner Trust Estate, other than the
Trust Accounts and the Certificate Distribution Account. To exercise such
option, the Seller shall deposit pursuant to Section 4.4 in the Collection
Account an amount which, when added to the amounts on deposit in the Collection
Account for such Distribution Date, equals the sum of (a) the unpaid principal
amount of the then outstanding Class A-__ Notes, plus accrued and unpaid
interest thereon, plus (b) the Certificate Balance plus accrued and unpaid
interest thereon. The Class A-__ Notes and the Certificates will be redeemed
concurrently therewith.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.2 of the
Trust Agreement, the Servicer shall instruct the Trustee to deposit the proceeds
from such sale after all payments and reserves therefrom (including the expenses
of such sale) have been made (the "Insolvency Proceeds") in the Collection
Account. On the Distribution Date on which the Insolvency Proceeds are deposited
in the Collection Account (or, if such proceeds are not so deposited on a
Distribution Date, on the Distribution Date immediately following such deposit),
the Servicer shall instruct the Trustee to make, and the Trustee shall make, the
following deposits and distributions (after the application on such Distribution
Date of the Total Distribution Amount pursuant to Section 4.5) from the
Insolvency Proceeds and any funds remaining on deposit in the Reserve Account
(including the proceeds of any sale of investments therein): (i) to the Note
Distribution Account, any portion of the Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution Account on such
Distribution Date; (ii) to the Note Distribution Account, the outstanding
principal balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits made in
the Note Distribution Account on such Distribution Date); (iii) to the Owner
Trustee for deposit in the Certificate Distribution Account, any portion of the
Certificateholders' Interest Distributable Amount not otherwise deposited into
the Certificate Distribution Account on such Distribution Date; and (iv) to the
Owner Trustee for deposit in the Certificate Distribution Account, the
Certificate Balance and any Certificateholders' Principal Carryover Shortfall
Amount (after giving effect to the reduction in the Certificate Balance to
result from the deposits made in the Certificate Distribution Account on such
Distribution Date). Any Insolvency Proceeds remaining after the deposits
described above shall be paid to the GP Holder.
(c) Notice of any termination of the Trust shall be given by the Servicer
to the Owner Trustee, the Trustee and the Rating Agencies as soon as practicable
after the Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee pursuant to this Agreement.
ARTICLE IX
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Administrative Duties of the Servicer
SECTION 9.1 Administrative Duties. (a) The Servicer shall perform all its
duties and the duties of the Issuer under the Depository Agreements. In
addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture and the
Depository Agreements. The Servicer shall monitor the performance of the Issuer
and shall advise the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture and the Depository Agreements. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Servicer shall take all appropriate action
that is the duty of the Issuer to take pursuant to the Indenture.
(b) (i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Basic Documents, and at the request of
the Owner Trustee shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Basic Documents. Subject
to Section 9.4, and in accordance with the directions of the Owner Trustee, the
Servicer shall administer, perform or supervise the performance of such other
activities in connection with the Collateral (including the Basic Documents) as
are not covered by any of the foregoing provisions and as are expressly
requested by the Owner Trustee and are reasonably within the capability of the
Servicer.
(ii) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Servicer shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to an Owner (as defined in the
Trust Agreement) as contemplated in Section 5.2(c) of the Trust Agreement. Any
such notice shall specify the amount of any withholding tax required to be
withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, the Servicer shall be responsible for performance of the duties of
the Owner Trustee set forth in Section 5.6(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things, accounting and reports to Owners
(as defined in the Trust Agreement); provided, however, that the Owner Trustee
shall retain responsibility for the distribution of the Schedule K is necessary
to enable each Certificateholder to prepare its federal and state income tax
returns.
(iv) The Servicer shall perform the duties of the Servicer specified in
Section 10.2 of the Trust Agreement required to be performed in connection with
the resignation
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or removal of the Owner Trustee, and any other duties expressly required to be
performed by the Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Servicer may enter into transactions with or otherwise
deal with any of its Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any directions received
from the Issuer and shall be, in the Servicer's opinion, no less favorable to
the Issuer in any material respect.
(c) The Servicer shall prepare and file, on behalf of the Seller, all tax
returns, tax elections, financial statements and such annual or other reports of
the Issuer as are necessary for preparation of tax reports as provided in
Article V of the Trust Agreement, including without limitation forms 1099 and
1066. All tax returns will be signed by the Seller.
(d) With respect to matters that in the reasonable judgment of the Servicer
are non-ministerial, the Servicer shall not take any action pursuant to this
Article X unless within a reasonable time before the taking of such action, the
Servicer shall have notified the Owner Trustee and the Trustee of the proposed
action and the Owner Trustee and, with respect to items (A), (B), (C) and (D)
below, the Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include: (A) the amendment of or any supplement to the Indenture; (B) the
initiation of any claim or lawsuit by the Issuer and the compromise of any
action, claim or lawsuit brought by or against the Issuer (other than in
connection with the collection of the Home Equity Loans); (C) the amendment,
change or modification of this Agreement or any of the Basic Documents; (D) the
appointment of successor Note Registrars, successor Paying Agents and successor
Trustees pursuant to the Indenture or the appointment of Successor Servicers or
the consent to the assignment by the Note Registrar, Paying Agent or Trustee of
its obligations under the Indenture; and (E) the removal of the Trustee.
(e) Notwithstanding anything to the contrary in this Agreement, except as
expressly provided herein or in the other Basic Documents, the Servicer, in its
capacity hereunder, shall not be obligated to, and shall not, (1) make any
payments to the Noteholders or Certificateholders under the Basic Documents, (2)
sell the Indenture Trust Estate pursuant to Section 5.4 of the Indenture, (3)
take any other action that the Issuer directs the Servicer not to take on its
behalf or (4) in connection with its duties hereunder assume any indemnification
obligation of any other Person.
SECTION 9.2 Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 9.3. Additional Information To Be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
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ARTICLE X
Miscellaneous Provisions
SECTION 10.1. Amendment. This Agreement may be amended by the Seller, the
Originators, the Representative, the Servicer and the Owner Trustee, with the
consent of the Trustee (which consent may not be unreasonably withheld), but
without the consent of any of the Noteholders or the Certificateholders, to cure
any ambiguity or defect, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of modifying in
any manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Owner Trustee and the Trustee, adversely affect in any material
respect the interests of any Noteholder or Certificateholder. This Agreement may
also be amended from time to time by the Seller, the Originators, the
Representative, the Servicer and the Owner Trustee, with the consent of the
Trustee, the consent of the Holders of Notes evidencing not less than a majority
of the Outstanding Amount of the Notes and the consent of the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Certificate Balance for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Home Equity Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance, the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all the outstanding Notes
and the Holders (as defined in the Trust Agreement) of all the outstanding
Certificates of each class affected thereby. Prior to the execution of any such
amendment or consent, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to the Rating Agencies. Promptly
after the execution of any such amendment or consent, the Owner Trustee shall
furnish written notification of the substance of such amendment or consent to
each Certificateholder and the Trustee. It shall not be necessary for the
consent of Certificateholders or Noteholders pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. Prior to the
execution of any amendment to this Agreement, the Owner Trustee and the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent to the execution and delivery of such amendment
have been satisfied and the Opinion of Counsel referred to in Section 10.2(i)(1)
has been delivered. The Owner Trustee and the Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Trustee's, as applicable, own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust. (a) The Seller shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the
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interest of the Issuer and the interests of the Trustee in the Home Equity Loans
and in the proceeds thereof. The Seller shall deliver (or cause to be delivered)
to the Owner Trustee and the Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
(b) None of the Originators, the Seller nor the Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Owner Trustee and the Trustee at
least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) Each of the Originators, the Seller and the Servicer shall have an
obligation to give the Owner Trustee and the Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Home Equity Loans, and its principal executive office, within the
United States of America.
(d) The Servicer shall maintain accounts and records as to each Home Equity
Loan accurately and in sufficient detail to permit (i) the reader thereof to
know at any time the status of such Home Equity Loan, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each Home
Equity Loan and the amounts from time to time deposited in the Collection
Account in respect of such Home Equity Loan.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Home Equity Loans, the
Servicer's master computer records (including any backup archives) that refer to
a Home Equity Loan shall indicate clearly the interest of the Issuer and the
Trustee in such Home Equity Loan and that such Home Equity Loan is owned by the
Issuer and has been pledged to the Trustee. Indication of the Issuer's and the
Trustee's interest in a Home Equity Loan shall be deleted from or modified on
the Servicer's computer systems when, and only when, the related Home Equity
Loan shall have been paid in full or repurchased by the Seller or purchased by
the Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell, grant
a security interest in or otherwise transfer any interest in mortgage loans to
any prospective purchaser, lender or other transferee, the Servicer shall give
to such prospective purchaser, lender or other transferee computer tapes,
records or printouts (including any restored from backup archives) that, if they
shall refer in any manner whatsoever to any Home Equity Loan, shall indicate
clearly that such Home Equity Loan has been sold and is owned by the Issuer and
has been pledged to the Trustee.
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(g) The Servicer shall permit the Trustee and its agents at any time during
normal business hours to inspect, audit and make copies of and abstracts from
the Servicer's records regarding any Home Equity Loan.
(h) Upon request at any time the Owner Trustee or the Trustee shall have
reasonable grounds to believe that such request is necessary in connection with
the performance of its duties under this Agreement or any of the Basic
Documents, the Servicer shall furnish to the Owner Trustee or to the Trustee,
within five Business Days, a list of all Home Equity Loans (by contract number
and name of Mortgagor) then held as part of the Trust, together with a
reconciliation of such list to the Home Equity Loan Schedule and to each of the
Servicer's Certificates furnished before such request indicating removal of Home
Equity Loans from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Trustee: (1)
promptly after the execution and delivery of this Agreement and of each
amendment thereto, an Opinion of Counsel either (A) stating that, in the opinion
of such counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the interest
of the Owner Trustee and the Trustee in the Home Equity Loans, and reciting the
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and (2) within
120 days after the beginning of each calendar year beginning with the first
calendar year beginning more than three months after the Cutoff Date, an Opinion
of Counsel, dated as of a date during such 120-day period, either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Trustee in the Home Equity
Loans, and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) stating that, in the opinion
of such counsel, no such action shall be necessary to preserve and protect such
interest. Each Opinion of Counsel referred to in clause (l) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(i) The Seller shall, to the extent required by applicable law, cause the
Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.3. Notices. All demands, notices and communications upon or to
the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating Agencies
under this Agreement shall be in writing, personally delivered, sent by
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller to CHEC Asset Receivable Corporation, ___________________________,
Attention: __________________________________, (b) in the case of the Servicer
to Centex Credit Corporation d/b/a Centex Home Equity Corporation., (c) in the
case of the Issuer or the Owner Trustee, at the Corporate Trust Office (as
defined in the Trust Agreement), (d) in the case of the Trustee, at the
Corporate Trust Office, (e) in the case of Moody's, to Moody's Investors
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Service, Inc., to 99 Church Street, New York, New York 10004, Attention of Asset
Backed Securities Group, (f) in the case of Standard & Poor's, to Standard &
Poor's Ratings Group, 26 Broadway (15th Floor), New York, New York 10004,
Attention of Asset Backed Surveillance Department and (g) in the case of Fitch,
to Fitch Investors Service, L.P., One State Street Plaza, New York, New York
10004 Attention of____________.
SECTION 10.4 Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Sections 5.4 and 6.3 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Seller or the Servicer.
SECTION 10.5 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the
Issuer, the Owner Trustee and for the benefit of the Certificateholders, the
Trustee and the Noteholders, as third-party beneficiaries, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 10.6 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.7 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.8 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 10.9 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK , WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.10 Assignment to Trustee. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest
by the Issuer to the Trustee pursuant to the Indenture for the benefit of the
Noteholders of all right, title and interest of the Issuer in, to and under
the Home Equity Loans and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Trustee.
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SECTION 10.11 Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, the Servicer and the Seller shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any Federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
SECTION 10.12. Limitation of Liability of Owner Trustee and Trustee. (a)
Notwithstanding anything contained herein to the contrary, this Agreement has
been countersigned by Name of Owner Trustee not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall Name
of Owner Trustee in its individual capacity or, except as expressly provided in
the Trust Agreement, as Owner Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of its
duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by not in its individual capacity but solely as
Trustee and in no event shall have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
SECTION 10.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way and
shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
SECTION 10.14 No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Servicer and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
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WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
CENTEX HOME EQUITY LOAN TRUST A
By: ______________________, not in its individual
capacity but solely as Owner Trustee on behalf
of the Trust,
By:_________________________________
Name:
Title:
CENTEX CREDIT CORPORATION D/B/A CENTEX
HOME EQUITY CORPORATION, Servicer
By:_________________________________
Name:
Title:
CHEC ASSET RECEIVABLE CORPORATION
By:_________________________________
Name:
Title:
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Acknowledged and Accepted:
_______________ , not in its individual
capacity but solely as Trustee,
By:_________________________________
Name:
Title:
Acknowledged and Accepted:
_______________, not in its individual
capacity but solely as Owner Trustee,
By:_________________________________
Name:
Title:
